Singapore venture capital surges as startups seek room to grow

SINGAPORE: Singapore is experiencing a surge in venture capital fund-raising, reflecting growing interest in South-East Asia’s startups.

This month, Vertex Ventures and two other venture-capital firms completed fundraising efforts in the city, each with their largest fund yet. In September, East Ventures, which made early bets on successful startups like Tokopedia and Traveloka, raised US$30mil that will go toward seed capital and early-stage financing.

Investors are putting money into the region’s venture firms as they seek opportunities beyond the US and China, the primary focus for Asia deals in recent years. Singapore’s government is providing incentives to attract entrepreneurs and venture capitalists – cutting regulatory red tape, protecting intellectual property and allocating public money for early investments.

“In the past decade, Singapore has invested heavily in the startup ecosystem,’’ said Paul Meyers, head of muru-D Singapore, Telstra Corp’s accelerator programme. “As a result, we’re seeing more and higher quality startups appearing and getting funded.’’

The venture industry continues to be led by the US, which accounted for US$21.5bil of the US$39bil total invested in the third quarter, according to KPMG’s Venture Pulse Q3 2017 report. Asia is the second largest region at US$12.3bil, with China pulling in US$10.2bil of that total. Singapore venture investments totalled US$725.3mil in the second quarter of this year, boosted by Sea Ltd’s US$550mil funding round, according to KPMG. In the following three months, investments totaled US$140.3mil.

“The fact that significant upticks still occur testify to how the Singaporean startup scene still produces companies capable of attracting significant capital,’’ the report said.

Sea, a gaming company formerly known as Garena, went public in the US last week, raising US$884mil in its initial public offering.

The Singapore-based company increased its share price and the number of shares available, signalling strong demand.

Some Singapore-based VCs are moving beyond seed and early-stage investing as startups grow in size. For example, B Capital Group, a VC firm that includes Facebook Inc co-founder Eduardo Saverin, typically targets series B and C financing rounds of tech startups in the US, South-East Asia and India.

Vickers Venture Partners, which completed its fundraising at US$230mil last week, is “stage agnostic,” according to chairman Finian Tan. VCs in Singapore are luring funds from a wide range of investors including family offices as well as multinationals and conglomerates seeking to diversify their traditional businesses and get access to promising tech startups through their corporate VC arms. Jungle Ventures’ SeedPlus, which targets early-stage deals in Asia, closed its first fund at S$25mil in April with backing from the investment arms of Fidelity International Ltd and Cisco Systems Inc. For its third fund for South-East Asian and Indian deals, Vertex Ventures, which raised US$210mil this month, invited outside investors for the first time. Its corporate backers included Thailand’s Kasikornbank Pcl and Taiwan’s Cathay Life Insurance Co.

Vertex has had two funds focused on SouthEast Asia in the past, fully funded by parent Temasek Holdings Pte, Singapore’s state investment firm.