Vertex Ventures, the venture capital (VC) arm of Singapore-based investment company Temasek Holdings (Pvt.) Ltd, is raising a new fund that is focused on Southeast Asia and India and is set to surpass its target of $150 million for this vehicle when it hits the final close over the next few months, a top executive with the firm told this portal.
The new vehicle will also mark the first instance of Vertex Ventures getting external investors into any of its funds in this region, Chua Kee Lock, Group President & CEO of Vertex Venture Holdings Ltd, the city-state’s largest VC firm with $1 billion under active management, said in an interaction.
Kee Lock, who is also the President & CEO of Vertex Venture Management Pte. Ltd., said the firm had utilised about 50 per cent from its existing $200 million vehicle for this region that was launched in 2015, and would make no new investments from this fund.
“Mid last year, we began working on a new fund that has third-party investors for India and South-east Asia. The target was $150 million, but we are on course to raise more than that, and I cannot reveal the final number now. More than half of this will be from external investors,” Kee Lock said.
“Our earlier fund for this region was a captive one – that was a $200 million fund and we’ve frozen it now. It does not matter whether we roll over investments in that fund over into the new one – the earlier fund will not make any more new investments. Vertex Venture Holdings was the only investor in the earlier fund, but for the latest one, we’ve got LPs from all over the world – from South Asia, Middle East and even some global players. In terms of commitments from our LPs, the range varies – from a million dollars to a couple of million to even $15 to $20 million,” he added.
For Southeast Asia and India, Vertex invests in three key areas: mobile/Internet, which includes on-demand mobile services, fintech, vertical e-commerce etc; tech-enabler, which includes mobile components, enterprise/Big Data and IoT; and services including O2O (Online-to-Offline), SaaS, etc.
With teams based in Singapore, Taiwan and India, Vertex Ventures Southeast Asia & India is part of a global venture fund network, under the parent Vertex Venture Holdings. In addition to SE Asia/India, the Vertex Global Network comprises Silicon Valley, China, and Israel.
As reported first by this portal, Vertex does not have external investors in its local funds in other geographies, which include a $225 million China fund, a $150 million US fund and a $150 million Israel fund.
Kee Lock pointed out that since 2015, all its local funds had been allowed to raise up to 50 per cent of the money from external sources.
“Our China team went out and raised money from outside in their last fund. The US and Israel teams also did that, and the Southeast Asia decided to adopt a similar model last year,” he said.
According to him, raising money from external sources presented a better model, in line with industry standards.
“VCs are all about people. If we have the ability to raise external money, it helps you to have standard industry terms and you can compensate your people as per industry standards. Then you can probably retain people better, and also get the best of people to work for you. We now have a structure that is aligned to industry standards,” he said.
Its portfolio companies in the region include Grab, the largest ride-hailing app in ASEAN, whose last funding round was in September 2016 when it raised $750 million in a round led by Japanese mobile giant SoftBank.
In November 2016, Singapore-based co-working space Spacemob had closed a $5.5 million seed funding round led by Vertex Ventures Southeast Asia.
Kee Lock also pointed out that Vertex had seen an opportunity in the downturn last year, stepping up its pace of investments during this period. “A lot of people were afraid, and valuations came down, and markets were choppy,” he said, referring to 2016, and added that this had led to the firm increasing its pace of investments during the second half of last year. “Entrepreneurs are always there. Good companies were always there. It is only about valuations,” he said.
Kee Lock, 55, was an entrepreneur before turning venture capitalist. He co-founded MediaRing.com Ltd., a voice-over-internet service before Skype. Before joining Vertex as chief executive in 2008, he was heading VC firm Walden International Inc.
Kee Lock believes that deal flows would be robust this year as valuations continued to be subdued.
Yet he urges caution. “Not a lot of people are rushing in and that is a good sign — our challenge will be not to get carried away, but maintain discipline. Just because no one is rushing in or is not hurrying for deals does not mean that we should invest more – we should be more careful at times like these,” he added.
The firm’s notable investments in India include FirstCry, Yatra, HouseJoy and GreenDust. Most recently, Bengaluru-based Flutura Decision Sciences and Analytics, an industrial Internet-of-Things (IIoT) company, raised $7.5 million in a Series A round led by Vertex Ventures. In September 2016, the investment firm had invested in SaaS-based customer experience management platform CloudCherry in a $6 million Series A funding round alongside Cisco Investments and IDG Ventures India.