Accelerasia, a hybrid accelerator and business development agency, has launched a new fund in the form of a vehicle called Accelerasia Ventures with S$2.5 million ($1.78 million) in capital.
The fund has a mix of high net worth individuals (HNIs) from the US, Europe and Asia as its limited partners (LPs).
In an interview with DEALSTREETASIA, Vincent Veehof, managing director at Accelerasia and lead at Accelerasia Ventures, said: “We’re not actually a fund so to speak. What we’ve done is establish a commitment-based model in which we will source the deals and when we find a suitable investment we will pitch it to our LPs and they can assess the opportunity and provide us with a certain amount of capital at their discretion.
As part of its investment thesis, the geographic markets that the latest fund will be targeting are early-stage ventures from Europe, Israel and the US seeking to enlarge their footprint in Southeast Asia.
The fund aims to realise an investment in five to seven years and recently closed an investment in a UK-based startup called Winnow Solutions which aims to reduce food waste. The product is already in use by Sofitel at its resort on the tourist island of Sentosa.
Accelerasia will provide business development and marketing support to companies it funds in the region, allowing the latter to focus on marketing and advertising technologies. Another recent investment it is likely to close soon is a digital marketing firm based in Europe interested in expanding into the region.
Veehof said, “Southeast Asia is a region growing very rapidly, especially in the online side of it. If you look at Singapore specifically, we clearly see that the ecosystem is quite dynamic and young at the moment. So there’s a lot of seed and Series A funding. However, if companies mature and want to raise a Series B or C, it becomes slightly difficult at the moment. You need to take out money from either China, US or Europe.”
“If you want to move into Series B or Series C funding it requires very solid metrics. And those metrics should be focused not on a local or regional basis but on an international perspective. So what you need in my opinion is an ecosystem which also supports the globalisation of a young venture. Later round are when companies are expanding beyond a region and you need to have the funding, management and mentorship in place, as well as trade relations,” he added.
Digital firms operating across different segments of the marketing sector focusing on Indonesia are expected to be a significant part of the fund’s portfolio for digital marketing.
Joeri Gianotten, a partner at the firm, says, “What we’re seeing is that a lot of foreign companies use Singapore as a hub. The reason is because of the infrastructure and ecosystem, but also because the regional office of all the large players like banks and MNCs are here. If you look at the top advertisers, the regional offices are here but the money usually sits in the markets.”
In terms of digital marketing capabilities and readiness, Gianotten notes that Singapore and Hong Kong are mature and lead the region in terms of infrastructure and ecosystem, followed by Thailand, Malaysia, Indonesia and the Philippines.
Gianotten notes that while Indonesia is an interesting market by virtue of its sheer size, its technological capabilities and infrastructure are not as mature.
Commenting on an Indonesian growth strategy, Gianotten said, “You really need local knowledge to be able to execute a solid growth strategy, so you need a local partner that can help navigate the market. From a business strategy, what we are starting to see is that for innovation they are looking at China, rather than at Europe or the US.”
He adds, “The Chinese market is comparable to the Indonesian market in terms of infrastructure. What a company needs to do is to understand the level of the market and adjust their product to the market. What we see more often with businesses that approach us is that they have a great tool and a great strategy. For instance, everyone that uses it can pay with a credit card. It’s the simplest thing but it simply won’t work in certain countries. So having a local partner and adjusting your product to the market is crucial, as well as having a presence on the ground there.”