Access Ventures has chalked out an ambitious investment target for the Southeast Asian market.
The venture capital (VC) firm, which focuses on early-stage technology companies, recently made its first close at over $20 million of its second fund to focus on markets such as Vietnam and Indonesia, Access Ventures partner Charles Rim told DealStreetAsia in an exclusive interaction. It’s eyeing a total corpus of $50 million.
This is bigger than the debut fund it launched in 2017. With a total size of $15 million, the VC firm has clocked investments in as many as 21 companies from its first fund. Its portfolio includes fintech firm Moca, AI firm startup Kata.ai, logistics startup Ecotruck, internet firms Omni Labs and Kofera, and Zuzu Hotels.
Earlier, Access Ventures was also focusing on the South Korean market. But with its second fund, it plans to primarily concentrate on the Southeast Asian region.
“The valuation bubble and macroeconomics in Korea was concerning. Southeast Asia is where we see growth. We expect half the deals in Vietnam and Indonesia from the next fund and few deals from other regions like Silicon Valley and Korea with nexus to SE Asia,” Rim, a former Google executive, said.
Limited partners (LPs) of the first fund such as Line Ventures and Mahanusa Capital will continue to support Access Ventures in its second fund, said Rim. Besides, investors are also expected to pump in capital from across markets including Singapore, Korea and the rest of the world.
The fund has already seen participation from corporate venture capital (CVC) arms of South Korean conglomerates such as F&F and Singaporean family offices including Octava.
Access Ventures will focus on deals at seed and Series A level with ticket sizes ranging from $500k to $2 million.
“We expect to have 20-25 portfolio companies and the fund to be deployed in three years,” said Rim.
Access Ventures has already closed two deals from its second fund. While it has invested in a Silicon Valley analytical startup Moss.ai that is currently building its tech team in Southeast Asia, its second investment was in an Indonesian SME.
“By the end of this quarter, we will complete 3-4 deals,” said Rim. “Digital commerce is what we think will boom. We prefer investing in data analytics, logistic, AI technology, e-commerce, and e-sports, healthcare and education,” he added.
Delving deep into the sectors, Rim said eSports is quite a huge rage in Korea and is increasingly catching up in other parts of Southeast Asia. One of Access Ventures’ early investments has been in OP.GG Korea, a platform that keeps track of scores for popular games such as Fortnite, Legends, PUBG, among others.
With a similar GDP per capita and urbanisation level as Indonesia, Vietnam is catching investor fancy across the globe, helped by its engineering talent, Rim said.
“While we are concerned about valuations going up in Vietnam, we think it’s a positive factor that more funding across multiple stages is becoming available. Having said that, Access was early into Vietnam, where it has led several seed round deals. In fact, our first exit from the first fund was an investment where we were the only VC,” said Rim.
In Indonesia, on the contrary, Rim says the firm needs to be selective and invest in rather ‘unpopular’ sectors and stay away from over-invested sectors such as fintech, which has seen a bubble in valuations.
“We are older guys who have a lot of experience in seeing cycles, and one of the things that scares me is a lack of diligence in VC and their practices. With our network being robust, we also help our companies to expand, recruit, help in operational needs and strategic needs,” said Rim.
Cashing out profitably
Access Ventures’ biggest exit came through late last year when it sold its stake in Vietnamese company Moca to ride-hailing giant Grab.
Speaking of an impending recession, Rim said that the situation is not as bad and that investors don’t need to hold on to cash yet. Going forward, over the next one year, the firm is expecting to see a few more exits.
The VC firm typically invests with a 5-7 year horizon. While it is currently focused on deals at seed and Series A level, it may later look at doling out growth-stage capital as well, said Rim.