Arbor Ventures, one of Asia’s oldest fintech-focused venture capital (VC) firms, expects to exit some of its investments in companies based in 2-3 markets in the next year, co-founder and managing partner Wei Hopeman said.
The exits will come in addition to two publicly reported exits made from Arbor’s global portfolio so far – US-based digital advertising firm C1X and risk assessment solution provider DeepLabs.
Founded in 2013, Arbor Ventures has offices in Singapore, Shanghai, Tokyo and Tel Aviv. It was started by two veteran venture capitalists, Melissa Guzy, a former managing director of VantagePoint Asia, and Wei Hopeman, Citi Ventures’ former head of Asia. Arbor Ventures is also one of the very few funds in Asia to be co-founded by an all-women team.
Hopeman told DealStreetAsia in an interview that the fund closed its $220 million second fund at the end of 2018 and continues to actively deploy from the fund today.
Its limited partners (LPs) are represented widely across strategic investors, fund of funds, endowment funds and family offices in Asia, Europe, the US and Israel. Some of its earlier LPs had included the International Finance Corporation (IFC) and Thailand’s Digital Ventures, which participated in its first $100-million venture fund in 2014.
Arbor Ventures sets aside about 80 per cent of its fund for early-stage startups in the seed to Series A stages with the remaining for growth-stage opportunities. Its targeted ticket sizes for the early-stage opportunities typically fall in the range of $3-6 million with room for follow-on funding.
As a fintech-focused venture firm, it deploys widely across payments, regulatory tech (regtech), lending, capital markets, cybersecurity, AI and data firms. Hopeman added that the firm tends to prefer B2B opportunities that have served the firm well during this COVID crisis.
“B2B startups tend to take a bit more patience. It takes experience and strategic networks to introduce investors, customers and partners who can be helpful before the company’s business ramps up over time. But I think during times like these, they can be more stable. Corporates tend to be more sticky customers when they’re already utilising your services,” explained Hopeman.
She added that Arbor likes to keep an open mind to where fintech can come from, having witnessed the meteoric rise of China’s biggest fintech players Alibaba and Tencent. These companies had started out as an online retailer and chat app, respectively, proving that strong fintech winners can come from pretty unexpected places in Asia.
“This doesn’t really happen in markets like the US, where fintech startups tend to stick to their zones. Fintech players in Asia tend to expand horizontally, either because of a lack of existing solutions or large growing market opportunities, so we keep an eye out for platform or ecosystem plays in Asia,” she said. “You already see this happening in Southeast Asia with the likes of Grab and Gojek becoming key fintech players in the market. Both started off as ride-hailing firms.”
Hopeman added that Arbor has another 4-5 more deals to go before fully deploying its second fund. In Southeast Asia, the firm is seeking early-stage opportunities in cross-payment solutions, cloud and insurance. She added that regtech is likely to grow in importance in the region as well, but has yet to see many strong homegrown players in the market to date.
Arbor has five Southeast Asian investments so far, which include Akulaku, Ralali.com, Beam, 2C2P and Silot. It has a global portfolio across the US, China, Israel and Southeast Asia backed by two funds.