The collapse of Silicon Valley Bank under a confluence of factors peculiar to the current environment has sparked fears of contagion and is probably the last thing the startup ecosystem needs.
While a broader collapse of the financial system seems unlikely for the moment, there are already repercussions: Startups that have failed to get their funds out of SVB are now struggling to meet payroll, for one.
More issues could surface in the coming weeks as the VC sector in the US and elsewhere examine their risk management again.
In Asia this week, it was a mixed bag for the venture capital and private equity sector.
NYSE-listed Sea Group turned profitable for the first time after a turbulent year of market exits and job cuts. Indeed, the group continued to cut costs at its e-commerce arm Shopee, shortly after announcing the surprise profit.
Another company that has continued to cut back on manpower is GoTo, which on Friday said it was letting go another 600 of its employees amid a “consolidation” of its business.
One of the developments our reporters in Jakarta have been following is the pressure agritech company TaniHub is under. It has been plagued by troubles and is now facing creditors amid proceedings that would determine its future. The startup, backed by name investors, including Openspace Ventures and MDI Ventures, had raised nearly $100 million over the last few years as it rode on demand for fresh produce.
Deals
Singapore-based private equity firms Capital Square Partners and Basil Technology Partners are merging, pending regulatory approval. This follows their $700 million deal that combined their existing portfolio companies into a continuation vehicle.
Singapore’s GIC has raised its stake in IDX-listed Primaya Hospital, acquiring $191 million worth of shares from three shareholders, including the company’s founder.
Malaysia’s International Medical University is set to be acquired by a consortium led by TPG’s The Rise Fund and Malaysian conglomerate Hong Leong Group from healthcare company IHH Healthcare for about $300 million, following government approval.
The divestment from IHH, part of a review of its non-core businesses, includes the sale of a hospital owned by IMU to Columbia Asia.
Also in Malaysia, private equity firm COPE PE is set to exit its investment in Pet World as the pet food producer heads for an IPO in Singapore.
Meanwhile, global PE major KKR has exited its investment in Malaysian helicopter service company Weststar Aviation. The value of its minority stake, which was acquired by the company’s parent, was not disclosed. Weststar was reported last year to be mulling an IPO.
Separately, KKR is reportedly in play for a minority stake in South Korean industrial gas business AirFirst, currently owned by South Korean GP IMM Private Equity. Other potential bidders are reported to include BlackRock, Stonepeak, and Brookfield Asset Management.
Fundraising news
Singapore-based used car marketplace Carro has secured UAE-based EMPG as a new shareholder, according to regulatory filings. The transaction could be an indication of Carro’s acquisition of Thai marketplace Kaidee from EMPG.
A battery-recycling startup based in the city-state, Green Li-ion, has raised over $20 million in pre-Series B funding.
Separately, Indonesian car financing startup Broom raised $8 million in a Series A round led by Openspace Ventures.
Tepid investor sentiment continued to be an overhang on the Indian ecosystem, where startup fundraising in February was 25% lower than in January and significantly lower than in the same period the year before.
Among firms, Bangkok-based alternatives asset manager PrimeStreet Capital, which is raising three global funds simultaneously, has secured some $160 million for the vehicles.
After some unexpected delays, Singapore-based AcclerAsia Ventures is raising its first blind pool fund of up to S$20 million to invest in early-stage B2B companies in Southeast Asia.
Overall, nearly 100 venture capital funds in Southeast Asia are in the market to raise nearly $10 billion.
LP track
As GPs face longer fundraising timelines, limited partners could be increasingly averse to backing emerging managers. Already, in 2022, under half of the first-time funds reached their target, versus more than three-quarters of managers doing so in 2021, according to Bain & Company.
Ricardo Felix, head of Asia Pacific at global PE placement agent Asante Capital, noted in an interview that the current buyer’s market, where assets are attractively priced, could actually mean tougher times for fundraising. Further, more conservative investors are holding back from funding China GP relationships.
Indeed, geopolitical tensions between the US and China have broad implications for fund managers as well as entrepreneurs in Asia.
In India, fundraising by PE and VC firms is slowing, albeit from record levels the year before.
Against that backdrop, development finance institutions are still stepping into the fray.
The Asian Development Bank is committing $25 million to Exacta Asia Investment III, the latest private equity vehicle of Mizuho Asia Partners. The fund has a $350 million target for investing in lower-middle market companies in Southeast Asia.
ADB is also investing up to $15 million in Philippine discount retailer DALI Stores, joining private equity firms Creador and Navegar in a Series C round.
Germany’s DEG has committed a total of $20 million to a Vietnamese diaper manufacturer and a Thai retail lender.
Women in startups
Our Southeast Asia and India gender funding gap reports released this week to coincide with International Women’s Day show less-than-thrilling developments for women as entrepreneurs.
In interviews with startup founders, many spoke about hurdles peculiar to being a woman.
Aruna co-founder Utari Octavianty talks about the biases she’s encountered; in the face of those biases, Homage founder and CEO Gillian Tee advises female entrepreneurs to be “entitled”; and Assiduus Global’s founder and CEO Somdutta Singh spoke about battling male egos and mental barriers.
Former VC-turned-entrepreneur Tanya Rolfe says founders need to look at funding alternatives, as she has her doubts about the effectiveness of the current venture capital system.
The situation, and the narrative, need to change. Here’s to the women making that happen.
