Michael Smith of early-stage venture fund SeedPlus, an affiliate of Jungle Ventures, is uncertain about the trajectory of early-stage funding in Singapore and the wider region but believes that deep technology as a segment will emerge a winner in the long run.
Venture capitalists (VCs) are bullish on the maturation of the regional venture ecosystem, with Southeast Asia seeing tremendous growth in the VC-startup space.
Commenting on the general trajectory of early-stage funding (i.e. pre-seed to Series A) and its evolution since 2015, Smith said there is plenty of capital in the local ecosystem for early-stage funding.
“With the creation of the local Entrepreneur First (EF) programme, the focus from SGI on early-stage and the increase in fund sizes, there is no better time like the present to build a company. Add to this the active angel ecosystem and the corporate VCs either investing or running programs to the total activity across the region all doing early-stage deals. So if you look back from five years ago to today, the landscape is dramatically different,” he said.
SeedPlus is bullish on deep tech as a segment in the region. “We feel that deep tech will emerge as a winner in the Singapore ecosystem and that across the region there will be startups raising substantial money at the pre-A level for regional or APAC-wide business ideas that need institutional money on their way to their Series A. The future looks pretty exciting in our opinion,” he added.
Notably, while observers such as Matt Wichrowski of Entrepreneur First see the local venture scene as up and coming, he argues that a seed crunch exists in specific domains such as deep tech.
Smith differs on this. He argues: “I don’t think there is a seed crunch since there is more seed money available now than ever before. Every successful ecosystem has issues – whether it be a talent crunch, ecosystem growth pains but I don’t think seed capital is holding things back. Of course, it will take some time to see the gains from the emphasis on deep tech and rigour around institutional seed stage rounds.”
For entrepreneurs seeking to raise a Series A round, Smith explains: “SeedPlus only conducts pre-Series A rounds, but generally we talk to founders to be mindful that Series A raises in the region are mostly based around revenue. There will also be some talk about other growth metrics to track but they are anchored around revenue.”
Coupled with the evolving landscape of micro-venture capital, Smith sees round sizes for startup ventures in the deep tech space growing in size due to the engineering costs and the time it takes to build something substantial.
“I think the incubators and accelerators will evolve to service a startup’s first capital need but that will be augmented by the growing roster of capable angel investors who, apart from capital, will offer good advice. That means startups might have months before raising a seed round to better set them up for larger rounds to power to a Series A. Again, we think the future is pretty exciting around here.”