Singapore-headquartered Golden Gate Ventures (GGV) Wednesday said it had held the first close of its second investment vehicle, a $50 million early-stage fund committed to Southeast Asian tech startups as well as international companies looking to move to the region.
The early-stage VC firm held the first closing of this fund at $35 million from a mix of international investors and advisors, including Temasek, Facebook cofounder Eduardo Saverin, and Monitor Capital Partners (a European multi-family office). Additional partners included Singapore’s National Research Foundation, NAVER (parent company of LINE messenger), and Far East Ventures, the venture capital arm of Far East Organization,one of the largest property developers in Southeast Asia.
This marks the first official announcement by the company of its $50 million second fund that is called Golden Gate Ventures Fund II LP. Besides, it also confirms the DEALSTREETASIA report in March this year, where we first reported that GGV was raising a $50 million second fund.
GGV’s first $10 million fund, which was launched in 2012, had been fully deployed around the region.
For Singapore state fund Temasek, this is the second local VC it has invested in during the last couple of months. DEALSTREETASIA had recently revealed that the Singapore state fund and American multinational technology company Cisco had invested in Monk’s Hill Ventures.
Temasek, which recently announced that it had posted total shareholder return (TSR in Singapore dollars) of 19.2 per cent on a one-year basis, driven by strong performance of its Singapore and China portfolio, also has its own venture capital arm in Vertex. Both Temasek and Vertex invest in other VC firms. It is not known if Temasek’s investment in both GGV and Monk’s Hill is direct injection of capital, or is routed through Vertex Ventures.
While announcing its latest fund, GGV also released its first research report comparing investment trends in Southeast Asia to those of China and India. The report concluded that the number of deals and the investment climate in Southeast Asia mirrors that of China and India in 2005 and 2010 respectively. Based on the analysis, Southeast Asia is predicted to emerge as a foreign investment destination in 2016.
“If you’re looking to invest in Asia, China’s not only overpriced, but it’s starting to cool down. Earlier this month the Chinese Securities Regulatory Commission went so far as to put a moratorium on tech IPOs, an action that has since stunted as many as 28 IPOs. Meanwhile Southeast Asia has explosive growth in development and investment at much lower valuations – it’s like going back in time and getting in on the ground floor of China’s tech scene,” said Vinnie Lauria, Managing Partner, GGV.
GGV’s report is also supported by a recent KPMG-CB Insights report, which noted the since 3Q 2014, late-stage deal sizes in Asia exceed $100 million, with the average late-stage Asian deal size nearly 270 percent higher than in Europe in 2Q 2015. Most of this investment is focused on Internet and mobile startups, receiving 82 percent of all funding during 2Q 2015. By comparison, 65 percent of deals in North America and 74 percent of deals in Europe were focused on this particular segment of the telecommunications, media and technology (TMT) sector.
GGV has invested in more than 25 companies across 7 countries in Asia. The company said its portfolio has created over 500 new jobs in the region and is projected to generate over $60 million in revenue for 2015.
It will continue to focus on internet and mobile startups targeting the Southeast Asian consumer and SMB markets, in sectors such as e-commerce, payments, marketplaces, and SaaS applications, it added.
In line with its goal to bridge ties between Southeast Asia and Silicon Valley, GGV has helped bring top tier VC firms into the region, including follow-on investments into their portfolio by Sequoia Capital into Carousell and 99.co.
In its statement, GGV pointed out that Mattermark has ranked the firm a top 10 per cent portfolio globally in 2014, based on the portfolio’s web traffic, mobile downloads, employee count, and social media reach.
“We’ve been quite fortunate with our companies to date. We’ve had no startups drop off the radar, on the contrary we’ve been able to bet on terrific entrepreneurs building high growth companies, such as online grocer Redmart, baby related e-commerce Bilna, online social credit scoring company Lenddo. And we’ve worked with great regional co-investors, such as Jungle Ventures, with inventory management SaaS company TradeGecko,” Jeffrey Paine, a founding partner at GGV said.
GGV is also the first of leading Singapore based VCs to announce the first close of its second fund. DEALSTREETASIA recently reported that Expara Ventures, which invests in interactive and digital media startups in the city-state, Malaysia and Thailand, has held the first close of its second fund, on S$5 million. It is also understood that Expara’s vehicle has received commitments for a large part of its S$30 million target, that will be called the ‘Regional Early Stage Fund’, and the VC firm plans to invest upwards of S$500,000 in startups looking at raising seed and Series A funding.