Singapore- and Silicon Valley-based seed investor Hustle Fund has raised $33.6 million for the final close of its second global pre-seed fund.
Hustle Fund 2’s anchor limited partners are US venture capital firm Foundry Group Next, Taiwanese corporate Far Eastern Group, Japanese corporate venture arm LINE Ventures, and Chinese private investment firm Shanda Group.
Both LINE Ventures and Shanda Group re-joined this vehicle, having anchored Hustle’s $11.5 million debut fund in 2019.
Hustle Fund targets the pre-seed segment, writing $25,000 first cheques in startups before working alongside the team to determine follow-on rounds. It plans to deploy up to one-third of the fund in Southeast Asian companies in Hong Kong and Australia, among other places, while the remaining will be invested in North American startups.
Hustle Fund’s Singapore-based managing partner, Shiyan Koh shared that the firm looks for teams with a core customer insight around which it can build its product market and go-to-market strategy. “We find that our most successful investments have a strong orientation towards customer acquisition early on,” shared Koh.
“It is a nascent ecosystem, where we are starting to see the ‘rails’ get built out — payments, logistics, regulatory frameworks. There is so much greenfield opportunity in the region, and I am excited to see new waves of founders entering the ecosystem, such as returnees, unicorn alumni, and young people inspired by our regional success stories like Sea Group, Grab, Gojek…etc,” she added.
Hustle Fund also recently launched a revenue-based financing initiative called Hustle Flywheel, which provides non-dilutive financing options for budding startups. Flywheel has deployed $2 million so far, with a number of Singaporean companies being recent recipients.
Revenue-based financing is an advance based on an estimate of a company’s future revenue and is repaid as the firm generates the revenue. This allows founders to avoid equity dilution, which tends to occur through multiple rounds of venture-backed fundraising rounds.
“Equity is great for R&D; credit is more appropriate for things that have more repeatable outcomes, such as scaled marketing, and invoice factoring,” explained Koh. “There is some education to be done in the market here, since equity does such a good job of marketing itself, but we are big believers in matching the right financial instruments to each use case.”
To date, Hustle Fund I has invested in about 100 startups, including names such as Setter, Doorr, Reap and reDock. Its Southeast Asian portfolio investments include names such as Propseller, Moovaz, Doyobi, BukuKas, and Narus.