Singapore-based early stage investor Jungle Ventures, has clocked 65 million in commitments, for its $100 million second investment fund, its founders and managing partners, Anurag Srivastava and Amit Anand, said in an interaction.
Again, as reported by this portal earlier, the investors in Jungle’s second fund include Singapore state fund Temasek Holdings, the city-state’s Thakral business family, as well as the private sector lending arm of the World Bank – International Finance Corporation.
“The 65% or $65 million that we’ve raised so far of our $100 million target includes a good base of family offices, institutional investors, and a significant participation from advisors. From an institutional perspective, Temasesk is one of the new investors in this fund. Singapore’s National Research Foundation, which is associated with the Prime Minister’s Office here has come on board. We have a Malaysia based public listed technology company, which we cannot name,” explained Amit Anand.
Added Anurag: “Most of the investors of our first fund are continuing in the second too, We’ve had Kumar Malavalli (Indian-American technology entrepreneur and philanthropist and founder of Brocade Communications Systems with Paul Bonderson Jr) coming in. We’ve also had Prabhu Goel (Indian-American researcher, entrepreneur and businessman, known for having developed the PODEM Automatic test pattern generation and Verilog hardware description language) joining this fund. We’ve got family offices from the region – Singapore’s Thakral family, the Orion Group from Indonesia. It is a good mix of institutional investors, some of whom are taking their first bets in Asia. I think that that Asian family offices are a phenomenal power house. First, they bring tremendous business wisdom on how businesses are built in Asia. Most of them have built and run global businesses.”
According to Amit, the diversified pool of investors also puts Jungle among the largest independent funds in the region. “When I say independent, what I mean is that, we are not anchored by a single investor, private equity firm or family office or a corporate or an Asian arm of a global firm. We are in independent home grown fund that grew from $10 million in 2012 to hopefully $100 million in next two to three months.”
The Jungle Founders also explained that while the first fund did both seed and Series A investments, the second fund would largely target larger cheque sizes and focus on Series A. The tciket sizes are expected to be in the $3 million to $5 million range.
“This fund will be heavily focused on Series A and early Bs. That is the right fit for us as we look at companies that are scaling globally,” Amit said.
DEALSTREETASIA recently reported that Jungle Ventures was also launching a separate $20-million Seedplus Singapore fund, citing its filings with the US Securities and Exchange Commission. Asked on this, Amit refused to divulge details, but said the firm ‘was working on something related to the seed stage with other partners in the ecosystem’.
“We think that seed investing requires a systematic change in the ecosystem and we are working on that,” he added.
Throwing further light on this, Anurag said: “We have our strengths. And the ecosystem that we are building has a larger value to add to both Seed and Series A. They are fundamentally both different platforms. And focus is right now is to get Jungle to build that whole vehicle and that is why we brought in David ( the former operating partner at private equity firm TPG Growth, who has joined as managing partner with Jungle). On the seed plus, there is different level of specialization, and at some point of time, verticals will come in. Right now, we are at the research and development mode for that space, and hence we are here to put Seed and Series A separately, rather than treat them the same. But we will be continued to focus on both sectors – we cannot really separate them in the true sense, but at the same time, we cannot treat them as same,”
Edited Excerpts from the interaction.
How do you select the companies that you invest in? Which countries does Jungle focus on? Do you look at specific sectors?
Amit Anand: If you look at any of our portfolio companies, they fit into two buckets. Either, they have the potential of becoming a regional category leader – these are companies such as payments startups Momoe, Malaysia-based bus ticket-booking service CatchThatBus, Zipdial (that was acquired by Twitter), iMoney – they have the potential of dominating the entire South East Asian market. Or they have the potential to be a global category leader – these are companies like Tradegeckho, interior design company Livspace. Our first criteria for investing in a company is whether they have the potential of being a global or regional leader. If you look at where our deployments are going, South East Asia and India are two hot pockets where most of our capital is going almost evenly. From our first fund, we’ve got 8-9 investments in India, and similar number in Singapore and again 8-9 investments in South East Asia. Selectively, we are also investing in US-based companies, where we think that this company is something where 100% of their market is in Asia.
What are your learnings from your first fund? How do you apply these to your second fund?
Amit Anand: One of the things, we’ve realized from the first fund is that, we underestimated the value that some of the advisors and operating partners are creating for the firm. We did some lip service on that model in the first fund. In some of the startups, where we used our advisors more extensively, there was disproportionate value that was created. I remember a comment Zipdial’s zipdial Valerie Wagoner, when she was asked on the value that Jungle created for them, and obviously she said that we were great long time partners and all that. But she spent significantly more time talking about our advisors and the operating partners, and what they brought to the table. We have now understood and learnt that can be a phenomenal differentiator and more importantly value creators for our portfolio companies. So, in Fund-II, we are putting significant effort to adding more deep operating experience in Asia and that will help our portfolio companies, and also bring about vertical advisors. This was something that every fund did, and we did that too – but it was only when we looked at the outcome, we went and said, ‘did we do it right, or not’. We are now spending a lot more time with every company, thinking who can we can bring on board to help that company. The other key learning, and you will see that play out in the platform strategy we have, is the fact that the kind of investor that you need to be for a seed company, and for a Series A company is very different. You need to be able to look under the hood for both companies, but the kind of things you need to look under the hood for both companies are significantly different, and the kind of hiring and mentoring you need to do for them are significantly different. A lot of people underestimate that. I have seen large VC firms literally throwing cheques at seed stage companies – I am not a fan of that, and I think it requires a whole different approach, and we’ve realized that with our failures in the first fund. Some of our companies from the first fund did not do too well, as we feel that we are to blame for that.
The positive learnings from the first fund are also equally strong. We are one of the few funds in the region that have seen successful exits – we’ve had three exits in three years to large global multinational companies. Twitter’s first acquisition in this region was Zipdial, a portfolio company of ours. Travelmob was bought by US-based vacation rental site HomeAway and Japan’s Rakuten first buyout was travel site Voyagin which we had invested in. When we were raising the fund, there was always this dilemma about long-term value creation versus liquidity – a lot of institutional investors look for long term value creation, whereas family offices and individuals look for liquidity, because they compare startups to real estate, bonds and mutual funds. The strategy of allocating certain percentage of our fund to companies or sectors where we will see early exits have paid off for us. I think the fact that majority of our investors in the first fund have come to the second fund, and have upped their investments is a signal to that. That we’ve been able to demonstrate our place with liquidity and also get our place in having some home runs.
Anurag Srivastava: Some of the learnings are that there were couple of businesses where there is no clear model as to when it would make money. That is a lot better developed in the US, where you build a Whatsapp, and for a very long period of time, you don’t have a revenue model. I am not sure if we are not as mature for such businesses here. We did invest in a video company where the business model was not clear. Businesses where there is a clear sight and involved problem solving, even if they have struggled, we have been able to leverage the power of our operating partners, and made sure that these companies all had money. We did a review of our portfolio, and it is surprising – a very large percentage of our portfolio is very active – more or less, everyone is raising money right now, and are getting funded. We’ve made some mistakes and we’ve clearly started realizing that the kind of people we felt would probably fail, those were the companies that have not done well. It was not about them being first time entrepreneurs – so many of our portfolio companies are first time entrepreneurs. It was not about product background versus pedigree. This is an area we are also trying to learn to see how we can do more, be different. A lot of our companies have pivoted – at least, soft pivoted. Look at Pockkt, Livspace. Livspace is full home design – it is not a problem that has been solved anywhere in the world. It is a new concept. It has not been solved before and they are learning as they build the company and go deeper. It is also a lot of learning for us to get the entrepreneurs who will learn as they go deeper into the company in the first couple of years.
As much as South East Asia, Jungle is also known for its investment practice in India. What makes you so bullish about India?
Anurag Srivastava: We’ve got a billion people – if you look at the age groups where startups are happening, and look at that percentage of people to those in Korea, Australia, Singapore, it is pure math. It is also the flavor of the season to some extent. Asians and specially Indian have a herd mentality. But I also think, it is the sheer opportunity from a domestic perspective. The whole ecosystem is relatively built. If you look at the pedigree of angel investors and compare it to three years ago – the Bansals (Sachin Bansal and Binny Bansal, the founders of Flipkart, who share the same last name but are not related) were not angel investors three years ago – they were raising their Series A. Look at the corporates, who are now angel investors – the likes of Rajan (Rajan Anandan, vice president & managing director of Google, South East Asia & India). If you think there is a problem that you want to solve, you can jump in because there are enough parachutes. Success breeds success – every morning you read stories of success of some of these startups, of some company raising a billion dollars. There are some concerns, but overall the startup scene in India is very healthy.”
Amit Anand: There is so much broken in the country, and if you look at the way the country has been going so far to mend to things, it has been in the traditional ways. For example, in retail, they have been trying to scale up the mall business, the franchisee models. Given the size of the country, it takes time to scale, but the consumer does not want to wait. Because of global connectivity, the consumer wants everything today. That is where technology startups have come in – they are creating a whole new stack of businesses in every industry that is broken in India. That belief is new. I don’t think that belief existed in the first two waves of technology or internet startups in India. There are massive opportunities in the domestic markets that is untapped – be it logistics, travel, payments, retail.