Jungle Ventures has collaborated with venture capital partners Infocomm Investments Pte Ltd (IIPL), Accel Partners (India) and RNT Associates, to establish SeedPlus, a seed stage venture capital (VC) firm based in Singapore.
Strategic partners in this new joint entity are Google South East Asia and PwC Singapore. The fund will function as an early stage venture investing platform that will be managed by partners with a “strong global operational backgrounds who can help the companies grow via their network and direct involvement with each company,”a press release states.
Besides facilitating access to what is termed as a “sizeable amount of seed stage capital and access to significant growth capital from the venture capital partners”, SeedPlus is focusing investments on ventures targeting large addressable markets with the ability to expand globally.
SeedPlus has appointed Michael Smith Jr from streaming service HOOQ, where he was CTO, Gabriel Lundberg, previously product manager at Spotify, and Tiang Lim Foo, who led Evernote’s market development in the Asia Pacific, as operating partners to spearhead its activities.
All three have been appointed as operating partners. Their roles differ from that of investment partners, who are responsible for overseeing decisions on making and exiting investments. In VC firms, senior investment partners usually manage the firm, with operating partners reporting to them.
Speaking on the development, Tiang elaborated: “SeedPlus aims to be a network of networks. Between Jungle Ventures, Accel, PwC Singapore, Google, IIPL and RNT Associates, there are very few questions we can’t answer and little support we can’t give. Our mandate is to adopt a hands-on approach. We co-locate with each investment, and our operating partners will spend several days out of each week solving hard problems for and with the founders.”
According to the SeedPlus website, the firm invests S$500k to S$1 million in early stage ventures on market terms, coupled with helping the firm “grow to profit or the next round of funding through our network and our full-time operating partners”, with a preference for firms that have their core teams based in Singapore.
This effectively makes SeedPlus a micro-VC fund, being a fund that targets seed-stage investment on behalf of third-party limited parters (LPs) and with a corpus size below the $50 million-$100 million fund range, characteristic of an evolving funding market. Given prevailing trends of micro-VC funds, the fund is likely to grow and evolve its investment theme and thesis upon entering the market.
DEALSTREETASIA had earlier reported on this development in September 2015, when the fund was launched with a corpus of $20 million, according to a filing by Jungle Ventures with the Securities Exchange Commission (SEC) in the US.
Smith’s background as former CTO at HOOQ, where he drove product and growth decisions, as well as his technology and startup engagement experience will enable him to influence investment decisions as a partner in SeedPlus.
Commenting on his new assignment, Smith, who will serve as a partner in SeedPlus, said, “We are looking for companies with the potential to upend an industry on a wide scale. With the objective of doing only a half dozen investments per year, we want to make sure we actively help build and scale these businesses along with the founding teams.”
Meanwhile, Lundberg sees the the launch of the joint fund as an investment model that fills a void in the funding market – with Singapore as a test-bed – supporting startup ventures seeking to solve major issues and pain points across a number of industry verticals.
The investment of RNT Associates, an investment vehicle used by Ratan Tata, who is an advisor for Jungle Ventures, is notable as it brings significant knowledge capital and access to the India market for the fund. RNT, whose objective is “acquiring technology and allied services”, is also exploring diversification into consultancy services in the field of international collaborations and mergers and acquisitions”.
Beyond just reflecting a move by the Jungle Ventures-led consortium to build a pipeline that can both tap early-stage ventures and develop them into more robust ventures, its seeming emphasis on operating partners reflects an evolution of venture capital ecosystem in the region. This is sorely needed and reflects a US trend of VC firms deploying operating partners to develop more robust startup ventures.
The local startup founder highlighted a deficit of positive risk-taking among many local VC firms, with a preference for “…going for the low hanging fruit…,” describing local government-affiliated and institutional VCs originating from Singapore as “…sub-par investors who run after the “next chip” in Silicon Valley of old, instead of ideas with transcendental potential.”
Pillai observed: “Unlike second-rate startups that fail and rejuvenate, crummy investors go on to raise their next round of cash for their funds without having to reincarnate, without rationalising why they failed and they keep perpetuating the poor investment decisions that led them to their failures, or their lack of astounding success. Still, fund managers still take home top salaries. The equation seems ominously lop-sided at the moment.”
In the current funding environment, the adoption of a venture capital model oriented heavily towards operating partners might be the element required to spur greater innovation and positive risk-taking behaviour among conservative Singapore-based venture capitalist firms.