Malaysian-owned Dialog Axiata Plc, Sri Lanka’s leading telecom service provider, has unveiled a $15 million fund, to invest in startups in the island nation.
The Digital Innovation Fund (DIF) is Sri Lanka’s first as well as its largest venture capital vehicle, and it will support the country’s nascent startups, and it plans to invest between Rs. 50 million (about $326,500) to Rs. 200 million ($1.3 million) in each company, while 20 percent of the fund will be set aside to seed startups that seek investment below Rs. 40 million (about $261,200).
“It will fund the expansion of game-changing, best-in-class digital businesses in Sri Lanka,” Malaysian Prime Minister Datuk Seri Najib Tun Razak said when lauching the fund at the Dialog Axiata’s office in Colombo earlier this week.
DEALSTREETAIA had first reported in October that Malaysian telecom major Axiata’s digital services arm – Axiata Digital – was set to launch a $15 million venture capital fund for Sri Lanka, along the lines of its micro VC fund for Cambodia launched earlier this year. That report had also added that this vehicle would be launched in December.
Axiata Digital makes investments directly or through its VC-style vehicle Axiata Digital Innovation Fund (ADIF), which was originally formed to fund local tech startups but has now branched out into investing in financial services, advertising/adtech, e-commerce and entertainment. In March this year, ADIF announced the Smart Axiata Digital Innovation Fund, a $5 million micro VC fund for Cambodian companies. The fund was launched in partnership with Mekong Strategic Partners (MSP) and looks to invest in ideas and businesses in the digital ecosystem.
Cheque sizes to be disbursed from the Cambodia fund will range from $25,000 to $500,000.
The Sri Lanka vehicle will be managed by BOV Capital, Sri Lanka and Singapore-based venture capital firm. It will be start seeking startups that has a proven business model and demonstrate a market fit in Sri Lanka.
“Small-medium-and large-scale digital-based service providers will be the focus of the Digital Innovation Fund, and we will be selecting potential candidates through a systematic evaluation process. Our ultimate goal is to develop the digital service ecosystem in Sri Lanka and further enrich the lifestyle of people through digital services,” said Supun Weerasinghe, group chief executive of Dialog Axiata Plc.
The startups-to-be funded will also be able to leverage the strengths Smart Axiata Digital Innovation Fund that supports incubation programs Cambodia.
“The Digital Innovation Fund will provide much-needed risk capital and business building support to Sri Lanka’s digital startups. Our first fund BOV Capital 1 focused on B2B tech startups keen on expanding regionally, and DADIF will now look at digital ventures that are focusing on the domestic market. We are very excited about the partnership with Dialog Axiata,” said Rajan Anandan and Prajeeth Balasubramaniam, general partners of Dialog Axiata Digital Innovation Fund.
Dialog Axiata so far has invested over $2.2 billion of cumulative investments in Sri Lanka.
Axiata Digital emerged as a leading VC player prominently in May this year when it led a $23-million Series B round in Melbourne-based mobile advertising startup Unlockd. It had teamed up with existing strategic and early-stage investors and Australia-based Alium Capital Management for that funding round.
Other investments made by Axiata Digital include soundwave-based technology solutions provider VAV Apps Sdn Bhd, Malaysian telematics startup Pixelated Sdn Bhd, now known as KATSANA, and BIMA, an insurance technology (insurtech) firm that provides microinsurance to underserved families in emerging markets.
In an interaction with the portal in June this year, Axiata Digital CEO Mohd Khairil Abdullah had said that when the digital arm does deals in the Europe or the US, it looks for models that can be brought into Asian or Southeast Asian markets.
“For example, we looked at (insurtech firm) BIMA in Sweden that has a model very much designed for emerging markets. We made an investment in (US wireless carrier) FreedomPop and we wanted to understand the model there,” he had said.
Axiata and Malaysia Venture Capital Management Berhad (MAVCAP) had established the MYR100-million Axiata Digital Innovation Fund, the country’s largest digital corporate venture capital fund, in 2014 to spur innovation and foster Malaysia’s digital ecosystem.