Cambodia-based venture capital firm and fund manager OBOR Management is on track to raise $30 million capital for its evergreen small and medium enterprises (SME) fund OBOR Capital, according to a top executive of the firm.
OBOR Capital focuses on frontier markets and will allocate more than 50 per cent of the capital for its first stage, which is investments in SMEs in Cambodia, OBOR Management chairperson Christophe Forsinetti told DealStreetAsia in an interaction.
“Frontier markets have so much potential, but execution can be challenging, and most companies need both capital and help with execution. The fund will not only address the capital gap in the “missing middle”, but it will also allow OBOR to continue building out its support team,” he said.
Forsinetti pointed out that like most frontier markets, Cambodia is a victim of the “missing-middle” syndrome. There are financing mechanisms for individuals and very small companies (microfinance); large corporations, on the other hand, borrow from banks as they can provide collateral. But in between these two, lie the SMEs (which usually represents 90 per cent of the economy and the jobs) that are capital deprived.
It is this untapped middle layer that OBOR Capital aims to tap. The fund allows new investors to come in on a quarterly basis to mobilise capital and execute existing opportunities. It welcomes high-net-worth-individual investors on a permanent basis.
“The $30m raise is an 18-month plan but we want to be able to do multiple smaller closings in the meantime to be able to take advantage of immediate opportunities,” he added.
The firm, however, refused to divulge how much the OBOR Capital fund has raised so far.
While Cambodia is the focus, the fund is also eyeing other countries in the Mekong region such as Vietnam, Laos, and Myanmar. The firm aims to invest $13 million in startups in these countries that are addressing basic services, bringing new tech solutions to the traditional sectors, and consolidating and professionalising inefficient sectors.
“OBOR Capital is already engaging companies in these countries and have already identified interesting ones,” according to Forsinetti. “We are also exploring options to establish a footprint in each country [in the Mekong region]. All this is running in parallel to the capital raise.”
Forsinetti says one way to expand footprint is to “follow” portfolio companies as they expand to other Southeast Asian markets. Before COVID shut down borders, portfolio companies were in the process of expanding to countries like Laos and Myanmar.
“Because we are so involved in our portfolio, this is an easy way for us to learn the market dynamics of neighbouring counties, make connections, and build a pipeline,” he said.
OBOR Capital focuses on logistics, mobility, and finance — microfinance, microleasing, microinsurance — besides traditional sectors such as waste management and water treatment with ticket sizes ranging from $100,000 up to $1.5 million per investment.
The firm has $6.5 million assets under management.
In February, Obor Capital led a $900,000 pre-Series A round in French-Cambodian logistics startup ShopRunBack. Last October, the firm closed an early-stage equity fundraising deal with Cambodia-based online supermarket platform Delishop.Asia.
Recently, OBOR Management was issued a Fund Management License by the Securities Exchange Commission of Cambodia. With the new licence, OBOR Management will offer small- and medium-sized enterprises (SMEs) and startups alternative sources of reliable and regulated funding, while giving local and international investors the opportunity to invest in the fast-growing Cambodian market.