As it expands its investments in Southeast Asia, Prosus Ventures is looking to tap into “tech-enabled” startups as a play on the region’s emerging middle class, Martin Tschopp, head of Prosus Ventures, told DealStreetAsia this week.
“We invest ultimately behind the rise of the global middle class, and by investing in it, we also enable it in this virtuous cycle,” said Tschopp. “If you look at the demographics of Southeast Asia, it’s a young population. They are eager to embrace technology. There is a lot of growth. And there is a lot going on in the venture ecosystem.”
Prosus Ventures is a unit of Amsterdam-listed internet company Prosus, which in turn is controlled by Naspers, the influential South African company that owns media empire Media24. Prosus has a small office in Singapore to oversee its interests in food delivery, and there are plans to expand its presence here.
The venture capital arm typically invests in businesses at Series A, B and C levels. Tschopp added that because it is part of a larger internet-focused company, the VC invests for the long term, without pressure on exits.
It takes stakes of at least 10 per cent, all the way up to full ownership. Cheque sizes can run from $2 million to consideration of a $200 million deal.
“We always try to do things that commensurate with how much we actually understand about it, how comfortable we are, how long you have done business there. In India, that track record is much longer than Indonesia,” Tschopp said. “We tried to make the cheque size commensurate with our knowledge with the risk.”
In Southeast Asia, Prosus is looking at logistics and property tech, and fintech startups, such as insurance plays outside of Singapore, and wealth management and small to medium business credit segments.
The company looks to invest in addressing “offline problems with a tech angle,” using smartphone penetration to match supply and demand in real-time, Tschopp said.
He pointed to his previous experience as CEO of nonprofit microfinance distributor Kiva, and cited difficulties and expense in collecting cash payments in person. “Tech enabled” means cheaper credit and loan dispersal, which can be combined with payments, giving visibility into a small business’ sales for better loan underwriting.
Prosus Ventures’ previous investments have included food delivery play Swiggy in India and a host of edtech firms.
Within Southeast Asia, Prosus Ventures led a Series A investment round in Indonesian logistics tech platform Shipper, an investment believed to be around $20 million. Meanwhile, in the Philippines, Prosus and Naspers led a $5 million Series A investment in Coins.ph in 2017. Tschopp said the investment was divested to GoJek around two years ago.
The internet economy in Southeast Asia – which includes online travel, online media and gaming, and ride-hailing – crossed the $100 billion mark in 2018, growing faster than expected, and was projected to reach $300 billion by 2025, according to the e-Conomy SEA 2019 report from tech behemoth Google, Singapore state-owned investment company Temasek and consultancy Bain & Co.
The report was released in October 2019, before the COVID-19 crisis virus even emerged.
It highlighted how Southeast Asia added more than 10 million Internet users in 2018, for a total of around 360 million last year, many of them under the age of 20. Now, analysts have pointed to the pandemic and the resulting lockdowns as accelerating acceptance of e-commerce, fintech and online gaming.
Last year, South African company Naspers listed its assets outside the country on the Amsterdam stock exchange under the name Prosus. Naspers remains the majority shareholder of Prosus, which owns Prosus Ventures. The parent company holds an around 31 per cent stake in Chinese internet giant Tencent and around 22 per cent stake in Delivery Hero, which owns FoodPanda.
For the fiscal year ended March 31, Prosus reported profit attributable to equity holders of $3.82 billion, on revenue of around $21.5 billion. During the year, it invested $1.3 billion in existing and new businesses, Prosus said in a press release in June.