Chinese venture capital firm Qiming Venture Partners is looking to boost its investments in Southeast Asia, especially in the consumer internet space, a top executive with the firm told this portal.
Qiming Venture’s partner Helen Wong told DEALSTREETASIA on the sidelines of Wild Digital 2018 that the firm hopes to find some “interesting opportunities” in fintech, digital media and entertainment, e-commerce and e-commerce enablers in the region.
The firm had led a $30-million round for Indonesia’s fintech startup Akulaku last year. Qiming closed three funds this April totalling $1.39 billion, with a focus on investing in Chinese and US tech and healthcare firms, bringing total funds under management to over $4 billion across 12 vehicles. Its four core interests lie in consumer internet, deep tech, healthcare and cleantech.
“We don’t have a specific budget allocation for Southeast Asia. We look to do two to three deals a year and our average cheque size would be $5 million to $10 million. That’s the pace we hope we can do. But we’re quite flexible on the amount, we could go higher and cut a cheque that is more than $10 million,” she said.
With increasing opportunities in the region, Wong was optimistic that Qiming Venture Partners would look at raising a Southeast Asia fund “in a few years’ time if everything goes well”.
“We would probably look to raise about $100 million (for the SEA fund). That’s the plan, but we will also have to adapt to the market conditions as we go along,” said Wong, adding that Qiming would be setting up a Singapore office by the end of this year.
She also pointed out that the Southeast Asian region was very fragmented, and therefore, it had made sense for the firm – founded in 2006 – to first invest in China and the US, as the former has grown very fast in the past 10 years while the latter was at the forefront of innovation.
“I don’t think Southeast Asia could ever be the size of China because the GDP growth is not as fast. Southeast Asia, like other emerging markets such as South America, is very attractive but the size of the middle class will be a determining factor as to how fast these markets can grow. Basic internet infrastructure, payment systems, these things are still lagging behind. But the internet giants like Alibaba and Tencent coming in will accelerate the growth process,” she opined.
On India, Wong said Qiming is still at a very early stage of market exploration and pointed out that it was a competitive market compared to Southeast Asia, as several US funds and tech giants were already present in the country.
“I also think that based on my preliminary understanding of the market, it will still take some time in India [for the ecosystem to grow], so we would like to monitor the market for a while before making a decision to enter India or not,” she said.
In addition to Qiming, industry sources say several leading Chinese VC firms including Morningside Ventures, CDH Investments, 01VC and Orchid Asia Group, among others, are actively looking at investing in Indian startups, at the Series B and above stages, across financial and education technology, e-commerce, content and online classifieds.
More than 20 private companies in the Qiming portfolio are now valued at $1 billion or more, including UBTech, WeDoctor, Face++, APUS, Mobike, Tujia.com, Tuhu.cn, TutorGroup (VIPABC), Zhihu, Luojisiwei, Gan & Lee, Meituan-Dianping, Wacai.com, Musical.ly, Meili Inc. and Sinocelltech.
The firm has also delivered on exits, with the latest being Xiaomi, which recently raised $4.72 billion in the world’s biggest tech float in four years. Other recent listings from its portfolio include Bilibili, an online anime and video streaming site, which successfully landed on Nasdaq in March 2018 and ARMO Biosciences, a clinical trial stage immune-oncology company that successfully completed an IPO in January this year.
Asked on exits in Southeast Asia, Wong noted that they were not easy to come by, even as she highlighted that the region had taken its first steps in tech listings last year with Sea Limited and Razer listing on NYSE and Hong Kong Exchange, respectively. She was also of the view that every company could not be expected to go public, and said that trade sales offered good exit opportunities for investors, including VCs.
Specifically, on the trade sale option, she said that Chinese companies looking to expand to this region may look at buying out Southeast Asian startups.
“But we do see a lot of interest in Chinese companies to acquire companies in Southeast Asia where they see it as a natural extension for their business – because they can’t expand into Southeast Asia themselves. Of course, we wish that our companies could go public but can the companies get to that scale? Like Go-Jek in Indonesia, they’re expanding their businesses to beyond ride-hailing – something they didn’t expect to do when they first started the company, so now they’re sort of shaping an ecosystem around their businesses. By doing that, the numbers might add up, because if you only do one thing, it’s very hard to go for an IPO,” she added.