Singapore-based early-stage venture capital firm Quest Ventures and Singapore-based maritime venture builder ShipsFocus have jointly launched a $7.5 million (S$10 million) fund to invest in early-stage maritime startups.
The fund, which raised capital from high net worth individuals and family offices, will issue cheques between S$250,000 and S$1 million in seed and Series A companies. It has invested in underwater robot maker BeeX so far, with two more in the pipeline, Quest Ventures managing partner James Tan told DealStreetAsia.
“[The sum of] $10 million is not small. It is a thematic fund, which means we are allocating 100% of it to only one sector. At the early stage that we are investing in, this provides sufficient capital for a portfolio of 20 companies,” he said.
The fund will back startups that are creating solutions for the entire shipping supply chain such as digital operating systems, products and services that reduce shipping emissions, autonomous vehicles, and drones for inspection.
SEEDS Capital, the investment arm of Enterprise Singapore, will invest up to $5 million alongside the fund in Singapore-based startups. The ShipsFocus-Quest Ventures fund was one of six co-investment partners selected by SEEDS to invest in maritime startups in the country.
Tan said the new fund aims to jumpstart a fledging maritime technology sector in Singapore. Though the city-state has the world’s second-busiest container port — 25% of trade passes through Singapore every year and is expected to account for 29% by 2025— and largest bunkering port, technology companies that serve the sector are still few, he said.
As for follow-on investments, Tan said these startups should be able to raise capital from local and regional investors if they are doing well. However, he acknowledged that given the lack of investors with deep maritime expertise and shipping giants like APM-Maersk headquartered overseas, startups will have to position themselves globally and go abroad to look for capital as well.
Meanwhile, Tan said, Quest Ventures’s $50 million Asia Fund II, the VC’s first institutionally-backed fund, had closed earlier this year. Tan has also partially exited from classifieds platform Carousell, in which he had invested through his angel fund. The fund, which is a holding of over 50 angel investments in tech startups like 99.co and Carro, has generated an internal rate of return of more than 40% as of end-2020, per information on the firm’s website.
Carousell, which acquired sneaker marketplace Ox Street, became one of the latest companies to join the unicorn list after it raised $100 million in a round led by Korean private equity firm STIC in September.