Southeast Asia’s venture capital firms raised $1.96 billion in 2020, a 39% drop from the $3.23 billion they secured in 2019, according to DealStreetAsia’s latest report.
According to SE Asia’s VC Funds: Q4 2020 Review, venture firms based in the region closed 11 funds last year, down from 28 in the previous year, as travel restrictions imposed in the wake of the COVID-19 pandemic and increased limited partner (LP) caution affected fundraising. On the other hand, Southeast Asia witnessed a growing interest from global VCs wanting to tap into the emerging market growth story.
A total of $4.08 billion was raised by nine global funds in 2020 with significant allocations for private companies in the region, a massive jump from $867 million by five funds in 2019. For the purpose of the report, we only track global funds with minimum 10% allocation to Southeast Asia.
The chasm in the performances of regional and global VCs highlights the challenges exacerbated by the pandemic. Unlike their larger peers that have long-standing relationships with limited partners (LPs) and exit performance to boot, regional and local VCs have much to prove. Their task is all the more challenging, given that Southeast Asia is a nascent market where exits have been historically hard to come by.
“While we will see continued momentum in the tech sector in the region, we will also see VCs adapting to the changing times,” said Jungle Ventures managing partner David Gowdey.
Amid high investor caution and rising LP expectations, fund managers will need to do more to differentiate themselves in order to secure capital.
“With a decade of venture activity, GPs can no longer just rely on the Southeast Asia macro narrative—it’s about fund metrics and deliverables—solely deploying capital is no longer enough for GPs to earn their keep. Differentiation will be a prerequisite for any existing or new GPs in the market,” Intudo Ventures founding partner Eddy Chan told DealStreetAsia.
A total of 66 VC funds are currently in the market to raise $6.3 billion for Southeast Asian opportunities as of January.
DealStreetAsia – Research & Analytics’s latest report, SE Asia’s VC Funds: Q4 2020 Review, captures the quarterly and annual trends in VC fundraising for Southeast Asia, including global funds with a mandate to invest in the region.
- VC fundraising performance across SE Asian markets
- Trends in fund sizes and fundraising milestones
- Fundraising by local and global VCs for SE Asia
- Funds currently in the market