<article><p>Spurred by a recovery in risk appetites and an improving exit outlook, Southeast Asian venture capital firms recorded 22 final closes in 2021, nearly double the previous year&#8217;s tally.</p></article>

<p>Spurred by a recovery in risk appetites and an improving exit outlook, Southeast Asian venture capital firms recorded 22 final closes in 2021, nearly double the previous year&#8217;s tally.</p>
<p>Although the number remains below pre-pandemic levels, it is a clear sign that the overall fundraising landscape is improving, notes <a href="https://www.dealstreetasia.com/reports/se-asias-vc-funds-q4-2021-review/">the latest report</a> from DealStreetAsia &#8211; DATA <em>VANTAGE</em>.</p>
<p>According to the report, a pick-up in fundraising in the third and fourth quarters saw local VCs achieve 50 fundraising milestones throughout 2021, a big jump from just 27 in 2020 and higher than 44 in 2019.</p>
<p>By milestones, the report refers to capital raised within a specific timeframe, excluding money secured previously within a fund’s lifetime.</p>
<p>&#8220;2020 was a ‘friends and families’ year from a fundraising perspective … But we saw in 2021 a real pivot. More institutions were ready to move forward. This is because they have had the opportunity to crystalize their processes further for the new operating environment,” said Dave Ng, general partner at Altara Ventures.</p>
<p>Alpha JWC Ventures&#8217;s third Indonesia-focused fund was the largest to reach a final close last year at $433 million, followed by B Capital Group’s $415 million Opportunities Fund. The <span style="font-weight: 300;">AC Ventures III Capital LP Fund ($205 million) secured the third biggest final close, while </span>Openspace Ventures closed a $200 million third fund in 2021.</p>
<h3>New VCs on the block</h3>
<p>The frenetic growth of Southeast Asia’s tech ecosystem, which recorded $23 billion in equity funding and minted 25 new unicorns last year, has inspired more investors to set up their first venture funds.</p>
<p>Seven out of the 22 funds that reached a final close in 2021 were first-time funds, up from just three in the previous year. At least 16 VC firms launched their debut funds since January 2020, mostly targeting pre-seed to Series A deals.</p>
<p>While the emergence of startup VCs is positive for the region, the early-stage market is already a crowded space <span style="font-weight: 400;">with established regional players such as East Ventures, AC Ventures and Alpha JWC Ventures. Meanwhile, global players such as Andreessen Horowitz, Sequoia Capital and Y Combinator are also becoming more aggressive in the space.</span></p>
<p>&#8220;There is a high demand for tech exposure across the region, particularly in Indonesia, where the most promising early-stage opportunities lie,&#8221; said Adrian Li, founder and managing partner of AC Ventures.</p>
<p>Willson Cuaca, whose company, East Ventures, was the most active VC firm in the region last year with 80 deals in total, said technology had made cross-border investing easier.</p>
<p>&#8220;With the adoption of remote calls, remote due diligent and remote investment, the world is now flat, and everyone could invest anywhere in any part of the world,&#8221; he said.</p>
<p>Competition aside, the emergence of new funds, combined with strong interim closes in 2021, should provide a solid foundation for stronger fundraising in 2022.</p>
<p>Based on fund launches since January 2019, there are 79 Southeast Asian VC funds currently in the market to raise $7.6 billion. Of this, about 23.7% of the corpus has been secured. Separately, at least 22 foreign VC firms with at least 10% allocation for markets in Southeast Asia are currently on the fundraising trail.</p>
<p><img loading="lazy" decoding="async" class="aligncenter size-full wp-image-281667" src="https://media.dealstreetasia.com/uploads/2022/02/Crop.jpg?resize=640,325" alt="" srcset="https://media.dealstreetasia.com/uploads/2022/02/Crop.jpg?w=1280 1280w, https://media.dealstreetasia.com/uploads/2022/02/Crop.jpg?resize=300,152 300w, https://media.dealstreetasia.com/uploads/2022/02/Crop.jpg?resize=1024,519 1024w, https://media.dealstreetasia.com/uploads/2022/02/Crop.jpg?resize=768,389 768w" sizes="(max-width: 1280px) 100vw, 1280px" data-recalc-dims="1" /></p>
<h3>Rebalancing of portfolios</h3>
<p>While a further easing of travel restrictions should aid fundraising in 2022, the pandemic is far from over. This is partly why fund managers have stayed largely conservative while setting their fund targets.</p>
<p>The median value of closed funds in 2021 stood at $50 million, much lower than in every year since 2018, but in line with the median value of funds launched in 2020. Separately, the median value of funds unveiled in 2021 also stood at $50 million.</p>
<p>Rising inflation and monetary tightening at national and global levels should loom over expectations in 2022 as limited partners rebalance their portfolios. The impact on VC fundraising, however, is likely to be limited and less severe.</p>
<p>“I think in general, 2022 will be lower than 2021 in VC land across metrics because Q1 and Q2 are impacted by Nasdaq/crypto declines. Q3 and Q4 will depend on how fast and how much Fed raises rates versus current expectations. Of the many metrics, VC fundraising is least impacted in my opinion,” said Tito Costa, a partner at Global Founders Capital.</p>
<p>Speaking from a Southeast Asia perspective, Openspace Ventures partner Jessica Pouleur said the region is likely to benefit from the tech industry crackdown in China and continued geopolitical uncertainty, particularly the ongoing frosty US-China relations.</p>
<p>“[These factors] have encouraged investors, both GPs and LPs alike, to seek investment opportunities elsewhere, and particularly in Southeast Asia,&#8221; she said.</p>
<hr />
<p><a href="https://www.dealstreetasia.com/reports/se-asias-vc-funds-q4-2021-review/">SE Asia’s VC Funds: Q4 2021 Review</a> covers fundraising by VCs based in the region and their regional and global counterparts with a mandate to invest in Southeast Asia. It offers:</p>
<ul>
<li><span style="font-weight: 400;">Quarterly and annual fundraising data for SE Asian VCs </span></li>
<li><span style="font-weight: 400;">The rise in the number of global funds with allocations for the region </span></li>
<li><span style="font-weight: 400;">The VC firms currently in the market </span></li>
<li><span style="font-weight: 400;">Insights from prominent investors on the VC fundraising scene</span></li>
</ul>
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Although the number remains below pre-pandemic levels, it is a clear sign that the overall fundraising landscape is improving.

Southeast Asia's VC firms doubled fund close tally in 2021

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Southeast Asia's VC firms doubled fund close tally in 2021

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