Editor’s Note: This story was updated on March 9 to reflect the addition of more VC firms to the list of those currently fundraising.
Fundraising efforts by Southeast Asia-based venture capital (VC) firms, which are in the market to raise $4.97 billion, are taking a hit due to the coronavirus outbreak, multiple industry players told DealStreetAsia.
Of the 42 Southeast Asia-based VCs currently in the market, the largest is global tech investor B Capital Group, which we earlier reported is seeking to hit its second fund’s hard cap of $750 million after meeting its $600-million target.
Others in the market include Vickers Ventures (seeking $500 million for its sixth fund), Malaysia’s Xeraya Capital (eyeing $400 million for its latest life sciences fund) and Golden Gate Ventures (a $200 million growth fund with Hanwha Asset Management).
Top 15 Southeast Asia-based funds currently in the market
|Fund||Target||Raised so far|
|B Capital Fund II||750||600|
|Vickers Ventures Fund VI||500||125|
|Xeraya Lifesciences Fund IV||400|
|BRI Ventures Fund I||250||136|
|Openspace Ventures Fund III||200|
|Golden Gate x Hanwha Fund I||200||80|
|Meranti ASEAN Growth Fund||200||50|
|MDI Ventures's Centauri Fund||150|
|Circulate Capital Fund I||150||106|
|BAce Capital SEA & India Fund||150||100|
|Wavemakers Partners SEA III||100||60|
|BEENEXT Emerging Asia Fund||100||8|
|Qualgro VC Fund II||100||60|
Source: Company announcements, DealStreetAsia data and regulatory disclosures
“The virus does not affect the long-term macro trends of the Southeast Asian region, but [in the] short-term, the uncertainty may hit VCs who do not have long-term LPs backing their funds. So we do expect the impact to hit the peer group in Southeast Asia,” said Openspace Ventures founding partner Hian Goh.
Openspace launched its $200-million third fund in February but Goh is confident about the relationships the VC has built with its investors.
“If you already have strong relationships to anchor a fundraise, that should not impact too much on your timeline. If you are raising your first fund or you don’t have a track record yet, it is probably likely that you will find it much longer to close your fund,” he said.
Fundraising by VCs and startups alike has been stymied by travel restrictions, cancelled events and closed offices. Unlike startup-investor matchmaking events which have been moved online by players such as Sequoia Capital China and marquee seed accelerator Y Combinator, in-person meetings with LPs are critical for VCs to secure investments.
“It’s difficult to schedule any meetings that involve travelling. For any deal to close, people still want/need to meet face to face. You can do some work with online meetings but not everything,” said a partner at a Southeast Asia-focused VC firm currently in the market.
“[The coronavirus] will definitely have an impact on the upcoming closing.”
In addition, large investors such as university endowments are set to see increased internal scrutiny of fund commitments, further extending VCs’ fundraising timelines.
“Our LPs are institutional investors and we expect them to take longer to commit capital because their own investment committees (ICs) are becoming extremely cautious,” said a top executive at an early-stage VC firm, who preferred to remain anonymous.
A “black swan” warning from storied Silicon Valley VC Sequoia Capital last week has further fuelled concerns.
“Sequoia, as the granddaddy of the industry, is the benchmark of panic. You know the slowdown is here if it is sending a doom-and-gloom message,” said an industry executive.
There is consensus that the coronavirus will serve as a litmus test for the industry and help LPs separate the wheat from the chaff.
“This is a good time for LPs to sniff out the strategy that works, just like how VCs would find it a good time to see which are the fundamentally sound startups,” says Vynn Capital managing partner Victor Chua.
It boils down to the fundamentals, said the founder of a prominent VC firm. “If a virus can kill your business, you should not have been in the industry in the first place.”
This week, DealStreetAsia will release a report on Southeast Asia’s venture capital landscape, covering fundraising in 2018 and 2019, country-wise list of VCs, all the funds currently in the market and the most active VCs in the region. The report will be made available to our annual, biennial and three-year subscribers for free. Pick up one of these subscription packages now to get your copy.