The performance of Southeast Asia-focused funds weakened in the first quarter of this year, putting an end to a year-long growth streak for capital commitments that started in the first quarter of last year, DealStreetAsia’s latest VC market review shows. The situation is poised to worsen, industry stakeholders say, as the COVID-19 pandemic further hurts investors’ risk appetite.
SEA-focused funds raised more than $1.3 billion in the first three months of 2020, more than tripling the value recorded in the same period last year, but down by 47 per cent relative to the previous quarter. VCs that are headquartered in the region contributed 77 per cent of the total.
As home to Southeast Asia’s leading VCs, Singapore and Indonesia dominated the VC fundraising market with total fund closes worth $983 million and $161 million, respectively. No deals were recorded by VCs based in Malaysia, Thailand, Vietnam and Cambodia.
The first-quarter drop, however, does not reflect the full impact of the pandemic. Most of the capital commitments within the period were solicited long before governments in Southeast Asia began imposing stricter social distancing measures. The region’s largest fundraising hub, Singapore, only began to impose a nationwide stay-at-home order in April. That was also the month that Indonesia, the most populated country in the region, decided to implement large-scale social restrictions in first and second-tier cities.
Industry stakeholders said that investors’ risk appetites have “dramatically changed” since early January as family offices, which invest in venture capital funds, look for more income-generating investment opportunities. Things will be particularly challenging for early-stage funds and those without a proven track record, market observers told DealStreetAsia.
On top of the closed funds, 53 SEA-focused funds are currently looking for about $6.1 billion of capital, with only 30 per cent of a combined $8.4 billion of fundraising targets secured so far. Three of the largest funds in the market are Vanda Global Capital’s $1.5 billion Agritech fund; B Capital’s $750 million Fund II; and Vickers Venture’s $500 million Fund VI.
Access the SEA VC Funds Review: Q1 2020 report for more details on VC fund close data and insights from industry stakeholders. The report is only available to premium subscribers.
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