B Capital Group, launched last year by Facebook Inc. co-founder Eduardo Saverin and Raj Ganguly, a veteran of private-equity firm Bain Capital LLC, has raised more than $143.6 million in the first close for its first fund.
The company reported the fund raising in a regulatory filing, according to the Wall Street Journal.
The firm plans to invest in innovative tech firms around the world. It has offices in Manhattan Beach and San Francisco in California, and Singapore.
The fundraising comes at a time when venture capital firms have become more cautious about funding in Asia after record levels in 2015. Since then the Chinese economy has slowed further, and the global economy remains weak.
B Capital Group has already invested in its first two portfolio firms — Singapore-based Ninja Van, a startup provider of e-commerce logistics services and US-based Evidation Health Inc., a digital health and analytics firm — from the new fund, the report said.
In a LinkedIn post, Saverin and Ganguly said that India and Southeast Asia will register high rates of growth in the near future, due to their large populations and increasing demand for better services.
According to the IMF, India’s GDP is about $2.1 trillion, with a 1.3 billion population. The GDP of the entire Southeast Asia region is $2.4 trillion, with a population of 628 million.
“To put things in perspective, the U.S. population is roughly 320 million people but has an enormous $18 trillion economy. Still, both India and Southeast Asia represent vast market potential. India is projected to grow at 5.9 per cent between 2014 – 2018 and Southeast Asia at 5.4 per cent. That is double the average U.S. growth rate of 2.5 per cent,” they said in the post.
“Yet, many investors traditionally bet on the U.S. market. In 2015, the U.S. alone saw a total of $58.8 billion in venture investments. Contrast that number with Asia, which has a population 10 times the size of the U.S., but only saw $55.3 billion in venture investments in 2015.”
Last year, China received the majority of VC funding in Asia, totaling $41.8 billion. India came second with $8 billion, while Southeast Asia got only $1.6 billion.
Saverin and Ganguly said they want to help entrepreneurs in Silicon Valley and Asia learn lessons from their experiences.
“We believe there are many invaluable lessons and experience that can be shared from both sides. For instance, a startup based in the valley might have insights that can help companies in emerging markets leapfrog the technology ladder. At the same time, entrepreneurs from developed markets can learn a thing or two on the complexity of cracking on-demand hyper local challenges from their counterparts in say, India.”
They also said that they want to address the funding gap at post-Series A stages. In Southeast Asia, about 90 per cent of VC funding was made at the seed and early stage levels, compared with 57 per cent in the US.
“We observe companies with fewer options and a potential gap in growth stage funding, especially Series B and C, which are crucial in taking a company from proving product-market fit to achieving scale successfully,” they said in the post.
“From an aggregate funding perspective, it’s clear to us that the funding gap has existed for a while. Funding pace improved around 2005/06 in India when there was a sharp increase in new VC funds and private investments almost tripled. For Southeast Asia, the inflection point came in 2013, when technology investments jumped from about $200 million in 2012 to $800 million in 2013. While such recent growth has been encouraging for both India and Southeast Asia, current levels of funding still pale in comparison to the U.S. and China,” Saverin and Ganguly said in the post.
The World Bank has said that India is likely to the world’s fastest growing economy until at least 2018. Several Southeast Asian countries such as Indonesia, Vietnam and Malaysia are also likely to grow at a faster pace than most other world countries.
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