Singapore-based venture capital firm Qualgro is raising $100 million for its second vehicle, nearly double its previous $52-million fund. It hopes to use the fresh pool of money to cut larger check sizes, and double down on B2B companies in the tech space across Southeast Asia and Australia, a top executive told this portal.
Qualgro is set to hit the first close of its second vehicle within the next two months, and is targeting a final close in Q1 2019, its founder and managing partner, Heang Chhor, said in an interaction.
“Our existing LPs have already contributed almost half – 40 per cent to be precise. We started to raise this fund about nine months ago and we are more than halfway through already. The final close will be in the first quarter next year, and the first close will be in about 1-2 months,” he said.
Currently, the firm makes investments in the $2-3 million range, and will look at larger ticket sizes in the range of $5-8 million from the second vehicle, Chhor said.
Qualgro focuses on investments in B2B companies in the areas of data, enterprise and SME SaaS, and fintech. Its portfolio of about 15 companies includes lending platform Funding Societies, retail software startup Fluent Commerce, restaurant solutions provider Mobikon, cash back-focused e-commerce startup ShopBack, cloud communications platform Wavecell, Myanmar travel company Oway and Indonesia’s B2B online marketplace Ralali.com.
Qualgro, which had launched its first fund in 2015, is following the trend of Southeast Asian venture capital firms targeting larger vehicles to target the growing internet economy in the region.
Chhor said that Qualgro, which has largely been under the radar, would stick to its niche and focus on companies in the B2B space.
“The reason why we focus on B2B companies for 70 or 80 percent of our portfolio is because such startups target corporate clients. Second, they would have business models that are not constrained by country boundaries. If a startup is providing software to a bank in Thailand, it should be able to do the same to a bank in Indonesia too. Third, B2B is less expensive to invest in and operate. We believe that the B2C space in SEA is well covered, and the prices (valuations) are also high,” he added.
Chhor was previously a senior partner at McKinsey & Company and has worked for many years in Europe, with the last decade spent in Asia, especially in Japan and Asean.
He said the firm’s first vehicle was backed by six large listed Asian entities without divulging names. “From Japan, it is a large financial institution and a large internet company. From SEA, our LPs include one of the top-10 banks in the region, as well as one of the largest Asian conglomerates in agribusiness, retail, telco, finance’conglomerate in the agribusiness,” he added.
The VC firm’s other founders include Jason Edwards, who was previously with private equity firm Clearwater Capital Partners, as well as Peter Huynh, who joined from Singtel Innov8. Huynh was also the co-founder of Optus-Innov8, a corporate VC investing in Australian startups.