After closing its second fund focused on growth-stage medtech startups at S$50 million last year, Singapore-based VC firm Venturecraft is now targeting to raise up to $500 million for its third fund – Venturecraft III, industry executives aware of the development told this portal.
Venturecraft has already begun raising this fund and has received backing from a large Southeast Asian entity for a significant part of its target amount, DEALSTREETASIA has learnt.
If successful, this will make it the largest private fund in Southeast Asia at more than double the size of other large vehicles that have been recently closed or are on the road to raise capital. Earlier this month, Singapore-based Vickers Venture Partners had announced that it had raised a total of $230 million for its fifth fund, which includes a yuan-denominated vehicle of $40 million, making it the largest private fund in Southeast Asia.
This portal has learnt that Venturecraft will look at making investments to the tune of $10-50 million from its upcoming vehicle that will, much like its predecessor, focus on healthcare and medtech companies. With the capacity to write larger cheques, Venturecraft will also target biotechnology and biopharmaceuticals firms from its third vehicle.
“For biotechnology and biopharmaceuticals firms, the investments required are huge even in the early stages. So smaller VCs don’t target these sectors. The third fund will provide Venturecraft the firepower to look at the best of deal flows in this space from across the globe,” an industry executive aware of the VC’s fundraising plans explained.
The firm is aiming to hit the final close for this fund in Q1 2018.
Another executive aware of the development said that Venturecraft had set the ball rolling to structure itself as an investment holding company, rather than as a VC firm after it hits the final close for its $500 million vehicle.
The new fund will look at providing capital to healthcare and medtech companies that want to expand operations to Asia, and make Singapore their local base to target this region. Venturecraft is of the view that with Singapore’s strong R&D base and an impressive track record of intellectual property protection, startups in healthcare and medtech space can move here, and use the city-state as the beachhead of an emerging single market (ASEAN) of more than 600 million users.
With Singapore having invested heavily in R&D during the last decade, Venturecraft is also aiming to ride the next phase when biotechnology and biopharmaceuticals startups from the city-state and its universities look at commercialisation and taking their products to the market.
Venturecraft started out with managing multiple offices – or managing the wealth of high-net-worth individuals – and evolved into an entity focused on helping companies expand to Asia, especially China and Taiwan, even as it began to make investments in startups from the region. Its Limited Partners (LP) base is largely Chines billionaires – technopreneurs who rode the internet boom in the Asia’s largest economy – as well as leading businessmen from traditional sectors looking to gain a foothold in tech.
It has so far raised two funds. Venturecraft-I was a $5 million vehicle, and it invested up to $500k per deal from that fund. Venturecraft is currently making investments from its second fund – the S$50 million Venturecraft II – that primarily targets growth-stage opportunities in medical devices and healthcare. The firm writes cheques of up to $5 million per company from its second vehicle.
Venturecraft is also pitching itself as the go-to partner for US-based VCs looking to help their portfolio companies in the biotech space target Southeast Asia. The firm believes that this model will also enable it to access deal flows in the US, a major challenge for VCs from this region. Besides, it is also studying business modes of leading US-based VCs in the biotech and medtech space to see if it can replicate their strategies, which include identifying niches in this space, evaluating demand, and then launching startups from scratch targeted to meet that demand.
Other large funds in the region include Vertex Ventures, the venture capital arm of Singapore state fund Temasek Holdings Pte, which recently closed its third vehicle for Southeast Asia at $210 million, exceeding its target of $150 million.
The Southeast Asia fund marked the first time Vertex has limited partners – LPs – or investors outside Temasek. Vertex also has separate vehicles – some of which are larger than its latest Southeast Asia fund – for investments in China, Israel and the US.
Shanghai and Kuala-Lumpur based Gobi Partners is currently raising a $200 million Meranti ASEAN Growth Fund that will target Series B and C rounds and concentrate on cloud services, e-commerce, fintech and Muslim-focused tech (also known as Taqwatech). Singapore and Silicon Valley-based K2 Global, whose portfolio includes Uber and Spotify, is also targeting to raise $200 million for its second venture capital fund.