Singapore’s state investor Temasek Holdings wants to invest in Southeast Asia’s “aspiring unicorns” as it seeks to replicate its successful investments in unicorns such as Gojek, Razer and Lazada.
The investor defines these aspiring unicorns as technology-based companies valued at between $100 million and $1 billion, Rohit Sipahimalani, Head of Investment and Portfolio Strategy at Temasek, said.
Temasek has invested in three such aspiring unicorns in the last one year: Indonesian beauty platform Sociolla, mixed martial arts (MMA) media company ONE Championship and fashion e-commerce startup Zilingo.
According to the Google-Temasek-Bain eConomy SEA 2019 report, there are over 70 such aspiring unicorns in the region with more likely to join them as Southeast Asia enjoys rising inflows of venture money.
Sipahimalani did not say how many aspiring unicorns Temasek plans to invest in but said that the firm has been eyeing sectors such as fintech, B2B and healthcare for investments. The firm has also been looking at new sectors such as agritech, he added.
Temasek’s first cheques to startups typically range between $50 million and $100 million, although it may invest lower amounts if the right opportunity comes along, as it did for Sociolla.
“We normally would come in with at least a $50-million cheque but there are exceptions. If there’s something we find attractive which is smaller than that we would look into it,” Sipahimalani said.
Apart from making direct investments, Temasek is also a limited partner (LP) in five Southeast Asian venture capital (VC) firms – Wavemaker Partners, Openspace Ventures, Jungle Ventures, Monk’s Hill Ventures and Vertex Ventures.
Sipahimalani said that the region could see a funding gap emerge at the Series C-D stage — where startups are typically looking to raise $25-100 million — but it was unlikely to impact growth significantly since global private equity players such as Warburg Pincus and KKR are already making moves to bridge that gap.
In terms of Temasek’s exit strategy, Sipahimalani said it should be looked into on a case-by-case basis because there might be companies with a lot of growth potential even after listing.
“If a company still has a lot of growth potential, there is no reason for us to want to sell,” he said. Temasek continues to hold a large position in Alibaba, which went public in 2014.
He added that the exit environment in Southeast Asia is more via M&A than public markets, with none of the exchanges in the region listing new economy companies.
“More listing of Southeast Asian companies in Southeast Asia itself would be a positive catalyst but we are not there right now,” he said.