VC allocations not growing proportionately with surge in deep tech startups, says SGInnovate’s Leonard

Steve Leonard, Founding CEO, SGInnovate at DEALSTREETASIA's Asia PE-VC Summit 2018 in Singapore.

Venture capital portfolios are not growing proportionately with the rising number of deep tech startups in Singapore, says Steve Leonard, CEO of SGInnovate. This may lead to companies getting left out, even if some of them have good investment potential.

Leonard noted that while funding rounds have grown bigger, the capital may not be filtering down to the seed level, where most of the deep tech firms are.

“There’s tons of money at Series A and B, and that’s where you get the big boys like the Vertexes and more established funds. But if you take a look at the other VCs in town, they have a lot of other things that they’re investing in. The question is – how much room do you have left in your fund for some of these things called deep tech?” asked Leonard. 

A large number of new deep tech firms are expected to enter the market.

In September, the National University of Singapore (NUS) committed $18.18 million to launch 250 deep tech startups in Singapore. Entrepreneur First has also committed to launching over 20 deep tech companies a year.

Some of the more active VCs in SEA deep tech include Silicon Valley’s 500 Startups and Wavemaker Partners.

In a previous interview with DealStreetAsia, Vishal Harnal, Partner at 500 Startups called deep tech “one of the most underrated investment opportunities in Asia”, citing verticals like biomedical, communications, space and robotics with the greatest potential.

It is not just in Singapore that deep tech is generating investor interest. Earlier this year, Vietnam-based Innovatube Fund launched a $5-million fund focusing on frontier technology like AI, IoT, blockchain and AR/VR in Southeast Asia. The fund has so far invested in one company based in Thailand.

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