Startup valuations globally are on the rise, but is this growth sustainable and justified?
“It all boils down to fundamentals at the end of the day,” said Vertex Holdings chief executive officer Chua Kee Lock during a fireside chat at the recently-concluded Asia PE-VC Summit 2021.
“The question is whether it is a multi-billion dollar concept or just a $50-million idea…What we need to do is make sure that the team and technology are real. [And that] we’re not investing in some fluffy concept,” shared Chua.
Venture capital as an asset class continues to hit record highs in terms of capital raised and invested globally.
According to Preqin’s Global Private Equity and Venture Capital Report 2021, $297 billion was invested and $391 billion realised through exits in 2020 for venture capital alone. Closer to home, SE Asian startups have raked in at least $17.2 billion since the beginning of 2021, according to DealStreetAsia’s SE Asia Private Capital Markets 2021 report. This is more than double the amount raised for all of 2020.
Vertex Holdings has taken advantage of capital flooding global markets by raising its first bond – a S$450 million ($330 million) seven-year issuance to support its venture capital activities at the holding level.
The bond issue seeks to not only diversify its sources of funding but also allow investors exposure to venture capital as an asset class. Vertex Holdings has an active portfolio of over 200 firms in technology and healthcare across key innovation hubs around the world. Its regional portfolio includes Grab, PatSnap, Validus, Tickled Media, FirstCry, Warung Pintar and Nium.
Vertex is also reportedly in talks to launch a special purpose acquisition company (SPAC) on the Singapore Exchange (SGX) — a move that will see the Singapore-based venture capital firm dabble in public market investing. Chua declined to comment on Vertex’s SPAC plans but shared it as something the Southeast Asian ecosystem should support and leverage to grow regional businesses.