Singapore’s Vertex Holdings taps Japanese investors to widen reach

Vertex Ventures. Photographer: Sam Kang Li/Bloomberg

The venture capital arm of Singaporean sovereign wealth fund Temasek Holdings is diversifying its sources of funding by tapping an unusual group of Japanese companies and government agencies to fuel its global expansion at a time when many other investors feel skittish about cooling tech valuations.

Vertex Holdings last month began holding meetings with its Japanese investors, including the government-linked Development Bank of Japan, trading company Marubeni, consultant ABeam Consulting and Risa Partners, an investment bank, to discuss potential areas of collaboration with the roughly 200 startups that it invests in.

Vertex plans to hold the meetings every month and has hired two Japanese members to lead the effort. As part of the tie-up, the Japanese investors chipped in $180 million of Vertex’s $730 million fund that invests in six major funds across its global network.

Japanese companies are “very resilient, able to withstand challenges and crisis,” Vertex Holdings Chairman Teo Ming Kian, who also sits on the board of Temasek, said in an interview. He said potential areas of collaboration can range from the Japanese companies becoming vendors and customers of the startups to M&A opportunities.

“Japanese companies have gone beyond the Japanese market,” he said. “It is not only their capital but their wide reach and network that we are looking for.”

The move signals Vertex’s efforts to diversify its profile of investors and startups amid growing uncertainty surrounding the booming venture capital industry. Venture capital fundraising in China fell sharply last year and caution over cash-burning startups has rippled across the world.

On the other hand, many Japanese companies are increasingly on the lookout for startups with strong growth potential as they grapple with an aging and shrinking population at home. Investment so far has mostly gone to domestic startups. But the commitment in Vertex’s “master fund” signals a growing appetite for overseas markets.

Vertex will be “disciplined” in its investments, Kian said. “You don’t want money chasing out the ideas. You want ideas to chase money.”

Kee Lock Chua, Vertex Holdings’ CEO, said valuations are high in Vietnam, but those in Indonesia have started to come down. “Now is best time to deploy capital, not the best time to raise money.”

Vertex was established more than 30 years ago as a unit of Singapore Technologies and later became the venture capital arm of Temasek. But it has opened up to outside capital in recent years. More than a third of its roughly $3.5 billion under management now comes from external investors.

In addition to its regional funds across Asia and the U.S. that invest in early-stage companies, Vertex has added funds dedicated to health care and growth-stage startups.

Providing services like facilitating corporate partnerships also helps venture capital companies appeal to startups when competing for deals. When Vertex funded Grab in 2014, it advised the ride-hailing company to move its headquarters from Malaysia to Singapore, Southeast Asia’s financial hub. Grab has since raised more than $9 billion, according to Crunchbase.

This article was first published on Nikkei Asian Review.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.