Singapore’s Vertex Holdings hits final close for $730m fund-of-funds

Vertex Ventures. Photographer: Sam Kang Li/Bloomberg

Singapore’s Vertex Holdings has fully closed its $730-million Vertex Master Fund (VMF), according to a senior executive in the venture capital (VC) firm.

VMF – which deploys capital directly into Vertex’s six network funds – is backed by Singapore state investor Temasek Holdings, as well as Japanese corporates Sumitomo Mitsui Banking Corp, Marubeni, ABeam Consulting and the Development Bank of Japan.

These five early-stage funds are Vertex Ventures US, Vertex Ventures China, Vertex Ventures Israel, Vertex Ventures Southeast Asia/India and Vertex Ventures Healthcare. The Singapore-based VC firm also recently closed a $290 million growth-stage fund called Vertex Growth, which invests in companies starting from the Series B round.

Temasek remains the anchor investor for VMF, contributing about three-quarters of the total corpus.

This is the first time that Vertex is raising capital externally at the master fund level. Such moves signal greater confidence on the part of the Singapore-based VC, which has long been viewed as a mere extension of Temasek, a government-backed investment vehicle.

In an interview with DealStreetAsia, Vertex Holdings’s CEO Chua Kee Lock said that Japanese involvement in VMF was opportunistic. Investors from Japan, similar to those elsewhere, have also been on the hunt for global opportunities with a strong and proven track record.

“(Japan’s involvement) wasn’t so much about the money. We wanted the right kind of people we could work with as well. Japanese corporations have a lot of interest in technology, and (we felt) this would give our portfolio companies a good opportunity to access Japanese expertise and markets,” explained Chua.

He added that Southeast Asia’s VCs and startups will begin to feel the onset of an economic slowdown in 2020. First-time funds and execution-weak startups will also struggle when it comes to fundraising.

“I think we will begin to see a divide between first-time and experienced funds. This will be the same on the portfolio level. We will see a greater gap between the companies which are executing and those which are just pretending to be. Those that are executing well will continue to raise funds – but at cooler valuations, while those which are not will find it a struggle to fundraise,” said Chua.

The WeWork debacle and SoftBank’s liberal accountancy methods have also brought about greater rationalisation around company valuations. LPs have also begun displaying greater scrutiny over existing investments while exercising caution on new ones.

“Warren Buffet has said this before: you’ll only find who’s been swimming naked when the tide goes out. I think that’s exactly what’s going to happen next year,” said Chua.

Vertex Ventures is one of Singapore’s oldest and best performing VC firms, producing returns of 20-30 per cent on average for its first three Southeast Asia and India funds. Chua noted that these were cash-on-cash returns rather than paper mark ups – citing the VC’s focus on strict fiscal discipline.

“Unlike most VCs in the market, we don’t spray and pray. The VC business at the end of the day is still about returns and performance, not just investing,” said Chua.

Vertex Ventures SEA and India manages over $700 million of assets under management to date. It is an early backer in companies like Grab, Nium (formerly InstaREM), Tickled Media and Binance.

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.