Vickers Venture hits $63.5m first close for Fund V, confident of beating $250m target

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Singapore-headquartered Vickers Venture Partners Thursday said it had held the first close on its latest global fund, after amassing $63.5 million from existing investors.

The venture firm aims to raise $250 million for Fund V, which has a $400 million upper limit, or hard cap, its chairman Dr Finian Tan, told this portal.

Tan said firm had given itself a 12-month window to hit the final close for this vehicle – Vickers Venture Fund V L.P –  and sounded upbeat about the prospects of beating the $250 million target.

“When you raise a fund, you have a data room of investors who are interested. So we have about $300 million in our data room right now. It looks healthy – I don’t want to predict this thing – $250 million is our front cover but we have hard cap of $400 million,” he said.

DEALSTREETASIA first reported in July 2015, quoting sources, that Vickers, which specializes in early stage and growth capital, had kicked off the process to raise a $150-200 million fifth fund.

This is also the largest raise by a VC from the city state, and only the venture arm of Singapore’s state fund Temasek Holdings has amassed a larger pool of money. Last year, Temasek had pumped in an additional $600 million into Vertex Ventures to enable it to invest in startups across the U.S, Israel and China.

For Vickers, its latest vehicle is over three times larger than its predecessor, which closed on $81.1 million in 2012. Its previous four funds combined had raised $185.3 million, as per information on the company’s website.

The fundraising close comes at a time when investors are showing increased caution towards funding startups.

Earlier this week, this portal had reported that the number of VC funded deals globally had declined to 1,886 over the previous three-month period, the lowest level since Q2-2013. In fact global numbers during this period have been propped up by some mega rounds over $1 billion – in decacorns – like Uber, Snapchat and Didi Chuxing.

In Vickers’ earlier funds, about 60% of its investments were in China, with 30 per cent in South East Asia and the rest spread across other parts of the world, but Tan said the firm’s exposure to China had come down to 40%. “Southeast Asia and India remain at around 30%, and 30% is from the rest of the world, mainly in the US –  we will maintain this ratio with our new fund too,” he said.

Tan said the lead investor in the firm’s latest vehicle was ‘one of the largest family offices in the world based in Europe.

“They (the Europe-based family office) has been our anchor all the way since Fund 2. The people in our data room include sovereign wealth, funds of funds, family officers, couple of endowments… no foundations yet. We are going out quite hard to meet as many as we can because its our first institutional fund and want to make sure we cover everyone.. or as much as possible. I would say that we’ve seen about 10 per cent of who we want to see so far,” he said.

Founded in 2005 by Tan and his four partners – Khalil Binebine, Jeffrey Chi, Damian Tan and Linda Li – the firm now has offices in Singapore, Shanghai and California, and its existing funds have a current gross value of $748million, representing a multiple of 3.36x over invested capital during this 11 year period.

Tan’s biggest bet had been his investment in Baidu in 2000 at a valuation of $30 million, as head of Asia for international venture capital firm DFJ ePlanet. Baidu is worth US$55 billion today, a multiple of 1200x over the valuation at entry.

Does he have any holding left in Baidu?

“Very little. I had to create Vickers so I liquidated along the way. But some of my partners at DFJ have kept the shares all the way till today. But we have Samumed (a privately-held biopharma company) from Fund four, and we think that the returns here will be more than Baidu. Samumed is valued at $12 billion today,” Tan said.

On unicorns (firms valued at over $1 billion) in the Vickers Venture portfolio, Tan said that there were 11 potential companies, with one of them being already at $12 billion (in valuation), and another one at $800 million plus.

“This is based in Beijing. It’s a clean technology company. It’s already given us about 90 times in value and they’re preparing to go public early next year in China. The estimated IPO price will be about $2 billion. Right now they’re doing a pre IPO round at about $800 million plus,” he added.

In Singapore,Dr Finian Tan,Chairman of Vickers Ventures Partners Vickers is known for their investments in Cambridge Industrial, the Asian Food Channel, TWG tea and their latest portfolio, Matchmove pay, an epayment company with millions of subscribers in India and Southeast Asia.

After its fourth vehicle, which closed in 2012, Vickers had also raised $178.2 million in co-investments.

“Along with the co-invesments, we have deployed around $250 million since 2012. The pace has been a bit too fast – typically this amount would be invested in around 4-5 years. We’ve not left much for follow-on deals for our existing portfolio, and so as result, we are looking at deploying half the amount we raise for Fund V for follow-on investments in our portfolio companies,” Tan said.

 “We have 11 home runs that we are pushing out as possible deal flow for fund 5. Home runs are more than 5x for us and they are all very high growth companies,” he added.

According to Tan, Including the co-investments, Vickers’ existing funds has a current gross value of $2.1 billion. “What excites us more is not so much how much we’re managing, but that we are also one of the best performing funds globally,” he said.

Edited Excerpts:

 

You have reduced your exposure to China. Is that because China has been overheating?

I wouldn’t say that our deal flow in China has dropped. I would say our deal flow increased in other parts of the world because of countries such as India – when India starts waking up, it’s a big giant. And then in Southeast Asia, Indonesia is also fairly big country. And then we went quite actively into global life sciences with our headquarters for this division in San Diego.

The reason we went into global life sciences was that, with the discovery of stem cells and the discovery of the human genome, this sector saw a lot of hype. Everybody felt that tailor made therapies would be the next big thing because of genes – the perception was that if you had a some kind of sickness, you could tailor make a cure. But the world didn’t manage to come up with good therapies – it is taking much more time.

Until today I think there is hardly any FDA approved stem cell therapy. So as a result, life sciences got bit of a hit and prices become very cheap, and in the mean time new discoveries – equal or greater than these therapies – were discovered. So we thought with prices coming down, and with new discoveries which can be much closer to the market – because these discoveries are not as fundamental as stem cells or genes.

And with prices becoming more affordable, we thought it was the right time to go. So I think move has resulted in the greatest push in our value. We’ve had an incredible 3 years. We’ve grown about a 100 per cent per annum over the last three years overall mainly in fund 4, and it has been an incredible journey. So we hope to continue with that pace.

 

How do you see the deal flow in ASEAN?

Deal flow is always big. There are always people with ideas so that’s always very large. Is there too much money chasing after too little deals? No.

How do you see the startup scene in Singapore?

You know our first company that we exited from Singapore – it is called Cambridge Industrial Trust. It is not an unicorn….. well they now have more than a billion dollars worth of assets under management from 0. When we came they had 0 and now they have more than a billion of assets under management. So that’s a pretty big success I think. Maybe the definition of a unicorn will not cover it but we sold it quite quickly to National Australia Bank Group in 2008. We made 26 times return.

The Singapore startup scene is much richer than its economy deserves. So we are punching above our weight. If you take on a GDP basis the amount of money raised and invested in Singapore is actually very large. So I see Singapore as being very competitive. They have produced unicorns like GrabTaxi.

But the likes of Grab are not founded by Singapore-born entrepreneurs.

That doesn’t matter. That’s like saying that Silicon Valley companies are not started by people living in Silicon Valley. Almost none of them are started by people living in Silicon Valley. It doesn’t matter where they are born. The key is where they start, where they grow, where they raise capital and where is it is based.

It really doesn’t matter if its Singaporean or non Singaporean. In fact if you only rely on Singaporeans, then the pool is just so small. I used to be in government, and that has always been what the government has been trying to achieve – making Singapore a hub of activity. Anything that adds to GDP or GNP.

Do you see ASEAN becoming an innovation hotspot?

When you say innovation you mean sort of cutting edge? This part of the world has always been a follower of Silicon Valley. So if I give you an analogy – if you say R&D, we are kind of a ‘D’ rather than the ‘R’. We are a small ‘r’ and a big ‘D’. Silicon Valley is big on R&D. So a lot of the ideas here have been followed and copied from business models in the US. But recently in China there have been some major innovations – WeChat is more complete than WhatsApp or even Facebook Messenger.

WeChat is a combination of what everyone does on Twitter, Facebook and WhatsApp, and it’s unbelievable. And Go-Jek is another idea from Uber, but modified for this region. But on that idea, Uber has really lead the way. I think Uber is so so innovative, and that they will be a lot bigger than they are today. They totally disrupted the entire sector.

Can Grab compete with Uber, considering the amount that the latter has been raising in the recent past?

There will always be competitors in the region. It’s all about execution. When I was invested in Baidu, people were asking the question whether we can compete with Google, and we have.

In fact, we were like 80 per cent of the Chinese market, as we were helped a little bit by the government policies along the way. So its all about execution. Nobody can say how well will Uber execute in this region, or how well GrabTaxi will do. But if they (Grab) do well, yeah they can compete. I don’t see why not. They’ve raised enough capital.

Southeast Asia is a thrilling frontier for the tech business – it has 600 million people, it is the fastest growing online market and smartphone adoption is booming. From Singapore to Malaysia to Thailand, governments are pumping monies to fund startups. When civil servants put money into companies, what are the risks? do you think that easy funding for tech startups in Singapore has distorted market realities?

Ok that’s true (that there is a lot of government funding here). But you know the amount of angel capital in the Silicon Valley is huge, that’s first. Secondly they have all sort of small business incentive schemes – we don’t have these schemes. So the grants and the semi equity grants by the government are all important. So it may be very easy to start here. The ecosystem is not quite complete. There is a big gap at the seed, pre-seed and Series A.

There is a big gap and there’s where we’re in, and that’s why the deal flow is so rich. So it’s great that there is a lot of money earlier than us – it starts the deal flow so we have a lot of fish to see. And then at the later end, there’s a lot of money chasing after too little deals – when you have proved the concept, there’s a lot of money to take you further. At the start, there’s little eggs being hatched by the government so its a very nice sweet spot to be.

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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.