Singapore-based Vickers Venture Partners said Tuesday that it had raised a total of $230 million for its fifth fund, which includes a yuan-denominated vehicle of $40 million, making it the largest private fund in Southeast Asia.
For Vickers, its latest vehicle is over three times larger than its predecessor, which closed at $81.1 million in 2012. Its previous four funds combined had raised $185.3 million, as per information on the company’s website.
Other large funds in the region include Vertex Ventures, the venture capital arm of Singapore state fund Temasek Holdings Pte, which recently closed its third vehicle for Southeast Asia at $210 million, exceeding its target of $150 million. The Southeast Asia fund marked the first time Vertex has limited partners – LPs – or investors outside Temasek. Vertex also has separate vehicles – some of which are larger than its latest Southeast Asia fund – for investments in China, Israel and the US.
Shanghai and Kuala-Lumpur based Gobi Partners is currently raising a $200-million Meranti ASEAN Growth Fund that will target Series B and C rounds and concentrate on cloud services, e-commerce, fintech and Muslim-focused tech (also known as Taqwatech). Singapore and Silicon Valley-based K2 Global, whose portfolio includes Uber and Spotify, is also targeting to raise $200 million for its second venture capital fund.
Vickers had initially targeted to raise around $250 million, and it had seen the first close of this vehicle at $63.5 million in July last year.
The venture capital firm led by Finian Tan, who made his name by backing China’s Baidu in 2000 against conventional wisdom, said the latest vehicle was capped at around $230 million because of issues related to the RMB.
“We had a lot of investors from China – so we had to create a piece of our fund into RMB and we capped that at $40 million – that part was oversubscribed,” Tan explained.
He dismissed concerns that VCs would find it tough to get their capital out of China when exiting their portfolio companies.
“That is the reason we created an RMB part of this fund – we can make an internal onshore investment… so we escaped all hassles related to China. Yet, the problem with China is not big – it is just that it takes a lot longer to get your money out from China now,” he added.
Tan said the VC firm has already deployed 70-80 per cent of its latest vehicle, adding it could be out in the market soon raising its sixth fund.
“We have to decide whether we do it as fund six, or launch a strategy fund, which could be a deep-tech fund or an impact fund. I think we will be in the market quite a lot investing and raising at the same time,” he added.
Vickers is also committing a part of this vehicle for investments in India, venturing into that market for the first time.
“About half of the latest vehicle will be for follow-on investment for our existing portfolio companies. That leaves us with about $120 million. Up to 40 per cent of that could be for Asia, which includes Southeast Asia, China and now, India,” Tan said.
“For India, the first thing to do is to get a team. We are generally early-stage investors and then we double down at the later stage. We will initially do India from Singapore and eventually may set up a team there,” he added.
In addition to Singapore, Vickers Venture Partners has offices in Shanghai, Hong Kong, New York and San Diego, and it plans to open another one in San Francisco in 2018.
The VC firm that Tan co-founded in 2005, with four other partners – Khalil Binebine, Jeffrey Chi, Damian Tan and Linda Li – has so far invested over $360 million, including co-investments, in 34 ventures globally. Some of its big bets include San Diego-based regenerative medicine company Samumed LLC, which was last valued at $12 billion, and KPISOFT Inc., an enterprise performance management startup aiming to list in the US early next year.
On the evolution of Vickers’ investment thesis, Tan said that each vehicle had invested in the latest technology at that point in time.
“AI (artificial intelligence) is the biggest buzzword now… Indonesia has come out on the scene. China is now more established. VCs always have to be cutting edge to do well. I would split our investment strategy into two. Actually, we have a deep tech strategy in all the funds since our second fund. When it comes to deep tech, we look at the US.”
“So, the deep tech part has been focused on biotech, AI, AR, VR, and in the emerging markets we look at investing in catchups, and sometimes in companies and technologies that help these countries to leapfrog. We started our US presence five years ago and are very big on regenerative medicine because that can make a difference. It is a whole new realm of science – if you solve this problem, people don’t die anymore,” he added.
Though the largest private fund in this region, its corpus is relatively small when compared to big VCs in the US and China. Tan said that from a Net Asset Value (NAV) perspective, the firm was at par with some of the largest venture capital funds in the US.
He also highlighted that Vickers was performance oriented, adding that as per Preqin data, net value of its fourth fund has increased 4.85 times, making it the best performer globally among vehicles that were launched in 2012. In addition, Vickers is the only Singapore-based VC present in the top quartile on Preqin’s list, when it came to the best performing fund managers globally.