Innovatube, a Vietnam-based startup activator, has launched its maiden $5 million pre-seed fund for Southeast Asian startups and has re-defined itself as a venture capital firm.
Innovatube Fund focuses on frontier tech areas, which include virtual/augmented reality, IoT, artificial intelligence, fintech and blockchain, even as the firm said it was open to any potential projects in other verticals.
Each investment by Innovatube Fund will be in exchange for 5-10 per cent equity of a portfolio startup, the company said in a Tuesday announcement.
The new fund targets at startups across Southeast Asia, with a strong focus in Vietnam considering the country’s potential and Innovatube’s track record with Vietnamese startups.
“Given the technical strength of the local market, I believe that Vietnam can be the best market for frontier tech startups,” Hajime Hotta, Innovatube’s Singapore-based founder, elaborated on the prioritised attention to the country.
Innovatube’s interest in investing in frontier tech is also because of its founders’ already established activities to promote new technologies in Vietnam, including the AI Lab associated with Hotta.
The latest fund provides pre-seed capital to help bridge the gap between the increasing number of venture capital investors that are looking at Vietnam, and the current situation of local early stage startups both in terms of company growth and founder’s capability.
“Theoretically, you will raise some money from angel investors and then close a seed round with a VC. This is always easier said than done. In reality, it’s very likely that young startups will fail to meet necessary traction to raise seed round. They will have to raise some small rounds in between,” said Hotta, emphasizing the significance of pre-seed capital to the survival of a startup.
Innovatube Fund is founded by Hajime Hotta and London-based Danny Goh, two serial entrepreneurs and angel investors who have invested in eight Vietnamese startups over the past three years, including marketing platform Beeketing and food media startup Lozi, which respectively later attracted financing from 500 Startups and Golden Gate Ventures.
Goh said the new fund will keep their angel investment perspective. “Working with startups at this stage varies from advising on business model changing, to even coaching on a very basic thing, like how to create a good pitch deck for the next round. Also, most local founders are limited to a local mindset. They think they should build a product for the Vietnam market first and expand; but in our opinion, they should think of a product that targets regionally or globally as soon as possible. We try to help them form such a product in the early stage thanks to our network and understanding about Southeast Asia and Europe or the US,” he said.
“We don’t look for a big fancy vision at this stage but do need a strong conviction in the founder and his team,” Hotta added.
Before kicking off the fund, Innovatube was known as an event organiser for early-stage startups in Vietnam, most of which has aimed to deliver business knowledge to local engineer founders. One of its recent highly received events is LaunchIT, which features the latest beta-stage startups in town. In 2016, Innovatube brought the ASEAN Ricebowl Startup Awards, the first of its kind in a regional scale, to Vietnam.