Breaking News
Investing Pro 0
Cyber Monday SALE: Up to 54% OFF InvestingPro+ CLAIM OFFER

Funds flock to Southeast Asian startups as China loses sheen

Economy Sep 23, 2022 03:40AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
© Reuters. A man passes the city skyline during the coronavirus disease (COVID-19) outbreak, in Singapore, September 29, 2021. REUTERS/Edgar Su
 
GOOGL
-1.02%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
SDR
-0.43%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 
GOOG
-1.23%
Add to/Remove from Watchlist
Add to Watchlist
Add Position

Position added successfully to:

Please name your holdings portfolio
 

By Anshuman Daga and Yantoultra Ngui

SINGAPORE (Reuters) - Southeast Asian startups are enjoying a boom in fundraising exercises by venture and buyout funds that are chasing bigger returns and turning away from regulatory turmoil in Chinese markets, even at the risk of slower growth.

Firms such as Insignia Ventures Partners and SoftBank-backed East Ventures are among those that have raised a combined total of billions for startups over the past year as the region's 650 million people take to digital platforms.

"Some of the world's largest institutions are coming up with strategies now to invest and deploy capital into regions like Southeast Asia, which six to seven years ago may not have even had the ability to absorb cheques of a large enough size," said Vishal Harnal, a managing partner at venture fund 500 Global, with $2.8 billion in assets.

Harnal was one of the scores of investors gathered in Singapore this week at SuperReturn Asia, a private equity and venture capital conference, for whom Southeast Asia tops the investment rankings.

"Today, there's much stronger appetite for India and Southeast Asia," Joel Thickins, co-managing partner at TPG Capital Asia, told Reuters.

Led by Indonesia, Southeast Asia's internet economy is forecast to double to $363 billion by 2025 from an end-2021 estimate of $174 billion in gross merchandise volume, a report has cited Google (NASDAQ:GOOGL), Temasek and Bain & Company as saying.

Ridehailing and food delivery firm Grab Holdings listed on Nasdaq in December after a $40-billion merger, while Indonesian rival GoTo, raised $1.1 billion in a domestic listing this year.

This month, digital financial services group Fazz raised $100 million and Indonesia's Xendit, which bills itself as Southeast Asia's alternative to payments processor Stripe, announced fund-raising of $300 million in May.

The enthusiasm persists despite due diligence for startups that requires many months while valuations are under pressure, investors said.

"For want of a better word, FOMO is also present," added Harnal, referring to the "fear of missing out" he saw motivating many institutional investors who lost out on "phenomenal" returns as they were late in backing entrepreneurs in China.

DIVERSIFYING FROM CHINA

Southeast Asia is benefiting from Beijing's tough lockdowns and other measures to rein in COVID-19 in China and Hong Kong.

But although funds were diversifying, investors said the region's vastly different markets meant a uniform investing strategy was not ideal.

"It's not that they don't believe in China, just that they are reducing that exposure," said Tang Kok-Yew, the founding chairman of Affinity Equity Partners.

"Where can they go? One area that I constantly notice that everybody is very interested in is Southeast Asia. Unfortunately that's the market that is the hardest to penetrate."

Registered to attend the SuperReturn event were 500 so-called limited partners, who offer capital for investors, such as the Houston Firefighters' Relief and Retirement Fund, as well as about 700 venture and buyout firms, such as Schroders (LON:SDR) Capital, along with Chinese family offices.

Despite all the interest, the region might still have some way to go in the quest for funding.

"There are still individual U.S. cities where startups are raising more money than all of the startups in Southeast Asia," said Julie Ruvolo, managing director of venture capital at Global Private Capital Association, which says its 300 members manage assets of more than $2 trillion.

Funds flock to Southeast Asian startups as China loses sheen
 

Related Articles

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email