Focus on early-stage, Series A and B, and growth-stage startups in SEA
Founded on the concept of 'entrepreneurs backing entrepreneurs'
MONK'S Hill Ventures (MHV), a fresh entrant to Asia’s venture capital scene, has launched with a S$100-million fund (US$80-million) venture fund founded on the concept of “entrepreneurs backing entrepreneurs.”
The venture fund was one of six VC firms chosen from 32 proposals, by the Singapore Government for the Early Stage Venture Fund (ESVF) scheme, run by the island-republic's National Research Foundation (NRF), which sits under the Prime Minister’s Office.
Under the ESVF, the NRF will invest S$10 million (US$8 million) on a one-to-one matching basis with each of the selected VCs, capitalising a total fund size of S$120 million (US$95.6 million) for early stage investments.
The other five VCs are Jungle Ventures, SBI Ven Capital, Walden International, New Asia Investments and Golden Gate Ventures.
The MHV partnership comprises Peng T. Ong, Kuo-Yi Lim and Stefan Jung, with Thomas Clayton as special advisor. Its mandate is to address the lack of operational experience, which it has identified as a critical deficiency across the VC landscape in Asia today.
In a statement announcing the fund, Peng noted that there are clearly “two big gaps” in the market, with one being the much discussed Series A funding gap.
“However, the more significant one that we see is the lack of seasoned entrepreneurs, with deep operating experience, as investors – people who can roll up their sleeves and really help entrepreneurs. This is what separates the best VCs from the rest,” he said.
The MHV team certainly boasts impressive résumés with Peng being the founder of three companies that now generate annual revenues that total more than US$1 billion.
He founded Interwoven, which had a successful initial public offering on Nasdaq, cofounded Match.com which was acquired by InterActiveCorp (IAC), and enterprise identity management startup Encentuate which was acquired by IBM.
Lim was the chief executive officer of the US$200-million Asian VC fund Infocomm Investments, with investments in Twilio, Reebonz, Dataxu, Gengo, DS3, Quid, JustCommodity and Mobilewalla; co-investing with Sequoia, Bessemer, Union Square Ventures, and Accel.
Jung cofounded and built several of South-East Asia’s largest e-commerce companies as cofounder and managing director of Rocket Internet, with Zalora and Lazada raising over US$400 million in funding. He was also a venture partner of Global Founders Capital, a US$200-million early stage fund, where he led amongst others, the investment in Traveloka (Indonesia).
Clayton has started and run numerous technology startups, including Bang Networks and California Audio Technology, which together have raised more than US$160 million from the likes of Sequoia Capital, Goldman Sachs, Jafco, SV Angels and SingTel Innov8. He is currently running Bubbly, a mobile social media company with more than 40 million users.
“We also want to set the bar for how venture funding is done in Asia, by bringing the best practices we have personally experienced through working with top VCs ourselves,” said Lim, adding that the fund will be practising “a straightforward and transparent process which treats entrepreneurs as partners.”
Fund focus, ecosystem thoughts
MHV will invest in high-growth technology companies that take advantage of fast-growing Asian markets. It views South-East Asia as ripe for an "explosion" of leading technology companies, driven by a "confluence of favourable macroeconomic conditions, exciting talent and available capital," it said.
The firm’s mission is to also help build the overall startup ecosystem, not just its portfolio companies, it claimed, adding that it aims to help as many startups and entrepreneurs as possible in order to help accelerate growth across the region.
The firm will start with offices in both Singapore and Jakarta, but plans to continue building out and spending time across the major Asian markets.
There are two primary areas of focus: Firstly early stage, Series A and B technology startups, primarily across South-East Asia. The second focus will be on growth rounds of leading startups in Silicon Valley and from around the world that want to expand in Asia.
In an email interview with Digital News Asia (DNA), Clayton said that the partners will be looking at both consumer and enterprise startups, including mobile, e-commerce, big data, and cloud-based services.
The focus is primarily on Series A and B rounds in companies based in South-East Asia namely Singapore, Indonesia, Thailand, Vietnam, Malaysia and the Philippines.
“The team will be a major factor, as well as the opportunity that the startup is addressing and its unique value proposition in Asia,” he added when asked what the key criteria will be for prospective investees.
The other focus on growth-stage startups is also significant, and follows the announcement made by Malaysia Venture Capital Management Berhad (Mavcap) with Elixir Capital Management for Mavcap's third Outsourced Partners Programme (OSP3).
An agreement was signed between Mavcap and Silicon Valley-based fund manager Elixir to launch the ECM Straits Fund, which will target growth equity investment opportunities to help scale up small-to-medium enterprises (SMEs) in the region.
The fund, which currently has a commitment of US$50 million with a target of US$150 million, represents the first of the partnerships targeted to be signed under OSP3.
Clayton acknowledged there is a funding gap for growth-stage startups and said that for a fund to address this need, the team needs to have “a combination of operational experience, [a] strong network in the region as well as connections into the places like Silicon Valley, where companies want to expand into South-East Asia or Asia, but don't know how.”
“The ability to speak the language of Silicon Valley is critical and Monk's Hill Ventures uniquely combines all the above characteristics in a single team,” he claimed.
Asked whether investments in the initial stages of the fund would lean more towards South-East Asian startups wanting to go global in initial stages or Silicon Valley startups wanting to break into Asian markets, Clayton said the focus would be on the former.
“We will be investing in both types of startups, with the South-East Asian startups accounting for a larger number of companies in [our] portfolio. We’re here to bridge the gap on both sides,” he added.
Clayton has been living in Asia for the last seven years and has witnessed the evolution of the region’s various startup ecosystems, and said that the biggest change to date is “the fact there are now VCs and investors.”
“There are easily over 10 times the number of startups as well. Today, there is a vibrant ecosystem growing at a rapid pace compared with seven years ago, when there were only a handful of VC-backed startups and hardly any VCs.
“We think this is only the beginning; it’s very exciting to see how far things have come in such a short amount of time. Everyone is bullish – and for good reason. Real companies are being built,” he added.
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