Singapore’s US$96mil bid to address Series A crunch
By Karamjit Singh April 23, 2014
- Singapore govt picks 6 VCs to launch 1:1 matching fund
- Golden Gate Ventures to announce matching investors soon
IN 2010 Vinnie Lauria (pic), founding partner at Golden Gate Ventures, a Singapore-based regional venture fund with strong Silicon Valley links, travelled across Asia and met over 80 startups.
All of them posed the same question, he recalls: “How do I raise money?”
Golden Gate Ventures was created to solve that problem.
Today, after incubating 18 companies from six countries in Asia which created 338 new jobs in 2013 with revenue of US$19.5 million (RM63.7 million), Golden Gate Ventures is taking it up a notch.
[Correction: The revenue was incorrectly referenced in Singapore dollars earlier.]
It has become one of six venture capital (VC) firms chosen, from 32 proposals, by the Singapore Government to help tackle the dreaded Series A crunch.
Under a scheme the Government calls the Early Stage Venture Fund (ESVF), run by the National Research Foundation (NRF) which sits under the Prime Minister’s Office, NRF will invest S$10 million (US$8 million) on a one-to-one matching basis in each of the six VC funds.
This round will capitalise a total fund size of S$120 million (US$95.6 million) for early stage investments. Besides Golden Gate Ventures, the other five VC are Jungle Ventures, SBI Ven Capital, Walden International, New Asia Investments and Monk’s Hill Ventures.
As is typical for Singapore Government funding for tech companies, eligible companies just need to be based in the island-republic, and need not be owned by Singaporeans.
Golden Gate Ventures will be creating a separate fund for this purpose. What’s exciting for Lauria is that it already has more than S$10 million committed.
“About one-third is from Silicon Valley, one-third from Asia and one-third from Europe,” he told Digital News Asia (DNA) via email. Announcements of who the funders are will be forthcoming over the next one to two months.
Lauria said that previous investors from Silicon Valley include Partech Ventures, i/o Ventures, 500 Startups, and some notable angels such as Russ Simmons (Paypal Mafia) and Aaron Patzer (founder of mint.com).
When asked if the fund size was too small, given that Malaysia's GrabTaxi is reported to have raised over US$10 million for its Series A last month while Singapore's TradeHero raised US$10 million in its Series A last year, Lauria said he felt that these were the exceptions to the rule.
“Many companies here raising Series A are raising S$2-5 million. For instance, RedMart's Series A was US$3.4 million, and Coda's Series A was US$2.3 million,” he said.
Meanwhile in an official statement, NRF chief executive officer Professor Low Teck Seng said, “We recognise that it is very competitive for high-tech startups to secure follow-on financing as they have to fight with the best in the region to get VCs’ attention.
“Through this investment, the Singapore Government is addressing the gap in Series A funding, which is critical in sustaining the rapid growth of startups beyond the seed stage.
“With their expertise and savvy investments, VCs will help commercialise promising technologies into innovative products,” said the Johor-born Low.
The investment by the Singapore Government mirrors a similar initiative by the Malaysian Government which has committed up to US$100 million (RM327 million) in funding to co-invest in four VC funds.
The difference with the Malaysian approach is that the four VC’s are to be spinoffs from its existing anchor VC, Malaysian Venture Capital Management Bhd or Mavcap.
So far only one US$50 million fund has been created, with Mavcap co-investing US$25 million, and is due to be announced on April 25 at the official launch of the Malaysian Global Innovation and Creativity Centre (MaGIC).
On the timing of the funding, Lauria cited as factors the rising income levels in South-East Asia; the rapid digital consumption of services and goods that has led to US$500 million in investments; and strong support by the Singapore Government for startups as.
“And even more important, finally South-East Asia is now beginning to see exits and strategic acquisitions that are fostering even more attention, both from entrepreneurs and investors looking to profit,” he said.
Lauria pointed to sgCarMart that was acquired for US$48 million, Viki by Rakuten for US$200 million, JobStreet for US$524 million; Reebonz which raised US$40 million, and the US$120 million that was recently raised by Malaysia’s MOL Global Pte Ltd.
“With the advent of strategic acquirers, such as the iProperty Group in Malaysia, and Rocket Internet from Europe, high growth investments and acquisition activity will continue to rise,” he said.
“I feel quite fortunate to be riding a wave that’s taking over the region,” he added.
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