East Ventures raises US$27.5 mil fund for startups in SEA

  • Money raised from prominent family offices and entrepreneurs across continent
  • Expects more mergers and acquisitions in 2017 involving its portfolio companies

East Ventures raises US$27.5 mil fund for startups in SEA

 

SINGAPORE-based venture capital firm East Ventures announced today that it has raised a US$27.5 million fund for early-stage startups in Southeast Asia (SEA). This is the fifth East Ventures investment fund to date, and partners Willson Cuaca, Batara Eto, and Taiga Matsuyama, plan to deploy the capital to further their thematic investment thesis as the startup ecosystem matures.

The firm identifies technology verticals that are poised to expand in each market, then backs people whom it believes will be future leaders of the space. Once a clear category winner has been established, the firm will shift its focus to other parts of the value chain as the market matures. It focuses on commerce, social, games, SaaS, and mobile services.

With its new fund, East Ventures aims to ramp up activities and empower more first-time entrepreneurs. The firm wants to leverage technology to disrupt traditional industries, fill gaps in various verticals, increase stakeholders’ value, and ensure significant return on investment to its shareholders.

It expects leads to double for the year while the number of deals it does will remain the same. The firm believes there will be more mergers and acquisitions this year involving its portfolio companies. However, it feels that startups in the region can expect little activity in series B investments.

Identifying opportunities

According to Singapore state-investment firm Temasek Holdings, SEA is leading the growth of internet users in Asia with its internet economy projected to grow to more than US$200 billion by 2025. East Ventures has successfully contributed to Indonesia, one of fastest growing internet markets in the world, helping to build the startup ecosystem.

Anticipating the boom in SEA, East Ventures, with 80 active portfolio companies in the region, has earned itself the moniker as one of the most active startup investors in Asia. It also claims that assets under management in aggregate across the funds in SEA have increased ten-fold.

From 2015 to 2016 the firm’s inbound deal leads increased 133 percent from 331 to 774. Despite an increased inbound deal flow, East Ventures’ selectiveness has remained constant, investing in 2.5 percent of incoming leads in 2016. The firm has backed more than 20 startups per year and sees a follow-on investment rate of 75 percent.

The fund aims to shift its focus in verticals as the ecosystem matures and clear category winners, mostly backed by East Ventures, have emerged.

East Ventures focuses primarily on companies with strong founders that are in the idea/prototyping stages of their company building process or have a product with early traction. To date, the firm has made early-stage bets on fast-growing tech companies like Tech in Asia, Tokopedia, Traveloka, Kudo, Shopback, IDNTimes, Moka POS, Talenta, Jurnal, Jojonomic, Ralali, Popbox, Ruangguru, Cermati, 99co, Glints, and Omise.

East Ventures works closely with local and regional governments to help identify trends and opportunities in their respective technology sectors. This in turn fosters development in emerging markets. In Asia, East Ventures’ portfolio companies are spread out across Singapore, Indonesia, Malaysia, Thailand, and Japan.

Investing in people

Indonesia’s largest consumer-to-consumer (C2C) e-marketplace Tokopedia owes much of its success to East Ventures. Founder and CEO William Tanuwijaya says, “As East Ventures’ first investment, we have been in a relationship for seven years and can attest to their supportive and founder-friendly nature. Their loyalty to portfolio companies has built a vast portfolio network and helps build the network effect between entrepreneurs in the SEA startup community.”

Today, Tokopedia serves over one million online merchants and is considered the clear C2C e-commerce leader by many in Indonesia.

In the past, East Ventures has seen successful exits of seven portfolio companies. Groupon acquired Indonesian daily deals site Disdus in 2011, Korea’s Yello Mobile purchased price comparison site PriceArea in 2014, and Singapore-based media firm Migme bought up local fashion e-store Shopdeca in 2015. One of Indonesia’s largest media conglomerates bought up e-reader platform SCOOP in 2016.

Building an ecosystem

Besides making winning bets on breakout startups across the region, closer to home, East Ventures is also investing heavily in the archipelago’s ecosystem. It recently set up two co-working spaces in Jakarta under the name EV Hive (located strategically in South Jakarta and BSD City), which it also manages.

In less than two years, EV Hive has become one of the most high-traffic co-working spaces in Indonesia, as the venue hosts more than 100 public tech events every year, with an audience of more than 3,000 and speakers from various industries, startups, and corporates.

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