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B Capital raises US$360m to invest in tech-enabled small businesses

Global venture capital firm looking to invest in entrepreneurial companies with global-first mindset

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From left: B Capital partners Gavin Teo, Kabir Narang and Eduardo Saverin. Mr Saverin says there is tremendous growth potential in Asia for "technology-enabled'' financial services, healthcare, industrial logistics and consumer enablement.

Singapore

B CAPITAL Group, a global venture capital firm co-founded by Facebook co-founder Eduardo Saverin, has raised US$360 million at the final close of its fund, substantially exceeding its original target.

Investors comprise a mixture of institutions including pension funds, banks and insurance companies, as well as family offices.

Mr Saverin told The Business Times the fund is looking to invest in entrepreneurial companies with a "global-first'' mindset.

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It aims to invest in the "technology-enabled'' areas of financial services, healthcare, industrial logistics and consumer enablement - all areas where there is tremendous growth potential in Asia.

Portfolio companies include Mswipe Technologies, India's largest independent merchant acquirer and point-of-sale network provider; and Ninja Van, a Singapore-based logistics firm with a regional presence. Recently it announced an investment in Capital Match Holdings, a regional fintech firm which operates a platform for invoice financing and secured lending.

Said Mr Saverin: "We're not just investors passively backing the entrepreneur. We're business builders ... rolling up our sleeves, and helping these companies scale on a global level.''

B Capital's vision is to help bridge the gap between innovative entrepreneurs who need resources, and corporations which seek to innovate and partner companies with emerging technologies.

"It's going away from the idea of people in a dorm room or incubation space trying to disrupt the businesses of this world, but that same group of individuals building phenomenal technology, leveraging the distribution network, the regulatory know-how of the largest businesses of the world to scale their growth.''

B Capital is founded in partnership with The Boston Consulting Group. This enables it to match cutting edge startups with top corporations, platforms and brands. It has offices in Los Angeles, San Francisco, New York and Singapore.

It focuses on providing B and C Series funding to companies which already have a product and generate revenues, rather than early seed-stage financing.

B Capital partner Kabir Narang said valuations have started to stabilise. "That's good news for us... There is a big gap in B and C Series funding. That's why it's a very interesting time for us, a happy hunting ground where you can see some level of traction to evaluate companies, with the ability to compare and contrast entrepreneurs and their (business) models.

"I think it's a great time. Series B and C are an attractive entry point for us.''

Gavin Teo, also a partner, said it is also a good time in the macroeconomic cycle, when corporates are sitting on cash and reporting a "bumper crop'' in profitability. (See amendment)

"The combination of high profits and low corporate taxes mean there is a lot of cash on balance sheets for the types of companies we bring to bear as partners for the portfolio companies we invest in. This is a good time to invest, but also a good time to look at potential exits in the next 18 months as we're at a point of the cycle where a lot of companies will be looking to buy growth inorganically.''

B Capital expects to invest up to US$20 million in each portfolio company, including reserves for future growth funding.

Mr Saverin believes "tech enablement'' of the world has a very long runway.

"We're less than 1 per cent of the way in terms of how technology is enabling society. If you think about large businesses that have come to bear on the technology side, like Google and Facebook, both of those started targeting an advertising market in its early days which is meaningfully smaller than the types of markets that the companies we invest in today are tackling - healthcare, financial services, logistics. These are massive industries.

"We believe in our strong hypothesis that companies will partner earlier and earlier with large businesses, versus simply disrupt. They will transform in collaborative fashion. They lend themselves in my view to the opportunity for us to see companies even much bigger than what we see today in the tech space. Tech enablement of the world is only scratching the surface.''

Amendment: The correct name is Gavin Teo, not Gavin Tan. The article has been amended to reflect this.

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