A NEW US$75 million venture fund has been launched by global investment firm Catcha Group to support growth-stage companies dabbling in new media, mobile and technology in South-east Asia, seeking to plug the current gap in the availability of growth funds here.
The fund, managed by Catcha Group's newly minted venture capital arm, Catcha Ventures, will be based in Singapore and Kuala Lumpur.
To date, some US$30 million has been raised, Patrick Grove, chief executive officer of Catcha Group, told The Business Times, and each time, US$2-6 million will be invested in each company in return for an equity stake of 25-50 per cent.
While Catcha Group has traditionally focused on majority stake ownership with significant operational control, Mr Grove said that Catcha Ventures will look at minority interest opportunities in growth-stage companies.
"We want companies that have already been built . . . with a proven business model and paying customers. They can be one to two years old, and are typically looking to expand regionally."
Mr Grove added that challenges faced by growth-stage companies are inherently different from that of early-stage startups. These include rapid revenue and customer growth, establishing and scaling effective systems, and dealing with market competition.
Catcha Ventures' role then, is to partner such companies to help them through this "pivotal phase".
"Because of our entrepreneurial backgrounds and experience in guiding companies at every stage - from startup to IPO - we can tell them what to do, or better yet, what not to do," said Mr Grove.
For instance, he said, it would be a mistake for a company looking at overseas expansion to launch its offerings in five new cities at once. Also, if it were torn between hiring someone with ability and another with good work ethics, it is always wiser to go with the latter.
"Get the person with the right attitude on the team first. He may start off doing almost everything - as per the case in many startups - but he will eventually mould into a role he is best suited for," said Mr Grove.
Catcha Group, since its founding in 2004, has led four portfolio companies - iProperty, iCarAsia, (Singapore-headquartered) iBuy and Rev Asia - from startup to IPO. The first three are listed in Australia, while Rev Asia is Malaysia-listed.
On the lack of support for growth-stage businesses here, Mr Grove said: "It comes down to experience. There aren't enough successes or case studies here, unlike in the US. Not many people here can comprehend the amount of money needed to grow a tech business, or appreciate the huge value a tech business can bring. It took Google five years, for instance, to be profitable.
But Singapore is getting there; more investors are getting educated on tech businesses and their appetite for such ventures is growing, he said.
Vinnie Lauria, general partner at Golden Gate Ventures, an early-stage venture capital firm with offices in Singapore and Silicon Valley, said: "There aren't enough companies here that are in their growth phase too. This was why GrabTaxi and RedMart had to bring in foreign investors."
Other growth-stage fund managers here include Temasek's Vertex Venture Holdings and Beverly Hills-based Velos Partners.