FRESH from raising US$240 million for its third fund, Jungle Ventures is on the prowl for South-east Asian startups that meet the region's digitalisation and data privacy needs, the firm's co-founder and managing partner Amit Anand told The Business Times.
On Wednesday, Jungle announced the final close of its third fund, which, at US$240 million, exceeds the original US$200 million target. The fund had hit a first close of US$175 million back in April. Institutional investors contributed over 90 per cent of the capital, including Singapore's Temasek, German development finance institution DEG, Dutch development bank FMO and IFC, a member of the World Bank Group. More than half of the capital is from outside Asia.
The blockbuster raise signals strong institutional demand for South-east Asian startups. Jungle previously raised US$12 million for its first fund and US$100 million for its second fund in 2012 and 2016 respectively.
Foreign institutional investors have tracked South-east Asia for the past few years, and are now confident enough to take the leap, Mr Anand said. "These are institutional players; they want to give you money (only) when they think there are no cowboys at work. A lot of institutional investors have been keen on the region but were waiting for the ecosystem to get a bit more mature," he said.
But is it too late for institutional players to pump more funds? While acknowledging that seed stage valuations are getting expensive, Mr Anand said that valuations are still reasonable at the Series A and B stages. "I'm hearing a lot of companies at seed stage getting random investments at random valuations; I would say it seems like there's too much going on there. (But) Series A and Series B haven't seen a major change in valuations. Compared to what we were investing in four years ago, there's maybe a 10 per cent increase in the valuations - which is fair," he said.
And while the capital influx has intensified competition among South-east Asian startups, Mr Anand posits that the region is still not as saturated as other markets such as India.
"I keep telling my LPs, I think this is one of the best markets in the world to create alpha, because of low competitive intensity, very young demographic, growing per capita GDP - why would you not put money in it?" he added.
Other investors' in Jungle's third fund include corporate venture capital arms of US tech giant Cisco and Thailand's Bangkok Bank, the family office of Wilmar International chief Kuok Khoon Hong, as well as endowments, fund of funds and other family offices.
Jungle plans to make about 15 investments out of the third fund. It has already invested in five startups, three of which are in Indonesia: beauty e-commerce site Sociolla, photography booking platform SweetEscape and logistics startup WareSix. The others are point-of-sales software provider KiotViet in Vietnam and Indian artificial intelligence startup Engineer.ai.
With the new fund, Jungle is eyeing investments related to the growing need for data privacy and compliance, on government, corporate and even an individual level, Mr Anand said. In the coming weeks, the firm is set to close an investment in a Singapore-based startup related to this field, he revealed.
Another trend Jungle is watching is the pressing need for South-east Asia's sprawl of small and medium-sized enterprises (SMEs) to go digital. Several of Jungle's investments already speak to this trend, such as Singapore-based Deskera, which provides cloud solutions for SMEs. A more recent example is KiotViet, which aims to bring its store management services to SMEs and microbusinesses in remote areas of Vietnam.
Beyond broad trends, Jungle also pays attention to fundamentals and corporate governance, Mr Anand emphasised. As an active investor, Jungle ensures that it gets a board seat on all its portfolio companies and has visibility into the kind of margins they generate.
"It's very important to us to look for companies that can grow organically and don't need a lot of capital to grow. Our capital typically gets used to build teams, to do market expansion and not to subsidise users or supply," he said.