S-E Asia venture playground still has room for new entrants: VCs

EVEN with the influx of venture money into South-east Asia, the funding scene here still has key gaps that offer opportunities for both incumbents and new entrants, said venture capitalists who spoke at a panel at the Innovfest Unbound conference on Friday. 

Nikhil Kapur, partner at venture firm STRIVE, noted that there is still a gap in the early-stage funding landscape. He was responding to a question from moderator Liu Genping, partner at Vertex Ventures, if the Venture Capital (VC) scene here is getting crowded.

"I think there definitely is a lot of capital now...and there are many more new fund managers who are coming up. But the demand has actually outstripped the supply, and I think there are a lot of people who are still finding it difficult to raise their seed round... We will see a lot more capital coming in in the future," he said. 

In particular, there is still a shortage of angel investors in South-east Asia, Mr Kapur added. "There are mainly three to four angel investors... who are top-of-mind for founders to go to. Whereas in India and even other markets like China and the US, there are so many more angels who are active in the ecosystem. 

"I'm talking about professional angels who do this as a side job... rather than just throwing money (at) the company. That's definitely a gap we see in the market, that there's not enough strong capital in the very early stage of the company," he added.  

From Wavemaker Partners' perspective, many South-east Asian startups in fact serve a global customer base, creating many opportunities for investors, said the firm's operating partner Sui Ling Cheah. 

"The field has actually broadened quite significantly. We look at startups that are building products for the globe, not just for South-east Asia... We've got companies based in Singapore that are servicing the largest companies outside... We are looking at many world-class technologies and companies," she said. 

When asked for his outlook on the landscape in the next year, Abheek Anand, managing director at Sequoia Capital, emphasised on taking a more broad-based approach in assessing startups in the region, instead of focusing on specific sectors. 

"Is this a market that is going to be large enough to produce an outsized company? And is this a founder who has a unique insight and is particularly well-equipped to solve this particular problem? If you go in with that lens, then any company that you are meeting becomes relevant. 

"If you go in with the lens that you are only going to invest in AI companies or blockchain companies, then you end up missing some of the things.

"The most interesting companies are the ones that are very hard to predict. So from our perspective, going in with a first-principles approach to every conversation, and not being judged by what we like and what sectors we dislike is critical. Otherwise, we risk missing the most important companies of the future," he added.