Growth investor B Capital goes upstream with close of US$250m early-stage fund
B CAPITAL, the technology-investment firm co-founded by Facebook’s Eduardo Saverin, wants to become a “lifecycle investor”.
B Capital typically backs mature startups at the Series B, C and D stages, where companies have mostly figured out their business model and have steady sources of revenue.
For the first time though, the firm has closed a US$250 million fund dedicated to early-stage investments globally. The fund, Ascent Fund II, will invest in seed and Series A rounds, with average cheque sizes ranging from US$500,000 to US$10 million. Its focus is on the US and Asia.
As with B Capital’s growth-stage funds, Ascent will primarily look at opportunities in fintech, enterprise software and digital healthcare. The firm is also interested in “enabler” companies in South-east Asia and India, such as logistics startups that support the growth of commerce, said partner Karan Mohla.
B Capital, which manages US$6.5 billion in assets, has backed some of South-east Asia’s fastest-growing companies, including logistics unicorn Ninja Van and Indonesian coffee chain Kopi Kenangan.
The firm will, however, be investing amid a volatile environment that has prompted some venture capitalists to hold back on funding or impose tighter conditions on startups approaching them for deals.
Valuations are taking a much larger correction in the US, with India coming in a distant second. Indonesia, Vietnam and Singapore are currently less impacted, said Mohla. He believes that while a correction is still likely to happen, the vast amount of capital raised for the region will cushion some of it.
“The real test will come in the next 6 to 12 months, when a lot of companies that raised seed and Series A rounds in the late part of last year and the early part of this year go on to raise the next round. I think that’s where the rubber really meets the road.”
B Capital is paying attention to the effect of rising interest rates on startups. “Any sectors that are directly impacted by the increased rates of lending, where the businesses (could have their interest margins affected) – I think we’d want to see how that kind of settles down,” said Mohla.
He has been dedicating a lot of time to understanding how fintech businesses build their credit-scoring capabilities and develop risk-management strategies. B Capital has been wary of startups without enough expertise to do that, he said.
Ascent’s first fund was a partner fund, which used capital from the firm’s partners. That inspired the firm to then accept capital from external investors.
The Ascent team was founded by B Capital chairman and general partner (GP) Howard Morgan, the American venture capitalist behind seed investor First Round Capital. The other founders include Saverin and Mohla, and GPs Gabe Greenbaum and Karen Page.
“Our belief is that as a globally integrated firm, if you have that institutional knowledge early, and you have the platform team to support it and a partnership with BCG (Boston Consulting Group), it just makes all the sense in the world to be a lifecycle investor for the best founders,” said Mohla.
B Capital is raising its third global fund for growth investments after closing its second fund at US$820 million in 2020. It briefly ventured into the public market last year after filing to launch a special-purpose acquisition company (SPAC) in the US, though plans were withdrawn in May after the SPAC market soured.
