Startup ecosystem not as bullish now, but fresh capital is available, says panel

WITH inflationary pressures on the rise following the stock market meltdown and the Russia-Ukraine war, the startup ecosystem is not as bullish this year as it was last year, though startups can still tap the dry powder still readily available in South-east Asia, a panel of investors said at InnovFest x Elevating Founders, the official start-up event of Asia Tech x Singapore (ATxSG), this week.

Michael Lints, a partner at venture capital firm Golden Gate Ventures who took part in the discussion, said that the worldwide crisis has affected the way investors look at investing in early- and late-stage companies. 

He noted that 2021 had been a bullish year for the ecosystem, with companies raising funds at high valuations and quickly as well. “In 2021, the sky was not even the limit; you could go beyond,” he added.

This year, the sentiment has changed, he said. For example, some companies who had planned their initial public offering this year have pushed it to next year or the year after. He noted that there has also been talk about layoffs in the technology sector. 

However, Lints said he believes that startups in the region can still expect exciting times; several venture capitalists have raised fresh capital that they need to deploy this year, with Jungle Ventures’ recent US$600 million fund-raising as an example. 

In agreement with Lints, Michelle Ng, head of environmental, social and governance at Quest Ventures, also a venture capital firm, said she sees a lot of dry powder among venture capitalists, especially those in South-east Asia. 

“Whenever there is a crisis, an opportunity is presented,” Tony Heng, president of Stellar Lifestyle said.

He said that if startups focus on the right area and ride the wave, there are great opportunities for them to reach out to funds. 

The panel discussion on Wednesday (Jun 1) was titled “Courage, ambition and boldness: What has the Year of the Tiger brought to the investment landscape in South-east Asia so far?”. The panel, comprising Lints, Ng and Heng, discussed upcoming startup trends, opportunities for startups as well as startup growth in the current landscape. 

SEE ALSO

Vietnam's Med247 raises US$4.5m from Koh Boon Hwee-led fund, biotech Mirxes

Singapore-based Jungle Ventures closes US$600m fund, crosses US$1b AUM

Golden Gate Ventures to open 2 new offices in Vietnam

Ng noted that the bulk of funds in South-east Asia are in Singapore and Indonesia, but that Vietnam also held “tremendous opportunity”. Between 2017 and 2021, funding in Vietnam grew from US$40 million to US$2.1 billion; these funds are from returning Vietnamese raising funds in their home country, as well as regional investors investing in the country’s startups.

Lints also named Vietnam as an up-and-coming hot market, driven by capital coming in from Japanese and Korean corporations with headquarters in Vietnam. The early-stage market in the country is active and vibrant, he noted.

This comes as Golden Gate Ventures sets up 2 new offices in Vietnam. Lints said the firm is bullish on Vietnam for the longer term, although it is incomparable to Indonesia at the moment.

*Amendment note: An earlier version of this story said the panel discussion was part of the Asia Tech X Singapore (ATxSG) event. It is in fact a session that occurred under InnovFest x Elevating Founders, the official start-up event of ATxSG. The story also said Tony Heng was the president of SMRT Corporation. He is in fact the president of Stellar Lifestyle.  The article has been amended to reflect these changes.