E-102: What’s Buzzing in Southeast Asian Investor Ecosystem

It is proving quite challenging for private equity players focused on Southeast Asia to raise funds.

So far, this year, only one fund—Thailand's 9Basil Group—has been able to do the final close of its Southeast Asia-focused vehicle, as per a recent report by DealStreet Asia, compared to seven PE funds that hit the final close in 2023. Meanwhile, four such PE funds have secured interim closes, as of mid-September 2024.

However, the situation isn’t too grim, thanks to the global PE funds that also look at Southeast Asia. At least 14 regional and global funds with minority allocations to Southeast Asia closed so far in 2024, raising a total of US$43.6 billion. For context, in H2 2023, 13 such funds closed raising US$43.8 billion. US-based CVC Capital Partners closed the largest global fund with a partial focus on Southeast Asia this year, raising US$6.8 billion for its sixth Asia fund.

Then there are plenty of PE funds out in the market raising capital—37 open global and pan-regional funds with minority allocations to Southeast Asia and at least 28 Southeast Asia-focused PE funds. Cumulatively, they aim to raise nearly US$40 billion. 

Interestingly, PE funds in Southeast Asia are focused on growth capital primarily. For context, Southeast Asia-focused PE firms raised US$10.4 billion over the past five years. Of this, 86% of the capital was earmarked for growth capital investments, according to the report.

This sends a clear signal—there is a strong demand for growth capital as the regional startup and tech ecosystem evolves.  

On the brighter side, family offices in the Asia Pacific region seem upbeat. 

A new report jointly released by Deloitte Private and Raffles Family Office, based on the survey of  89 regional single-family offices, found that despite geopolitical instability and uncertain market conditions, this year, 84% of Asia Pacific family offices expect an increase in the family’s wealth and 77% expect to see their assets under management rise.  

These family offices, on average, allocate 68% of their portfolio to investments in the Asia Pacific, while the rest goes outside the region. This year, their investment levels in Asia Pacific and Europe are expected to largely remain consistent, whereas 23% of family offices may allocate a bit more to North America and the Middle East.

On the flip side, Asia Pacific has become a popular investment destination for global family offices, with an average of 20% of family offices worldwide planning to expand their portfolios in the region this year.

Interestingly, many family offices in the Asia Pacific have shifted toward more growth-oriented investments. According to the report, last year the top asset classes for regional family offices were public equities (25%), private equity and private debt/lending (21%), real estate (19%), and fixed income (19%). This year, APAC family offices are leaning more toward developed and developing market equities, real estate, hedge funds, and cryptocurrencies or digital assets.

Speaking of family offices, this space is quite buzzing this week. 

Venture Studio Family, a paid online community for startup studios, venture studios, and venture builders, is hosting the 𝐀𝐏𝐀𝐂 𝐅𝐚𝐦𝐢𝐥𝐲 𝐎𝐟𝐟𝐢𝐜𝐞 & 𝐕𝐂 𝐎𝐧𝐥𝐢𝐧𝐞 𝐂𝐨𝐧𝐟 on Sept 20th. More than 500 family offices, VCs, and venture studios from Southeast Asia, India, China, South Korea, Taiwan, Hong Kong, Australia, and New Zealand are expected to attend the event.

The discussions will focus on dynamics between general partners and limited partners, with topics ranging from how family offices evaluate startups and venture funds for investment to venture capital trends in APAC.

On that note, let’s dive into this week’s recap.

Buzzing Deals

➤ Indonesia-based natural climate solutions developer CarbonEthics raised a US$2.1 million seed round led by Intudo Ventures. Founded in May 2019, CarbonEthics specializes in restoring natural ecosystems while assisting businesses in their decarbonization journey. It focuses on nature-based carbon projects, tree planting, ecosystem rehabilitation, and carbon consultancy. The recent funding will enable the company to acquire more carbon projects and involve additional technical experts. By 2030, CarbonEthics aims to manage 8 million hectares of land. 

➤ Jakarta-based aquaculture company Delos secured undisclosed funding in the first close of its Series A round, led by Monk’s Hill Ventures. Founded in 2021, Delos offers two main products: AquaHero, a farm management app that uses water quality data to predict and reduce harvest risk, increase yields, and maintain profitability; and AquaLink, a harvesting and logistics platform to oversee seafood supply across the value chain. The company plans to use the funding for product development. The new investment is expected to catalyze Delos's plans to enter Japan and the U.S. by next year. 

➤ Singapore-based early-stage VC Wavemaker Partners just wrote a US$1.6 million seed check for Checkmate, a New Zealand-based pre-employment screening solutions provider. Founded in 2019, Checkmate offers easy-to-use online reference checking and background screening tools to simplify the hiring process for organizations. The startup plans to use the fresh money to support its expansion into the United States and Southeast Asia, particularly the Philippines, as well as to improve its tech infrastructure.

➤ Singapore’s Wavemaker Partners and 500 Global recently invested US$2 million in seed funding for Tour Amigo, an Australian travel tech company. Tour Amigo is a SaaS platform offering tours, destination management, and cruises through a B2B AI-driven marketplace that enables suppliers and resellers to integrate, connect, and promote their products. The company will use the new funds to develop its business, reservation, and operational software solutions tailored for multi-day tour operators and travel agencies. 

➤ South Korean content streaming company Spoon Labs bagged KRW 120 billion (US$89.3 million) in strategic investment from Krafton. This is Krafton’s largest investment to date in a non-gaming area. Seoul-based Spoon Labs owns an audio platform called Spoon and recently launched a service dedicated to short-form videos called Vigloo, focused on K-drama. With fresh money in the kitty, the company wants to establish a new international standard in the short-form drama sector and enter the US and Japanese markets soon.

Green Push For Southeast Asia

➤ Indonesia plans to establish a US$65 billion green fund by 2028 through the sale of carbon credits, both domestically and internationally. The fund's primary goal is to support environmental projects such as rainforest preservation, reforestation, and mangrove restoration. To oversee carbon emissions and manage this initiative—aligning with Indonesia's commitment to the Paris Agreement—a new regulator will be formed. This regulator will create a "special mission vehicle" responsible for managing carbon offset projects. Leveraging its vast natural resources, this ambitious plan aims to help Indonesia—one of the top 10 global emitters and home to the world's third-largest tropical rainforest—achieve net carbon neutrality by 2060.

➤ Vietnam-based private equity firm Mekong Capital has received a proof of concept grant from global blended finance network Convergence for its proposed US$200 million climate impact fund. This multimillion-dollar blended finance project aims to provide growth-stage funding and technical assistance to regenerative agriculture and sustainable land use businesses in the Lower Mekong region, which faces significant shifts in agricultural practices due to climate-related risks. It seeks to foster a thriving, biodiverse ecosystem in Cambodia, Laos, and Vietnam through sustainable land use, nature-based solutions, and regenerative farming practices.

➤ Malaysia-based renewable energy firm Samaiden Group Berhad has signed an agreement with Indonesia's PT MCS Bina Energi to establish a joint venture (JV) in Indonesia. The JV will have authorized capital of IDR 10 billion (US$651,466), with Samaiden holding 70% and MCS owning 30%. This partnership enables Samaiden to expand into Indonesia by leveraging MCS's extensive local business network. The JV will undertake renewable energy initiatives, including developing solar photovoltaic systems, power plants, build-own-operate-transfer projects, and offering consulting services.

What Else Stood Out

➤ As many as 40 PE and VC firms, including Do Ventures, Golden Gate Ventures, and Mekong Capital, have come together to form the Vietnam Private Capital Agency (VPCA), which aims to channel US$35 billion into private investments in Vietnam by 2035. Their objectives are to fuel economic growth and entrepreneurial development, enhance Vietnam's position in the global investment arena, and promote best practices in the country’s VC and PE sectors.

➤ Temasek-backed 65 Equity Partners has completed a significant minority investment in Kendra Scott Design, a U.S.-based lifestyle and accessories brand. Co-investors in the transaction include HPS Investment Partners and Belzberg & Co. Following the deal, founder Kendra Scott will retain a majority stake in the company. Founded in 2002, Kendra Scott Design has become a celebrated brand, which has experienced remarkable growth by staying attuned to evolving market demands and consumer trends.

And that’s the wrap for this edition of #ICYMI, our weekly curated highlights from the Asian tech ecosystem. Subscribe to receive it every Thursday and stay updated on the noteworthy tech developments you might have missed during the week. Like this newsletter? Share it with your friends and colleagues here.