While there has been an overall decline in early-stage deals in Southeast Asia during the first nine months of 2022, most venture capitalists feel the region has largely managed to beat the global funding winter.
In a panel discussion titled “Are early-stage deals still hot amid funding winter?” at DealStreetAsia’s Asia PE-VC Summit 2022, Khailee Ng, managing partner of Palo Alto-based early-stage venture capital firm 500 Global, said the answer depends on the definition of ‘winter’.
Ng said his firm geared down its deal pace and started to astutely assess founders and their startups [in terms of quality] when COVID-19 reared up valuations in the sector last year.
“In the past two months and the next nine months, our target has gone up to 17 more new seed-stage investments because we do think the quality has increased and the valuation will start to come down,” Ng explained, adding that his firm will be announcing new funds in Southeast Asia this week.
500 Global, formerly known as 500 Startup, has been investing in tech companies globally, including Grab, Carousell and Canva.
Avina Sugiarto, partner at East Ventures, echoed Ng’s views that there is no such thing as winter in Southeast Asia as the Indonesia-focused venture capital firm is actively investing in early-stage startups in the region. Last year, the firm gobbled up 80 deals, which is equivalent to an average of one deal every four days.
“We see a slight slowdown in growth-stage investment. Though there is not very much of a down round, the verdict is yet to be out,” Sugiarto said. Giving a similar testimonial was Anup Jain, managing partner at India-headquartered Orios Venture Partners, who told DealStreetAsia that the company’s early-stage deals – up to Series A – in the first half of 2022 have actually increased. “We don’t actually see a winter though we expected a winter. What’s actually happening is the valuation has come off. There was a lot of money chasing a lot of founders but now that same money is chasing fewer founders,” Jain pointed out. “The dealmaking [this year] is much better than last year,” he said.
Pharmacy app Pharmeasy and car services provider GoMechanic are among the online platforms that have been backed by Orios Venture.
Jennifer Ho, partner at Integra Partners, said she hasn’t seen any drastic change in the way her firm approaches due diligence and thinks about valuations since her firm “didn’t ride the hype cycle up or down”.
Nevertheless, Ho pointed to big exits, a vibrant SPAC market and acquisition sprees by large tech companies as examples of what might influence the way the market reimagines exits and their returns in general.
The Southeast Asia-focused Integra Partners has been actively deploying its capital in fintech and healthtech startups such as Jirnexu and Flow. Ho reaffirmed that the fundamental driver of startups in the region is strong and will continue to be so.
