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HomeEconomyFunds flock to Southeast Asian startups as China loses sheen

Funds flock to Southeast Asian startups as China loses sheen

Startups in Southeast Asia booming fundraiser By venture funds and buyout funds that pursue greater returns and turn their backs on investment regulatory chaos of china marketat risk of slow growth.

companies such as Insignia Ventures Partners and supported by Softbank East Ventures With 650 million people in the region using digital platforms, it is one of the companies that has raised a total of billions of dollars for startups in the past year.

“Some of the world’s largest financial institutions are coming up with strategies to invest and deploy capital in regions like Southeast Asia, which will absorb large enough checks six to seven years ago. We might not even have the ability,” said Vishal Harnal. is the managing partner of Venture Fund 500 Global, where he has $2.8 billion in assets.

Harnal is one of many investors in Singapore this week at SuperReturn Asia, the private equity and venture capital conference, where Southeast Asia tops the investment rankings.

Joel Sickens, co-managing partner at TPG Capital Asia, told Reuters, “The demand for India and Southeast Asia is much higher today.

Southeast Asia’s internet economy, led by Indonesia, is expected to double from an estimated total merchandise volume of $174 billion at the end of 2021 to $363 billion by 2025, Google, Temasek and Bain & Company said. A report is cited.

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Ride hailing and food delivery company Grab Holdings went public on the Nasdaq in December following a $40 billion merger, while Indonesian rival GoTo raised $1.1 billion in a domestic listing this year.

Digital financial services group Fazz raised $100 million this month, and Indonesia’s Xendit announced a $300 million round of funding in May, calling itself an alternative to Southeast Asian payment processor Stripe.

Enthusiasm continues despite startup due diligence taking months while valuations are under pressure, investors say.

Noting that many institutional investors who have been slow to help Chinese entrepreneurs and missed out on “tremendous” returns are driven by a “fear of missing out”, Harnall said, “better words If you want FOMO, there is also FOMO,” he added.

Diversification from China

Southeast Asia has benefited from Beijing’s stringent lockdown and other measures to curb COVID-19 in China and Hong Kong.

But despite the diversification of funds, investors say a one-size-fits-all investment strategy is not ideal because the markets in the region are so different.

“It’s not that they don’t believe in China, they’re just reducing their exposure,” said Tan Kok Yu, founding chairman of Affinity Equity Partners.

“Where can they go? One area I always notice that everyone is very interested in is Southeast Asia. Unfortunately, it is the least penetrated market. ”

Registered to participate in the SuperReturn event were 500 so-called limited partners that provide capital to investors such as the Houston Firefighters Relief and Retirement Fund and nearly 700 venture and buyout firms such as Schroders Capital and China. was the family of office.

Despite all the interest, there may still be avenues for funding in the region.

“There are still individual cities in the US where startups raise more money than all startups in Southeast Asia,” said Julie Ruvolo, managing director of venture capital at the Global Private Capital Association. rice field. .

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