New Startup Sectors Gain Ground As Venture Capital Firms Fill Up Coffers

Singapore Business Review|April-Jun 2020

New Startup Sectors Gain Ground As Venture Capital Firms Fill Up Coffers
Specialised funds are growing larger than ever, but where does the money go?

Venture capitalists’ long-running efforts towards launching funds for emerging startup segments are paying off as rounds grow larger. By the time native venture capital (VC) firm Jungle Ventures launched its newest fund (and its third in Southeast Asia), it had already pumped up its targets to $286.64m (US$200m)—significantly larger than the targets it had for its first fund in 2012: $14.33m (US$10m). In April 2019, it successfully breached this target and closed the round with a whopping $343.96m (US$240m).

Jungle Ventures’ latest round is one of Singapore’s largest for 2019 and highlights how VC firms are pushing their funding goals further than ever. But a question remains: where does the money from these big rounds go?

According to Valmiki Nair, partner at Dentons Rodyk, startups in fintech, payment services, B2B, and digital tech are getting the most attention from these funds. This is reflected in the data aggregated by Enterprise Singapore (ESG) which showed that for the first three quarters of 2019, digital tech startups clinched 93.2% of the $13.4b deployed towards startups, accounting for 278 deals, up from 145 deals in the same period last year.

Notably, by the time Jungle Ventures III closed, it had already invested in Indonesian beauty e-commerce and social platform Sociolla ($57m or US$40m, series D), Vietnamese point-of-sale software provider KiotViet ($8.56m or US$6m, series A), Jakarta-based logistics platform Waresix ($20.68m or US$14.5m, series A), and AI startup Engineer.ai.

But the capital does not only flow to these popular segments, as other investment areas have emerged as well. Nair noted that logistics and healthcare are two sectors that have attracted significantly more interest.

Notably, Reefknot Investments’ new $69m fund for logistics and supply chain startups is especially interested in companies that are using AI or deep mind tech, digital logistics, and trade finance to solve problems that range from analysing supply chain data to managing the risk of financing trade transactions.

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April-Jun 2020