GGV launches second SEA fund, releases report on ecosystem

• SEA investments expected to grow like China in 2005 and India in 2010
• Continued focus on Internet, mobile startups targeting consumer and SMB markets

SINGAPORE-headquartered Golden Gate Ventures (GGV) has launched the US$50-million Golden Gate Ventures Fund II LP fund, its second for South-East Asian tech startups.
 
US$35 million came from a mix of international investors and advisors, including Temasek, Facebook cofounder Eduardo Saverin, and Monitor Capital Partners (a European multi-family office), GGV said in a statement.
 
Additional partners included Singapore’s National Research Foundation, Naver (the parent company of LINE messenger), and Far East Ventures (the venture capital arm of property developer Far East Organisation).
 
GGV also released its first-ever research report, on the region’s venture capital investment climate titled South-East Asia: The East’s Next Blockbuster Economy, which compared investment trends in South-East Asia to those of China and India and looks into the state of investment in the region.
 
The report posits that the number of deals and the investment climate in South-East Asia mirrors that of China and India in 2005 and 2010 respectively. Based on the analysis, South-East Asia is predicted to emerge as a foreign investment destination in 2016.
 
“If you’re looking to invest in Asia, China’s not only overpriced, but it’s starting to cool down,” said GGV managing partner Vinnie Lauria (pic).
 
“Earlier this month, the Chinese Securities Regulatory Commission went so far as to put a moratorium on tech IPOs (initial public offerings), an action that has since stunted as many as 28 IPOs.
 
“Meanwhile South-East Asia has explosive growth in development and investment at much lower valuations – it’s like going back in time and getting in on the ground floor of China’s tech scene,” he added.
 
Noting that the Association of South-East Asian Nations (Asean) is home to 600 million people and some of the fastest growing economies in the world, the research report also highlighted that the region will integrate under the Asean Economic Community (AEC) by the end of this year.
 
“Under the AEC, the region will be considered a single market with a single production base, with the result that it will have enhanced infrastructure and freer movement of goods, services, skilled labour, and capital,” it said.
 
“These factors all point to South-East Asia’s emergence as the third pillar of growth in Asia, after its predecessors China and India.
 
“… both in terms of the number of deals and the aggregate value of investment, the investment climate in South-East Asia mirrors that of China and India in these prior periods. The region is on track to hit US$83 million in total investments by the end of 2015.
 
“… South-East Asia will at least double the number of Series A investments in 2016 to 40, and reach a total Series A investment of at least US$120 million,” it added.
 
The research report was prepared by GGV analysts, with Raj Anmol Garg from the Delhi School of Economics; Ganesha Thirumurthi from Queen’s University; and Xiahua Wei from the University of Washington Bothell School of Business.
 
To download a copy of the report, click here.
 
Meanwhile, GGV said it has invested in more than 25 companies across seven countries in Asia.
 
These startups have in total created over 500 new jobs in the region and are projected to generate over US$60 million in revenue for 2015, it claimed.
 
“We’ve been quite fortunate with our companies to date,” said founding partner Jeffrey Paine (pic). “We’ve had no startups drop off the radar.”
 
Its portfolio companies include Ayannah, Bilna, Carousell, CodaPay, RedMart and TradeGecko.
 
The firm will continue to focus on Internet and mobile startups targeting the South-East Asian consumer and SMB (small and medium business) markets, in sectors such as e-commerce, payments, marketplaces, and SaaS (Software-as-a-Service) applications.
 
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