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50 hot startups 2017

VC investors make a beeline to Singapore

The Singapore government’s Singapore Variable Capital Companies (SVCC) legislation, introduced last year, has also acted as a major incentive for fund managers.
New Delhi: A clutch of new investors focused on the Indian and Southeast Asian startup ecosystem is making Singapore their base, looking to take advantage of the city state’s regulatory regime and its positioning as a gateway to both regions.

Flipkart co-founder Binny Bansal, who recently relocated to Singapore, is reportedly setting up a $300-400 million venture capital fund with a focus on startups across India and Southeast Asia, although he has yet to comment publicly on his upcoming fund.

Another fund manager, Nicholas Cator, earlier this year launched Venturi Partners, a mid-stage investment firm that will look to invest across Asia’s third-largest economy and the broader Asean region. Cator was till recently leading the India investments of Verlinvest, the Belgium-based investment holding company created by the founding families of Anheuser-Busch InBev.

Others, such as Tanglin Venture Partners — set up by former Tiger Global Management executive Ravi Venkatesh and Edwina Yeo earlier this year — have also based themselves in the city-state.

India continues to be the core focus area for most of these fund managers, but they do not want to lose out on opportunities in SE Asia, particularly in markets such as Indonesia and the broader Asean region, where the GDP per capita is almost double that of India, and where the markets are getting stronger with greater mobile penetration.

“For funds that are not single-country focused, it makes sense to be placed in a location that’s really quite unique, and that’s what Singapore offers. It’s recognised by investors to be a regime of trust… This is because of tax or double tax treaty reasons, ease of moving around or even because of the talent that’s here,” Cator said.

Cator, who led Verlinvest’s investments in domestic companies such as educational technology leader Byju’s, condiments maker Veeba and fresh goods-focused Epigamia, set up Venturi Partners, which will look to make Series B and Series C investments ranging between $10 million and $25 million.

The Singapore government’s Singapore Variable Capital Companies (SVCC) legislation, introduced last year, has also acted as a major incentive for fund managers.

“You know how the government here works. Once they have a vision of what’s going to work, it will put all resources towards making it work very quickly,” Cator said.

VCC is a new legal entity form or structure for all types of investment funds in Singapore. It can be formed as a single standalone fund, or as an umbrella fund with two or more subfunds, each holding different assets.

“The Monetary Authority of Singapore has made it very attractive to set up funds and fund management companies. The new licence regime, Venture Capital Fund Manager (VCFM), allows new fund managers to get management licences because the government has publicly said they want to make Singapore the investment hub for the region,” Deepak Shahdadpuri, managing director of DSG Consumer Partners, said.

The new investors are also following a route taken by leading venture capital fund Sequoia Capital, which saw its managing director Shailendra Singh also shift base to Singapore a few years ago to drive the firm’s investment strategy.

Sequoia, which continues to invest in the Southeast Asia region through its India fund, has invested in consumer internet unicorns Tokopedia and Gojek since then.

Another blue-chip investment firm, Accel Partners, which recently raised a $450-million fund, is also reportedly eyeing Southeast Asia from its latest fund.

“Singapore is the highway to the rest of Southeast Asia. The quality of entrepreneurs and the quantity of companies that we’re seeing here is significantly higher than the rest of SE Asia…As a market, Singapore’s certainly not the largest, but if you look at it, Facebook, which is based in the Bay Area, has its largest growth market in Indonesia,” Anurag Srivastava, managing partner at Jungle Partners, said.

Srivastava and his co-managing director Amit Anand, DSG’s Shahdadpuri and Sequoia Capital’s Singh are seen as the forerunners to a new set of fund managers, having set up shop even before the government aggressively eased rules.
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