Venture capital arm of Singapore’s state-run investment firm Temasek Holdings, Vertex Venture Holdings have launched a fund of $200 million for investing in early age startups in India and the South-East Asian region as a whole, reports Deal Street Asia.
We have launched a new $200 million fund this year for Southeast Asia and India, and are currently making investments from it,
said Chua Kee Lock, Group President and CEO at Vertex Venture Holdings
Vertex recently raised $600 million from Temasek Holdings and Lock said that a part of it would go to the captive funds of Vertex, from which the company would make investments in India and South East Asia. The other part of funds would be used for investing in their third China Fund, fourth Israel Fund and the US Fund, where there are external investors, too.
Without naming the external investors, Lock said that the external investors in China, Israel and the US were well-known pension funds, international corporations and endowments and if one counts that money also, then Vertex has about $850 million in hand to put into companies.
Vertex will focus on early stage investments in India and has appointed Ben Mathias as managing director and India head for Vertex Ventures. The first office will be opened in Bengaluru and subsequently they would move to Delhi.
Lock also gave his views about the surging startup ecosystem of India and why Vertex was largely absent from India in the period which saw and is still witnessing hoards of investors putting money in the upcoming startups.
It is not that we are staying out of India. Valuations have gone crazy—we don’t see how a company with no revenues can raise $100 million in Series A or B. India is still in its early stage of development for start-ups,”
He further added that India would be a good market for investment over a 10 or 20 year horizon and they are focussing on building companies rather than chasing companies that are suddenly quoting $2 billion valuations.
Comparing the Indian startup ecosystem with the other South East Asia regions, Lock admitted that in terms of capital structure and funding, startups in South-East Asia were five-to-six years behind India.
However, he said that Indian startup ecosystem is going through a highly competitive stage which would create a lot of inefficiencies. This is a cycle which is same as that the US, China and Israel have been through and this will end soon.
Today, you can raise money because the market is hot, but the music will stop soon, and you don’t want to be one caught without a chair when that happens. Now you can see that companies are merging in China while some companies are not able to raise any more money. This will come to India, too, at some time.