Who's filling Southeast Asia's Series B gap

Chinese VCs are also growing more interested in the region, reports Tech in Asia

Start-ups in Southeast Asia are facing a shortage of Series B funding, experts observe.

“A lot of seed and Series A investments have happened and many of these companies will get to Series B stage, but we don’t have a lot of Series B funds. There’s only a handful that are really dedicated to writing $7 million, $10 million, $15 million checks in Southeast Asia,” Stefan Jung, a founding partner at Venturra Capital, said.

Also onstage were Hanno Stegmann, CEO of Rocket Internet Asia-Pacific, and Vishal Harnas, venture partner at 500 Startups.

The investors said they’re seeing “non-venture capitalist players” filling in the gap.

“We’ll probably see more rounds that are syndicated like $4 million, $3 million investments added up to get to $10 million upwards. That means three to four entities investing together in one round — with no one clear investor leading it,” Stefan said.

“That’s exactly what we’re seeing in the last half of the year. Private equity funds that are interested in new tech investments saw the opportunity and have invested. There’s hedge funds. I’ve also seen a lot of strategic conglomerates looking at larger tickets,” he added.

In particular, Chinese venture capitalists and late-stage companies are growing more interested in Southeast Asian start-ups. “We’re bumping more and more often into these companies. What they’re trying to do is shop around for start-ups that are at the later stage as well,” Vishal revealed. 

Take for example Alibaba and its $1 billion stake in Lazada, which is Southeast Asia’s answer to Amazon. With China now a very mature e-commerce market, the Lazada takeover brings the Chinese giant onto fresh and fertile ground.

This is an excerpt from Tech in Asia. You can read the full article here