Instead, it aims to fill the gap with its own identity, one that borrows heavily from its anchoring limited partner, Korean asset management firm Hanwha. A backer of Golden Gate Venture’s previous funds, Hanwha is said to have provided nearly all of the initial $80 million commitment gathered for the fund last year.
Hanwha’s unusually dominant position—and its profile as one of South Korea’s top fund managers with over $80 billion in assets under management—has put off some potential limited partners who had expressed an interest in investing in the fund, Lints said. But with Golden Gate Ventures actively fundraising in Europe, it is expected to round up its last limited partners and make a final close by the summer of 2020, a senior venture capital professional speaking on the condition of anonymity told The Ken. Lints and Golden Gate Ventures declined to comment on the fund’s future plans.
Why is Southeast Asia Growing as a VC Hotspot in the Midst of Global Uncertainties?
“It’s about how we can be more supportive of our portfolio companies,” Lints said of the fund’s purpose. “We noticed that they’re raising larger rounds and it became inherently difficult for them to find a local lead investor that was not some sort of syndicate of family offices or private equity firms.”
Nash and Rippel, meanwhile, as new entrants with Asia Partners, jumped in after drawing parallels between Southeast Asia and other markets, particularly China. In a 2019 report, the firm estimated Southeast Asia has “over $400 billion of incremental tech value creation potential” based on the fact it is roughly 10 years behind China’s startup ecosystem with comparable companies across segments like e-commerce, payments and ride-hailing.
“Southeast Asia has hit an inflection point and the potential is very interesting,” Rippel told The Ken. “In the past, there was very little investment activity in the region and now we have a very vibrant venture ecosystem.”
Asia Partners is reported to be working to raise a $300 million fund. Unlike many firms that invest in Southeast Asia, it is leaning on Nash’s experience with Sea to land US-based investors, such as pension funds and endowment funds, rather than conventional sources of capital such as investors in Japan, China or domestically in Southeast Asia. After 18 months of fundraising, US regulatory filings indicate it has raised around $118 million as of 21 January. It has already closed deals, such as leading a $70 million Series C investment in Singapore-based budget hotel startup RedDoorz.
Pipeline competition
There’s no question that initiatives like Sequoia’s Surge programme, which aims to give it access to early-stage deals, are a threat to VC deal flow. Particularly since Sequoia is rumoured to be raising a $1.3 billion later-stage fund of its own for India and Southeast Asia. The fear is that tapping prospects early limits the ability of other funds to invest in the hottest deals as they are on a Sequoia fast track
With others getting their initial funds off the ground, East Ventures is powering ahead with a follow-up since two-thirds of its first fund is already deployed.