A second EV Growth fund is likely to be announced before the end of the year, a senior venture capital executive aware of the plan told us anonymously because they did not want to be seen discussing another firm’s business. East Ventures declined to comment on its plans for EV Growth.
The firm has been able to spend rapidly thanks in no small part to East Ventures’ prolific approach to seed investment. The firm claims that 70% of startups in Indonesia that have raised a Series A round have already taken money from it, providing a ready-made investment pipeline for the growth platform of East Ventures.
PE is evolving
Growth-stage investment may be obvious for investors already in Southeast Asia, but the region’s potential is also beginning to bring meaningful commitments from large investors in other parts of the world.
“Over the past five years, Southeast Asia has grown quite a bit,” said Dave Ng, head of Southeast Asia for Eight Roads Ventures, a global proprietary investment firm backed by Fidelity. “Increasingly, we see the pace of growth on what we have seen previously in other markets.”
Ng joined the firm from B Capital—the investment firm co-founded by Facebook co-founder Eduardo Saverin—in May 2019 and is based in Eight Roads’ Singapore office, which anchors its Southeast Asian presence. Currently, the firm invests in the region from a fund shared with India, but Ng hinted that a dedicated Southeast Asia fund could launch as the firm increases its presence in the region.
This cautious approach has also been echoed by others who are making opportunistic investments, or extending Asia funds to cover Southeast Asia. New York-based private equity firm Warburg Pincus, for example, has upped its presence as well. It co-led a $550 million investment in Gojek, the Indonesian ride-hailing firm, in 2016.
Talent Grab
Competition between funds hasn’t yet spilled into deals, but it does extend to areas such as talent. Indonesia-focused Northstar Group—best known for an early investment in Gojek—added operational smarts to its line-up when it hired the former head of Google Indonesia, Henky Prihatna, to join its investment committee for digital economy-related investments.
In 2017, TPG Capital picked up Twitter’s former head of international operations Shailesh Rao to lead its efforts across India and Southeast Asia. It appears, however, that Rao has since left the firm.
The firm went on to back Vietnamese payments service Momo in a deal reportedly worth $100 million and led a smaller $25 million investment in Indonesian fintech company OnlinePajak. In June 2019, it made a large commitment when it announced a $4.25 billion fund dedicated to China and Southeast Asia. The fund marked the first time Southeast Asia became part of the China strategy, and it could yet be a precursor to a fund dedicated to the growing region.
That’s the route KKR, one of the world’s largest private equity firms, appears to be taking now. The New York-headquartered fund is reported to be planning a $300 million technology, media and telecommunications fund for Asia to supplement its $3.9 billion Asia buyout fund through earlier stage deals.