Dear Reader,
We are back with our top headlines from the week that went by.
Let us look at some of our analytical pieces first. We examined Indonesia’s edtech space, especially e-learning platforms, which witnessed a huge boom following the onset of the pandemic in 2020 that forced students to study from home. With the reopening of physical schools post-pandemic and the global economic turmoil leading to a so-called funding winter, the sector is fighting for survival. Monetisation remains the biggest challenge for edtech startups in SE Asia’s biggest market. Industry experts concur that while the school segment may be severely affected, edtech will still remain relevant, particularly in some niches such as upskilling.
A similar trend is playing out in India’s edtech sector, where demand for online education has slowed. In fact, edtech startups, which were one of the favourite sectors for investors, have been facing an acute funding crunch. This has led to many players resorting to drastic steps, including layoffs, to stay afloat. According to data from DealStreetAsia’s DATA VANTAGE, edtech startups in India raised $290.4 million in Q2 2022, which is 80% lower than the $1.4 billion amassed in the preceding quarter.
Some niches in the edtech industry, however, seem to be somewhat insulated. Edtech unicorn upGrad comes across as an outlier as it seeks to raise more capital to scale up some of its new businesses and continues to build its arsenal of companies through acquisitions. The higher education platform recently raised $210 million in a fresh funding round, soon after making its third acquisition in a month, standing out in an otherwise slow edtech market in India.
Interviews
In The LP View this week, we featured Thai state-owned SET-listed oil and gas company PTT, which has earmarked about $500 million for investments in tech companies and venture capital funds. PTT’s CVC arm investment director Prempreedee Kitirattrakarn said the firm mainly looks at managers outside the Asia Pacific region because that is where technology and innovation development is more mature. It is an LP in vehicles managed by US-based G2 Venture Partners and Energy Impact Partners and The Environmental Technologies Fund and Set Ventures in Europe.
US-headquartered private equity giant General Atlantic continues to bet big on opportunities in India and Southeast Asia — two regions it considers as the bright spots for growth. “One of the inherent benefits of the growth equity sector is that growth is driven by long-term secular trends, not economic cycles. Secular growth is more insulated from recessions and market leaders have the market power to adjust to inflation,” Sandeep Naik, managing director, head of India & Southeast Asia at General Atlantic, said in an interview. General Atlantic has backed KGBio, VNLife and Kumu in SE Asia.
SE Asian private equity firm Navis Capital Partners, which has recently launched its Asia private credit platform, sees this as the right time to tap opportunities in this asset class. Justin Ferrier, who has joined the firm to spearhead the private credit business, is bullish on the growth of the credit market in Asia, especially SE Asia. This is because private credit investors are still under-allocated in the region.
Global payments giant Stripe will push its investments in Asia as it strives to capture demand in one of the world’s fastest-growing regions — one filled with markets with potential that US tech companies often fail to notice, CEO Patrick Collison told Nikkei Asia. The payments unicorn entered SE Asia in 2016 when it opened in Singapore.
Fundraising trail
We had this exclusive on IFC proposing to invest $20 million in the latest Southeast and India-focused fund of Vertex Ventures, which has a target of $500 million. Vertex Ventures, backed by Singapore state investor Temasek, closed its $305-million fourth Southeast Asia and India fund in September 2019.
Emerging markets-focused venture capital firm Quona Capital has secured capital commitments worth $308 million so far for its third fund, per its US SEC filing.
US pension fund Teachers’ Retirement System (TRS) of the State of Illinois has committed a total of $100 million to Hong Kong-based Baring Private Equity Asia’s eighth pan-Asia buyout fund, which is seeking to raise $8.5 billion.
Fubon Life Insurance has committed about $13 million to the latest vehicle of local venture capital firm Taiwania Capital. Another Taiwanese insurer, Taiwan Life, has committed about $20 million to the said fund.
Shima Capital, an investment firm that focuses on supporting blockchain startups, has launched its debut fund with $200 million in total commitments from various investors, including game developer Animoca Brands.
Venture debt firm Stride Ventures, an investor in unicorns such as MyGlamm, Upstox and MensaBrands, has closed its second fund at $200 million.
Numbers speak
Dealmaking in Greater China slackened in July but still managed to remain at elevated levels as startups sealed 236 venture investments worth a combined $4.2 billion. The deal value in July decreased by 10% from June, while the deal count declined slightly by 3.7% from the previous month, according to proprietary data compiled by DealStreetAsia. And, the aggregate deal value of $27.8 billion in the first seven months of 2022 was not even 60% of that in the same period last year, indicating some degree of hesitation among investors to make heavy bets at a time of global market slowdown.
In India, meanwhile, SaaS startups continue to reap a bounty from investors even as macroeconomic headwinds threaten to derail deal-making momentum in the short term. SaaS startups amassed about $2.3 billion across 102 transactions between January and July this year. Increased digitisation has led to several businesses shifting towards cloud-based environments, creating opportunities for SaaS startups in India to build for the world.
While the pace at which unicorns are getting minted in India has slowed, the week saw Zomato-backed logistics tech platform Shiprocket earning the tag and becoming India’s 106th startup valued at over $1 billion after it raised $33.5 million in a funding round co-led by Temasek and Lightrock India. Shiprocket is currently valued at $1.2 billion.
We studied Sea Group’s numbers, and it appears that the financial services arm will likely have to do some heavy lifting to drive growth in the upcoming quarters, at a time when demand for its gaming product has slacked and e-commerce activity is set to slow down post-pandemic. The group’s digital services segment, or SeaMoney, booked a 214% jump in revenue to $279 million in Q2 2022 compared with $88.7 million in Q2 2021. This follows a 53.3% rise in quarterly active users to 52.7 million. The financial services segment has been showing an upward trend over the preceding few quarters.
In some funding exclusives from SE Asia, we reported on Thai fashion commerce platform Pomelo Fashion seeking to raise up to $20 million in a Series D funding round. The company has already secured some capital as part of the round from existing backer Jungle Ventures.
Docquity, a Singapore-based online community for medical professionals, has raised $32 million from Japan’s Itochu Corporation in an ongoing Series C funding round. Itochu is an existing investor in Docquity, having co-led the startup’s $11 million Series C round in March 2019.
Lastly, the Asia PE-VC Summit 2022, our first physical conference in two years, will be held in Singapore on September 27-28. We have already put together nearly 20 private equity and venture capital sessions featuring a stellar lineup of 50 speakers. Do check out our agenda and speaker list for more details, and stay tuned for updates.
