White Star Capital launches new Asian investment hub

Among other key findings in the report, Singapore surpassed 2020 VC investment in the first half of 2022 and is on track to overtake the record levels seen in 2021. Crypto, blockchain, and Web3 startups are driving much of the growth in the region, with almost $1bn in funding to date in 2022, on track to surpass the $1.45bn total in 2021 across SEA. Highlights are included below, and the full report can be accessed here.

The firm started investing in SEA in 2020 when Sanjay Zimmermann moved to Singapore. Since then, the firm has backed several companies in the region including Flash Coffee, Sleek, Una Brands, Pop Meals, and ALEX. As part of its commitment to the region, White Star Capital has officially opened an office in the CapitaSpring building in Singapore and now has six investment professionals based in the country. The firm also recently announced the promotion of Cristina Ventura and Joe Quinn Wei to General Partners of the firm.

SEA is the top new region for VC investment this decade, with 10% of the world’s population, 4x the GDP per capita growth vs the world average, the second-fastest-growing workforce in the world, and a growing base of 480 million active internet users in the region. There has been over $120bn in venture capital invested in start-ups in SEA since 2019. In light of this rapid growth, White Star Capital has released its second report on the VC landscape in the region. The findings multiplied the firm’s long-term excitement for the region.

The report shows that funding is moving away from later-stage deals and into earlier stages, affecting overall deal value. Although valuations are falling from the previous quarter, the deal number is staying constant. And, while SEA used to be viewed as an M&A exit market, public market exits took off in 2021 — and some were spectacular. For instance, GoTo’s $1.1bn IPO in 2022 almost equaled the total value of exits for the entire SEA market in 2021.

Although the number of VC deals in South East Asia remains at an all-time high, the amount of VC capital invested dropped in Q1′ 22. The main reason behind this discrepancy between deal count and capital invested is the significant decline in valuation. The median valuation for South East Asia startups dropped by 50% from Q4′ 21 to Q1′ 22.

VC activity in SEA strongly correlates with growth in online commerce, which has grown at a 40% CAGR since 2013. More than half of the region’s 42 unicorns are in e-commerce and e-payment, but the region is seeing significant increases in funding activity in healthcare and edtech as well.

The most noteworthy trend – SEA is at the forefront of digital assets development, with an astounding 627 crypto/blockchain companies headquartered in the region. To date, there has been $3.3bn worth of VC investment into the region’s digital assets companies. A lot of these investments were fairly recent, with more than $2.5bn occurring in the last 18 months. Indeed, SEA has emerged as the capital of digital asset investing, with the 10 most active VC firms in the sector having made over 300 investments. VC investments in digital assets in SEA are on course to surpass 2021 in the first half of this year, even in light of the market cooling.

Despite its size, Singapore has emerged as the startup hub in the region. As a country with a population of only 5.9m, it is impressive that startups based in Singapore have managed to raise $4.2bn in 2022 year-to-date alone. Deal count is also looking strong with 249 deals already completed in 2022. As the top country in terms of VC funding per capita, Singapore has created a healthy ecosystem where startups have sufficient access to capital.

On the other hand, Indonesia has seen a drop in funding, with the surge in venture capital secured in 2021 ($9.3bn) not matched in the YTD of 2022, with only $1.3bn so far. Worth noting that there were 222 deals in 2021, and 86 in 2022 suggesting that valuations are decreasing and investors are seeking investments in earlier-stage companies. Indonesia still shows promise, however, due to its large population and growing middle class. The country is also home to several unicorns and has ample access to funding.

“We believe South East Asia is one of the most exciting markets for venture capital investment, given its large diverse population, fast-growing economies, and the incredible leapfrogging of technology,” said Eric Martineau-Fortin, Founder and Managing Partner of White Star Capital. “We’re doubling down in the region by opening a Singapore office, appointing two new general partners and investing in early, growth, and late-stage start-ups. We have now strengthened our position as the partner of choice for founders building businesses in the region.”

“It has been inspiring to see the growth of the tech ecosystem across South East Asia, and Asia more broadly, over the last 18 years,” commented Cristina Ventura, Chief Catalyst Officer and General Partner at White Star Capital. “The region is going from strength to strength, and I’m looking forward to establishing a permanent office with White Star Capital in Singapore. Looking ahead, we’re focused on accelerating the human, growth, and value capital of the ecosystem in the region. The combination of exceptional talent, economic growth, availability of venture capital, early success stories, and the support of government institutions makes SEA an incredibly exciting place to be an investor right now.”

For the full report please visit Medium.

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