Singapore’s government should set
aside more money for startup firms as global venture-capital
investors allocate most of their funds to China and India,
overlooking Southeast Asia, according to Vertex Venture Holdings
Ltd., a Temasek Holdings Pte unit.
While the government funds young entrepreneurs in their
early stages, it relies on their ability to attract foreign
capital in later financing rounds, Chua Kee Lock, chief
executive officer of Vertex, said.
North America, Europe, China and India accounted for about
90 percent of all venture-capital investments in the second
quarter of this year, with the bulk being allocated to later-stage financing, according to a study by London-based research
firm Preqin Ltd. published this month.
“Singapore has solved the problem of seed-stage
incubation,” Chua said in an interview in the island-state July
19. “However, they need to be prepared to give the big money.
When the business idea looks interesting, somebody needs to give
the big money, and that’s the issue here.”
Venture capital is typically provided to startup companies
with new business ideas, which are unable to issue debt or get
funding from banks as they lack a track record.
Fewer Players
Vertex, which is wholly owned by Temasek, focuses on early-and medium-stage investments in startup firms, with a focus on
Asia and Europe. It has invested in more than 350 companies
since its inception in 1988, according to its website.
Asian countries like South Korea and Taiwan face the same
scarcity of later-stage investors, Chua, 52, said.
Vertex is one of fewer than 10 “real venture-capital
players truly focusing on early stage in Southeast Asia,” he
said.
The company focuses on three areas, with about half of its
investments in Internet and social media, Chua said. Between 30
percent and 35 percent of its assets are in the “technology-enabling” area, mainly hardware, while the remaining 15 percent
are in the health-care industry, he said.
About 65 percent of the value of all venture-capital deals
in the second quarter were in the Internet, software and health-care industries globally, the Preqin study showed.
Vertex typically holds its investments from seven to eight
years, with an average return of three to four times the
invested sum, Chua said. Geographically, between 40 percent and
45 percent of Vertex’s assets are invested in China, he said. As
much as 15 percent are allocated to India and Taiwan,
respectively, with the remainder in Southeast Asia.
To contact the reporter on this story:
Klaus Wille in Singapore at
kwille@bloomberg.net
To contact the editor responsible for this story:
Andreea Papuc at
apapuc1@bloomberg.net
Temasek"s Vertex Says Singapore Should Fill Startups" Cash Gaps
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