Report faults Singapore on late stage start-up fundsSingapore’s government should set aside more money for start-ups as global venture-capital investors allocate most of their funds to China and India, overlooking Southeast Asia, according to Vertex Venture Holdings, a Temasek Holdings unit.
While the government funds young entrepreneurs in their early stages, it relies on their ability to attract foreign capital in later financing rounds, said Chua Kee Lock, chief executive officer of Vertex. 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. published this month.
“Singapore has solved the problem of seed-stage incubation,” Chua said. “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 start-up companies with new business ideas that are unable to issue debt or qualify for funding from banks as they lack a track record.
Vertex, which is wholly owned by Temasek, focuses on early and medium-stage investments in start-ups, with a focus on Asia and Europe. It has invested in more than 350 start-up companies since its inception in 1988, according to its Web site.
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. Bloomberg