With the present financial uncertainties and geopolitical challenges, securing funding for startups in Asia has lately turn out to be extra difficult. Venture capital firms have additionally been impacted by the downturn, resulting in a lower within the variety of funds being closed.
The VC market is “going by means of [one of its] cyclical winters marked by excessive rates of interest, tightened liquidity, and cautious LP sentiment,” Akio Tanaka, a co-founder of and associate at Headline Asia, a Tokyo- and Taipei-based VC agency, advised TechCrunch in an interview.
But funds are nonetheless closing. Headline Asia mentioned Tuesday it had accomplished certainly one of its largest funds up to now, Headline Asia Fund V, at $145 million to put money into tech startups throughout Asia-Pacific. (Headline previously said that it was focusing on $180 million for the fund.)
Headline’s newest fund is earmarked for startup founders constructing corporations focusing on digital transformation and cross-border operations in Japan, Taiwan, and Southeast Asia, with selective funding in South Korea. Headline invests in early-stage — seed to Collection A — with verify sizes starting from $1-5 million in e-commerce, logistics, fintech, IP, and AI.
Backers of Headline Asia’s fifth fund embrace a mixture of private and non-private entities, together with Japan Funding Company (JIC), the Nationwide Growth Fund of Taiwan (NDF), Korea Enterprise Funding Company (KVIC), and SME Assist Japan.
Headline’s new fund has already invested in 17 corporations, together with Newmo, a Japanese taxi and ride-sharing startup; Jenfi, a Singapore-based firm offering revenue-based financing for digital companies and startups in Southeast Asia; and Pi-xcels, a Tokyo- and Singapore-based startup that delivers NFC-enabled tech for retailers to ship receipts to their clients.
Sure traders in Southeast Asia prefer to make safe investments that generate profits as an alternative of investing in high-growth, high-risk tech startups in a difficult funding local weather, in accordance with Tanaka. Headline goals to make investments that these traders gained’t.
“Early-stage valuations are nonetheless the place essentially the most outsized returns are made,” Tanaka mentioned, “particularly in immediately’s exit atmosphere, the place later-stage valuations have compressed and liquidity stays restricted.”
Tanaka advised TechCrunch that the agency is especially enthusiastic about alternatives in Japan. Previously, most Japanese startups have centered on enterprise of their native market, in accordance with Tanaka. There have been quite a few IPO offers, though they have been comparatively small in dimension.
“Many startup founders in Japan discovered it low-hanging fruit to go public with a comparatively small providing,” Tanaka added. “We’re very a lot thinking about international startups popping out of Asia, whether or not it’s Japanese startups going worldwide, or perhaps Southeast Asia or North Asian startups going international.”
Headline Asia is a part of the Headline international community, with regional places of work within the U.S., Europe, and Latin America. The VC has about $4 billion in belongings below administration.
Based in 2008, Headline Asia, which has backed over 100 startups, manages roughly $420 million in belongings throughout its 5 funds. The agency employs 10 funding professionals in Tokyo, Taipei, and Singapore.
The closure of Headline’s latest fund comes on the heels of different Asia-focused VC fundraises.
Antler closed a $72 million Southeast Asia fund in August, and MindWorks Capital, a Hong Kong-based VC agency, completed a fourth Pan-Asia fund at $220 million in October. In November, Indonesia VC agency Intudo secured $125 million throughout two funds, together with $50 million for a fund to put money into downstream pure sources and renewable power.