Visibility opening up for VC funds

Venture capital across Southeast Asia totalled $4 billion as of the end of May

GIMO, a Vietnam-based fintech specialising in providing flexible pay and financial wellbeing solutions for under-banked workers, in late July announced the successful completion of its Series A funding round, securing a substantial capital raise of up to $17.1 million.

Co-founder and CEO Quan Nguyen told VIR, “The funding round’s final closing, comprising a blend of equity and debt financing, came to fruition a mere five months after GIMO secured an initial close of $5.1 million. A consortium of Singaporean venture capital (VC) funds joined in the round.”

Spearheaded by Singaporean VC TNB Aura, the Series A round saw participation from GIMO’s existing backers, including Integra Partners, Resolution Ventures, Blauwpark Partners, ThinkZone Ventures, and Y Combinator.

Meanwhile, TNB Aura is currently in discussions to secure funding for its forthcoming third fund, which is expected to surpass the scale of its previous funds, according to Dealstreetasia.

The Singaporean fund has set its sights on further strengthening its investment activities in Vietnam. Before its involvement in GIMO, TNB Aura led a $6-million funding round for Vietnamese edtech startup VUIHOC. TNB Aura has established an initiative to tap into early-stage opportunities in Vietnam. Last year, it partnered with ThinkZone Ventures to launch the Global Minds Accelerator initiative to co-invest, mentor, and support Vietnamese tech startups.

Vicknesh R Pillay, co-founder of TNB Aura, said, “Through applying some of the research and learnings from our investments in Indonesia and other more mature markets, we foresee making another 5-7 investments into Vietnam over the next 18 months,” Pillay said.

During the past three years, the firm has made a total of eight investments in Vietnam. Typically, it designates 20-40 per cent of its fund’s total assets for ventures in this country.

However, with many horizontal opportunities in Indonesia disappearing, Vietnam has yet to produce candidates in verticals which have created unicorns as seen in more mature markets such as Indonesia, India, and China, according to Pillay.

“For example, we have seen multiple social commerce companies targeting tier 2-3 cities in Indonesia, though Vietnam has yet to see many companies at scale in this sector,” he added.

Amid these uncertain times, VC funds are grappling with some downward trends.

As of the end of May, VC funding across Southeast Asia for the current year totalled $4 billion – a 65 per cent decline compared to the first half of 2022, according to British investment data company Preqin. This marked the lowest level since the second half of 2019, while Indonesia and Singapore experienced the most significant declines, with funding plunging 70 and 65 per cent, respectively, in the first half of this year.

Additionally, a drop in high-profile deals was evident. Out of 195 deals in the first quarter of the year, a mere five secured funding surpassing $50 million, marking a 75 per cent drop compared to the same period last year.

Dinh The Anh, partner of Deal Advisory and head of mergers and acquisitions at KPMG in Vietnam, believed that slowing investment from VC and private equity (PE) is a trend that should be temporary and can reverse course.

“Vietnam has always been a very bright spot thanks to the country’s high growth profile and strategic benefits in the global supply chain. In the short term, the country’s export sector will surely rise with the recovery of global demand in 2024, and rebounding domestic consumption will be another major growth driver. Once PE/VC starts to see more visibility in corporate growth traction, we will see more investment following suit,” he said.

Sandeep Aneja, founder and managing partner of Singaporean education-focused fund management firm Kaizenvest – an investor in Vietnam’s edtech MindX – offered some guidance.

“For Vietnamese startups, our advice is to deeply focus on identifying and addressing unique problems. Establishing a profitable business model early on demonstrates market viability,” Aneja said. “Vietnamese entrepreneurs will be good at achieving a strong product-market fit through rapid experimentation, quick short failures, and focused customer deployments and beta tests/feedback cycles.”

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