Vickers closes fifth VC fund at $230m

The total includes a renminbi-denominated pool of $40 million. Vickers opted for a dual currency approach in part due to investor demand and in part because it is taking longer to convert between renminbi and US dollars. This impedes the speed at which capital can be deployed onshore and the ease with which distributions can be made offshore.

The increase in fund size – Vickers closed its fourth fund at approximately $80 million in 2012 – has been accompanied by substantial change within the LP base. Only one institutional-level LP in Fund IV committed $10 million or more; in Fund V there are seven and they account for around 80% of the overall corpus.

Growing interest in Vickers is a function of performance. Fund IV generated a net multiple of 5.1x based on data for the quarter ended September 2017. The previous quarter – when the net multiple was 4.8x – Preqin ranked it as the best performing VC fund globally for the 2012 vintage. The stand-out portfolio company is US-based regenerative medicine specialist Samumed, which is said to be worth $12 billion.

Finian Tan (pictured), chairman and founder of Vickers, added that the firm also ranks highly in terms of consistency of performance across funds. The second quarter net multiple for Funds I-IV was 3.2x, rising to 5.4x when co-investment is included. He noted that Fund V is already at 1.05x.

The vehicle launched last year with a target of around $250 million and achieved a first close in July 2016. It is already over 50% invested and has made commitments – some of which have yet to close – to 16 companies.

The remit is the same as for the previous fund, which was deployed equally between the three core geographies of China, Southeast Asia and India, and the US. Vickers backs innovative deep technology start-ups in the developed markets and companies that use technology to solve problems in emerging economies.

Competitive dynamics mean the firm focuses on early-stage deals in China while enjoying more flexibility in Southeast Asia as one of relatively few funds in the region with the scale to back companies across multiple rounds. “It is much easier for us to invest in companies that have patentable technology rather than just code, but we do make some shared economy-type investments,” Tan said.

In Southeast Asia, Vickers has backed the likes of gym membership platform GuavaPass, mobile payment start-up Matchmove, and Snapcart, which mines data from consumers’ receipts and uses it to help brands understand shopper behavior. China investments include electric motor systems manufacturer Jing-Jin Electric and SIM card-less technology start-up Simo Wireless.

The firm’s strategy in the US is driven by megatrends in areas such as artificial intelligence, the internet-of-things, artificial and virtual reality technology. “You can say for certain that there will be a lot more IoT devices next year than this year, but then you have to project what that means,” said Tan. “It means security for IoT devices will be in demand.”

This rationale prompted Vickers to invest in AgilePQ, which owns seven US patents relating to end-to-end system protection for IoT devices, data transmission to the cloud, more efficient power usage, and tailored solutions for IoT in legacy infrastructure.

Tan founded Vickers in 2005 with four partners. Before that, he was a managing director at Draper Fisher Jurvetson and a founding partner of the firm's Asia Pacific operations. Early investments included Chinese search player Baidu.

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• Topics
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