AppWorks targets $360m for Fund IV, launches Web3 arm
Taiwan-based VC firm and accelerator AppWorks has established a dedicated Web3 arm and plans to launch its fourth flagship fund with a target of USD 360m in the second quarter of 2022.
AppWorks closed its third fund at USD 150m last year, while Funds I and II closed on USD 11m and USD 51m in 2012 and 2015, respectively. LP support has historically come from the likes of Taiwan Mobile, Axiom Asia Private Capital, Fubon Life, Wistron, Cathay Life, and Taiwan’s National Development Fund. Assets under management currently stand at about USD 212m.
Fund II has achieved an annualized IRR of 29.3% and a distribution to paid-in multiple (DPI) of 1.34x. Fund III currently posts an annualized IRR of 92.9% and is said to have begun to generate substantial distributions.
Key exits include omnichannel commerce services providers 91App, a Fund II investment sometimes called Taiwan’s first homegrown unicorn, which listed in Taipei last year and currently has a market capitalisation of around NTD 18.6bn (USD 652m). The start-up is considered a flagbearer of Taiwan’s emerging digital ecosystem.
AppWorks, which describes its geographic focus as Greater Southeast Asia, is launching a Web3 arm as part of a broader effort to further institutionalise the firm and redefine its core mandate. The strategy is characterised as “ABS,” meaning artificial intelligence (AI), blockchain, and Southeast Asia. Investments span early to growth-stage start-ups.
Web3, also referred to as the metaverse, has rapidly risen to the top of many VC agendas as a decentralized vision of the internet, where users interact in 3D environments, and micro-economies run on digital assets.
AppWorks said it would focus on providing entrepreneurs with resources to drive Web3 mass adoption, support innovation in new business models, and help founders in more traditional internet models pivot to Web3. Since making its first blockchain investment in 2018, the firm has backed 75 start-ups and 141 entrepreneurs in the Web3 space, including Animoca Brands, Dapper Labs, Figment, Blocto, and XREX.
The new Web3 unit will be headed by Ching Tseng, who is being promoted from associate to principal. Tseng is considered the architect of AppWorks’ exiting Web3 practice and one of Asia’s early movers in the sector. He is responsible for the Animoca and Blocto investments as well as an investment in Choco TV, a Taiwanese streaming service that was acquired by Japan’s Line in 2016.
Tseng’s promotion coincides with two other personnel changes aimed at institutionalising the accelerator program and formalizing a strategy for making balance sheet LP investments called Beacon Funds. Alyssa Chen, has been elevated from associate to principal to oversee AppWorks Accelerator, while analyst Jun Wakabayashi has been confirmed as an associate to head Beacon.
Since its establishment in 2010, the accelerator has built a community of 1,402 alumni entrepreneurs, operating 435 active start-ups with cumulative fundraising of USD 4.7bn. This does not include a bi-annual accelerator in partnership with Wistron that focuses on AI, internet-of-things, cloud, information security, education, and medical verticals.
Beacon has backed more than 20 venture capital funds off AppWorks’ own balance sheet. Roughly one-third of all AppWorks investments are now sourced from Beacon. The firm said it plans to invest in 10 more funds every year aligned with its ABS mandate.
“We are proud of the performance and contributions of Alyssa, Ching, and Jun—and we have decided to put on their shoulders greater responsibilities as part of our institutionalisation process,” Jamie Lin, chairman and founder of AppWorks, said in a statement.
“With these structural improvements and our upcoming Fund IV, AppWorks will be more ready to create an even greater impact on the development of Taiwan and Southeast Asia, supporting more entrepreneurs, and accelerate emerging and innovative new segments of the digital economy.”
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