Fund focus: Vickers prepares to narrow its focus

“Assets under management don’t excite me,” Finian Tan, founder and chairman of Vickers Venture Partners told AVCJ in 2012, explaining why he didn’t want to scale up to address growth capital opportunities. “Can I be the largest asset manager in the world? No. Can I be the best performing fund? I have a chance.”

By one measure, he has achieved this goal. Vickers’ fourth fund, which closed at $80 million earlier that year, had delivered a 4.8x net multiple as of July 2017, enough for Preqin to rank it as the best performing VC fund globally of its vintage. It also helped propel the average net multiple for all of the firm’s funds to 3.2x, rising to 5.4x with co-investment.

This has enabled Vickers to close Fund V at $230 million – larger than the four previous vehicles put together. There is a structural change, with the inclusion of a renminbi-denominated pool, but the investment remit is the same, focusing on deep technology in the US and then socially transformative technologies in China, Southeast Asia, and India. Still, Tan suggests this fund could be the last of its kind.

“Going forward, it won’t be the traditional Fund V, VI and VII; we are going to start being a little more focused. We have an eye on raising a deep technology fund and an impact fund,” he says. “I think any future generalist funds will be feeders, channeling capital into our other funds.”

It appears to be one way of accommodating LP demand without substantially increasing fund size. Certainly, the Vickers investor base has become more institutional: Only one institutional-level LP in Fund IV committed $10 million or more, whereas in Fund V there are seven and they account for around 80% of the overall corpus.

However, a more nuanced approach could also be seen to reflect the evolving investment opportunity. For example, Tan describes his deep technology strategy as finding valuable niches carved by the relentless power of megatrends around artificial intelligence (AI), the internet-of-things (IoT), artificial reality, and virtual reality.

“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. 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 systems protection for IoT devices.

These megatrends also apply in Asia, but the scope of the Vickers mandate – targeting problem-solving technologies – means it dabbles in a wider variety of areas. Portfolio companies include a SIM card-less technology start-up and an electric motor systems manufacturer in China as well as a mobile payments business and a gym membership platform in Southeast Asia.

It remains to be seen whether Vickers can maintain its performance levels in such a dynamic environment, but Tan believes the early signs are good. Fund V is already over 50% deployed and tracking at 1.05x. 

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• Topics
• Southeast Asia
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• Vickers Venture Partners
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