Fund focus: Monk’s Hill rides SE Asia momentum

To some degree, a spate of successful Southeast Asian venture fundraising in the past 12 months has been attributed to the US-China trade war and the notion that ASEAN’s relative disconnect from the drama has reassured LPs about diversifying into an emerging region with potential to fill a range of global supply chain gaps. It’s a good story, but the bigger picture is even more convincing.

Southeast Asia’s uneven but irreversible economic maturation has finally crept into a phase where frontier specialists and development financial institutions are being joined by more moderate risk-takers seeking to replicate past successes in China or India. Kuo-Yi Lim (pictured), a managing partner at Monk’s Hill Ventures, notes that some of the most tangible encouragement came in 2017 with an $884 million Singapore IPO for VC-backed gaming platform Sea, the region’s largest-ever float.

The comments come as Monk’s Hill closes its second Southeast Asia VC fund at $100 million. The firm’s debut vehicle raised $85 million in 2016 with Temasek Holdings as the anchor LP and additional backing from YJ Capital, Telstra Ventures, Cisco Systems, and Singapore’s National Research Fund. Temasek has returned for Fund II, with more diverse support, including a number of US and international university endowments, foundations, and family offices. Lim says many of the LPs are first-timers in Southeast Asia.

“The diversity of Southeast Asia has always been top-of-mind with LPs, but there’s more comfort now to look at the different countries in aggregate as a very sizeable opportunity where you can build significant companies focusing on several countries,” says Lim. “When LPs visit for the first time, they’re blown away by the dynamism of companies and the sophistication in addressing digital consumers. There’s a strong sense that language, culture and systems may be different, but you can cross borders at scale.”

Monk’s Hill has demonstrated this effect in its portfolio, perhaps most notably with Ninja Van, a Singaporean last-mile deliveries provider that has set up shop in six other countries within five years. The logistics space where Ninja Van competes is also a useful marker of ASEAN development as one of the region’s trendiest and most intensely invested segments, with ride-hailing unicorns Grab and Go-Jek leading the hype. The question is, when will rising competition and valuations begin to color the fundraising landscape for regional VCs?

“LPs used to say they couldn’t tell the difference between GPs in Southeast Asia – everyone talks about the same things like value-add and teams,” Lim adds. “And truth be told, Southeast Asian VCs don’t have enough track record yet to cause that dispersion, but in the next 3-5 years, the dispersion will become apparent in exits and IRRs. Have you followed a consistent strategy or are you a scattershot investor? LPs will correlate that information with where they want to be as investors in funds."

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• Topics
• Venture
• Technology
• Southeast Asia
• Fundraising
• Monk's Hill Ventures
• TMT