Fund focus: MassMutual Ventures widens remit

When MassMutual Ventures (MMV) set up its first Asia fund in 2019, AVCJ asked how the strategy differed from those of other insurers entering the VC space.

“We are first and foremost a financial returns-driven fund, with the objective to deliver superior long-term risk-adjusted financial returns to MassMutual’s policyholders,” explained Ryan Collins (pictured), a managing director with the firm. “We invest as part of MassMutual’s allocation to alternative investments, rather than as a strategic or corporate development mandate.”

Nevertheless, in some quarters, the perception that MMV was a classic corporate venture capital player, interested only in insurance technology, persisted. But after three years and two funds, Collins believes the message has hit home. “Nothing beats building a portfolio,” he said. “Just looking at the list of companies on our website, it’s very clear we are making financial investments.”

Collins was speaking to AVCJ following the launch of a USD 300m third fund that will invest in Asia. Each one has differed in remit. The debut vehicle of USD 50m was Southeast Asia only; the second, which came two years later with a USD 100m corpus, added India, Australia and New Zealand, and Hong Kong; the third is Asia ex-China plus Europe.

“Most of our deal flow is India, Singapore, Australia, and Indonesia, but we want the flexibility to look at anything. Until recently, valuations – and round sizes – have only been going up. We want to be Series A lead, so that means larger cheques,” said Collins. “We are not chasing bigger AUM [assets under management]. We still focus on Series A, although we have gone earlier and later.”

Including coverage of Europe also contributed to the fund size increase. Massachusetts Mutual Life Insurance, MMV’s sole LP, has previously backed some venture funds in the region. For MMV, it is virgin territory – and Collins, who recently returned to the UK after 16 years in Asia, finds it much changed. He continues to lead the business alongside Singapore-based Anvesh Ramineni.

MMV started exploring opportunities in Europe 12 months ago. There were some similarities with Asia across the firm’s target verticals of digital health, financial technology, software-as-a-service (SaaS), and cybersecurity. This is partly because MMV prioritises companies that want to scale globally, so jurisdiction of origination is not necessarily relevant.

“Global expansion has been made easier by COVID – companies are much more likely to take a Zoom call and deploy remotely,” said Collins. “At the same time, we see interesting things in Asia that inform what we do in Europe. European companies don’t think much about competitors in Asia. We often come across Asian companies looking to expand in Europe, and no one is aware of them.”

Change at the margins

There might be a stronger focus on certain verticals in Europe compared to Asia. For example, MMV sees a lot of European digital health start-ups that want to enter the US. MMV is uniquely positioned to help given MassMutual’s network across the healthcare and financial services value chains. However, forging a relationship with the parent is not a pre-condition for investment.

In Asia, opportunities in different markets are influenced by broader trends in MMV’s target verticals. For example, there is likely to be more SaaS in Fund III because the area is starting to take off in Southeast Asia, adding weight to what is currently an Australia-driven portfolio theme.

But Collins anticipates minimal change in overall strategy, noting that Fund I is already tracking a top quartile return and there have been some early valuation mark-ups in Fund II. Standout portfolio companies include Singapore-founded digital therapeutics business Biofourmis, Indian medical imaging start-up Qure, and Singapore online banking platform Aspire.

All three have raised meaningful follow-on funding, with Biofourmis recently achieving unicorn status. Collins believes strong companies that scale globally – and therefore appeal to investors all over the world – will continue to raise capital. However, the growth-stage space in Southeast Asia appears to be levelling off.

“I haven’t seen down rounds, but I’m hearing about them. Some heat has been taken out of the market and it remains to be seen how sustained it is,” he added. “It pays to be prudent in terms of financial management. Everyone we talk to is aware the market has changed over the last 3-4 months and is acting accordingly.”

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• Topics
• Southeast Asia
• Europe
• Fundraising
• Venture
• Financials
• Technology
• Healthcare
• Singapore
• MassMutual Ventures