News > Venture Capital

Singapore's Vertex beats $200M target for third China fund
Venture Capital
<p>Vertex Ventures — the venture investing arm of  Singapore's Temasek — has reportedly smashed its $200 million target for its third China fund.</p> <p>This is not really surprising as Temasek pumped $600 million into the firm earlier this month. But raising this latest fund was still no mean feat. Vertex CEO Chua Kee Lock told Deal Street Asia that around $850 million of the total raised came from outside investors.</p> <p>Its a first for Vertex's China vehicle which was a 100% captive fund in its last two incarnations. Vertex's U.S., Israel, and China funds all have external investors, among them are pensions funds, endowments, and corporate investors.   However,  Vertex is far from courting success independently of its powerful parent. Kee Lock added:<br /> "We are owned by a very strong shareholder – so we can be selective on the type of investors we can pick for our funds.”<br /> Photo: Shubhika Bharathwaj</p>
Is Xiaomi losing its magic?
Venture Capital
<p>For a while now venture capital-backed smartphone maker Xiamoi has been the darling of Asian tech, disrupting incumbants left and right, but new sales data shows that the firm may be losing some of its lustre.</p> <p>Tech in Asia reports that the firm may be feeling the effects of a China slowdown, citing several reports that indicate Xiaomi might be fall short of its revised goal to ship 80 to 100 million units this year.</p> <p>Xiaomi is yet to release it Q3 sales figures but the consensus among research firms is that the hype might be wearing off. That said, most agree the firm could still be on course to shift around 70 million units, which is still an awful lot.<br /> Photo: nijanthan_v</p> <p>&nbsp;</p>
Startups eager for sky-high valuations should heed this cautionary tale
Venture Capital
<p>As the IPO market tanks and startups continue to seek absurdly high valuations, they would do well to remember the 2013 listing of textbook rental service Chegg and its ill-fated use of the IPO "ratchet."</p> <p>Wall Street Journal's Venture Capital Dispatch recalls how Chegg sought to secure a higher valuation during its pre-IPO funding rounds by promising investors their share price would double by time the company went public – a term known as a "ratchet." It backfired. Massively. As early Chegg investor Oren Zeev explained in a conference this year:<br /> “While it turned out that the top line was great, the fundamentals of the business, or the assumptions we were making about the business, were a stretch. It was far less clear it was a great business.”<br /> The upshot was that the business sunk below its IPO valuation after going public and could not deliver on what it promised, and Chegg was forced to issue additional shares to Insight Venture Partners, the VC with which it had the covenant. Companies like Box Inc. and Kayak Software Corp. have also had to pay a painful price for the same reason. </p> <p>One has to wonder how many  of our newly-born unicorns managed to achieve such lofty valuations, and how they will cope when it's time to go public.<br /> Photo: Jellaluna</p>
Snapchat execs are disappearing
Venture Capital
<p>Blink and they're gone. Snapchat's executives are disappearing like their photos, with eight upper-level execs leaving in the last year.</p> <p>It's not unusual to see leadership shuffles in startups as competition is high for talented staff, reports Business Insider. But it may be a bit concerning that Snapchat can't keep execs on board. Only one of the eight now-departed leaders lasted longer than eight months.</p> <p>Is the super-young CEO Evan Spiegel to blame, or is this just the tech world we live in?<br /> Photo: AdamPrzezdziek</p>
Watch out Silicon Valley, Asia’s VC space has you in its sights
Venture Capital
<p>Silicon Valley may have Apple, Google, and Facebook but as far as venture capital investments are concerned, Asia’s beginning to give it a serious run for its money.<br /> “The venture capital industry in Asia has seen strong growth over the past year, and in Q3 the aggregate value of deals was comparable to the total value of deals in North America. India and China, the largest part of the Asian industry, marked 709 financings in the quarter, worth a combined $16.9bn. There were 932 venture capital deals in North America in the same period, worth an aggregate $17.5bn.”<br /> Preqin adds that total Q1 to Q3 venture capital investments in China and India have surged to $36.2 billion – an over 180% climb from 2014’s $19.9 billion total – bringing Asian VC investments just $17 billion shy of North America’s $53.5 billion for the same time period.</p> <p>Nine of the ten largest venture capital deals in the third quarter were based in Asia as well, with Didi Kuaidi’s two recent rounds bagging the top two spots.</p> <p>However, North America may still have a chance to stretch their lead. While deal numbers in the west has fallen, deal sizes continue to climb with some late stage and debt financing deals reaching “record levels.”</p> <p>Deal numbers in Asia are still climbing though, as Preqin’s Christopher Elvin notes:<br /> “The venture capital industry is developing in two different directions between emerging and mature markets. In emerging markets, particularly in Asia, rapidly developing economies like China and India are providing increasing numbers of opportunities for investors and fund managers. While average deal size is increasing slightly, the key driver of growth is the increasing number of deals.”<br /> Photo: brefoto</p>
Knight in shining armour: Alibaba's $3.5B bid for Youku Tudou
Venture Capital
<p>It looks like Alibaba could add another string to its bow with a bid to buy US-listed Youku Tudou. For the ailing Chinese video site the timing could not be better.</p> <p>Alibaba says it's offering to pay $26.60 per American depositary share to acquire the 82% it doesn't already own. The offer represents about a 30% premium on Youku Tudou's last closing price prior to the bid going public and values the company at $5.1 billion. Tech Crunch reports that total offering is worth $3.5 billion, when taking the cash already on Youku's book already into account.</p> <p>Its a welcome development for the one-time venture capital-backed Youku which, despite its dominance as China's answer to YouTube, has had a miserable loss-making run on US public markets. Its chairman and CEO Victor Koo has already pledged his shares in support of the deal.</p> <p>Alibaba already holds an 18% stake having made a strategic investment in May 2014. The decision to gobble up the rest may be fairly opportunistic but it's a large leap for Alibaba as it looks to spread its e-commerce empire to include digital content. Daniel Zhang, chief executive officer of Alibaba Group, said this:</p> <p>"We believe that the proposed transaction, with tighter integration of our resources, will help Youku achieve exciting growth in the years ahead by leveraging Alibaba's assets in living-room entertainment, e-commerce, advertising and data analytics. Digital products, especially video, are just as important as physical goods in e-commerce."</p> <p>With Baidu’s iQiyi and Tencent’s QQ video services already operating in this space its is yet another front on which the China's internet giants are battling fiercely for dominance.<br /> Photo: Hans Splinter</p> <p>&nbsp;</p>
The state-backed VC fund shaping the future of Japanese tech
Venture Capital
<p>If you have never heard of the Innovation Network Corporation of Japan (INCJ) then you really haven't been paying attention to Japan’s tech industry.</p> <p>INCJ made headlines again last week when shares in Sharp Corp. soared on the news that the state-backed fund was mulling a 200 billion yen ($1.7 billion) bailout for the ailing electronics giant. </p> <p>Such deals are par for the course for INCJ which has spent the last six years spearheading the government’s efforts to restore Japan’s status as a leader in technology and innovation. </p> <p>It has mostly made a name for itself through its private equity and venture capital investment activity. Backed by the biggest names in Japanese tech - including Canon, Panasonic, Hitachi, Sony, Sharp, and Toshiba - and with about 2 trillion yen of investable capital, it has some serious firepower. </p> <p>Sharp is the most recent example of INCJ supporting the country’s embattled electronics giants. It is the largest shareholder of Japan Display, a firm it created  out of the LCD divisions of Hitachi, Toshiba, and Sony. The fund also famously gazumped  U.S. private equity major KKR in 2012 through its acquisition of chipmaker Renesas. </p> <p>Unsurprisingly, INCJ has come in for a lot of flak from its critics for propping up, rather than revitalising, its distressed targets. That said, rescuing giants is only part of INCJ’s strategy. The fund is also a major player when it come to early stage investments. Around three-quarters of the 90 investments made by INCJ since its inception have involved early stage companies. </p> <p>This is likely to be the real area of focus for Toshiyuki Shiga, Nissan’s former COO who took over as chair of INCJ in June, as the Japanese government looks to replicate some of Silicon Valley’s success in Japan rather just revive some of Japan's own past glories.<br /> Photo: Curt Smith</p>
The love affair between VCs and the media is unraveling
Venture Capital
<p>It's tough going from hero to zero. But as the startup craze ages and cracks in the facade of many startups (or at least their valuations) are beginning to appear. Most recently, The Wall Street Journal published a searing story on startup sweetheart Theranos, the lab that takes "nanotainers" of blood from the phlebotimically-challenged.</p> <p>Venture capitalists didn't take too well to the challenge to the private company, valued at $9 billion. Business Insider says this is becoming a bit of a pattern these days: The fawning is mostly over.<br /> Nobody likes to be questioned.</p> <p>But lately, some of Silicon Valley's big tech investors seem to be particularly upset that journalists are questioning some of the valley's hottest startups.</p> <p>There's a fundamental difference in point of view here. The funders see first-hand how hard it is to build something and sympathize with the struggle. The journalists are supposed to be as objective and careful as possible and report what they find — even if some people don't like it.<br /> That's an incredibly nice way of saying that some journalists aren't swallowing startup news releases without questions. Seems like a backhand compliment: The press corps that largely missed both the financial crisis and Bernie Madoff can hardly be called fierce or clairvoyant.</p> <p>And BI also notes that for every upset VC there are also some pretty experienced investors who are also ringing the alarm -- including Marc Andreessen and Mike Mortiz of Sequoia. Not bad company to be in.<br /> Photo: Owlana</p>
Founders, investors gather in Hong Kong to share past failures
<p>Learning and growing from one's past failures is a core part of startup culture and this week a group of founders will gather in Hong Kong to observe that tradition at the 2nd annual Postmortem conference.</p> <p>The event will be held at KPMG's Causeway Bay office at Hysan Place and will feature a line-up of HK's best startup founders, investors and mentors sharing their personal failures, pivots, regrets, and mea culpas. Confirmed speakers at the event include:</p> <p> Deepak Madnani, Paperclip<br /> Daniel Walker, Dragon Law<br /> Christopher Geary, Asianet Group<br /> Elsa Chan, Jetlun<br /> Andrea Livotto, Perpetu<br /> Sam Gellman, Uber<br /> Jeffrey Broer, Grayscale<br /> Donna NguyenPhuoc, Angel investor</p> <p>The event starts tomorrow (October 17) but a handful of tickets are still available.<br /> Photo: Steve Jurvetson<br /> &nbsp;</p> <p>&nbsp;</p>
Mega rounds keep rolling in amid IPO slump
Venture Capital
<p>It be might a lousy exit market right now but the big VC deals have still been coming through thick and fast these past three months with 68 startups globally each raising $100 million or more, according to a new report.</p> <p>The joint report by KPMG and CB Insights reveals there have been 170 of these so-called mega rounds for the first nine months of the year raising an aggregate $19 billion. In total VC-backed startups raised $37.6 billion worldwide during the three months and $98.4 billion for the year so far, already exceeding the 2014’s $88.7 billion total.  </p> <p>Asian mega deals in particular tipped the scales for the third quarter, with massive investments into the likes of Didi Kuaidi, LY.com, One97 Communication and Eleme. The top five deals in Asia accounted for $5.3 billion, or 39% of fundraising in the region. </p> <p>But the report also shows that while there are more late stage deals, there are fewer IPO exits than previous years, exacerbated by the fact that China suspended IPOs once again in July. The number of late-stage investments has affected the availability of cash for seed-stage investments. Despite more funds investing at the seed stage, seed investments have dropped to a five-quarter low of 28%, globally. </p> <p>In the short term at least it seems the gigantic late stage deals will continue to spur the rise of the unicorns - startups valued at $1 billion or more. There were 23 new unicorns in the quarter: 17 in the US, 3 in Asia and 3 in Europe.<br /> Photo: Maxwell Hamilton</p>