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Venture capital

Korean VC firms expand investment in Southeast Asia

KB Investment is expected to ramp up its Hibiscus Fund managed with RHL Ventures in Malaysia

By Oct 18, 2021 (Gmt+09:00)

Grab, Southeast Asia’s largest ride-hailing company
Grab, Southeast Asia’s largest ride-hailing company

South Korean venture capital firms are expanding their investment in Southeast Asia,  where startups grow rapidly based on a large population.

KB Investment, with 1.8 trillion won ($1.5 billion) in assets under management, is considering increasing the size of the Hibiscus Fund it manages with RHL Ventures in Malaysia, according to the South Korean venture capital industry on Oct. 18. They had raised $50 million for the fund initially, but are expected to ramp this up to $80 million due to strong interest from the industry.

Hibiscus Fund is set to invest half in startups in Malaysia and half in new companies in other Southeast Asian countries. Earlier, KB Investment participated in a $5 million Series A round funding for Malaysian digital healthcare startup Naluri through the fund.

KB Investment established Centauri Fund, which focuses on fintech e-commerce startups in Southeast Asia, with MDI Ventures in late 2019. MDI is a multi-stage venture capital firm backed by Telkom Indonesia. The fund that was initially set up with 40 billion won is expected to grow to more than 100 billion won.

INDONESIA, SINGAPORE

LB Investment Inc. is also making inroads into Southeast Asian markets. In July, the venture capital firm with 1.1 trillion won in assets under management made its first investment in Southeast Asia by participating in a funding round for Indonesian online grocery platform HappyFresh. HappyFresh, founded in 2014, provides grocery delivery services not only in Indonesia but also in neighboring countries, such as Thailand and Malaysia. LB Investment had been focusing on China with a branch in Shanghai.
(Courtesy of HappyFresh)
(Courtesy of HappyFresh)

Korea Investment Partners, the country’s largest venture capital firm with $3.2 billion in assets under management, formed a venture fund with Golden Equator Capital in Singapore, opening a branch in the city-state last year. Korea Investment Partners has also invested in Singaporean fintech firm C88 Financial Technologies and Indonesian telemedicine platform Halodoc.

Smaller venture capital firms such as TS Investment and Intervest were also looking to expand their presence in Southeast Asia. TS Investment teamed up with Vietnam’s VSV Capital for Korea Venture Investment Corp.’s foreign venture capital investment fund. Intervest has been managing a $100 million venture fund in Southeast Asia with Indonesia’s Kejora Ventures since 2018. FuturePlay, a South Korean accelerator, is discovering early stage startups with Bandung Institute of Technology in Indonesia.

20 UNICORNS IN SOUTHEAST ASIA

Startups in Southeast Asia are rapidly growing. The region’s largest ride-hailing company Grab is about to list on the Nasdaq through a merger with a special purpose acquisition company (SPAC) with an estimated value at $40 billion. Vietnam’s VNG Corp. and GoTo Group, a new entity established from the merger between Indonesian e-commerce firm Tokopedia and ride-hailing company Gojek, emerged as unicorns, or those unlisted firms with valuations reaching $1 billion, in Southeast Asia. The region has about 20 unicorns as of the third quarter of this year, according to global market research firm CB Insights.

Southeast Asia is a market with great potential given its total population of more than 600 million. About half of the population is younger than 30 years old.

“The market is expanding, led by Indonesia, the world's fourth-most populous country, as income is rapidly growing in Southeast Asia,” said a South Korean venture capital industry source. “A startup ecosystem is being well created as the information technology (IT) infrastructure is also growing.”

Write to Jong-woo Kim at jongwoo@hankyung.com

Jongwoo Cheon edited this article.

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