These VC funds lead SEA, but are they truly winning?

In 2019, data insights firm Preqin tried to answer the critical question: Which are the top-performing VCs in Southeast Asia? Tech in Asia picked up the findings and ran an analysis. Six years later, we attempt to answer the same query – albeit with caveats – with the publicly available data we can find.

Data we’ve gathered shows that funds from East Ventures and Jungle Ventures, both from the 2016 vintage, and Cocoon Capital, which launched its second fund in 2019, registered the highest internal rate of return (IRR) among their peers in Southeast Asia. IRR is a calculation of the expected return a fund will generate on an annualized basis.

The IRR data is compiled by Alternatives.pe, which tracks startup and VC fund data across the region. Only funds launched from 2016 to 2019 were considered for the rankings.

Jason Edwards, CEO and founder of Alternatives.pe, says the IRR figures are obtained from regulatory filings, “which we like to call the only source of truth,” he tells Tech in Asia.

It is worth pointing out, however, that the IRR often doesn’t reflect a VC’s realized gains.

Jungle Ventures team / Photo credit: Jungle Ventures

Moreover, Alternatives.pe calculates the figures using valuation data from funding rounds. This means a VC fund’s IRR could also be propped up by a startup hitting a high valuation in one round, only for the same company to run into trouble later.

Another key question to ask is this: Would the investors in those funds have gotten a better return by putting money in lower-risk vehicles?

Consider the S&P 500 – a stock market index of the 500 largest companies in the US. It achieved an annualized return of approximately 15.8% from 2016 to 2024. For example, a US$100 investment in the S&P 500 at the start of 2016, with dividends reinvested, would have grown to about US$366 by the end of 2024.

This highlights a concerning reality: Even some of the top-performing VCs in Southeast Asia may have underperformed compared to the S&P 500 as VCs are expected to generate higher returns than public market investments.

A final caveat is that distributed to paid-in capital (DPI) – which is the money that actually goes back to the investors – is a better indicator of a fund’s performance, although such figures on individual funds are not readily available.

That said, the aggregate DPI of the region’s funds has been the lowest globally, according to the e-Conomy SEA 2024 report.

Fintech, ecommerce return faith

We now look at the startups that are generating the most returns. Our analysis reveals that most VCs focus their investments on fintech, ecommerce, and related services.

For instance, the top performers in the Jungle Ventures III fund primarily operate in ecommerce. Leading the pack in terms of IRR is Hypefast, an ecommerce acquirer. Monk’s Hill Ventures is also an investor in the startup.

Deeptech holds significant promise