Should Temasek reel in startup bets?

Sign up for the Daily Newsletter, sent exclusively to our premium subscribers. We break down the big and messy topics of Asia’s tech and startup community. Get the newsletter in your inbox everyday with a premium subscription.

Hello reader,

Being entrusted with someone else’s money should come with the weight of responsibility.

I help organize a flag football tournament in Hanoi once a year, and I know I feel this burden whenever we start collecting entry fees. Visiting teams hand over their hard-earned cash, so we have to make sure they get their money’s worth.

It helps that we’re not trying to profit off the tournament, so all the revenue can go towards tournament expenses.

By definition, state-linked investors like Singapore’s Temasek use public money, meaning they should be extra responsible with how they spend it. However, they do need to turn a profit, making some risk necessary. Today’s featured piece dives into this tricky balancing act.

Today we look at:

• Where state-linked funds go after the eFishery fiasco
• Indian banking tech firm Zeta’s US$50 million fundraise
• Other newsy highlights such as Elon Musk launching an acquisition bid for OpenAI and Temu gearing up to enter South Korea.

Premium summary

The state of state funds

Image credit: Timmy Loen

As the fallout from the fraud allegations at Indonesian startup eFishery continues, state-linked funds have come under the microscope.

Both Singapore’s Temasek Holdings and Malaysia’s government pension fund Kumpulan Wang Persaraan (KWAP) are investors in the aquatech unicorn.

• Balancing act: Due diligence is an important part of the investment process, but do state-linked investors have a duty to be even more diligent? The fact that public money is involved makes a strong case for greater effort, but investors also have to balance other factors like moving fast enough to secure their spot in a funding round.
• Track record: State-linked funds in Southeast Asia have history when it comes to failed investments in startups. Two Malaysian government-linked investors faced scrutiny due to the firesale of a portfolio company, ecommerce platform FashionValet. Meanwhile, Temasek was questioned in parliament over its investment in failed crypto exchange FTX.
• Hedging bets: A fund-of-funds strategy could be a safer approach for state-linked investors. By investing in the funds of other investors (like VC firms), they get some exposure while also putting some distance between public money and a failing company.

Read more: Should Temasek cast net in startup waters after eFishery fiasco?

Funding you can bank on

Quick bytes