Singapore’s hardware startups get boost with arrival of Applied Ventures

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Are you thinking of starting a hardware startup? You probably should. In our always-on, always-connected world, there’s increasing demand for gizmos and tech that make our lives easier, solve problems, or just look damn cool.

Sooner or later, though, you’ll hit one very particular wall, and on the other side is something your startup sorely needs: money.

Startups that are built around a physical product often have a hard time convincing venture capital firms to back them. The main issue is that hardware startups don’t tick certain boxes that a lot of VCs have in mind when thinking of startups – like rapid growth and customer acquisition, fast returns, and nimble pivots.

We’re not about writing the biggest check.

Not to mention it’s more expensive building and perfecting a physical product than a digital one.

Applied Ventures has been active in this space for the last 11 years. As the venture arm of US-headquartered electronics manufacturer Applied Materials, its mandate is investment in promising early-stage hardware and tech companies.

While Applied Materials has had a presence in Asia and Singapore for a while now, its investment arm wasn’t really active in the region. That’s about to change, with Applied Ventures starting a team in the Lion City.

Investment strategy

Applied Ventures invests up to US$50 million every year worldwide, with deals ranging from US$500,000 to US$3 million.

“We look for good return on investment, but more importantly, we’re looking for strategic synergy,” Tony Chao, senior investment director and general manager for Applied Ventures, tells Tech in Asia.

Half of the investor’s portfolio is what Tony describes as “close to the core” – companies that have a clear connection to Applied Materials’ main business. The other half includes businesses in industries that Applied isn’t necessarily involved in at the moment but are particularly promising.

Applied’s portfolio includes mostly US-based companies working in cleantech, semiconductors, wireless energy, and more. It’s seen several exits through both mergers and acquisitions and IPOs, like Dutch display maker Liquavista (acquired by Samsung in 2010 and sold to Amazon in 2013) and US telecommunication chip manufacturer Infinera, which listed on NASDAQ in 2007, raising US$182 million.

Back in 2009, Applied invested in Singaporean A-Star spin-off Tera-Barrier, maker of nanomaterials that can be used in things like flexible screens, flexible photovoltaics, and medical and food packaging.

Collaboration