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Collin Furtado · · 8 min readNew investors eye SEA startups seeking lifeline, but there’s a catch
One man’s loss is another man’s gain.
That old idiom seems to apply to the current state of Southeast Asia’s tech ecosystem. As layoffs, plummeting valuations, and drying venture funding continue to plague the sector, a new class of investors is emerging in the region.
Their aim is to get a majority stake in targeted startups, mold them into profitable businesses, and then seek quick exits via acquisitions or public listings.
Image credit: Timmy Loen
One such investor is Singapore-based Turn Capital. The turnaround fund was established in 2020 by Joseph Phua, a co-founder of livestreaming firm 17Live.
In November 2023, Turn Capital raised over S$20 million (US$14.7 million) after the first close of its maiden fund to take controlling stakes in consumer and technology firms – especially those that are no longer VC-investable – and then steer them to profitability.
Flash Coffee’s Thailand unit was Turn Capital’s first acquisition. The coffee startup fit the bill since it was undergoing consolidation across markets, and the investor saw potential for a turnaround.
But is turnaround investing truly as straightforward as it seems? And will it take off in this part of the world?
Investors or rescuers?
This approach bears some resemblance to what private equity (PE) firms typically pursue, but they often target more mature or profitable businesses.
But Shang Koo, Turn Capital’s general partner and CFO, points out that what investors like his firm do is “somewhat closer to management buyouts.”
Turn Capital partners (from left) Shang Koo, Ho Kheng Lian, and Joseph Phua are targeting deals in the consumer and technology sectors. / Photo credit: Business Times
According to Koo, the turnaround strategy prioritizes budget discipline, which is crucial as some founders receive excessive VC funding and “spend it on whatever trend is hot.”
See also: Asia layoff tracker: Amazon China cuts hundreds, Byju’s axes 500 positions
Leadership mindset
No grand exits
Slow adoption to non-VCs?
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As valuations fall and runways shrink, a new wave of investors in the region is eager to acquire and assume control of startups.
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