Northstar bucks PE playbook to reenter early-stage investing

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Hi readers,

Nowadays, it’s common for private equity (PE) firms to invest in tech companies in Southeast Asia. We’ve seen firms like Warburg Pincus investing in Gojek, KKR in PropertyGuru, and L Catterton in Sociolla, to name a few.

Such investments are a departure from the typical PE playbook, which involves cutting huge checks for majority stakes in conventional businesses to improve and sell pretty quickly.

So, understandably, tech deals for PE firms have been very few and far between. And when they do happen, it is usually to back growth- or later-stage tech companies.

This is what makes the recent move by Northstar Group very intriguing.

The Southeast Asian PE major, which counts as one of the region’s pioneers when it comes to PE investments in tech, has launched a dedicated fund to invest in startups.

What’s more, it’s targeting early-stage startups, where investment risk is at its highest and reaping meaningful returns would mean having to hold investments for the long term.

This is pretty much uncharted territory for many PE firms, but interestingly, Northstar has actually been here before. Kind of.

In 2014 the PE firm established an affiliate VC fund called NSI Ventures in 2014. But this entity later went independent and rebranded as Openspace Ventures.

The new fund, while not yet officially launched, looks like it will be fully under Northstar’s management. Leading the fund’s investments will be the firm’s managing director, Carlson Lau, together with Melvin Hade of Global Founders Capital (GFC).

Coming in with over three years of experience leading GFC’s Southeast Asia early-stage deals, Melvin may prove to be the key to make this risky bet a successful one for Northstar.

— Ardi Wirdana, journalist at Tech in Asia

P.S.: Our daily newsletters will be on hiatus on Monday in light of Diwali. However, we’ll be back up and running on Tuesday

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