Golden Gate and Hanwha Asset join forces to plug Southeast Asia’s series B gap

Singapore-based Golden Gate Ventures is teaming up with South Korea’s Hanwha Asset Management to invest in series B rounds across Southeast Asia, the two firms announced today.

The Golden Gate Ventures team / Photo credit: Golden Gate Ventures

Until now, Golden Gate has largely focused on seed and series A investments, and was among the earliest backers of high-profile startups including ecommerce player Carousell, peer-to-peer lender Funding Societies, and online grocer Redmart.

Hanwha Asset, on the other hand, is known for its growth-stage investments in companies such as Southeast Asian ride-hailing app Grab and US biotech startup Zymergen.

Quoting anonymous sources, Bloomberg reported that the investors are launching a US$200 million Southeast Asia fund together, and have already secured US$80 million in committed capital.

Both Golden Gate and Hanwha Asset, however, declined to comment when asked by Tech in Asia to confirm these claims.

The venture capital firms said in a joint statement that they will co-invest “in technology platforms that can take advantage of the region’s rapidly growing middle class; accelerating rates of internet, mobile phone, and technology penetration; and ballooning online consumer spending.”

The focus will be on consumer-oriented tech startups in areas such as “mobility, commerce, or logistics,” which are “capturing unique data on the long-tail of consumers and micro-merchants, and will serve as the starting point for financial inclusion, technology-enabled healthcare, and other new, innovative industries across Southeast Asia.”

Based on historical series A trends, Golden Gate and Hanwha Asset said they “expect anywhere from 80 to 110 series B investment opportunities to be available over the next two years alone and believe this number may double within four years.”

According to investment research firm Preqin, there are only two dedicated series B-themed funds investing in the region, compared to 32 for seed and series A rounds, and 24 for post-series B investments.

Moreover, the Singapore Venture Capital and Equity Association has found that while around half of US and European series A startups go on to receive series B funding on average, the same is true for less than a third of Southeast Asian startups.

While it is widely acknowledged that series B fundings in Southeast Asia have been few and far between, there is plenty of debate about the reasons.

Some observers have suggested that there’s a cash crunch at series B, with investors willing to risk small amounts of money on early-stage prospects and put larger sums into safer late-stage investments. As a result, startups at the mid-stage miss out.

Others have suggested that the cash is there, but a perceived lack of “blockbuster” opportunities at series B in Southeast Asia is stopping that money from being put to work.