Recession Run: Quest Ventures bats for food security, sustainable solutions

The funding winter is here. News of layoffs and troubles in startups have been cropping up. In this Q&A series, we talk to Southeast Asia’s investors to suss out what opportunities they see, what strategies they’re implementing, and what areas of investment they’re looking at in the next few months.

The market has taken a dip, and startup valuations have similarly fallen. While this is an optimal time for investors looking for the best deals, there’s more to it than what meets the eye.

Michelle Ng, environmental, social, and governance head at Quest Ventures and the director for its Sustainable Impact Accelerator, talks to Tech in Asia about this and more.

Are there any particular startup sectors that will be least affected by the current economic headwinds? Why so?

Michelle: We are seeing the tables turn post-Covid-19. The sectors riding the tailwind of the pandemic are now faced with headwinds from the economic uncertainties created by slow growth, high inflation, and synchronized monetary tightening, amplified by the Russia-Ukraine war and China’s lockdowns and slowdown.

In terms of startups, those in the agrifood tech (security and sustainability) and clean/alternative energy spaces will be the most resilient against the headwinds, as investors look for innovative solutions to solve some of the most pressing problems now. ESG investments will also continue to be resilient, as environmental, social, and governance is a long-term focus for all investors in this space.

Ecommerce for consumer staples and platforms that help consumers and businesses save costs would also be more resilient when faced with the current economic headwinds. Fintech firms would also be less impacted, as more would try to reallocate their cash and assets to preserve their value.

Michelle Ng / Photo credit: Quest Ventures

Which sectors is your firm looking to actively invest in this year? 

Quest Ventures is sector-agnostic, which enables us to be opportunistic in our investments in Asia. This year, we have been actively investing in startups with sustainable impact like the silver economy, healthcare, education, the future of food, and the metaverse. 

Will your firm increase or decrease its investment plans during the economic downturn?

Technically, the valuations for tech startups will take a dip during a downturn, and that’s an optimal time for investors to scoop up some of the best deals. However, the performance of the startup may also be negatively impacted by the recession, leading to lowered returns for investors. There is a need to balance both when VCs are evaluating the companies who are fundraising right now.

Most of our investments are made in Southeast Asia, and we are still bullish on the medium-term and long-term outlook of this region.

Late last year, Quest Ventures launched a fund specifically for early-stage startups. Are there more such funds in the making?