Which are the top-performing VC funds in Southeast Asia?

Venture capital funds from East Ventures (EV), Openspace Ventures, Vickers Venture Partners, and Golden Gate Ventures have been named by investment data provider Preqin as the top performers in Southeast Asia, Tech in Asia has learned. (Disclosure: EV is an investor in TIA.)

Only funds launched between 2009 and 2015 were considered for the rankings, which includes self-reported data from VCs and limited partners – the investors in those funds.

Preqin’s data, however, covers just 12% of funds in Southeast Asia, says Kam Ee Fai, the company’s head of Asia operations. This means there are possibly more funds that could match the returns of those on this list.

Regardless, Preqin’s “global benchmarks are used as the gold standard in the industry,” Kam adds.

What makes a top fund?

The funds have been ranked based on the net internal rate of return (net IRR), a widely used measure of a fund’s expected returns. A 10% IRR means that investors stand to gain 10% on their initial capital each year.

Another way to track returns is through the net multiple. A 2x net multiple means that investors will double the capital that they’ve put in. Typically, the multiple goes up over time as its portfolio companies mature.

Both net IRR and net multiple include unrealized and realized gains. The “net” here refers to the profit that’s left after deducting management fees and carry (or the fund manager’s share of the returns).

To gauge paper gains, DPI– distributions to paid-in capital – is used to measure the sum of money that has been returned to the fund’s investors as a percentage of the invested money. A fund with a low DPI means its investors haven’t gotten much actual returns from its investment yet.

Combined, this alphabet soup reflects a fund’s health. However, it’s hard to truly judge a fund’s real performance until some 10 years later and investors receive their payouts.

Net IRRs and multiples can fluctuate wildly. A fund’s actual gains could be hit if a billion-dollar portfolio company goes through a rough patch and slashes its valuation by half.

That said, VC firms won’t wait a decade before raising money for a new vehicle. Neither do their prospective investors expect them to, so these metrics remain an important means by which to evaluate a fund’s performance.

Diving deeper

What the data doesn’t say