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Singapore-based Jungle Ventures' efforts to connect start-ups in Asia with investors and technology seem to be paying off. The fund, which raised $15 million in 2012, is in the process of closing a top-up. The fund's founders, however, declined to disclose the size of the top-up.
Jungle, started by Indian-origin entrepreneurs Amit Anand and Anurag Srivastava, believes the future of global entrepreneurship depends on smart, connected capital. Anand and Srivastava started the fund in 2011 and made initial investments in three firms through their own investments. In 2012, they raised their first fund.
This Asia-focused fund, which provides investment from seed to series A, believes that entrepreneurs in Asia are fundamentally different from their counterparts in the Valley and the ability to connect to a network of investors, customers or technology is crucial. Jungle has got co-investment support from Singapore government agencies such as Spring Seeds and the National Research Foundation's technology incubation programme.
According to Anand, entrepreneurs in India and Asia-Pacific, excluding China, are working in very different and difficult environs. Customers are still not mature, distribution cycle are not fully developed, consumer internet penetration is still low, albeit rising in some regions, and, more importantly, monitisation of online transaction is still a challenge.
"Asian startups need more "smart" money. You cannot just cut a cheque. Entrepreneurs here need a lot more support, as they are working in a very different operational environment. Start-ups are coming up early and want to scale into another geographies, sometimes very diverse from their local markets. This was true in case of our investee firm Zipdial; it wanted to venture out and demanded more of their investors," said Anand, who led the last round of funding.
With Asian entrepreneurs being different from the Valley, both Srivastava and Anand decided to make some ground rules for the fund. The first thesis was to invest "less for more". The fund invests in four-to-five firms on an annual basis. One of the reasons for this is the team size that Jungle Ventures has and the cash reserves for investment.
So far, Jungle Ventures has invested 30 per cent of the fund. The fund plans to invest another 20 per cent and the remaining 50 per cent is reserved for existing investments as dry powder.
"We have seen founders have to start thinking of the next round of fund even before the first round is closed. We decided to focus on giving more money to our investee firms at the seed stage to ensure that they have sufficient runway to focus on execution. In the US, seed rounds are anywhere between $1.4 million and 1.8 million, whereas in India, they are hardly $1 million. We would ideally want to stay with the investee firms for the first three rounds of fund raising," said Anand.
The other was the focus on Asia with the realisation that Asia is a heterogeneous market, with each of the region having its own nuances. "That's why we focus on finding regional category leaders. We believe in looking around thoroughly when spotting a potential firm. It may so happen that you may have two-to-three players in the same space, from across Asia-Pacific; then we will go with the one that has demonstrated some unique understanding of the problem or early stage traction."
Unlike other VCs that look for start-ups in a growing industry, Jungle Ventures takes a different route. "We have created a matrix for upcoming industry segments that have the potential to create billion-dollar businesses. I believe venture capital in Asia is reactive and not proactive. You cant tell the entrepreneur to wait for six months for you to make a decision. He will run out of money by then and you need to be ready to make decisions faster," said Anand.
It seems the fund's approach has managed to work well. In the past three years, the fund has exited from three companies, making 4-5x returns.
