There was a time where venture capital (VC) firms could get by with being generalist in Southeast Asia. In other words, you could be sector-, stage- and market-agnostic, simply because there were so few VCs around. But that’s slowly changing, especially where it concerns B2B.
Singapore-based Wavemaker Partners has 80 per cent of its SEA portfolio in the B2B space, most of it in the seed stages. Qualgro Capital has expressed interest to invest in more B2B firms from its $100-million first fund. And then there’s Tin Men Capital.
Singapore-based Tin Men Capital launched its maiden $100-million fund last month, targeting pre-Series A deals in B2B tech in SEA. That’s pretty sizeable for a focus that narrow, considering that most of the VCs that launched $100-million funds still tend to lump B2B and B2C deals in a single vehicle.
The Tin Men vehemently disagree with this approach.
“That’s trendsetting at best,” said Benjamin Tan, co-founder of Tin Men Capital. “To run a successful B2B company, you need a very focused setup, skillset and approach. If you gave us a B2C company today, we’d probably fail too, but you can’t do both. It’s very binary to me.”
The Tin Men are also ditching more traditional approaches to VC investing. LPs are involved from an earlier stage. The VC begins introducing limited partners to their companies even before they invest.
The Tin Men believe that a hands-on approach is what SEA firms really need. It’s a view also held by Cocoon Capital – probably the only VC that comes closest to the Tin Men in form and approach. Like Tin Men, Cocoon Capital focuses on early-stage B2B companies in SEA. It takes no management fee and caps the number of deals it does to just five or six each year.
The Tin Men emphasise that it is really for the benefit of startups and investors. It could also be seen as a sign of a maturing VC/startup ecosystem in Southeast Asia.
Murli Ravi, co-founder of Tin Men Capital, said: “If you look at the US, which has the most evolved VCs in the world, the capital market involves an increasing degree of specialisation. When the early VCs were set up, they did everything because everything was their playing field. Now we’re getting more specialisation, and only more specialisation can get returns…I think that is what we will do more and more of.”
Tin Men Capital’s first $100-million fund aims to invest in smart cities, security, enterprise productivity, transport and logistics, omni-channel retail solutions and travel and tourism segments. Its limited partners include prominent individuals, family offices and companies from Southeast Asia and Taiwan.
Tin Men did not reveal how much has been deployed, but said that more deals can be expected in the coming months. It targets a final close by July 2019. Tin Men Capital is a three-man team comprising Murli Ravi, Benjamin Tan and Jeremy Tan.
