3 months ago
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Antler, the Singapore VC that focuses on early-stage investments, just closed its second Southeast Asia fund. It’s raised $72 million to double down on startups in Singapore, Indonesia, Vietnam and Malaysia.
This should be welcome news for startups. Like other regions, Southeast Asia has faced a persistent funding slump. Between January and July 2024, tech companies in Southeast Asia had raised $2.31 billion through 328 equity funding rounds. This was a 69.69% decrease compared to previous year’s total of $7.63 billion raised across 426 rounds in the same period.
But Jussi Salovaara — a co-founder and managing partner of Antler who leads investments and operations it in Southeast Asia and broader APAC — believes now is the best time for early-stage investing.
“It has no doubt been challenging for startups and investors alike. However, this is the kind of environment that offers unique opportunities like no other for early-stage investments,” Salovaara said in an interview with TechCrunch. “During boom times, the market often becomes saturated with startups vying for attention and funding, leading to inflated valuations and a focus on rapid growth over sustainable business models. In contrast, the current downturn filters out weaker players, allowing truly innovative and resilient startups to emerge and secure funding.”
For Antler, this has translated to identifying and supporting founders “who are committed to long-term growth with a clear understanding of their market,” he said. “Early-stage investments in this climate are likely to focus on companies with solid foundations, clear paths to profitability, and prudent cash management rather than those chasing quick exits.” That in itself might say something about what the priorities might have been when the market was more bullish.
Antler SEA Fund II will focus on the pre-launch, pre-seed, and seed money stages. The VC plans to allocate $27 million in funding to 45 early-stage startups within six to nine months. It also aims to invest in around 300 startups through the second SEA fund. Some of the funding will support startups created during Antler’s residency programs.
The firm discovered Southeast Asia is a very integrated and incredibly diverse market, with each country offering unique opportunities.
When Antler set up its first Southeast Asia fund in 2018, it had only a Singapore team. The biggest lesson from the first SEA fund was that it adopted a very hyperlocal approach. It aims to establish a presence in the market by working closely with teams and founders. Salovaara mentioned that Antler has at least one partner in every Southeast Asian country who will help deploy funds from SEA Fund II.
Antler’s SEA Fund II is sector-agnostic. Still, it sees significant potential in fintech and health startups across the region as these address critical needs in rapidly-growing economies. AI is a technology it is already actively investing in, specifically non-generic, vertical AI businesses that will solve problems in the local markets.
Some 65% of the region’s population is expected to be middle-class population by 2030 with 60% of the population under 35, two factors driving the high demand for consumer-focused technology alongside growth of the B2B sector. Indonesia, the most populous country, presents an especially massive market for consumer tech due to its younger population. And Vietnam is emerging as a high-tech manufacturing and gaming hub driven by its highly-skilled and educated workforce, Salovaara said.
On top of the early-stage investments, the VC firm will invest up to $10 million in growth-stage startups from Series A through its new growth fund, Antler Elevate. Antler has also launched ARC (Agreement for Rolling Capital). This investment structure helps founders from the early building stages to the growth phase by providing up to $600,000 in rolling capital within the first six to nine months of a company’s lifecycle.
The VC says more than 50% of Fund II is coming from institutional investors, including a sovereign wealth fund, a pension fund, and a university endowment. Antler did not disclose the names of limited partners, but confirmed that most of the institutional investors are based in Singapore.
The VC has already invested in through Fund II: Farmio, a food supply chain platform; Zora Health, a startup offering fertility, reproductive, and family health services; and Clout Kitchen, a gen-Z marketing startup.
In addition to its focus on Southeast Asia, the VC, which has offices in more than 30 cities and 20 regional funds across the globe, has funds in India, Korea, Japan, and New Zealand/ Australia in the Asia Pacific. Antler did not disclose the AUM for Antler Global, but APAC funds have $200 million AUM, and the first and second SEA funds combined have around $100 million AUM, Salovaara noted.
The latest fund is three times the previous fund, the SEA Fund I, which was approximately north of $20 million. It has invested in 91 companies, including Airalo, an e-SIM marketplace; Reebelo, a marketplace that sells refurbished and new electronics like laptops, iPads, appliances, and power tools; and bluesheets, a startup that has built AI software to help businesses automate their bookkeeping processes.
