Singapore’s Openspace Ventures closes new $135M fund for Southeast Asia

It seems like everyone is out there raising new funds in Southeast Asia. Weeks after we reported Golden Gate Ventures hit a first close on its third fund aimed at $100 million, so Openspace Ventures — the Singapore-based firm formerly known as NSI — has announced a final close of $135 million for its second […]

It seems like everyone is out there raising new funds in Southeast Asia. Weeks after we reported Golden Gate Ventures hit a first close on its third fund aimed at $100 million, so Openspace Venturesthe Singapore-based firm formerly known as NSI — has announced a final close of $135 million for its second fund.

Founded in 2014 by entrepreneur Hian Goh and finance exec Shane Chesson, Openspace is best known for being an early backer of Indonesian ride-hailing unicorn Go-Jek. A selection of its other investments includes fintech startup FinAccel, e-commerce player Love Bonito, restaurant booking service Chope, health-focused insurance brokerage CXA Group, and bread maker Rotimatic.

Openspace specializes in Series A with a typical check size of $3 million to $5 million, and capital for follow-on deals. Goh told TechCrunch around the time of the first close that the plan is to expand the focus on startups operating marketplaces and/or the e-commerce space to cover emerging verticals such as fintech, health tech and education.

Chesson, his partner, said that in areas like healthcare, progress from startups has been “remarkable” while he sees “great opportunities” to develop new kinds of consumer-centric brands in e-commerce, both B2C and B2B.

Beyond vertical expansion, the firm may also seek opportunities in new geographies — it invested alongside Go-Jek in Bangladesh-based on-demand service Pathao, for example. It also plans to utilize local teams in Thailand, Indonesia and Vietnam and perhaps expand its network to more markets, too.

The target for the capital is Southeast Asia, a region of more than 650 million consumers where rising internet access is creating new opportunities for tech startups and internet-based businesses.

A report co-authored by Google last year forecast the region’s internet economy reaching $200 billion per year by 2025, up from $31 million in 2015. Already, Southeast Asia has more internet users than the U.S. population, and the total value of its digital economy was said to reach $50 million in 2017.

Between 2016 and 2017, investors pumped over $12 billion into Southeast Asia-based startups. It’s an impressive stat, but most of the capital was captured by the largest businesses and that’s why more seed and early-stage funds are needed — and are arriving — in the region.

The Openspace Ventures team

At investor level, there certainly seems to be a growing appetite among global LPs, the investors who fund the funds.

Openspace, for example, was originally targeting a $125 million raise, but the firm said it saw significant interest and so raised the additional figure to “embed deeper regional and operating capabilities” into its team.

Singapore sovereign fund Temasek and U.S. PE firm StepStone Group are among the named LPs. Openspace said others include pension funds, university endowments, insurance companies and family offices across the U.S., Europe, Japan, China and Australia.

“For most of these LPs, Openspace is their first and only investment in this region. For some, they have returned and increased their commitment since fund one,” Chesson told TechCrunch via email. “It has taken some time for LPs of this caliber to get comfortable with the region, but we are pleased that we now have the track record at the fund and the interest in the region to bring them on board.”

“This is a big change from a few years back and is a testament to all the entrepreneurs and ecosystem partners who have developed this market so rapidly. There is still much work to be done though in fulfilling the promise, realizing gains, filling in gaps in the regional capability set and we look forward to being part of this,” he added.

This second pot has already been open and, combined with a $90 million debut fund, the firm has backed 19 startups to date. That portfolio, it said, has raised over $2.6 billion in follow-on capital which, even without $2 billion from Go-Jek, is pretty impressive. Indeed, Openspace says its inaugural fund is ranked the third best performing VC fund in the 2003-2015 bracket, according to investment tracking service Preqin.

FinAccel raises $30M to build a digital credit card for Southeast Asia

FinAccel, a Southeast Asia-based startup that offers a digital credit card service in Indonesia, has closed a $30 million Series B round as it begins to consider overseas expansion. The company launched its ‘Kredivo’ service two years ago to help consumers pay online in Southeast Asia, where credit card penetration is typically low, and it is essentially […]

FinAccel, a Southeast Asia-based startup that offers a digital credit card service in Indonesia, has closed a $30 million Series B round as it begins to consider overseas expansion.

The company launched its ‘Kredivo’ service two years ago to help consumers pay online in Southeast Asia, where credit card penetration is typically low, and it is essentially the combination of a digital credit card and PayPal. The service is available in Indonesia, Southeast Asia’s largest economy, where it uses a customer’s registered phone number — there is no physical credit card — and a dedicated checkout on online retail websites.

For consumers, the service offers a 30-day payback option and then more longer-term options of three, six and 12-month payback windows. The 30-day option is interest-free, but other plans come with a 2.95 percent per month charge on the reducing principle, which effectively makes it 25 percent flat.

FinAccel says it has credit scored close to two million consumers in Indonesia, while on the retail side it has partnered with 200 online sales platforms including large names such as Alibaba’s Lazada, Shopee (which is owned by U.S.-listed Garena), and unicorn Tokopedia, which counts SoftBank and Alibaba among its investors.

This new investment, by the way, is a notable one for Southeast Asia, which has generally been considered to have a gap in Series B funding, so $30 million for a two-year-old business is quite something.

The round itself is led by Australia’s Square Peg Capital — in what is one of its highest-profile overseas deals to date — alongside new investors MDI Ventures, which is affiliated with Telkom Indonesia, and UK-based Atami Capital. Existing investors Jungle Ventures, Openspace Ventures, GMO Venture
Partners, Alpha JWC Ventures and 500 Startups also took part in the round.

FinAccel founders (left to right) Umang Rustagi (COO), Akshay Garg (CEO) and Alie Tan (head of product engineering)

The startup raised a seed round of over $1 million in 2016, before quietly raising a $5 million Series A last year, FinAccel co-founder CEO Akshay Garg revealed in an interview with TechCrunch.

Garg, who founded ad tech firm Komli, said the company is processing “hundreds of millions” in U.S. dollars per year and the immediate plan is to keep growing in Indonesia. Already, however, it is eyeing up potential expansions with its first move overseas is likely to be in Southeast Asia in early 2018, although he declined to provide more details.

“Our goal is to become the preferred digital credit card for millennials in Southeast Asia,” he told TechCrunch. “Those are consumers who are mobile-first and already bankable. The credit gap in this market is huge, there’s no electronic verification and other things that we take for granted in the West just don’t work here.”

FinAccel isn’t going after the unbanked in the region, but it also isn’t going after banks either. Garg said that it is possible that the company might try to work with banks in the future in order to grow its market share and offer new products.

One area it is looking at is financial products — such as loans for personal, educational and emergency purposes — but there could be ways to leverage its online presence and adoption among young people and work with existing financial institutions, which he believes simply aren’t equipped to reach out in the same way.

“We don’t see ourselves disrupting the banks, we are more partners,” he explained. “We could partner on balance sheet and on issuing credit cards to offer more efficient and seamless financial inclusion at best possible rates.”