Venture firm 500 Startups doubles down with second fund focusing on Southeast Asia
500 Startups, the venture firm that successfully backed ride-hailing startup Grab, is doubling down with a second fund focused on Southeast Asia.
Through the US$50 million Durian II fund, Managing Partner Khailee Ng plans to invest in 200 seed-stage companies. Malaysia Venture Capital Management Bhd., the country’s largest venture capital firm, anchored the new fund, just as it did when the first debuted in June 2014.
The first Durian fund, named after the stinky tropical fruit popular in Southeast Asia, has made 500 Startups the most active early-stage investor in the region, participating in more than 26 percent of deals from its launch through to May 2016, according to CB Insights. Ng is searching for the next Grab after being an early backer of the app that is now said to be valued at more than $3 billion.
“We de-risk by spreading across many companies and get a higher probability to catch a unicorn,” Ng, 32, said in an interview. “So far that strategy has proven in Southeast Asia and we are going to continue with that strategy.”
Other startups backed by the first $25 million Durian fund have been online marketplaces Carousell Pte and Bukalapak.com, as well as Indonesian shoe company Bro.do. The earlier fund backed a total of 119 startups, a quarter of which have raised additional money while none have shut down, according to Ng.
Local consumer brands like Bro.do, which has a cult-like following in Indonesia, will be one of the focuses of Durian II, Ng said.
500 Startups is investing in a region with rising incomes and a growing population. Southeast Asia, which includes Singapore, Malaysia and Vietnam, is expected to have 480 million internet users by 2020, according to a report by Google and Temasek Holdings Pte.
500 Startups sprinkles small amounts of money across a large number of startups, reflecting founding partner Dave McClure’s strategy since he began making angel investments with $300,000 he earned after his employer PayPal went public. He started the Silicon Valley firm in 2010 and has expanded to $250 million in assets with funds dedicated to Southeast Asia, the Middle East and Latin America. 500 Startups has invested in more than 1,500 companies across more than 50 countries so far.
Ng said his own experience as an entrepreneur helps shape the investment strategy. At the age of 24 he began building his own internet companies and by 30 had sold trending news site Says.com to Malaysia’s Catch Group and local daily deals site GroupsMore to Groupon Inc.
“I’m betting on founders who will outlast their competition,” he said.