Singapore-based startup accelerator-cum-VC fund, Accelerating Asia (AA), is working on a “larger” fund to support the startups in its cohorts.
The firm, which has already raised the initial cheque, plans to launch the fund as early as Q1 2021.
“We already have a Monetary Authority of Singapore-licensed fund worth US$10-million vehicle to invest in the first two cohorts,” Co-founder and General Partner Craig Dixon said in an interview with e27.
“We’re going to be launching a larger fund in Q1 of 2021, which is purely to invest in our cohort companies,” he added.
Although the exact size is yet to be determined, the new investment vehicle will be “substantially larger”, probably in the range of US$20-50 million.
AA expects its current Limited Partners to invest in the new fund. However, since the target size is much larger, it has opened up the doors to larger institutional investors and is having conversations with some institutions.
“The first fund was mainly funded by individual LPs and family offices, whereas the second fund will have a much larger stake taken up by institutional investors,” Dixon disclosed.
According to him, AA has the option to invest more during the cohort and then it has its standard pro-rata to participate in follow-on rounds.
“So the larger fund will probably have more money dedicated towards further pro-rata and the follow-on rounds, whereas the first fund was mainly around those initial investment cheques and the short-term financing needs of our startups,” he added.
On being asked about AA’s expansion plans, Dixon said that AA is expanding into new geographies in Asia, including India, Bangladesh and Sri Lanka.
It is currently in the process of forming partnerships with some Indian investors, and already has tie-ups with several entities in Bangladesh and Sri Lanka.
“Sri Lanka is interesting because it has a lot of similarities with Bangladesh. There is a lot of old industrial base that’s ripe for digitalisation,” he said.
The island country has started seeing investors such as Sequoia, and some other VCs also have started sniffing around. There is also a lot of business owners with capital.
“Lanka, like Bangladesh and Indonesia, also has a new generation of people who run family businesses that are looking to make their mark by investing in innovation and new product lines,” he continued.
“There is also a lot of government support for the startup ecosystem in Sri Lanka (it was through the government support that Singapore became number one in the region). So there’s a lot of dynamics that point positively towards good things coming out of Sri Lanka’s ecosystem. And we’ve had a good experience with that so far,” he said.
Image Credit: Accelerating Asia
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