Entrepreneur

Sunway Introduces A US$50 Mil Fund For SEA-Based Tech Startups, Here's What They're Looking For

  • Sunway Berhad have announced a Limited Partnership Agreement to create Sun SEA Capital, a venture capital fund that will be managed by Koichi Saito and Kuan Hsu of KK Fund, targeting tech startups around the SEA region.
  • Sunway Berhad will allocate an initial investment of US$5 million, with the planned fund size to be US$50 million.

Last week, Malaysia added yet another name to its burgeoning list of venture capital firms and funds when local conglomerate Sunway Berhad (through its subsidiary Sunway City Sdn Bhd) announced a Limited Partnership Agreement (LPA) to create Sun SEA Capital LP.

This new venture capital fund that will enable Sunway Berhad to get more heavily involved in the tech-startup scene around Greater Southeast Asia, Taiwan, and Hong Kong.

Dictionary Time: A Limited Parnership is where investors (or groups of investors) become Limited Partners in venture capital fund, meaning that they do not involve themselves in the business activities of the venture capital fund which they invest their money in. They reap rewards or suffer losses based on the decisions made by the General Partners of the venture capital funds. In simple terms, they put in the money and allow the General Partners to take care of nearly everything else.

Sunway Berhad’s initial investment of US$5 million will kick off Sun SEA Capital’s planned fund size of US$50 million, which will be managed by seasoned VC partners Koichi Sato and Kuan Hsu of Singapore-based KK Fund (whose portfolio includes Kaodim, Fabelio, Gixtix, and Venteny).

Koichi and Kuan Hsu will act as the fund’s consultants and directors, and will also be involved heavily as members of the investment committee.

Land Of Opportunity

On placing a firm foothold on Malaysian soil, Koichi said, “We have invested in Malaysian startups startups before, Kaodim being a good example.”

“So we do not see it as a new entry per se; rather the collaboration will allow us to increase our impact in the Southeast Asian market, which is the world’s largest digital economy, by leveraging on the established strengths of the Sunway Group.”

“Having said that, the Malaysian market has a lot to offer startups that want to grow in addition to having a good investor pool,” he remarked.

“It’s a good gateway for tech startups to expand their reach to the Southeast Asia market; there is strong infrastructure, policies are business-friendly here, and there is a strong talent pool.”

Along with Sun SEA Capital’s initial announcement of their fund was them also stating their intention to focus strongly on a myriad of tech-based sectors, namely online-to-offline (O2O), fintech, enterprise, e-health, and digital media and entertainment.

Left: ST Chua, Principal of Sun SEA Capital / Right: Koichi Saito, Director of Sun SEA Capital

“We are looking at scalable startups who are based in Southeast Asia, and preferably, they would have already gained traction in one of these countries,” said ST Chua, principal of Sun SEA Capital.

“For these startups, we will provide access to Series-A investments worth US$1 million to US$3 million per ticket size and help them grow quickly by providing strategic counsel, regional networking, and access to Sunway’s ecosystem.”

“We prefer startups with good unit economics, that solve a pain point, that are taking advantage of a big enough opportunity, and have gained steady traction that is replicable in one or more markets in Southeast Asia,” he added.

“Ideally, they have raised some early stage funding, and last but not least, the founding team’s strengths and weaknesses need to be considered, while the founders need to be reasonable in their valuations.”

Doubling Down On Digital

With its inception, Sun SEA Capital becomes yet another component in Sunway Berhad’s plans to become more digitally relevant. Just last year, the Sunway Group successfully launched its own incubator and accelerator Sunway Innovation Labs (or iLabs), as well as a corporate early-stage VC arm called Sunway Ventures just two years ago.

“Today’s signing marks the acceleration of our digitalisation efforts and the extension of our reach in the region,” said Dato’ Chew Chee Kin, president of Sunway Group. “We hope to see Sun SEA Capital attract great talents from around the region to pursue sustainable growth with us.”

Adding on to that sentiment, Koichi also said, “We aim to tap into the Sunway Education Group, with its two higher education institutions in the city providing a pool of researchers, talent, and facilities such as innovation labs.”

“It’s rare to have an established conglomerate partner up with an established regional VC, so we’re optimistic about our chances of attracting both investors and startups in the Southeast Asia region to Sun SEA Capital.”

The More The Merrier

The announcement of Sun SEA Capital’s fund in Malaysia is an indication of the times—Catcha Group predicted a heavy increase in startup funding around the SEA region within the next two years, with tech-based startups especially poised to benefit.

Indeed, there is a strong optimism surrounding SEA’s tech ecosystem, and with more investors looking to park their money in the fastest-growing region in the world, it will be interesting to see if Malaysian tech companies can leverage off the coming years of plenty. Hopefully, we’ll have more VCs making Malaysia a hotbed for tech startups.

  • For more information on Sun SEA Capital, visit their website.

Feature Image Credit: Sun SEA Capital

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