Entrepreneur

Why This Danish VC Chose M’sia To Become The Home Of Its New US$60 Mil Fund

  • Danish venture capital firm 3B Ventures have announced the launch of Frontier Fund II, a fund focused on combining talents from the Nordics with impact investments into startups in Southeast Asia.
  • The fund size will be US$60 million, with 3B Ventures targeting 60 ventures to invest in. They also plan to make their first investment in early 2019.

Malaysia welcomed yet another new name onto its growing list of VC firms when Denmark-based 3B Ventures announced the launch of their Frontier Fund II here in Kuala Lumpur on Tuesday.

Boasting a US$60 million fund size, 3B Ventures mentioned its plans for Frontier Fund II to invest into tech startups that have the capability to positively impact the lives of the “next three billion” around the world. These startups will come from sectors such as agriculture, healthcare, energy, water and education, and will be located in the Southeast Asia region.

They have also appointed Andrew Tan of TBV Capital  to become the fund manager in charge of overseeing investments.

If You Can Sell In Malaysia, You Can Sell Anywhere

Based in Kuala Lumpur, the fund will aim to identify 60 high-growth ventures in which to invest in, with hopes to begin funding by the start of 2019.

“We believe that a large portfolio of 60 change-bringing companies creates better results,” said James Digby, one of 3B Ventures’ managing partners. “Earlier investments at seed stage yield larger multiples, and a vast deal network leads to a qualified portfolio.”

“The overarching goal is to maximise financial and social return.”

According to 3B Ventures, investing in sustainable development is expected to be worth US$12 trillion by the year 2030, and with that they hope to leverage off Malaysia’s diversity and business opportunity to take advantage of that huge sum.

“Southeast Asia poses a unique opportunity in terms of market access and numbers,” James said. “Within ASEAN alone we have over 600 million inhabitants, with over 150,000 new Internet users coming online per day.”

“Focusing into Malaysia, we see this as a perfect test bed for operations to grow throughout Southeast Asia,” he added.

“With its demographic mix, we believe that if you are able to sell something throughout Malaysia, you then have the blueprint to move across the Southeast Asia region alongside China and India, giving you access to the next three billion.”

Artificial Intelligence: An Investment Tool

On their upcoming investments, James also mentioned that 3B Ventures uses an artificial intelligence (AI) engine developed by their partners in Singapore to evaluate ventures from even the earliest stages.

“It systematically allows us to provide a very clear snapshot of where the startup is, and its propensity for future activity in fundraising or potential exits.”

He went on to explain that the system offers up two separate scores—one for present-day quality and another for projected future valuation, enabling his firm to make better financial decisions compared to usual methods that contain risk or lack of insight.

“While this does not give us a crystal ball to be able to predict everything, we feel this is a system that is above and beyond the current standard in the VC industry,” he said. “The only thing it must be able to do is to highlight and summarise better than a [traditional venture capital] associate.”

3B Venture’s Frontier Fund II is the successor to its initial Frontier Fund I that raised US$500,000 from high-net worth individuals (HNWI) and other investors from the Nordic region.

It was set up to work with the idea of taking a small number of innovative startups from around the world and scaling them in Southeast Asia, with AgriEye—one of its most prominent investees—now serving the Malaysia, Indonesia, and soon Thailand.

“On the macro level, we recognise the historic opportunity presented by technology as we look to see how our innovations can impact the lives of the next three billion,” said John Raabo, partner at IWI technologies and one of the investors in Frontier Fund I.

“We invested in the fund because it has the right strategy and the 3B team has the network, experience, and expertise to execute it.”

Now after having officially launched Frontier Fund II, 3B Ventures say that they have already managed to secure early financial commitments for the new fund and that they plan to raise the rest from family offices, GLICs, and accredited investors.

  • For more information about 3B Ventures, head on over to their website.

Feature Image Credit: 3B Ventures

 

 

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