The week that was — Oct 10-15

Startups in Asia seem to be catching the chills of a global funding winter as fundraising slumped across Southeast Asia, China, and India in the month of September.

Fundraising by Southeast Asian startups plunged to its lowest so far this year at $1.27 billion in September, with just two deals in the month valued north of $100 million, showed data compiled by DealStreetAsia. The deal value in September was 76% lower than the $5.32 billion raised in August.

In Greater China, the deal count was 23.3% lower, while deal value fell 40.4% from August, mostly due to a lack of big-ticket deals. Meanwhile, in India, startups recorded a drop of 17% in deal value at $1 billion in September over August as macro headwinds continued to pose fundraising challenges.

And, amid the funding crunch and global economic slowdown, the layoffs and shutdown stories continue. In Indonesia, quick commerce platform Bananas announced the closure of its e-grocery operations, while furniture and interior marketplace Fabelio has been declared bankrupt.

In India, BYJU’S, India’s most valued edtech and also its biggest loss-making unicorn, said it is letting go of 2,500 employees from its umbrella of companies while hobby learning platform FrontRow is laying off 75% of its employees as it rethinks its growth strategy.

But it’s not just doom and gloom. Read on for all the week’s big funding news, deep dives, and more. First…

The scoops

Ucommune, a Chinese shared workspace provider that counts Sequoia Capital China among its early investors, recently sold its Singapore subsidiary as it seeks to improve its balance sheet and streamline its business.

Southeast Asian private equity major Northstar Group has roped in Global Founders Capital’s Southeast Asia partner Melvin Hade to co-head its upcoming first venture capital fund.

Indonesia’s sovereign wealth fund INA and a Chinese SWF are in talks to pick up a 20% stake in pharmaceutical company PT Kimia Farma, according to a top executive.

Primaya Hospital, a unit of the publicly-listed investment firm PT Saratoga Sedaya Investama, is targeting to raise up to 287.11 billion rupiah ($18.65 million) in a domestic initial public offering (IPO).

Indonesian beauty tech startup Social Bella, known for its e-commerce brand Sociolla, has raised around $50 million – about a third of what it was reportedly looking to raise – in a round co-led by private equity firm L Catterton Asia and Singapore state investor Temasek Holdings,

The fate of Singapore fashion marketplace Zilingo remains in limbo as stakeholders struggle to align competing interests. Several sources DealStreetAsia spoke to expressed conflicting views on the firm’s current status. One said that Zilingo’s board has decided to shut down and liquidate the firm in a transaction that will see its debtors — Indies Partners and Varde Partners — receive half their money back.

Bahrain-based alternatives firm Investcorp is said to be investing in a division of Indonesian retail giant Kanmo Group, the distributor of consumer brands including Nespresso, Mothercare and Coach.

LP-GP news

US infrastructure and real estate investment firm Stonepeak has so far raised $2.5 billion for its maiden Asia-Pacific fund, its filing with the US Securities and Exchange Commission showed.

Tower Capital Asia’s maiden private equity fund, which is soon expected to be 60% deployed, will focus on opportunities in Singapore before expanding to other Southeast Asian markets, said founder and CEO Danny Koh.

Falcon House Partners, an Indonesia-focused private equity firm, is seeing high inbound interest in its asset portfolio on the back of strong economic growth in the country, a top executive told DealStreetAsia in an interview.

Pierfront Capital, a Singapore-based private investment firm that provides alternative credit, is bullish on the real assets space in the Asia-Pacific as it offers more downside protection compared to investments in other assets across different markets, CEO and CIO Stéphane Delatte said.

Fundraising news

Fintech company FinAccel — the parent of Indonesian buy now, pay later player Kredivo — is seeking to raise up to $135 million in a Series D funding round, according to regulatory filings.

Dubai-based venture capital firm Nuwa Capital is on track to close its $100-million debut Middle East and North Africa (MENA) fund by the year-end, according to a senior executive.

AI-powered supply-chain visibility platform Altana has raised $100 million in a Series B round led by Activate Capital and joined by Temasek-backed Reefknot Investments, OMERS Ventures, Prologis Ventures and Four More Capital.

Airwallex, a Melbourne-based global payments unicorn, has announced raising $100 million more in its Series E extension funding round at its current valuation of $5.5 billion.

Deep dives

Layoffs at tech startups in Southeast Asia have surged in the past few months as looming economic headwinds impact growth and businesses. And industry observers note that the current wave is more serious than the one seen in 2020. But the changes could be welcome for sectors that had hired perhaps too aggressively during the boom, providing opportunities for companies in need of talent that would otherwise not have been accessible.

Financial technology startups are trying to win over customers as they bring in new products and new ways of selling, along with new ethical debates over privacy and other issues. The question is whether the emerging field of “insurtech” has hit upon the right business model for the region.

The recent collapse of several Chinese housekeeping service platforms left hundreds of thousands of workers unpaid, mostly women from poor rural areas, as the owners absconded with investors’ and clients’ money.

As Chinese internet giant ByteDance’s TikTok Shop sees frenzied traction within months of its launch in Vietnam, the country’s venture-backed e-commerce enablers are quick to tap into the platform’s “shoppertainment” model that blends shopping and entertainment.

India stories

At a time when investors are struggling to score exits amid growing macroeconomic uncertainty, over 45 PE and VC-backed companies in India are waiting in the wings to make their public market debut. If their IPO plans materialise, these firms could raise as much as Rs 76,948 crore ($9.4 billion) and pave the way for exits – be it partial or full – for their existing investors.

Fireside Ventures, an early-stage venture fund that invests in digital-first consumer brands, has closed its third fund at $225 million (Rs1,830 crore).

Mumbai-based Artha Group has launched a new micro venture capital fund — Artha Select Fund (ASF) — to invest in the follow-on rounds of category-winning startups within its portfolio. The fund is targeting to raise about $55 million (Rs 450 crore).

Adda247, an edtech startup that offers coaching for Indian government job examinations, has raised $35 million in a new funding round that was joined by Google as a new investor. Of the total funding amount, Google contributed about $5 million.

India’s fintech firm Spoon, focused on lending to young millennials and GenZ, is in advanced talks to close a $15-million institutional round that could value the company at over $100 million, its founder said in a LinkedIn post.

NirogStreet, a platform that strives to make Ayurveda the first line of treatment for people in India, has raised $6.8 million in a fresh funding round led by Singapore-based venture capitalist Jungle Ventures.

An affiliate of private equity funds managed by Warburg Pincus is acquiring a majority stake in India’s Vistaar Finance, which lends to small and medium businesses in the country.

India-focused fund manager Motilal Oswal Alternates has invested Rs 225 crore ($28 million) for a significant minority stake in family-owned shoe maker Asian Footwears as the latter looks to expand its business across the country.

Mumbai-based Inga Ventures and Singapore-based TIH Ltd are together launching a Rs 125-crore ($15 million) private equity fund to invest in family-owned mid-sized enterprises in India.

Indian edtech Vedantu has acquired a majority stake in education chain Deeksha for $40 million. Separately, another edtech firm PW (PhysicsWallah), which offers coaching for engineering entrance exams, has acquired PrepOnline and Altis Vortex.

Veranda Learning Solutions, a Chennai-headquartered digital learning platform offering test preparation courses for various competitive exams, has signed an agreement to acquire J. K. Shah Education.

Across the wall

SoftBank Vision Fund 2 has led a $100-million-plus funding round for SprintRay, a Chinese provider of dental-care solutions based on 3D printing, as the firm looks to expand its global operations beyond the US and Europe.

China’s STAR Market has emerged as the world’s largest fundraising destination in just over three years, but the young stock exchange may be moving into a period of valuation cooldown.

Trustar Capital, earlier known as CITIC Capital Partners, has raised 1.5 billion yuan ($208.8 million) so far for its fourth RMB-denominated buyout fund.

Volkswagen‘s software unit Cariad will spend more than $2 billion and take a 60% stake in a new venture with Chinese technology firm Horizon Robotics, it said on Thursday, tackling two big challenges: software and the Chinese market.

China’s ByteDance is reportedly in talks with music labels to expand its music-streaming service globally to compete with industry leaders such as Spotify.

And finally, some bytes from Asia PE-VC Summit 2022…

Emerging market fund managers and first-time fundraisers are seen as delivering better returns compared to their more established counterparts, according to Dave Richards, a managing partner at Capria Ventures.

The recent fall in the valuations of small and big startups in the region offers a chance for founders and investors to introspect and learn more about their game, according to GGV Capital managing partner Jenny Lee.

Even as global private equity (PE) firms are increasingly focusing on opportunities in Asia, there is still enough room for regional players to succeed, according to Ravi Thakran, former group chairman of LVMH Asia.

Fund sizes in Asia are getting larger, and startups are also scaling faster, which means venture capital firms active in the region need to evolve to cope with market trends and the changing dynamics, said panelists at DealStreetAsia’s Asia PE-VC Summit 2022.

One way to tackle sexual harassment in the workplace could be by having more women on the board, said Rishika Chandan, managing director at Venturi Partners. Other panelists also felt that having an equitable workforce is important to ensure a woman is not singled out in an otherwise male-dominated work environment.

Venture capitalists say India is much better positioned than other geographies in the world and that it’s an investors’ market right now, even though global macroeconomic headwinds have somewhat derailed the dealmaking momentum in 2022.

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