Golden Gate Ventures to raise $50m in second fund

DEALSTREETASIA: Early-stage fund Golden Gate Ventures (GGV) has upped its game in the venture capital space – raising around $50 million for its second fund.

GGV has exhausted its $10 million fund it started with in 2012, which has been invested into various consumer internet businesses, largely in Southeast Asia.

Under the new fund, GGV will also look at the thriving startup markets in larger Asia. It will allocate 10 to 15 per cent of the new fund for investments in Hong Kong and Taiwan.

Founding partner Jeffrey Paine told DEALSTREETASIA that the team is preparing the launch of the new fund, under which GGV’s strategy is to lead with more Series A investments.

This said, the fund will not discount seed funding opportunities.

“Our investments have always been in the seed stage, with follow-up Series A and sometimes B rounds, but this new fund will have more Series A,” he said at the sidelines of the Cradle Buzz entrepreneur conference in Kuala Lumpur last week.

 

GGV’s existing portfolio has investments around Southeast Asia. Going forward, GGV will expand to Hong Kong and further into Taiwan, Paine said.

“We already have two deals in Taiwan, but Hong Kong is a new market for us. We like Taiwan because the engineers there are good and the government is providing new initiatives and, frankly, I like the Taiwanese because they are hustlers,” he shared.

For Hong Kong, where GGV is in the midst of closing two deals, Paine commended on the city’s maturing  startup ecosystem. That, and the diversity among founders from various countries will give GGV’s previously Southeast Asia-centric portfolio a bit of flavour, he said.

“We will look at Japan and Korea for some companies that are coming to Southeast Asia as well, but as co-investors, not leading those deals,” he said.

Paine added that the fund is keeping eyes peeled for a deal from the US as well, if the startup comes to Southeast Asia. Within the Southeast Asia region, GGV intends to source more deals from Malaysia. “We are equally present in all Southeast Asian markets, but this year, we want to spend more time in Malaysia,” he said.

There are two to three Malaysian companies that Paine has checked out and he sees GGV investing in one to two startups per year, from Malaysia.

As for deploying the new fund, the seasoned investor said the team envisions securing 20 to 30 deals over the next three to four years.“We hope to do a deal once every two or three months,” Paine quantified.

On exits

Paine said the fund is not looking at divesting from its current portfolio yet as the first fund was deployed only three years ago. “We are just managing the investments from the first fund, and we plan to hold these investments for about eight to ten years,” he said.

Whether the fund was more keen on initial public offerings or trade sales, Paine said it will have to depend on market conditions at the point of divesting.

So what is GGV looking for when investing?

Paine said that the bulls-eye, for GGV, is the consumer internet space, noting that the media and entertainment sectors, which were popular investment targets 12 months ago, are setting the investment trend again. “We are looking at where the youth are spending their money and where they are growing into,” he noted of mobile apps being a continuing trend.

Paine said that he is keen to invest in out-of-this-world ideas which he opined he has not come across yet. “I want to invest in something crazy, something I have not found yet because most of what I have seen are a variation or copy of another idea,” he said.

Although, he gave merit to entrepreneurs who copy and were quick enough to secure first mover advantage in their markets. His advice to entrepreneurs who are building a ‘copy-cat’ model of an app that has been successful in a foreign market: “Please don’t talk, just run. Do the talking while you run.”