Current economic uncertainty and geopolitical challenges have made it more difficult recently to secure funding for Asian startups. Venture capital companies have also been affected by the recession, leading to a decline in the number of funds that have been closed.
The VC market is “passing” [one of its] Akio Tanaka, co-founder and partner of Headline Asia, a VC company based in Tokyo and Taipei, told TechCrunch in an interview.
However, funds are still closed. Headline Asia said Tuesday it completed Headline Asia Fund V, one of its biggest funds to date. (The headline previously said it targets the fund's $180 million.)
Headline's latest fund is allocated to the startup founder construction companies targeting digital transformation and cross-border operations in Japan, Taiwan and Southeast Asia, making selective investments in Korea. Headline is investing in early stages (seed to Series A seed) with check sizes ranging from $1 million to $5 million in e-commerce, logistics, fintech, IP, and AI.
Headline Asia's fifth fund supporters include a mixture of public institutions and private companies, including Japan Investment Corporation (JIC), Taiwan National Development Fund (NDF), Korea Venture Investment Corporation (KVIC), and SME Support Japan.
Headline's new fund has already invested in 17 companies, including Newmo, Japanese taxis and ride-sharing startups. Jenfi is a Singapore-based company that provides revenue-based funding for digital businesses and startups in Southeast Asia. Pi-Xcels is also a Tokyo and Singapore-based startup that provides NFC-enabled technology to merchants to send receipts to customers.
According to Tanaka, certain investors in Southeast Asia prefer to make profitable safe investments rather than investing in high-growth, high-risk, high-tech startups in a challenging fundraising environment. Headlines aim to make investments that these investors don't.
“The early stage evaluation is where the most distinctive returns are still taking place, especially in today's exit environment where later stage evaluations are compressed and liquidity is limited,” he said.
Tanaka told TechCrunch that the company is particularly excited about the Japanese opportunity. In the past, Tanaka said most Japanese startups have focused on business in local markets. There were many IPO transactions, but the size was relatively small.
“The founders of many Japanese startups felt that it was a low fruit to be published with relatively small products,” Tanaka added. “We are very interested in global startups coming from Asia, whether Japanese startups become international or Southeast or North Asian startups become global.”
Headline Asia is part of a global network of headlines with regional offices in the US, Europe and Latin America. The VC has approximately $4 billion in assets under management.
Founded in 2008, Headline Asia supports more than 100 startups and manages approximately $420 million in assets with five funds. The company employs 10 investment experts in Tokyo, Taipei and Singapore.
Headline's latest fund closure comes shortly after other Asian-focused VC funding.
Antler closed its $72 million Southeast Asia Fund in August, and Mindworks Capital, a Hong Kong-based VC company, completed its fourth Pan-Asia Fund in October for $220 million. In November, Indonesian VC company Intudo settled $125 million for two funds, including $50 million in investments in downstream natural resources and renewable energy.