Paris-based investment firm Eurazeo is one of the largest and most active European private equity and venture capital firms in Asia. With offices in Singapore, Shanghai, and Seoul, Eurazeo has taken stakes in notable Asian startups such as Grab, WeRide, and DST Car, in addition to the over 275 invested companies worldwide.
Eurazeo announced in February the first closing of its second Smart City fund, where it collected EUR 80 million (USD 94.7 million) to invest in sectors such as mobility, energy, and industrial tech. In total, Eurazeo aims to raise EUR 200 million (USD 237 million) before the end of the year. The fund will direct 40% of investments to non-European companies, with Asia being a “predominant” market, said Julien Mialaret, operating partner at Eurazeo for the APAC region.
KrASIA recently sat down with Mialaret to discuss the company’s plans in the region. The following interview has been edited and consolidated for brevity and clarity.
KrASIA (Kr): One of your portfolio companies, Paris-headquartered proptech firm WeMaintain, just announced the completion of a USD 36 million Series B round and its expansion into Singapore. How does this company embody the vision of the Smart City Fund?
Julien Mialaret (JM): WeMaintain solves a global problem. Most property owners, whether in London or Tokyo, pay a lot for elevator maintenance. Right now, it is almost an oligopoly; there are just five or six companies in the world that control this market—they sell the elevator, and aftermarket maintenance is very costly for property owners. WeMaintain’s founders reflected that perhaps this market is right for disruption, and they could do better maintenance at a lower cost. Similar to what Uber did, they realized that a lot of licensed elevator technicians were willing to join their platform and selected the clients they wanted to work with. If connected to a network, you could start doing IoT-enabled predictive and cost-effective maintenance, and that’s what they do. They are now working mainly with elevators, but they will also expand to provide other maintenance services for smart buildings, such as fire alarms and automated doors.
Kr: Eurazeo is one of the few European VCs to have an established presence in Asia. Why does this region occupy such a prominent role in Eurazeo’s investing strategy?
JM: The first reason is that, after more than ten years where we mainly localized non-Asian companies for Asia, from 2016 onwards, we realized there was a lot of pioneering innovation going on in Asia, and this innovation wasn’t staying there. Companies like WeRide in autonomous mobility, for example, targeted the international market from the beginning. China was very disruptive in creating global-focused companies, so we started to invest to help these companies go beyond their region and become global champions.
A second reason is that we are one of the very few European VCs with teams and offices in the region. We are very active in supporting entrepreneurs in their cross-border development from Europe and the US into Asia, and vice versa. The Asian venture capital industry is huge—comparable to the volume to the US—and we think we should be involved.
Kr: How do you identify the right companies for Eurazeo’s portfolio in such a diverse and complex region as Asia?
JM: First, because we have been working in Asia since 2004, we have developed strong connections with local VCs. In China, for example, we have co-investments with Qiming Venture Partners and Sinovation Ventures, among other VCs. Secondly, we have strong due diligence capabilities thanks to the support of global and regional corporates in our Smart City fund. When we invest in Southeast Asia or China, we compare what we see to other parts of the world, and we decide to invest in what we think is world-class. We have a lot of data from other regions, which is instrumental in devising our investment strategies. Finally, the last and most important point is getting to know the entrepreneurs early on and developing a relationship with them.
Kr: Eurazeo counts three investments in the mobility sector in China—WeRide, DST Car, and Immotor—while in Southeast Asia, there’s Grab. Will the mobility sector continue to have a special role in your next fund, or will you diversify into other sectors in the region?
JM: In China particularly, sectors such as EV, mobility, and logistics were drivers in the first Smart City fund, and they will continue to be important going forward. However, in this new fund, we will also look at some interesting companies in the Industry 4.0 ecosystem. In China, labor costs are increasing, while automation and the use of data on the production side are kicking in. We will also look at more companies in the energy sector.
In Southeast Asia, we are passionate about the electrification of the region. Most vehicles still use petrol, but we think that in the coming years, EVs and e-scooters will have a huge role, and so we want to look more at EV companies. We will also continue investing in the property sector. In Asia, property is where people invest savings, so everything that changes the economics of how you build, operate, and monetize a building has multiple effects on society. Another problem is inclusiveness [in real estate]. If you are a millennial, buying your first apartment is very difficult, there are huge down payments and other hurdles, and that’s why we invested in Singapore-based Cove, for example.
Kr: Can Grab be considered one of your most successful investments?
JM: Yes. Grab is very special to us, as it doesn’t represent just an investment but also a partnership. When we arrived in Southeast Asia, we developed a partnership with Grab Ventures, and every quarter, we would meet with their team to review investment opportunities in the region. We also helped them look at investment opportunities in Europe. It was great as we met many people at Grab who are now launching their own companies, and we also want to support them. We have seen a lot of great spin-off entrepreneurs already.