Five months after launching a fund to invest in early stage startups in India, iSeed has formed a separate fund dedicated to the Southeast Asia market, the investment firm said today.
Started by Utsav Somani, who leads India investments for US-based fund AngelList, and his colleague Wing Vasiksiri, iSeed SEA is a micro VC fund that will invest in about 35 startups within two years, cutting checks for USD 100,000 to 200,000.
iSeed didn’t say how much money it aims to raise. The firm is backed by investors and veteran founders such as Naval Ravikant, founder and chairman of AngelList; Kunal Bahl, founder and CEO of Snapdeal; Jonathan Swanson, founder and chairman of Thumbtack; and others.
While Somani manages the investments in India, Vasiksiri is based in Bangkok and will hunt for deals in Southeast Asia. Speaking to KrASIA, Vasiksiri said he is looking to invest in startups that are based in Indonesia, Singapore, Vietnam, and Thailand.
The following interview was edited for brevity and clarity.
KrASIA (Kr): How did you two link up to start iSeed? How is iSeed different from other investment firms?
Wing Vasiksiri (WV): Utsav and I were doing research about the Southeast Asia market, trying to pin down investment opportunities, as Angel List was looking to expand here. While we were talking to different founders and investors, we realized there was a gap in the market for seed funds. Founders told us investors were taking a really long time to sign deals, and things in general moved really slow. On the investors’ side, we were told that seed funding was drying up as most of the seed funds eventually grew and raised larger funds.
We are really able to differentiate our fund from others in the market, in the sense that we have access to a network of investors and founders who have the kind of knowledge and counsel which other funds don’t have. This group of people are founders and investors that have been successful in the US and India. So, we see ourselves as a bridge between the US, India, and Southeast Asia.
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Kr: Are there specific sectors you’re focusing on?
WV: We are founder-focused, so we are sector-agnostic. We are open to investing in companies in consumer products, B2B, SaaS, and even hardware. At this point, we are open to everything. What we really care about is backing great founders early on in their journey. We believe it’s better if we have a people-driven approach. It’s very hard to be a market-driven investor as a lot of times your insights are wrong.
Kr: Since different countries in Southeast Asia are at different growth stages, do you prefer one country over others?
WV: Not really. To begin with, we will focus on four markets—Indonesia, Singapore, Vietnam, and Thailand.
Indonesia is definitely the largest and most exciting market so far, just because of the population they have. We believe startups that are grown in Indonesia, even if they do not expand to other markets, will be able to have billion-dollar exits. We don’t think that’s the case in other geographies. For example, startups in Thailand will have to expand to other markets at some point to live up to their true potential.
Kr: What is the average investment size from iSeed SEA?
VW: We would invest anywhere between USD 100,000 to 200,000 in a company. We want to come in as early as possible. In some cases, we are happy to come in at the pre-product stage. We want to get to know the entrepreneurs from day one. The core of the fund is seed money, but we might cut a few later stage checks as well.
So far, we have made two investments and committed to two more. The first investment we made was USD 400,000 in an Indonesian company, and is slightly larger than what we would normally do. The second investment is in Singapore, at about USD 100,000. The two deals we have committed to are in Thailand and Singapore.
Kr: What is the fund’s size?
VW: We are still actively raising money for the fund, so we don’t want to say anything about the corpus size. What I can say is that it’s not going to be a super large fund. We want to be sure that our maiden seed fund does well. It’s easier to map out the process if you are a small fund, and we don’t want to compete with big investors. If we write USD 100,000–200,000 checks, we can collaborate with others rather than fight for allocation.
Kr: How did micro venture funds come about?
VW: The concept was really started in the US by Sequoia a long time ago. It had so much competition in the US that, to differentiate itself, it launched a scout program where they’d give scouts money to invest on behalf of Sequoia. Over time, these scouts didn’t just want to be Sequoia’s scouts, but wanted to build their own brands and do their own investing, so they started raising small funds from LPs and venture funds.
One of the reasons it took off was because these micro funds make very quick decisions. There are just one or two decision-makers. We saw this trend emerge in the US and wanted to bring this model to Southeast Asia and India.
Kr: Are there enough micro VC funds in Southeast Asia?
VW: We definitely think there is an open space for seed and micro VC funds to emerge. There are a few who we have talked to and we know that they are great. But there’s definitely not enough for the whole region, considering the pace at which new startups spring up. More capital is obviously better for the ecosystem; once that happens, there can be more experiments happening in Southeast Asia.
One thing that’s unique to us is that we have brought funds from the US to participate in the funding rounds with us. Typically, these funds wouldn’t look at deals in Southeast Asia, but they trust us. We bring in only those investors who we think would be suitable for the startup. This brings extra capital from the US, which otherwise wouldn’t be available for founders in Southeast Asia.
Apart from this, we have something called the “knowledge council,” which is essentially a group of entrepreneurs who have done very well in the US and are ready to share their knowledge with our portfolio companies, and host private workshops and sessions on specific topics. The council includes Sriram Krishnan, former product lead at Twitter; Prasanna Sankar, co-founder of Rippling; Sahil Lavingia, founder of Gumroad; and Anne Dwane, founder of Village Global; as well as others. They’ve committed to work with our portfolio founders to bring best practices from the US to India and Southeast Asia.