US $50 M fund launched by Auspac Investment Management to back SEA startups

Auspac Investment Management, a subsidiary of Auspac Financial Advisory in Australia, has established its first fund focused on Southeast Asian Series A-stage businesses.

After completing the first tranche of US $5 million from its Australian parent in September, the Singapore-based investment vehicle hopes to raise $50 million from rich people, corporations, and family offices over the following 18 months.

The vehicle recently invested in Malaysian insurtech company PolicyStreet’s US $6 million Series A round and aims to deploy its fresh cash in two to three additional rounds over the following four months, in parallel with Auspac’s fundraising process.

“We adopt this kind of pyramid approach that provides people with a simple snapshot of how we go about looking at investments,” said Cheong. “Our principle is to look at the addressable market, the revenue business model, the pain point, the management team, and lastly, the valuation and exit step.”

Auspac plans to invest in 15-20 firms over the next three years, with check sizes ranging from $1 million to $3 million, according to Cheong. The vehicle intends to earn a 30% internal rate of return with two to three agreements per half-year.

Auspac prioritizes a co-investment approach to utilise its portfolio’s due diligence process and advising component, with a staff of six Singapore-based individuals.

“The collective team experience, both on the buy-side and sell-side, should be Auspac’s strong selling point that helps us evaluate the deal more holistically,” Cheong added.

To decrease the failure rate, the VC company exclusively invests in businesses that have already begun to make money. The entrepreneur is particularly concerned about regulatory barriers in Southeast Asia’s fast-growing digital markets.

“Something that we always need to be mindful of is how regulation affects the operating environment under which these startup models operate,” said Cheong. “But I believe that the governments are actually more inclined to promote the ecosystem so this regulatory risk can be managed and compensated accordingly.”

In the first half of this year, VCs invested in a record-high number of deals in Southeast Asian companies, according to research from Singapore’s Cento Ventures. Indonesia topped the list, accounting for half of all capital raised in the area, followed by Singapore, which accounted for 32% of all fundraising.