After a string of governance scandals in Southeast Asia’s startup ecosystem—triggered by the shocking collapse of Indonesia’s eFishery—left investors wary of one of the world’s youngest venture capital markets, Temasek says tightening oversight and delivering exits are crucial to reviving confidence among global backers
“I think governance and trust is a big one,” said Temasek’s head of Southeast Asia Fock Wai Hoong, who highlighted that underlying economic fundamentals for the region remain robust. “The opportunity set continues to be there. You just need people to believe that the companies that they’re investing behind and the numbers that they’re investing on are correct and true,” he said in a media briefing.
Earlier this year, DealStreetAsia reported that Temasek-backed eFishery inflated its revenue by nearly 5x that later resulted in higher valuations in funding rounds while keeping two sets of accounting records since at least 2018. The revelations sparked investigations and culminated in the founder, Gibran Huzaifah, being detained. The startup, once a high-flying unicorn, had been in talks with companies like JAPFA’s subsidiary to divest some assets, but the process has stalled.
Fock said investors like Temasek look beyond the business model, strategy, and capital at hand. “It’s also about the mindset around governance—how can we instill the right level of trust, ensure young entrepreneurs are supported by institutional-level, mature CXOs, and make sure, from an audit perspective, they’re using the right level auditor to ensure numbers are solid.”
He added that seeing distributions from Southeast Asian venture funds would further help restore confidence, which has been shaken by high-profile fraud cases, and drive the next fundraising cycle.
One early sign of exit is AvePoint’s listing, marking 65 Equity Partners’s first liquidity event in almost four years after Temasek helped establish the firm to develop regional champions. The software company is trading at around S$16.61, down roughly 16% from its IPO debut.
“You’re seeing that the exit pathway hopefully starts to come back, with all the work that’s been done on the capital market exchanges,” Fock said.
Move to late stage
As Southeast Asia’s early-stage startup ecosystem has matured over the past decade, with numerous venture capital funds raising hundreds of millions to back new businesses, one of the world’s largest institutional investors is now shifting its focus to growth- and late-stage venture capital in the region.
“The intent [behind early-stage investment] over a decade ago was really to catalyse the early-stage ecosystem and help spur investment into the digital economy…” Fock said. “The notion that there are venture capital funds that have raised substantial third-party AUM and are investing in the seed space and very early venture capital space [means that] we’ve made great progress in that respect.”
“These are areas that I think have a better risk profile for us. The business models are proven out, product market fit is proven up, and unit economics are clear. Then it’s about going from startup to scale up, and how do we then use our capital to support that journey from startup to scale up.”
But that doesn’t mean that Temasek is backing off from fund investments. “There are a number of other venture capital funds that we continue to remain invested in. I think investing in the late stage is more just us shifting our focus, moving dollars in a slightly different direction,” he said, adding that the firm continues to “provide capital to” its regional VC arm Vertex Ventures.
In the last fiscal year, Temasek backed a number of offshore AI-focused funds, such as SignalFire and Radical Ventures; and AI backers like General Catalyst, Lightspeed, Khosla Ventures, and Thrive Capital are among Temasek’s underlying managers.
