Despite Pandemic, Wavemaker Closes Third Oversubscribed Southeast Asia Fund

Despite the raging coronavirus pandemic, Wavemaker Partners announced Wednesday it has closed its third and largest fund focused on Southeast Asia with $111 million in dry powder, exceeding its initial target of $100 million.

"If not for COVID we may have been oversubscribed a little more, but we're happy with where we ended up," said Eric Manlunas, the firm's founder & managing partner.

Some LPs cut their commitment once the seriousness of the coronavirus became clear, but Manlunas says Wavemaker benefited from a solid track record of previous funds and momentum after starting fundraising before the pandemic.

"The timing was challenging towards the end," he said. "There was certainly a fair amount of worry there when the world almost went upside down three or four months ago."

New investor Concentric Equity Partners will join existing institutional backers including Pavilion Capital, Temasek, International Finance Corporation (IFC), and Vulcan Capital in the new fund.

Founded in 2003, Wavemaker is a cross-border venture firm dual headquartered in Los Angeles and Singapore, and has raised some $400 million across multiple vehicles. Its previous $66 million Southeast Asia fund was already the largest early-stage fund focused on enterprise and deep tech start-ups in the region. Since 2012, the firm has invested in over 130 startups, over 100 of which are enterprise-focused and over 40 in deep tech and artificial intelligence. Exits include Indonesian mobile point-of-sale system Moka (acquired by Gojek), cloud communications software company Wavecell (acquired by 8x8) and regional payments solutions provider Red Dot Payment (acquired by PayU/Naspers).

Wavemaker believes the pandemic has helped to further strengthen the thesis that B2B startups represent an undervalued investment opportunity, though Manlunas says the firm has adopted a more cautious approach as it becomes clear that the coronavirus is not going away anytime soon.

"We're prepared to see really a sluggish environment for the next several quarters," Manlunas said. "We've shared with our entrepreneurs that this thing could last through half of next year."