SINGAPORE Trends and Developments Contributed by: David He, Benjamin Teo, Kinnari Sahita and Binh Vong, Gunderson Dettmer Singapore LLP
Concerns Around Internal Controls and Governance The South-East Asia VC and founder commu - nity was shaken by news in early January 2025 that agritech unicorn eFishery – a standout of the Indonesia start-up narrative backed by an enviable roster of investors including Softbank, Temasek, Northstar and Peak XV – had terminat - ed its senior leadership and was undertaking an internal investigation into financial irregularities. The scale and duration of the misconduct soon became evident: nearly USD600 million in inflat - ed revenues in fiscal year 2024 alone, and fur - ther misreporting dating back as early as 2021. eFishery’s impact extends far beyond the nearly USD1 billion in value that was virtually erased overnight for numerous top-tier investors. This incident, along with a number of less-publicised but equally concerning cases involving South- East Asian start-ups in recent years, has severe - ly undermined the confidence and sentiment of VCs, their limited partners, potential acquirers, and strategic investors around the world. It has already had, and will continue to have, a signifi - cant and transformative impact on the way deals are structured and how start-ups are managed in this region. In the aftermath of eFishery, we expect investors to approach deals with an even greater level of scrutiny, implement processes to ensure ongo - ing oversight, and introduce stricter measures to hold management accountable. As a result, start-ups and founders should prepare for a longer lead time to secure funding and a more comprehensive and costly due diligence pro - cess. Start-ups should also prepare for intensi - fied negotiations on investor rights and manage - ment responsibilities, and a risk-shifting by VCs to protect their investments. These measures will not be confined to the immediate transac - tion – investors will likely require regular and
StreetAsia reported only five debut South-East Asia focused funds closing aggregate proceeds of USD500 million in the entirety of 2024, while Pitchbook tracked ten funds closed by first-time managers. Additionally, DealStreetAsia found that among the 49 funds that achieved an interim closing since 2021, nearly half have not provided any further updates on a final close, indicating a sig - nificant backlog of announced funds that may be undersubscribed. In October 2024, Peak XV, one of the largest VC firms focused on India and South-East Asia, announced that it would release its limited partners from USD465 million in prior commitments related to the USD2.85 billion fundraise it had disclosed in 2022. The firm also offered to reduce its management fees from 2.5% to 2% and its carried interest from 30% to 20%. Meanwhile, Openspace Ventures, which was reported to be raising a USD300 mil - lion fourth fund in early 2023, announced a final close at just USD163 million in November 2024. According to Pitchbook, VC funds that closed in 2024 had a median duration of 17.4 months, a slight decline from the 19.1 months required for funds closed in 2023, but the longest duration since 2015. Despite the challenges, several notable inves - tors successfully closed funds in 2024. In March 2024, B Capital announced the final closing of its second opportunities fund, totalling USD750 million. A few months later, Jungle Ventures reported an interim closing of USD250 million towards its targeted USD500 million fifth fund. Additionally, Unstuck VC, a venture studio led by a first-time manager, raised USD250 million in April 2024.
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