Chinese tech billionaire invests $5 million in Singapore VC fund

Chinese tech billionaire invests $5 million in Singapore VC fund

Singapore - Chinese tech billionaire Pang Shengdong is investing S$5 million in Singapore's Tembusu ICT Fund I - a S$70 million venture capital (VC) fund run by Tembusu Partners, The Business Times has learnt.

The fund is said to be the only venture capital fund in Singapore investing solely in software startups.

Mr Pang said that the Republic has the potential to become a leader in the enterprise software or B2B (business-to-business) space as many companies here are tech-savvy and understand the importance of digitisation. B2C (business-to-consumer) startups, on the contrary, may find it hard to scale and thrive in Singapore's small, competitive market, he added.

"This environment is unique to Singapore. The opportunity for digitisation in the corporate and government space is exceptionally high, unlike in China or Indonesia."

The 38-year-old, known for founding Chinese directory website which in 2014 got acquired by Shenzhen-listed 2345 Network Holding Group for 2.6 billion yuan (S$537.9 million), has a published net worth of US$1.2 billion.

He is a shareholder in a few Singapore companies, including gamification firm Zwoo Mobile and e-commerce company SCI Ecommerce. Mr Pang told BT that he is starting up an online travel platform that will first roll out in Singapore and Malaysia, followed by Indonesia.

The Chinese citizen, who is a Singapore permanent resident, resides in Singapore with his wife and two children. He was recently reported by BT to have purchased a Sentosa Cove bungalow with five bedrooms and a pool for S$16.5 million.

Asked why he chose to make the Republic home, Mr Pang said: "Singapore is very cosmopolitan. I want my next generation to grow up in a globalised environment. In China, they don't learn how to speak English. Compared to the US, Singapore is a better choice as it's less far away."

Mr Pang added that living in Singapore is good for business too. "South-east Asia is a fast-growing region. Singapore's proximity to South-east Asian countries means greater accessibility to Indonesia, for example. It's harder to do business in Indonesia from China."

Tembusu ICT Fund I will mark the first time that Mr Pang is partnering a venture capital firm or private equity group in South-east Asia. In addition to capital, Mr Pang will provide the fund's portfolio companies with strategic and tech expertise, as well as market access to Greater China.

Notably, he is among a growing number of Chinese investors who are putting their money in Singapore-based funds. Last week, Jubilee Capital Management, co-founded by Stanley Zhang and George Gong, unveiled a US$100 million fund for tech startups. In September, Venturecraft (whose investors include Alibaba co-founder Sun Tongyu and Xiamen Meitu Technology executive chairman Cai Wensheng) launched a S$50 million venture fund for medtech.

Brijesh Pande, managing partner of Tembusu ICT Fund I, said S$30 million has been raised for the S$70 million fund; fund-raising should be completed in the next four to six months.

Since 2015, Tembusu ICT Fund I has invested in four companies: cloud-based business software platform Deskera, video analytics firm Vi Dimensions, big data company Latize, and cryptographic authentication solutions provider Sixscape.

Asked about the fund's razor focus on enterprise software, Mr Pande said: "Deep tech or core software has the best barriers to entry in terms of intellectual property, and marks the largest component of the startup ecosystem globally."

Mr Pande noted that B2C businesses - while easier to grasp - operate in a winner-takes-all and thus capital-hungry space, making it difficult for relatively-smaller venture capital firms to "see their journey through". Exits have been rare, he added.

Tembusu ICT Fund I is one of six funds selected by the National Research Foundation as part of its Early Stage Venture Fund II scheme. Tembusu Partners chairman Andy Lim is on the fund's investment committee, and his wife, former politician Lim Hwee Hua, is a senior adviser to the fund.

This article was first published on November 24, 2016.
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