Joining the Capria Network will help fund managers in Asia access global markets and deliver stronger returns
12th December 2018, Singapore — With first close of its new $100 million “network fund”, Capria recently launched an investment cycle with a focus on partnering with and investing in fund managers in Asia that invest in early-growth businesses. With 16 fund managers from across the globe and opening of a new office in Singapore, Capria is now looking to expand its network to work closely with additional managers from South & Southeast Asia, primarily Indonesia, Philippines, Singapore, to help them build world-class globally-connected funds. Capria recently hired an accomplished Regional Director to head up outreach to new partners and to support the regional network. Applications are open now, with priority consideration provided to those submitting by 14th of December.
Addressing Challenges Across Asia
While fund management is a tough business in all emerging markets, Asian managers face an extra share of difficult challenges, including building strong deal pipelines, operating efficiently across countries, and finding alternative sources of fundraising.
Finding and developing a successful pipeline
Fund managers raise funds to invest in businesses/startups that yield success. Many businesses identified look good on the surface, but have issues found once looking under the covers. The resulting lack of investible pipeline slows down the deployment process, reducing investor confidence. More importantly, shallow pipelines limit the choice of investments, potentially leading to compromised selections or overpaying, thus reducing the odds of strong returns. Capria works closely with its partners across South and Southeast Asia to build and execute strategies to increase pipeline depth and apply rigorous investment discipline to ensure only the best deals are made.
Effective Regional and Global Fundraising Alternatives
As funds grow, managers need to seek multiple new channels for fundraising; they can’t rely solely on small local family offices and DFIs. The clear option is to go to global investors as well as regional LPs. But these potentially highly-effective alternate fundraising options that would enable managers to keep pace with Asia’s growth potential continue to be out of reach for many. Why? Because managers have not adopted global best practices that regional and global investors expect. Capria helps fund manager partners upgrade their operations to adopt global best practices, across everything from team building to governance to branding. Once operating at a high level, fund managers have a much stronger ability to prevail in the increasingly- competitive world of fundraising from regional and global LPs.
Optimising Cost of Doing Businesses Across Countries
Within Asia, early-growth investments are often lucrative at the top line but can be expensive to transact and manage, substantially depressing net returns. Challenges include dealing with opaque and fragmented laws, leadership capacity building, taxation complexity, and country-specific regulatory frameworks. Most LPs prefer to invest in fund managers that are domiciled in tax/regulation friendly jurisdictions such as Singapore, further increasing operating costs for funds. These challenges are just the tip of the iceberg, but if addressed using regional and global best practices, it’s possible to find opportunities for outsized returns.
Lack of liquidity for fund managers
To-date a relatively small proportion of invested capital has been realised by early stage fund managers throughout South & Southeast Asia, particularly venture capital firms. As a result, they are sitting on illiquid portfolios with just paper gains to present. This hampers a fund manager’s ability to raise subsequent fund vintages. LPs in the current climate expect to see liquidity, not just paper gains, in earlier funds before they consider investing. Much of this is due in part to immature local capital markets and less M&A activity as compared to western markets.
These key challenges facing early-stage managers in the region as they work to build stable and reputable fund managers.
Building and expanding the Capria Network in Asia
Capria invests in venture capital, private equity, and other debt and equity funds backing early-growth businesses in emerging and frontier markets. Capria enhances fund managers’ ability to deliver superior returns through the network effect of collaborating fund managers, a proprietary investment platform backed by deep intellectual property, and long-term partnering and advisory services. Capria sees the pain points and the potential that are unique to South & Southeast Asia and aims to address these through peer learning and collaboration with other Capria Network funds in the region as well as with global peers in Africa and Latin America.
“Being part of a pioneering global network of fund managers has enabled many collaborations and a great deal of peer learning for us and for other network member funds. We only see this getting better as the network expands”
– Srikrishna Ramamoorthy, Partner, Unitus Ventures, India.
Being a part of the Capria Network helps funds across regions engage and enable each other. Each fund manager benefits from, and contributes to shared intellectual property, global and local best practices, original research, and investor connections within the network.
Capria is targeting to make aggregate commitments of USD $90 million in the best fund managers across Africa, LatAm and Asia by 2020. Capria is looking to grow current network-wide assets under management from USD $269 million to more than $750M million by 2020, positioning its network of collaborating fund managers to capture part of the USD $1+ trillion “missing middle” opportunity. From over 604 applications submitted, only 16 funds were selected over the last few years to join Capria Network. Capria intends to add 3-5 more fund managers to the network through its next investment cycle, with a special focus on those investing in Indonesia, Philippines, Vietnam and/or regionally across SE Asia. Fund managers can apply here: https://2019.capria.vc/apply
Capria is a global investment firm leading the largest network of fund managers collaborating to deliver superior returns in emerging and frontier markets, using flexible capital, advanced investment systems, and deep partnerships. Through its network fund, Capria invests in venture capital, private equity, and other debt and equity funds backing early-growth businesses. Capria applies global best practices of impact investment and ESG management in order to increase resilience of its portfolio. Capria and its global network deliver profits with scaled impact aligned with United Nations’ Sustainable Development Goals. Capria has offices in Seattle, Bangalore, Singapore, and Nairobi. More about Capria’s Network activities >