US Investment firm Capria Ventures is looking to establish five to seven impact investment funds in Southeast Asia by 2021.
These impact vehicles will most likely partner established local fund managers in the region, focusing on the Philippines, Vietnam, Myanmar, Indonesia, and Singapore. It will, however, expand into a wider Asia Pacific region to include India, Pakistan, and Bangladesh.
Capria will also contemplate a separate investment strategy and sectoral focus for its impact vehicles, in addition to providing support from its own Capria network, which is an invite-only network of global impact fund managers and investors.
The venture capital firm currently works with nine fund managers and the Capria Fund, a US$100 million multi-manager investment fund that funds early stage venture capitals and SME finance funds based in emerging markets of Africa, Asia, and Latin America.
“We focus on funds addressing the global missing middle, which generally refers to initial ticket sizes from US$500,000 to US$2 million. This amount is too small for banking and later-stage VCs or private equity, and yet too big for angel investing,” said Will Poole, the Managing Director and Co-founder of Capria.
Poole further explains it is through addressing this segment that Limited Partners (LPs) and funds are intent on nurturing commercially viable and sustainable enterprises with appropriate financing mechanisms; while at the same time ensuring social, environmental and financial returns on investment.
There is certainly no lack of innovative entrepreneurs in emerging markets such as Southeast Asia, however many innovators are not able to realize their full potential. It is not just a lack of capital, but rather a lack of experience which makes venture fund managers unable to facilitate the needed support and financing.
Hence, Capria steps in to finance local entrepreneurs in these high-growth emerging markets through accelerating the development of first-time managers to become on-the-ground, knowledgeable and capable fund managers.
Institutional funds that are limited partners (LPs) of Capria include International Finance Corporation (IFC) of the World Bank Group, UKAis and Pfizer. While several foundations that are also LPs of the firm are the Sorenson Impact Fund, the Crystal Springs Foundation, and the Lemelson Foundation, among some.
“The majority by number are HNIs who care about both market rate returns and social impact. From a dollar volume perspective, we have institutional and family foundation investors who still care about attractive financial returns, but have more defined criteria of social impact they took to be delivered alongside the returns,” said Poole.
In regards to the upcoming investment vehicle, Capria said that they will take anchor LP positions in the future with an investment of US$3 to US$7 million per fund, depending on the fund size and General Partners (GPs) maturity.