Redefining itself as a venture capital firm, Innovatube, a startup incubator with branches in Vietnam, Singapore, Hong Kong, and the United Kingdom, has initiated a US$5 million pre-seed fund for Southeast Asian startups.
Innovatube Fund is open to any potential projects, but the new fund particularly seeks its investments in frontier tech verticals, including virtual and augmented reality, Internet of Things, artificial intelligence, finance, and blockchain.
It will be targeting the Southeast Asian market, with a strong focus on Vietnam. Each investment by Innovatube Fund will also write cheques in exchange for a 5 to 10 percent equity of their portfolio startup. “Given the technical strength of the local market, I believe that Vietnam can be the best market for frontier tech startups,” Hajime Hotta, the Founder of Singapore-based Innovatube said.
In fact, Innovatube’s investment direction in frontier tech is also largely influenced by its founders – Hajime Hotta and Danny Goh due to their established activities that aims to promote new technologies in Vietnam. The two serial entrepreneurs and angel investors based in Singapore and London have been actively investing in eight Vietnamese startups over the last 3 years.
This latest fund will provide pre-seed capital to help bridge the gap between the increasing number of venture capital investors that are targeting Vietnam and the current situation of local early stage startups both in terms of company growth as well as the founder’s capability.
“Theoretically, you will raise some money from angel investors and then close a seed round with a VC. This is always easier said than done. In reality, it’s very likely that young startups will fail to meet necessary traction to raise the seed round. They will have to raise some small rounds in between,” said Hotta.
“In this case, we don’t look for a big fancy vision at this stage but do need a strong conviction in the founder and his team,” Hotta added. “Often, we seek for at least an extraordinary personality in the founder that we believe is critical to their business model.”
However, the risks involved in investing in unproven concepts is high, so Innovatube tends to adopts a hands-on approach in guiding the young startups.
“Working with startups at this stage varies from advising on business model changing to even coaching on a very basic thing, like how to create a good pitch deck for next round,” said Goh.
“Also, most local founders are limited to a local mindset. They think they should build a product for the Vietnam market first and expand; but in our opinion, they should think of a product that targets regionally or globally as soon as possible. We try to help them form such a product in the early stage thanks to our network and understanding about Southeast Asia and Europe or the US,” Goh further adds.
Before kicking off the fund, Innovatube was known as an event organiser for early-stage startups in Vietnam, most of which has aimed to deliver business knowledge to local engineer founders.
One of its recent highly received events is LaunchIT, which features the latest beta-stage startups in town. In 2016, Innovatube also launched the ASEAN Ricebowl Startup Awards, the first of its kind in a regional scale, to Vietnam.
By Vivian Foo, VCNewsNetwork