With the current economic uncertainties and geopolitical challenges, securing funding for startups in Asia has recently become more difficult. Venture capital firms have also been impacted by the downturn, leading to a decrease in the number of funds being closed.
The VC market is “going through [one of its] cyclical winters marked by high interest rates, tightened liquidity, and cautious LP sentiment,” Akio Tanaka, a co-founder of and partner at Headline Asia, a Tokyo- and Taipei-based VC firm, told TechCrunch in an interview.
Yet funds are still closing. Headline Asia said Tuesday it had completed one of its largest funds to date, Headline Asia Fund V, at $145 million to invest in tech startups across Asia-Pacific. (Headline previously said that it was targeting $180 million for the fund.)
Headline’s latest fund is earmarked for startup founders building companies targeting digital transformation and cross-border operations in Japan, Taiwan, and Southeast Asia, with selective investment in South Korea. Headline invests in early-stage — seed to Series A — with check sizes ranging from $1 million to $5 million in e-commerce, logistics, fintech, IP, and AI.
Backers of Headline Asia’s fifth fund include a mix of public and private entities, including Japan Investment Corporation (JIC), the National Development Fund of Taiwan (NDF), Korea Venture Investment Corporation (KVIC), and SME Support Japan.
Headline’s new fund has already invested in 17 companies, including Newmo, a Japanese taxi and ride-sharing startup; Jenfi, a Singapore-based company providing revenue-based financing for digital businesses and startups in Southeast Asia; and Pi-xcels, a Tokyo- and Singapore-based startup that delivers NFC-enabled tech for merchants to send receipts to their customers.
Certain investors in Southeast Asia prefer to make safe investments that generate profits instead of investing in high-growth, high-risk tech startups in a challenging funding climate. Headline aims to make investments that these investors won’t.
“Early-stage valuations are still where the most outsized returns are made,” Tanaka said, “especially in today’s exit environment, where later-stage valuations have compressed and liquidity remains limited.”
Tanaka told TechCrunch that the firm is particularly excited about opportunities in Japan. In the past, most Japanese startups have focused on business in their local market, according to Tanaka. There were numerous IPO deals, although they were relatively small in size.
“Many startup founders in Japan found it low-hanging fruit to go public with a relatively small offering,” Tanaka added. “We are very much interested in global startups coming out of Asia, whether it’s Japanese startups going international, or maybe Southeast Asia or North Asian startups going global.”
Headline Asia is part of the Headline global network, with regional offices in the U.S., Europe, and Latin America. The VC has about $4 billion in assets under management.
Founded in 2008, Headline Asia, which has backed over 100 startups, manages approximately $420 million in assets across its five funds. The firm employs 10 investment professionals in Tokyo, Taipei, and Singapore.
The closure of Headline’s newest fund comes on the heels of other Asia-focused VC fundraises.
Antler closed a $72 million Southeast Asia fund in August, and MindWorks Capital, a Hong Kong-based VC firm, completed a fourth Pan-Asia fund at $220 millio in October. In November, Indonesia VC firm Intudo secured $125 million across two funds, including $50 million for a fund to invest in downstream natural resources and renewable energy.