HONG KONG -- AppWorks, a venture capital (VC) company that invests in Taiwan and Southeast Asia, has raised $114 million for its third fund that is expected to have a total corpus of $150 million.
The company is on track to close its new vehicle by the end of the month, AppWorks partners told DealStreetAsia in an interview.
Taipei-headquartered AppWorks, an investor behind online classified ad platform Carousell and Hong Kong-based logistics company Lalamove, is stocking up more dry powder to raise its stakes in startups in the artificial intelligence (AI), Internet of Things (IoT), blockchain and decentralized finance (DeFi) sectors.
The company, which had initially targeted a fund size of $100 million, decided to raise the bar to $150 million after the investment team saw "a much larger funding gap" for fast-growing startups in Series A and B rounds across Taiwan and Southeast Asia.
AppWorks kick-started the fundraising work for its Fund III in 2018 and quickly hit the initial target of $100 million by the end of that year with commitments from most of its existing limited partners (LPs), as well as Taiwan Mobile, which was its anchor investor.
"As we started investing for the most part of 2019, we realized our pipeline was much stronger than we had expected," said Jamie Lin, chairman and partner at AppWorks.
Founded in 2009 after Lin returned to Taiwan from the U.S., where he had built what he refers to in a blog as two "less-than-successful" startups, AppWorks has embarked on a mission to boost the development of the startup ecosystem in Taiwan and Southeast Asia. It typically invests in 10 to 15 deals each year across seed to Series C rounds, with an average check size of $200,000 to $10 million.
"For most startups working in AI, blockchain, or digital economy in Southeast Asia, the No. 1 most sought-after talents would be UI (user interface)/UX (user experience) software developers, as well as front-end and back-end developers," said Lin. "Across Southeast Asia, I think only in Taiwan and Vietnam can you find a local education system that could turn out tens of thousands of engineers and software designers every year."
In its efforts to connect the ecosystems between Taiwan and Southeast Asia, AppWorks has built a network of 395 active startups and 1,331 founders as of January 2021. Collectively, these startups have raised a total of $2.36 billion in financing, with a combined valuation of $11.07 billion.
With $176 million in assets under management across three funds, AppWorks has also implemented a local seed fund strategy, under which it invests in five stand-alone seed funds operating locally across Southeast Asia.
AppWorks has deployed $92 million from its three venture funds, including $39 million from Fund III. Close to 14.8% of the overall funding went to startups registered or operating in Taiwan. But for Fund III, specifically, the proportion of capital deployment to Taiwan-related companies and companies in Southeast Asia now stands at approximately 50-50.
For the Southeast Asian market, AppWorks will continue its major focus on Indonesia this year, while actively looking at emerging opportunities in Vietnam. Since it started sourcing deals in Indonesia around 2016 and 2017, it has built a handful of portfolio companies in the country, such as online furniture retailer Fabelio, edtech startup HarukaEDU, school payments company InfraDigital, and cloud kitchen Yummy Corp.
Besides those based in Indonesia, AppWorks currently operates a portfolio of 56 startups including Carousell, Lalamove, and ShopBack, Taiwan-based online travel service KKday, retail storefront software-as-a-service provider 91APP and restaurant-tech startup iChef.
And four companies in which AppWorks has invested -- ride-hailing and delivery service Uber Technologies, cross-platform game publishing company Net Publishing and Taiwan-based e-commerce businesses KuoBrothers and Mobix -- have carried out initial public offerings (IPOs).
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