AppWorks, a venture capital (VC) firm that invests in Taiwan and Southeast Asia, has reached the final close of its AppWorks Fund III at a hard cap of $150 million, bringing the firm’s total assets under management (AUM) to $212 million.
An investor behind online classifieds platform Carousell and Hong Kong-based logistics firm Lalamove, AppWorks said in a statement on Thursday that most of its LPs re-upped in the Fund III. As its biggest fund to date, the oversubscribed AppWorks Fund III exceeded its initial target of $100 million.
It secured capital commitments from both existing and new limited partners (LPs) including Taiwan’s telecom operator Taiwan Mobile; Asia Pacific-focused private equity (PE) firm Axiom Asia Private Capital; and Taiwan-based conglomerate Fubon Life.
Taiwan’s insurance companies TransGlobe Life and Cathay Life; real estate firm Hongtai Group; original design manufacturer (ODM) Wistron; Taiwanese electronics firm Phison Electronics; Taiwan’s National Development Fund, and others also committed to the new fund.
At $150 million, the new vehicle is three times larger than Fund II, which was closed in 2014 with $50 million in total commitments, as well as the firm’s $11-million, 2012 Vintage Fund I.
The final close comes about five months after AppWorks told DealStreetAsia about its fundraising update with $114 million in commitments for Fund III. Having kickstarted the fundraising work in 2018, AppWorks decided to raise the fund’s hard cap after seeing “a much larger funding gap” for startups in the Series A and B stages in the Greater Southeast Asian region.
“Many earlier-stage funds that are sub-$50 million have popped up over the past five to six years, making things easier for early-stage startups [looking] to raise $3-5 million in a Series A round. But once they get to a certain point where they want to raise a $10 million Series A or a $20-30 million Series B, it becomes much, much harder,” said Jamie Lin, chairman and partner at AppWorks.
On track to back 40 deals
The Taiwan-based company plans to use its Fund III to capitalise on “a better-than-expected inflow of investment opportunities” in its focused areas of artificial intelligence (AI), blockchain, Internet of Things (IoT), decentralised finance (DeFi), and beyond, it said in the statement.
AppWorks Fund III is in the process of building a portfolio of about 40 startups, including 20 investments starting at $2 million in Series A to Series C companies and 20 seed-stage investments. AppWorks will also reserve capital to support its portfolio companies as they reach maturity.
Fund III has by far backed over 20 companies. Some of its better-known portfolio firms include Singapore-based online classifieds business Carousell; Dapper Labs, the company behind NFT collectible platform NBA Top Shot and blockchain platform Flow; Vietnamese e-commerce startup Tiki; and Hong Kong-based Animoca Brands, which hit the unicorn valuation of over $1 billion in May.
As part of the final close, the firm plans to recruit new investment associates and analysts to scale up its investment activity with a focus on Southeast Asia.
The final close marks “a huge milestone” for AppWorks since the firm started its “journey of raising and managing VC funds in 2011,” said Lin in the statement.
AppWorks claims that the predecessor fund AppWorks Fund II, which was launched in 2014, booked 3.3x in total value to paid in (TVPI), with its distribution to paid-in (DPI) at 1.3x and internal rate of return (IRR) approaching 34.7% as of the end of July.
Fund II’s portfolio includes Lalamove, which turned into a decacorn earlier this year with a valuation of over $10 billion; and Taipei-listed 91APP, Taiwan’s first locally grown unicorn with a market cap of over $1.4 billion.
Founded in 2009, AppWorks also operates AppWorks Accelerator, a semi-annual incubation project that takes in Greater Southeast Asia-focused entrepreneurs to help them get their ventures off the ground; as well as AppWorks School, which cultivates tech professionals to tackle a shortage of talent in the region.
After over a decade of development, its ecosystem now covers 414 active startups and 1,396 founders, collectively raising $4.3 billion and boasting an aggregate valuation of $17.4 billion. AppWorks has set a goal of expanding the community into a total of 1,000 active startups with a collective value of over $100 billion in the next 10 years.