Hedge fund Dymon Asia is getting into the venture capital game after it announced its maiden fund.
Dymon Asia Ventures is focused on fintech deals and it is targeting a $50 million raise. Today, its founding partners disclosed a first close of $20 million from a range of LPs that include Thai bank Siam Commercial (SCB), which invested an undisclosed sum via its Digital Ventures arm. Dymon Asia said a final close of the fund will happen over the next 12 months.
The Singapore-based firm is looking to invest in 12-15 companies over the lifecycle of the fund. It has already popped the lid and funded a portfolio of five so far: blockchain startup Otonomos, financing firm Capital Match, forex-focused 4XLabs, trading platform Spark Systems and marketing service WeConvene.
In an interview with TechCrunch, Dymon Asia partners Jinesh Patel and Christiaan Kaptein explained the firm’s decision to move into venture capital was related to both keeping abreast of new developments in the market, and seizing upon opportunities that have opened up in Asia. The focus is particularly on Southeast Asia, where the number of internet users is forecast to jump from 260 million today to 480 million by 2020, growing the total digital economy to $200 billion, according to a report co-authored by Google.
“The hype around fintech is warranted in some respects given the opportunity we’re seeing. The fund will be primarily be b2b-focused because that’s where we see the greatest disconnect,” Patel explained.
While plenty of funds have sprung up to tackle Series A deals, Dymon Asia is aiming to cater to a very specific category of fintech-led companies where the partners believe their resources and understanding can move the needle.
“We see that the progression of Series A to Series B is quite tough,” Patel added. “It’s not just about finding capital but the quality of the business there and how we can help, whether it is regulation or finding people, etc.”
Deal-wise, Dymon Asia is looking to invest as early as seed stage, right up until Series B. Typical check sizes will range from $300,000 up to $3 million, the partners said, with “significant reserves” available for follow-on rounds.
Beyond simply playing investor, the firm is also happy to incubate ideas. That’s the route that Spark Systems, the institutional FX trading platform in its portfolio, took to come to market and the model could be applied to other ventures going forward.
The overwhelming feeling the partners have is that, while there are more VC firms than ever, there’s a distinct lack of fintech specialists in Southeast Asia.
“We want to give fintech founders the attention they need, especially the b2b guys who often don’t appeal to traditional VCs,” said Kaptein, who previously wrote about the “fintech hype” in Southeast Asia for TechCrunch.
“Our investors are strategic in nature so the fund is an extension of that network. Our LPs are also looking at companies which helps us. We’ve always been in this sector so our old networks traverse into this fund,” he added.