Why Fundraising Will Pick Up in the Second Half of 2023
Hsu Ken's Column

Why Fundraising Will Pick Up in the Second Half of 2023

Hsu Ken Ooi
March 17, 2023

Fundraising is slow right now. My hunch is fundraising both will pick up in the 2nd half of this year. Here's why.

Investors Need to Deploy

Last year in SEA, there were billions raised in venture capital and almost none of it was deployed. VCs are measured by IRR (internal rate of return) which means the longer they wait to deploy their funds, the lower their IRR. You can get away with deploying slowly in the 1st year but not in the 2nd and definitely not the 3rd.

Comfortability with Macro Environment

Related to the above, if you just raised a fund and you don't know what's going to happen with the macro environment, you should take things slow to see what happens. It's been a year and although there's still some uncertainty, there's much more visibility than last year.

Good Companies, Lower Valuations

Iterative has invested in 86 companies in Southeast Asia so we get a reasonable approximation of how startups are doing. In our portfolio, we haven't seen significantly slowing in actual business growth. Fundraising is definitely taking longer and valuations are coming down but growth is good. That means investors have the opportunity to invest in good companies at lower valuations. At some point, that's going to entice people to be more active.

And because I also just raised a new fund and have to worry about IRR, you should apply to Iterative. We haven't slowed down our pace of investments and are actively working on cutting down our time to decision.

You can find the original thread here.

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