Wavemaker’s new fund’s all about automation, data, and intelligence: Paul Santos – DEALSTREETASIA

Left: Paul Santos, managing partner of WaveMaker. Right: Tim Draper

June 11, 2017:

Wavemaker Partners is hunting for automation, data, and intelligence startups across the region. The venture capital firm is in the process of closing its Southeast Asia-focussed $50 million fund, and is eyeing about 40 more companies, that would make its portfolio 80-strong, its managing partner Paul Santos said in an interaction.Its main focus about 80 per cent of the fund would still be business-to-business (B2B) models, while the remaining 20 per cent will go to B2C. The firm has at least 10 portfolio companies that count Indonesia as a key marketand is looking to invest more in the country, he added. Edited Excerpts.

Can you give us a brief description about your new fund?

We are early stage investors, so we will come in between seed and series A. This fund were aiming to have about 80 companies as we want to build a big portfolio.

About 80 per cent will have a B2B focus and the remaining balance, with minority invesments, is B2C. The mandate of the fund is Southeast Asia, especially Singapore, Indonesia, Philippines, and Thailand, which are our primary markets, as well as Malaysia and Vietnam.

How big is your ticket size?

First checks were about $100,000 500,000. Now the total exposure is between $1-1.5 million.

When you say B2B you mean which sectors?

It could be financial services, logistics, healthcare, or even SaaS. Basically anything from automation, to data, to intelligence. These are the sort of (verticals) that wed like to look at.

Automation is sensors for data. When you have automation youre creating data you never had before, and you can have data analytics when you start analyzing the data. If you have a lot of data, like multidimensional data, then artificial intelligence is something that you can apply next. So, I look at the problems, then opportunities that I want to pursue (in terms of determining sectors).

Whats the status of Wavemakers latest fund? Have you started to deploy it, and if yes, to how many startups?

We have deployed some of it already. In fact, we did our first close earlier at about half (of $50 million). We have invested in about 40 companies.

Is Tim Draper one of your LPs? What is the profile of your LPs?

Yes, and he is one of the advisors and a member of this network. Our LPs come from around the region and are ranging from family offices to funds, so very diverse.

How big is Indonesias position in this fund?

I would say around 25 per cent of the portfolio at least, if not more. Most of them (Wavemakers portfolio companies) tend to be Singapore-headquartered, but it does not mean that they only have Singapore as their markets. Many of them will touch Indonesia in a big way.

90 per cent of the businesses in the SEA are SMEs, and will always be an interesting market where startups can work by putting a layer of technology to leverage them. For us its more whats the opportunity, who are you serving, why do they love you, are you building a valuable business?

Why are you confident about Indonesia?

I grew up in the Philippines so I have a feel in emerging markets. And emerging markets all over SEA are going through the same change, like you have this young growing population, getting wealthier, adopting tech like mobile phones and cloud, which are enabling things that werent there before.That, for me, is a huge opportunity, and across the region you have that. You can actually make that leapfrog to take advantage of the latest tech, and thats very exciting. Things are changing.

You have seen startups in across emerging markets in the region. Where is Indonesia compared to others, lets say, the Philippines?

I think Indonesia is more aggressive in terms of the numbers of startups that are being built, and investors are more bullish than in the Philippines. Although, there are many problems to be solved across both markets, and entrepreneurs are coming up trying to solve them. In some ways Indonesia is more advanced, but in other ways, they are the same problems, like the population of the unbanked, limited access to information, access to capital, and so on.