Antler doubles down on Southeast Asia investment, invests in second startup fund at $72 million

Antler, a Singapore-based early-stage VC, just closed its second fund in Southeast Asia, raising $72 million to double its investment in startups in Singapore, Indonesia, Vietnam, and Malaysia.

This should be good news for startups. Like other regions, Southeast Asia has been grappling with a steady decline in funding. Between January and July 2024, tech companies in Southeast Asia raised $2.31 billion in 328 equity funding rounds. This was a 69.69% drop from the total $7.63 billion raised in 426 rounds during the same period the previous year.

However, Jussi Salovaara, co-founder and managing partner of Antler, who leads the firm’s investments and operations in Southeast Asia and the broader Asia Pacific region, believes now is the best time to invest early.

“It’s definitely a challenge for both startups and investors. But this is the kind of environment that offers a unique opportunity like no other for early-stage investing,” Salovaara told TechCrunch. “In times of prosperity, the market often becomes saturated with startups competing for attention and funding, leading to inflated valuations and a focus on rapid growth over sustainable business models. In contrast, the current crisis is weeding out weaker players, allowing truly innovative and resilient startups to emerge and secure funding.”

For Antler, that meant identifying and backing founders “who are committed to long-term growth with a clear understanding of their market,” he said. “Early investments in this climate are likely to focus on companies with solid fundamentals, clear paths to profitability and prudent cash management, rather than those chasing quick exits.” That in itself might say something about what priorities might have been when the market was more bullish.

Antler SEA Fund II will focus on pre-launch, pre-seed and seed money stages. The VC plans to allocate $27 million to fund 45 early-stage startups over six to nine months. It also plans to invest in about 300 startups through a second SEA fund. Part of the funding will support startups created during Antler’s residency programs.

The company found that Southeast Asia is an incredibly integrated and diverse market, with each country offering unique opportunities.

When Antler raised its first fund in Southeast Asia in 2018, it only had a team in Singapore. The biggest lesson from its first SEA fund was that it took a very hyper-local approach. It aims to establish its presence in the market by working closely with teams and founders. Salovaara mentioned that Antler has at least one partner in each Southeast Asian country who will help deploy the funds from SEA Fund II.

Antler’s SEA Fund II is sector agnostic. However, it sees significant potential in fintech and health startups across the region as they address critical needs in rapidly growing economies. AI is a technology it is already actively investing in, particularly in non-generic, vertical AI businesses that will solve problems in local markets.

The region is expected to have a middle-class population of around 65% by 2030, with 60% of the population under the age of 35, two factors driving high demand for consumer-facing technology alongside growth in the B2B sector. Indonesia, the most populous country, is a particularly large market for consumer technology because of its younger population. And Vietnam is emerging as a high-tech manufacturing and gaming hub, driven by a highly skilled and educated workforce, Salovaara said.

In addition to early-stage investments, the VC firm will invest up to $10 million in Series A growth-stage startups through its new growth fund, Antler Elevate. Antler also launched ARC (Agreement for Rolling Capital). This investment structure helps founders from early construction to growth by providing up to $600,000 in working capital in the first six to nine months of a company’s lifecycle.

The VC said more than 50% of Fund II came from institutional investors, including a national wealth fund, a pension fund and a university endowment. Antler did not disclose the names of the limited partners but confirmed that most of the institutional investors are based in Singapore.

The VC fund has already invested through Fund II in: Farmio, a food supply chain platform; Zora Health, a startup offering fertility, reproductive and family health services; and Clout Kitchen, a startup marketing to Gen Z.

In addition to its focus on Southeast Asia, the VC, which has offices in more than 30 cities and 20 regional funds globally, has funds in India, Korea, Japan and New Zealand/Australia in the Asia-Pacific region. Antler did not disclose AUM for Antler Global, but the APAC funds have $200 million in AUM, and the first and second SEA funds have about $100 million in AUM combined, Salovaara noted.

The latest fund is three times larger than its previous one, SEA Fund I, which had about $20 million in funding. It has invested in 91 companies, including Airalo, an e-SIM marketplace; Reebelo, a marketplace that sells refurbished and new electronics such as laptops, iPads, appliances and power tools; and bluesheets, a startup that has created AI software to help companies automate accounting processes.

Antler’s founder on its vertical AI bet in Southeast Asia