Danish venture capital firm 3B Ventures announced the launch of the Frontier Fund II – a $60 million impact investment fund focusing on investments in agriculture, water, energy, health, and education across Southeast Asia, the U.S., and Europe.
Frontier Fund II follows 3B Venture’s Frontier Fund I, which raised $500,000 from independent and high net-worth individuals across the Nordic region.
Fund II, which will be based out of Kuala Lumpur, Malaysia, and managed by CrowdPlus CEO Andrew Tan, has already secured $12 million of initial funding, and plans to raise the balance of its targeted commitments from family offices, individual investors, and Government Linked Investment Companies (CLICs). A first close of $30 million in anticipated for the end of this year,
“We see such a high quality of startups in the market that have impact integrated in their business. These companies are scalable, profitable, and good businesses. Corporates, GLICs, and industry leaders recognise this opportunity and show more and more interest to collaborate with startups and VCs. The government has been very supportive here to facilitate this process,” 3B Ventures General Partner Jan-Cayo Fiebig said in a press statement.
Under its investment thesis, Frontier Fund II plans to identify and invest beginning at the start of 2019 in 60 tech startups at the seed, bridge, or Series A stage that show promise of a positive impact on the world’s population. Follow-on investments through subsequent rounds also will be considered.
“We believe that a large portfolio of 60 change-bringing companies creates better results,” said James Digby, one of 3B Ventures’ managing partners. “Earlier investments at seed stage yield larger multiples, and a vast deal network leads to a qualified portfolio.”
Why Malaysia?
Digby told the Vulcan Post that the firm views Malaysia as the optimal ground-zero for a fund looking to capitalize upon opportunities in sustainable investment across Southeast Asia – an investment class expected to be valued at $12 trillion by 2030.
“With its demographic mix, we believe that if you are able to sell something throughout Malaysia, you then have the blueprint to move across the Southeast Asia region alongside China and India, giving you access to the next three billion.”
From Kuala Lumpur, 3B is targeting the broader ASEAN market – a region that is home to more than 600 million people with 150,000 people gaining initial access to the internet each day.
“Focusing into Malaysia, we see this as a perfect test bed for operations to grow throughout Southeast Asia,” Digby added.
To help ensure the best portfolio it can build, and to mitigate risk and gain insight, 3B is employing tech to its advantage, using an AI engine developed in Singapore by its partners to evaluate startups. Such a system gives each operation two scores: one that reflects the company’s value to-date, and a second that reflects the company’s future potential value.
John Rabbo, partner at IWI Technologies – an investor in both Frontier Fund I and Frontier Fund II, told VCNewsNetwork, “…on the macro level, we recognize the historic opportunity presented by technology as we look to see how our innovations can impact the lives of the next 3 billion. We invested in the fund because it has the right strategy and the 3B team has the network, experience, and expertise to execute it.”
-Lynda Kiernan