Munich-based investment firm Picus Capital is set to increase its investments across Asia. The company plans to invest up to $75 million in Asian startups in the next three to five years. This amount represents a 25 percent share of the total $250 million to $300 million the firm will be investing.
Oliver Heinrich, Partner at Picus Capital, shared these plans in an interview with KrASIA, wherein he detailed the firm’s Asian shift. Heinrich visited India early last year, before COVID-19 became a pandemic, in hopes of finding investment opportunities and opening an office in Asia.
“Last year, we formalized our interest in Asia by setting up a local office in India. This year, we will look closely at China to make our first investment there,” Heinrich told KrASIA. He also mentioned Indonesia and Singapore as other countries Picus Capital is eyeing.
According to Heinrich, the Asian market first caught the interest of Picus Capital in 2016 after observing the developments in India’s tech startup ecosystem. “We were fascinated by the kind of growth India, China, and Southeast Asian countries have been going through,” he said.
It was in 2018 when the six-year-old privately financed venture capital firm made its first investment in India. This became the start of the firm’s shift of focus towards Asia, after observing the massive growth opportunities in the region’s markets. “We believe the hyper growth in Asian regions will have a massive impact on global economies,” Heinrich enthused.
Picus Capital considers Europe as its core market. The firm also has investments in the United States and South America. However, it has already made investments in a few Asian startups including Singapore’s collaboration and communication startup Cove, India’s online learning platform Lido, and Thailand’s digital commerce app Crea.
A VC firm started by Rocket Internet co-founder Alexander Samwer, Picus Capital specializes in startups in the fields of education, finance, and healthcare. “We are excited to find out how technology can shape and improve accessibility in these three sectors,” Heinrich said. Other than the preference for these sectors, the firm is not looking for anything specific about the startups it invests in. “If we like the founding team, we don’t hesitate to invest in them even if they don’t have a product-market fit,” Heinrich added.
However, Picus Capital focuses on seed, pre-seed, and Series A investment rounds. The firm usually invests in the range of $250,000 to $750,000 per round, eventually going “bolder and bigger in the follow-on rounds with other lead investors.”
When asked if the firm is interested in making investments beyond Series A, Heinrich implied that they generally stop at this round. On average, Picus Capital invests a total of $3 million in the early-stage companies it chooses. However, Heinrich said that “we do like to follow up with further rounds in a participatory role.”
To date, the Picus Capital office in India is the firm’s only office in Asia. All of the firm’s investment activities in Asia will go through its office in Bangalore. Still, the entire Picus Capital team is involved in scrutinizing investment options including the examination of a startup’s founding team and their solutions. “We act jointly with all our teams, so we don’t have different entities,” Heinrich explained.
Heinrich, however, hinted that it is possible for another Picus Capital office to be established in China within the year. He acknowledged the possible challenges the firm will be facing in the world’s second largest economy, though. “I agree that the market has matured quite rapidly, and the funding rounds have gotten extremely big, typically three to five times higher than European standards,” Heinrich said while also expressing optimism in finding opportunities in China’s FinTech and HealthTech sectors.
Regarding the lingering threat of COVID-19, Heinrich recognized the uncertainty at the start and the middle of the year, noting how companies turned conservative with their investment allocations. “But we see the situation improving now. Good companies with strong fundamentals will always find a way to capture and raise capital at a reasonable valuation,” Heinrich said.
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