RHL Ventures, which is in the midst of finalizing funds for its Hibiscus Fund, is seeking opportunities in the environmental, social and corporate governance (ESG)-related, healthcare and financial sectors, a top executive said.

“While these trends may not seem new, these themes have started gaining momentum in recent times,” the Malaysia-headquartered VC firm Co-founder and Co-Managing Partner Raja Hamzah Abidin told TechNode Global.

“We are expecting Southeast Asia’s startup ecosystem to flourish, with ESG being one of the core pillars for investing, as investors look to invest in SEA beyond the pandemic, especially in the food tech and AgriTech space. It is an area that has historically been underinvested in ASEAN.

G-Life is one such company we have invested in. The Cameron Highlands (Malaysia) company is an integrated food solutions provider that does sourcing, storage, packing, and distribution within the app to save time and provide the best quality products to consumers. In the Agri-Tech sector, we have seen innovative apps like Fefifo that make farming accessible by getting farmlands ready to plant without the hefty investment of time and money.”

Hamzah said the ongoing COVID-19 pandemic continues to disrupt the traditional way of healthcare distribution, therefore healthcare services will continue to be in focus. “This sector has immense potential for disruption and evolution, whether telemedicine, virtual patient monitoring, or innovative solutions that make digital health more accessible. We expect this trend to continue,” he explained.

The financial sector is another sector that RHL closely looks at. “Southeast Asia has a huge unbanked or underbanked population. With digital financial services space heating up across the region, especially Indonesia, Vietnam, and the Philippines, we expect the unbanked population rate to decline in the coming years gradually,” he said.

The Hibiscus Fund is a venture capital fund managed by RHL and South Korea’s KB Investment Co Ltd., which forms part of the Dana Penjana Nasional (DPN) Program, an economic recovery initiative by the government. Under the program, foreign and private VC fund managers will match, on a 1:1 basis, with the Government of Malaysia in investment allocations of up to 1.2 billion ringgit ($290 million).

Hamzah said the VC firm has raked in around $70 million and it is targeting to finalize the fund by the end of first quarter. Besides Hibiscus Fund, he said RHL is planning for another fund in 2023, but declined to elaborate.

“We have a new fund in the pipeline in 2023, which we will only announce when the time is right,” he said.

On RHL’s plan in 2022, Hamzah said the firm is on track to close another two deals by the end of the first quarter, after closing nine deals in 2021.

“We anticipate the pace of deployment this year to be similar to 2021, allocating capital to new deals and also re-ups,” he said. “We also plan to form further partnerships with the government and private sectors to elevate Malaysian small and medium enterprises (SMEs), enable the sustainable development of the digital economy, and create more avenues for regional expansion for startups.”

Within Asean besides Malaysia, the main markets that the VC firm is looking at include Singapore, Indonesia, Thailand, and Vietnam as these countries display great potential in building successful private market businesses, Hamzah shared.

RHL’s portfolio companies include healthy Malaysia-based snacks e-commerce platform Signature Market, US-headquartered dating app Coffee Meets Bagel, Malaysia-based mental healthtech firm Naluri, Indonesian FinTech firm Alami, among others.

RHL continues to be bullish on the tech space in Southeast Asia, after the region saw a record year with more new unicorns emerging last year, accelerated by the COVID-19 pandemic.

“We have seen many deserving and innovative tech companies in the private market that would greatly benefit from access to capital, network, and mentorship at the right time,” he said. “As we move forward, we are looking to build and support innovative private tech companies that have the potential to disrupt and transform markets. Technology enables companies to grow exponentially and create a synergistic ecosystem where everyone can benefit from the value it makes.”

Southeast Asia’s startup ecosystem had its best year ever in 2021. Supported by excess liquidity globally, private investments in homegrown companies reached $25.75 billion last year.

Venture-backed companies in the region collected at least $23.18 billion in equity funding and $2.57 billion in debt financing, according to DealStreetAsia – DATA VANTAGE‘s SE Asia Deal Review: Q4 2021 report.

As more foreign funds flocked into Southeast Asia, with more money chasing tech startups, Hamzah said its well-established startups ecosystem, strong investors, and a proprietary startup database system to capture ecosystem champions over the long term would serve as the firm’s competitive edge.

“Our partnership with Korea’s KB Investments and Malaysia Ministry of Finance’s Penjana Kapital highlights the potential strategic value that we can bring to our portfolio companies,” he said. “This strategic partnership enables us to expand our investment portfolio by networking and connecting with giant unicorns that wouldn’t usually look at Malaysia yet. With the Penjana Kapital program, the startups can command a fair market value, gain better access to the capital and connect with the Malaysian stakeholders and significant government sectors, helping them scale faster and more efficiently.”

Malaysia startups could tap into less-developed sectors – Islamic commerce, AgriTech

Zooming into Malaysia, while the country’s startup and VC ecosystem is often seen lagging its peers like Singapore, Indonesia, and Vietnam, Hamzah said the public-private co-investment program under the Penjana Kapital could support Malaysian startups ecosystem beyond capital investment which include resources-sharing in terms of technical knowledge transfer, cross-border network support to grow local startups beyond the home market.

“To build a sustainable and resilient startups ecosystem in Malaysia, we should encourage local startups to leverage and enlarge Malaysia’s uniqueness and continue to tap into less developed sectors of the digital economy including Islamic commerce and AgriTech,” he said.

“RHL is committed to investing sustainably while creating long-term value for society and our investors. Some of the key areas it is currently looking at include food safety, security, and sustainability, empowering women entrepreneurs and economy, good company governance structure in startups and AgriTech,” he said.

“We believe that these areas will further flourish the Malaysian startup ecosystem, whereas we aim to build a more robust private market business in the region,” he added.

Based in Malaysia, RHL is a multi-family private investment firm focusing on Southeast Asia. Founded in 2016, the firm is currently led by Rachel Lau, Hamzah, and Jo Jo Kong. The firm typically invests in early stages companies (Series A/B fundraises) and it also participates in later-stage rounds. Besides Southeast Asia, it also invests opportunistically in other regions.

The investment firm has attracted attention when it was first set up, mainly due to the family background of its partners and the advisors it managed to put together. Lau is the daughter of the late property tycoon Lau Boon Ann, who was a non-executive director at Malaysia-based Top Glove Corp, the world’s largest glove maker. Hamzah is the son of former Federal Territories and Urban Well-being Minister and Rasma Corp founder Raja Nong Chik Raja Zainal Abidin. Kong is the daughter of David Kong Hon Kong, who founded Nirvana Asia Ltd, Asia’s largest funeral services firm.

On top of the network and family background, the partners also have experiences in investment management as well as the operations of businesses, among others.

RHL’s advisors include Raja Nong Chik, David Kong, Top Glove founder and chairman Lim Wee Chai, Malaysia sovereign wealth fund Khazanah Nasional board member Zainal Abidin Putih, Swiss-based private equity firm Partners Group Asia Chairman Kevin Lu, Deutsche Bank Managing Director Marlon Sanchez, among others.

RHL Ventures’ Hibiscus Fund targets final close of up to $100M, eyes opportunities in food, healthcare & mobility sectors