United States: Caroline Baker On Venture Capital Trends And The Lure Of Southeast Asia

Last Updated: November 29 2019
Article by John Bostwick

Trade tensions, Chinese debt reduction and other factors have led to a 90 percent drop in Chinese investment into the U.S. over the last couple of years. Despite this decline, venture capital in the United States continues to be popular, with U.S.-based VC firms raising over $28 billion in the first half of 2019. That's up nearly 10 percent from the same period last year.

The U.S. has of course long dominated the global VC market, but as the drop in Chinese investment into the U.S. shows, venture capital is undergoing profound global shifts. One area of dramatic VC-investment growth is Asia itself. According to an article in the Nikkei Asian Review, "Asia could overtake North America as the global centre for venture capital funding as early as next year." The article cites a study indicating that five years ago, North American funds outstripped their Asian counterparts by $169 billion. That gap has narrowed to $74 billion and counting.

Caroline Baker has been well-positioned to witness these changes over the past decade. She began her career at PwC in their asset management practice, with stints in Montreal, Sydney, London and Singapore. She went on to become CFO of Chandler Corporation, an investment firm with $5 billion of private equity and real estate investments, primarily in Asia. In 2014, she became Vistra's managing director of the Alternative Investments division for Asia, and the global lead for private equity. She's based in Singapore.

How long have you been providing services to venture capital firms, and how do you help them?

We have been working with VC firms for many years, but in particular for the past four years, since the VC boom in Asia started. We provide full fund administrative and corporate secretarial services, as well as deal-structuring support. We can also work with the investee companies of the VC funds, ensuring they stay compliant — which is extremely important for the fund managers!

In what significant ways has the global VC landscape changed in recent years?

It's becoming much more mainstream. Until recently, the VC market was a bespoke asset class. Now, more and more established fund managers are entering the space, and many entrepreneurs themselves are becoming venture capitalists.

The market has grown immensely in Asia in particular. We are seeing more entrants into the market, and a variety of fund sizes are being launched, from $20 million for first-time fund managers to over $200 million for more experienced ones. Part of the growth comes from local government encouragement. Singapore for example has launched a new venture capital fund managers' regime to make it easier to set up a VC fund.

Are there certain countries you encourage firms to operate in and certain countries you routinely caution them about?

In Southeast Asia there are many emerging markets that can deliver excellent growth, but are difficult to do business in, such as Vietnam, Indonesia and Myanmar. We don't want our clients to miss the opportunities associated with these markets, so we encourage them to exercise due care and fully understand the risks before committing. We have offices and partners in many locations in Southeast Asia, so we have lots helping hands for fund managers to speak to.

China is now the second-largest venture capital market in the world, with over 3,500 VC firms. Over the course of your own career, how has China's rise in this area affected the marketplace and how you do business?

Being in Asia, we have really seen the landscape shaped by China. The opportunity in that market is incredible, but it's also remarkable the way that China has entered other Asian countries. The amount of money invested is obviously transformative, but they also bring their own way of doing business. We have had to be cognizant of how to work with Chinese investors and embrace their way of operating.

After an all-time high in 2016, Chinese foreign direct investment has declined for two years due in part to tightening regulations and liquidity in China. How has this decline affected your own business over the last couple of years?

We have seen fund launches that were focused on China flag somewhat due to fundraising difficulties, however this seems to be compensated by capital from other sources entering Southeast Asia. We are seeing increasing demand from European and even U.S. investors in the region.

According to Preqin data, VC investment into China was down 77% in the second quarter of 2019 compared to Q2 2018. Why do you think some investors are less enthused about going into China than they were just a year ago?

The U.S. trade war is definitely having an impact on investment into China, as are worries about slowing growth. I think investors may be in a bit of a "wait and see" pattern right now, but my view is that this is temporary, and China is still a strong long-term bet.

China's Foreign Investment Law was passed this year and goes into effect January 1, 2020. The law addresses foreign investors' concerns over Chinese requirements to share technology with Chinese companies and the fact that foreign companies often have restricted access to China's market. The law and related concerns speak to the fact that China is very different from many VC target countries. What are some of the pitfalls of China that foreign investors often don't consider when targeting Chinese companies?

The first is administration. It is not easy to do business in China, and even after all the due diligence is complete and you decide to make an investment, there is still a lot of work to make it happen. The second pitfall is access to information. You may not be able to get the information that would typically be provided by your investee companies in other jurisdictions. Finally, deal access may not be as easy to come by as in other countries. In China, it's often driven by relationships.

In light of the U.S.'s increased scrutiny of Chinese investment, where do you think China-based VC firms are likely to turn?

We see these firms looking to Southeast Asia — Indonesia and Vietnam in particular.

Vulcan Capital, the investment house of the late Paul Allen, recently opened an office in Singapore that plans to invest in Singapore, Indonesia and Vietnam. Why do you think U.S. investors are attracted to Southeast Asian countries?

One major factor is ease of doing business. Singapore for example is typically ranked at or near the top of global ease-of-doing business rankings, and it's close to many large emerging economies. It's also a first-world country and an incredible place to live.

Southeast Asia is also attractive because of its emerging middle class and sizable populations, along with less competition for deals relative to more traditional markets. All of these factors together represent a huge opportunity for investors.

Have you noticed any significant recent trends in the types of industries that are attracting investors?

We are definitely seeing a trend towards green investing, typically green backed by tech. There are some really interesting innovative products out there that leverage tech to provide impactful green products.

Do you find that VC investors are investing in companies at an earlier or later stage than in previous years?

We are seeing VCs invest earlier and earlier. As the market heats up and competition to get into certain companies increases, we are seeing VCs take smaller stakes earlier than ever. They may do this across multiple, very early-stage companies in the hope that one of them will succeed.

A Pitchbook report released this month found that VC investments committed to female-founded startups have grown more than eight times in the last decade. Have you seen this trend reflected in the Asian market?

We are seeing an increase in female founders, but it remains still by far a small portion of the market. However, with every step and with every success these numbers are growing!

What's the most memorable thing anyone's said to you about working in the VC market?

Generally speaking, it's memorable when they talk about their investment returns! The numbers really can be mind-boggling. We also learn a lot from the actual investments our clients make, which often give us a glimpse of the newest trends before they become widespread.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions