500 Startups announces second 500 Durians fund worth $50m

Silicon Valley VC firm 500 Startups is doubling down on Southeast Asia with the launch of a second 500 Durians fund targeted to be worth US$50 million.

In a statement today, 500 Startups managing partner Khailee Ng says 500 Durians II will sign US$50,000 to US$150,000 checks for about 200 seed-stage companies in the region. He adds it will also invest US$500,000 additional capital in those that show exceptional progress.

“This follows the classic 500 Startups strategy of making many little bets and doubling down on winners that have taken flight across our family of funds, including 500 Durians I,” he points out.

Funding for Durians II was kickstarted by “fund of funds investor” Mavcap, the Malaysian government’s VC arm, which also largely backed Durians I. Khailee didn’t specify how much Mavcap ploughed in, and he says they’re still fundraising the rest of Durians II.

Opportunities abound

“Southeast Asia has a ready pipeline of explosive growth companies,” Khailee says of why they are deepening their presence in the region.

Not only that, Southeast Asia is also ahead of India, China, and even the US in terms of economic growth, and has a social media-savvy population, exploding smartphone penetration, and a rising middle class, he points out.

He claims the region has started to mature with the making of a complete ecosystem.

“While later stage capital like Tiger Global, Sequoia, SoftBank, and others have made investments in 500 Durians portfolio companies, a welcome development is the emergence of new local players like B Capital, Venturra, and Banma Capital launching Southeast Asia focused funds. Those funds will provide an additional US$1 billion of follow-on capital for promising startups,” Khailee explains. “They exemplify new sources of capital from corporates, family conglomerates, and China coming into the region. Governments have been making big moves as well, with Thailand’s US$570 million government-backed venture capital fund making the biggest news.”

The 500 Durians team, led by Vishal Harnal and Khailee Ng (center).

Little and big bets

500 Durians I started in June 2014, initially with US$10 million backing. In two years, the fund doubled to US$25 million, and invested in a total of 119 startups, including ride-hailing app Grab, mobile marketplace Carousell, and Indonesian ecommerce company Bukalapak.

“At time of writing this, one-fourth of our portfolio companies have raised more than 2 billion US dollars for further growth, and none have shut down. Our thesis is some of these companies will grow to be Southeast Asia’s next generation of startup success stories,” notes Khailee.

Khailee is an entrepreneur with two exits under his belt. He and his partner in the first fund, Vishal Harnal, previously an international disputes lawyer at Drew & Napier, will also oversee Durians II. They will be working with a team of at least 10 people.

Apart from Durians, 500 Startups has microfunds focused on certain markets such as Thailand and Vietnam. In August, Khailee revealed that they’re mulling over launching a microfund for the Philippines.

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