In the middle of a pandemic and a worldwide economic slowdown, Cathay Innovation has wrapped up its second fund with €500 million in commitments.
The firm makes early- and late-stage investments in North America, Europe and Asia, and with such a worldwide imprint, it felt the impact of covid-19 early on. Two months ago it opened a new location in Singapore to help better find opportunities in South-East Asia. The firm also has offices in San Francisco, New York, Paris, Munich, Shanghai and Beijing.
Co-founder Denis Barrier told Venture Capital Journal that the investment team is working from home and continuing to source deals remotely while they support their portfolio companies and use Zoom to communicate.
He said the impact the coronavirus has had on various regions far outweighs that of any business, but he said he doesn’t see the health situation as the end of the world.
“We have belief and confidence that business will start up again,” said Barrier, who spoke to VCJ while sheltering in place in Paris. He noted that the firm has announced recent deals, including taking part in the $8 million Series A funding two weeks ago for insurtech start-up Igloo.
“From our unique vantage point, we are seeing economies across the globe beginning to re-open from the coronavirus lockdowns and that the new world that is emerging will look and operate very differently. We are convinced that true recovery will only take place if job growth and economic prosperity has a positive impact on society and benefits all.”
In analyzing the firm’s portfolio and looking at other venture investments, Barrier says that many of the most successful companies are also, in fact, the most socially impactful. He said that investments that have positive impact on society will help regions get through the crisis.
As an example, he points to the growing mobile and internet usage in South-East Asia. The firm was part of the $90 million Series C funding round for FinAccel, a Singapore-based fintech company that helps Indonesian consumers make ecommerce purchases. The service is a particular benefit for the under-banked population who are online.
Cathay Innovation is affiliated with the private equity investor Cathay Capital, which Thursday also announced it had closed on an $850 million fund to invest in mid-market companies.
Cathay Innovation raised $320 million for its debut venture fund that closed in 2017.
Disclosed investors in Fund II, which included many returning investors, were Bpifrance, BNPP Cardif, Groupe ADP, Groupe SEB, Michelin, Valeo, GL events, Accor, L’Oreal, Dassault, JCDecaux Holding, Kering, Unilever and Pernod Ricard.
Barrier noted that on average, the strategic LPs – or partners, as he calls them – co-invest $1 for very $2 that Cathay Innovation puts into its portfolio companies. He said this is part of the firm’s value-add, to have many relationships with brand-name partners worldwide that not only invest in the firm’s portfolio but advise the companies on strategy growth plans.
Barrier said the larger second fund was partly a result of how the firm’s Fund I portfolio “grew so fast.” He added, “We’d like to invest more into our companies.”
The new fund is expected to invest in 30 to 35 companies.
The firm focuses on start-ups using AI and other innovation in sectors like retail, fintech, healthcare, mobility and energy. Investments include Pinduoduo, Chime, KaiOS, Momenta, Kayrros, Glovo, Ledger, Lumi, OnTruck, Owkin and Trifacta, among others.