STOCKTON, Calif. – Two years after breaking ground in the Philippines – creating alliances with local business and government officials to develop a sustainable technology infrastructure in the archipelago – Delta Venture Partners is set to close a $50 million venture fund to target that country’s life sciences and software industries.
Hal Spice, founder and managing director of Stockton-based Delta Venture Partners, first came to the Philippines as a health-care consultant. Struck by the nation’s innovative programmers – and their sophisticated viruses – Spice identified an investment opportunity still largely untapped by the major players in Asian venture capital: Chase Capital Partners, H&Q Asia Pacific or Walden VC.
“The Philippines’ number one asset is intellectual capital: a large English-speaking population, highly educated in information technology and life sciences,” Spice said. “There’s a surplus of intellectual capital with four-year and advanced degrees looking for work.”
Oversubscribed soon after announcing its launch, the vehicle will target seed-stage life science, bioscience, knowledge management and software companies with equity investments between $1 million and $5 million. Over the course of its two-year investment cycle, the fund expects to complete 20 deals. Follow-on financing will most likely come from the fund’s roster of limited partners, which includes a number of other venture firms and one private foundation.
Opportunities in the region, Spice said, are especially ripe in food production, agriculture and aquaculture. The firm will seek out intellectual property assets that can be licensed to, or sold to, larger U.S. companies as soon as 12 months after Delta Venture’s initial investment. Already, Delta Venture Partners has identified three potential portfolio investments: a software developer, a call-center delivering expertise in the biosciences and an Internet infrastructure firm creating a local backbone and layered applications. The fund expects to generate a ten times return on investment.
At the same time, Delta Venture Partners is readying a $3 million public-private partnership to develop a technology ecosystem in the Philippines. The initiative, Spice said, includes a team of development economists and strategists working to create a Silicon Valley-like environment and its financial, administrative, legal and technical backbone. The partnership was expected to launch in late March.
Formed in 1981, Delta Venture Partners evolved from a management and information technology consulting practice into an incubator-like operation in 1996. By 1999, the firm had morphed into an investment bank specializing in securing capital from Asian financiers for U.S.-based start-ups. This fund is the firm’s first foray into the VC arena. Four Silicon Valley-based partners will co-manage the fund alongside one Manila-based partner.