appworks Closes $150M Fund for Taiwan & Southeast Asia Startups

AppWorks Closes Oversubscribed Third Fund with $150 Million

AppWorks, a venture capital firm headquartered in Taipei with a focus on Taiwan and Southeast Asia, has announced the successful closing of its third fund. The fund exceeded its initial target, securing a total of $150 million in commitments.

Fund III Limited Partners

AppWorks Fund III benefits from a diverse group of limited partners (LPs). These include Taiwan Mobile, Axiom Asia Private Capital, Fubon Life, TransGlobe Life, Hongtai Group, Wistron, Cathay Life, Phison Electronics, and the National Development Fund of Taiwan.

Notably, a significant number of these LPs had previously invested in AppWorks’ $50 million second fund, established in 2014, demonstrating continued confidence in the firm’s strategy.

Growing Assets Under Management

With the completion of Fund III, AppWorks now manages total assets under management (AUM) reaching $212 million. This substantial growth allows the firm to expand its investment capabilities.

As a direct result of this successful fundraise, AppWorks is actively seeking to recruit new investment associates and analysts. A key focus of this recruitment drive will be identifying individuals capable of sourcing promising deals throughout the Southeast Asian region.

Fund Performance Drives Oversubscription

Jamie Lin, chairman and founding partner of AppWorks, revealed that Fund III originally aimed to raise $100 million. The fund ultimately surpassed this goal due to the robust performance exhibited by AppWorks’ second fund.

Fund II’s portfolio boasts successful companies like Lalamove and 91APP. As of July 31, 2021, the fund achieved a total value to paid-in (TVPI) ratio of 3.3x, representing a strong return on investment.

This performance surpasses the average for comparable funds; Cambridge Associates data indicates a TVPI of 2.4x for top-quartile global VC and private equity funds launched around the same period. Furthermore, Fund II delivered an internal rate of return (IRR) of 34.7%, exceeding the 26.1% average of its peers.

AppWorks’ Evolution and Ecosystem

Established in 2009, AppWorks initially launched an accelerator program before introducing its debut $11 million fund in 2012. The firm has since cultivated a thriving ecosystem.

Currently, the AppWorks ecosystem encompasses 414 active startups. These companies have collectively secured $4.3 billion in funding and hold an aggregate valuation of $17.4 billion.

Looking ahead, AppWorks has set an ambitious goal: to expand its ecosystem to include 1,000 active startups with a combined valuation exceeding $100 billion within the next decade.

Strong Deal Flow

Lin emphasized that AppWorks benefits from a robust pipeline of potential investments. This is driven by the success of startups within its ecosystem, including those emerging from its accelerator program and its extensive network of approximately 100 seasoned entrepreneurs who serve as mentors.

Many of these startups have achieved product-market fit, demonstrate scalability, and are actively seeking funding to fuel further growth.

Fund III Investment Strategy

Fund III is designed to support a portfolio of approximately 40 startups. Investments will be allocated equally between seed-stage and later-stage opportunities.

Seed-stage investments will range from $50,000 to $200,000, tailored to the specific needs of each startup. Larger investments, starting at $2 million, will be directed towards companies in Series A to Series C funding rounds.

A portion of the fund’s capital will also be reserved for follow-on investments in existing portfolio companies as they progress through their maturation stages.

Key Investment Themes

AppWorks’ investment strategy centers around three core themes: Southeast Asia, blockchain technology, and artificial intelligence.

Over the past three to five years, a growing number of AppWorks accelerator graduates have originated from Singapore, Malaysia, Vietnam, Indonesia, and the Philippines. The firm also actively invests in approximately 15 seed funds across Southeast Asia, bolstering its deal flow even amidst pandemic-related travel restrictions.

Current blockchain investments include prominent companies such as Dapper Labs, Animoca Brands, and Splinterlands. Lin particularly highlights the potential of NFTs to seamlessly connect the physical and digital realms, as well as blockchain’s transformative impact on the gaming industry, exemplified by the play-to-earn model pioneered by Splinterlands.

Balanced Investment Approach

The combination of seed- and growth-stage investments will result in a more evenly distributed investment schedule for Fund III. This approach is designed to benefit LPs and reflects AppWorks’ commitment to prioritizing the needs of founders.

Lin explained that many of the firm’s accelerator alumni are first-time founders who require ongoing support from the seed stage onwards. Additionally, mentors within the AppWorks network often seek guidance for larger funding rounds, such as Series B investments of $10 million, $15 million, or $20 million.

This unique deal flow, stemming from the firm’s focus on supporting its alumni and mentors, creates two distinct types of investment opportunities.

Portfolio Companies

Fund III has already made investments in AppWorks accelerator alumni including Pickone, WeMo Scooter, Omnichat, XREX, Blocto, SoopahGenius and Docosan.

Investments originating from the firm’s mentor network include Carousell, Dapper Labs, Tiki, Dcard, Yummy Corp and Animoca Brands.