(Bloomberg) -- Facebook Inc. co-founder Eduardo Saverin's B Capital Group plans to deploy its second $820 million venture capital fund toward capital-efficient startups, avoiding cash-burning firms during a time of global turmoil.
“For us, it's always been about unit economics, path to profitability,” Kabir Narang, general partner and co-head of Asia for B Capital, said an interview with Bloomberg TV's Haslinda Amin and Yvonne Man. “For businesses that are cash guzzling, those will face challenges and headwinds. It's a wakeup call for the ecosystem.”
Founded by Saverin and former Bain & Co. executive Raj Ganguly, B Capital bets on startups such as delivery firm Ninja Van that support growth sectors like e-commerce rather than e-commerce itself. The firm was so named because it aimed to fill the so-called Series B funding gap. In 2015, seed and early-stage financing known as Series A made up 90% of all startup investments in Southeast Asia.
Since then, about $36 billion has poured into VC- and private equity-backed startups in the region, propelling a tripling in its internet economy to $100 billion, Narang said. He expects the market to triple again to $300 billion in the next three to four years. But the executive cautioned investors against short-term market uncertainty, particularly as the U.S. and other countries clash with a rapidly growing China. India banned 59 Chinese apps after a border dispute led to violent clashes.
“Just in the last two, three months, there was oil price shock, a health pandemic and geopolitical tension,” he said. “It is going to be choppy in the short term. The key for investors is to focus on big businesses that are going to survive and thrive in the next five, 10, 15 years.”
With its second fund, B Capital will focus on Series B to D funding rounds for leading startups in enterprise software, fintech, transportation, logistics and health-care, he added. B Capital's typical investment size is $10 million to $60 million.
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