Emergex, though, is still a risky bet for Vickers. The vaccine space is crowded; some of the biggest pharmaceutical companies, like Johnson & Johnson and Sanofi, and big donors like the Bill & Melinda Gates Foundation and BARDA, are racing to produce a Covid-19 vaccine.
The crown jewel in Vickers’ portfolio, though, is Samumed, a San Diego-based regenerative medicine technology company. In 2012, Vickers invested 15% of its US$81.1 million fourth fund into Samumed. The company’s most recent fundraise—a US$438 million round—in 2018 valued it at US$12 billion. Almost single-handedly, Samumed has turned Fund IV into one of the top-performing funds in the world—Vickers has projected returns of 42X for it.
Turning to deep tech
“We like deep-tech startups because they typically aim to solve a real problem in a breakthrough way. Because of this, the value is much more defensible compared to, say, a consumer-discretionary tech business,” says Paul Santos, managing partner at Singapore-based Wavemaker Partners.
“Many deep-tech startups will tend to have valuable intellectual property (IP) or trade secrets that allow them to earn high margins and basically ‘print money’ if they get things right,” adds Santos. Wavemaker focusses on seed funding in enterprise and deep-tech startups across Southeast Asia. Biotech companies like Emergex are particularly likely to grow in status and value given the prevailing Covid-19 crisis.
Samumed and deep tech notwithstanding, Vickers’ funds haven’t all been runaway hits. In fact, its fund performance has been rather mediocre, according to experts. With only five full exits (and six partial exits) to date, its limited partners are yet to see great returns.
Take its Fund II, for example. As of the quarter ended September 2019—some 13 years into the fund’s existence—Vickers estimates a multiple of just 2.58X. This sort of return is paltry, given how much time has passed. The fund’s internal rate of return (IRR) stands at just 11%. Finian Tan, Vickers’ co-founder and chairman, however, is a study in confidence.
Prior to DFJ, Tan had a brief stint as the deputy secretary of trade and industry in the Singaporean government. He claimed to oversee the creation of the billion-dollar Technopreneurial Innovation Fund to boost tech investments in the city-state.
With the spoils from the Baidu deal, where Tan took up his carried interest in the form of shares, he began life as chairman and co-founder of Vickers in 2005. To date, the firm has raised just over half a billion dollars. One of its earliest investments was the Asian Food Channel (AFC), a Southeast Asian pay television channel. AFC was sold to American media company Scripps Networks Interactive in 2013 for US$66 million, giving Vickers a solid exit. According to a pitch deck obtained by us, Vickers exited AFC with a 5X return.
Prior to starting Vickers, Tan’s biggest claim to fame was a shrewd US$7.5 million investment in what was then a newly created and little-known Chinese search engine called Baidu. At the time, Tan was helming the Asian operations of Silicon Valley VC Draper Fisher Jurvetson ePlanet. By the time Baidu went public on the NASDAQ in 2005, the VC’s 28.1% stake was worth around US$1 billion.