Formation 8 has just raised its first $ 448 million fund with a special focus. Formation of 8 plans to leverage its extensive network of offices and locations in Asia to bring its technology investees into transactions with conglomerates in the region.
In Spain we are accustomed to the fact that the processes of internationalisation The main market for Spanish SMEs is Latin America, but it is less common to hear of foreign expansion into Asian markets. Even more surprising is Formation 8's proposal, which considers alliances with large Asian conglomerates as a successful formula for approaching these markets.
Formation 8. investment philosophy
The firm's investment philosophy is around "large, growing, global markets with difficult problems that can be solved through technology and society. It wants companies with a strong technology culture that offer long-term capital incentives, make data-driven decisions, dream big, stress discipline and have the humility to accept advice.
According to techcrunch, Formation 8 originally closed the first $200 million $ last year, and some strong early investments and success had more limited partners lined up to fill the $448 million $ total. Lonsdale says who some of the investors are: "the founders of PayPal, Palantir, Yahoo, and Yammer, plus Asian conglomerates and some New York institutions.
Why ally with large corporations?
Although it invests in start-ups, Formation 8 recognises that there are strengths in large companies, too.
"Corporations have scale, existing relationships, and distribution advantages in large, established industries such as energy, education, healthcare, logistics, financial services and government services," writes Lonsdale. "Many smart startups would do well to partner with large corporations that control the data, knowledge workers, and distribution channels."
Why in the Asian market?
It is in creating synergistic relationships that formation 8 really makes the difference. The firm's local teams in Korea, China and Singapore can help its portfolio with relationships, sales, implementation and market knowledge. When asked if corruption would be an issue, Lonsdale admitted some concerns with the way the Chinese military mixes with the internet industry in China, but says that most of the markets formation 8 is in such as Korea are exceptionally honourable.
While there has been a recent surge in deals between Silicon Valley and Asia, Lonsdale says the connection will grow as smart enterprise and energy companies disrupt the large, outdated company infrastructures developed 20 to 30 years ago by the first wave of enterprise. He concludes: "You need really talented engineers who are really good at big data to fix the infrastructure in big industry. Clearly there is a market for that in the US, but Asia is an even bigger market".
Diego Gutiérrez Zarza
ABRA INVEST
Web: www.abra-invest.com
Blog: http://abrainvest.wordpress.com/
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