Sovereign wealth funds throw funding lifeline to tech ventures

Tue Jun 7, 2016 10:01am EDT
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* Sovereign funds stepping up investments in private tech firms

* Big deals support high valuations

* Ten out of world's 80-plus SWFs active in private tech market

By Eric Auchard and Saeed Azhar

FRANKFURT/SINGAPORE, June 7 (Reuters) - A succession of funding deals by deep-pocketed sovereign wealth funds have thrown a life preserver to some of the world's biggest private tech firms whose high valuations have come under scrutiny in the past year.

Saudi Arabia and other Gulf States along with state-backed investors in Singapore and China have ploughed money into hot tech investments such as ride-sharing company Uber and Chinese Internet giant Alibaba and its private affiliates.

With overall funding for start-ups slowing down by a third to $25.5 billion in the last two quarters, according to data from CB Insights, high-profile ventures are turning to government funds or institutional money to create "private IPOs" rather than to venture capitalists or chancing public listings.

These capital injections have helped to keep valuations high as other tech ventures such as those of cloud storage service Dropbox or Indian takeaway food ordering app Zomato have been marked down by some earlier backers.

"Sovereign wealth funds are well placed to make large bets... given their deep access to capital and their risk appetite for growth investments," said Jacqueline Chan, a Singapore-based partner at law firm Milbank, who has advised sovereign wealth funds.   Continued...