[AVCJ] Flourish Ventures Adds Head of Asia, Plots Ramp-up
Originally posted on Asian Venture Capital Journal (Mergermarket)
Flourish Ventures, a US-based emerging markets financial technology investor with a strong Asia focus, has named Ravi Kaushik, previously of India’s WaterBridge Ventures, as its Singapore-based regional head.
It represents a refocus on Asia for Flourish after a two-year slowdown in activity related to difficult market conditions and the loss of two senior investment professionals in the region. Smita Aggarwal, a Southeast Asia investor, departed the firm in 2023 to take up a role at the UN. India-based Anuradha Ramachandran left in 2022 to join TVS Capital.
Kaushik currently leads a team of three Asia-based professionals, including Harsh Gupta, a principal, and Pranav Mittal, a senior investment analyst. Both are located in India. He said the plan was to hire “a few more” in the foreseeable future.
Flourish’s portfolio is currently about one-third Asian, but this is considered artificially low and set to increase. In addition to India, countries of interest include the Philippines, Vietnam, and Indonesia.
“We think more about specific markets than regions because financial services are regulated at a national level,” said Tilman Ehrbeck, a co-founder and managing partner at Flourish.
“That said, we are truly excited about emerging markets in Asia because they have a unique combination relatively higher per capita GDP compared to other emerging markets like Africa, a sophisticated emerging middle class with aspirations, a digitalization formalization trend in the economies, and they are relatively underpenetrated by the tradition financial sector.”
Flourish spun out from Omidyar Network, the investment vehicle of eBay founder Pierre Omidyar, in 2019. It added USD 350m to its balance sheet last October, bringing assets under management (AUM) to USD 850m. Omidyar remains the sole LP.
The VC firm is one of a clutch of global fintech specialists that are achieving scale with a financial returns-focused impact agenda largely targeted at developing Asia.
Most significantly, LeapFrog Investments, which is increasingly incorporating healthcare into its strategy, has more than USD 1bn in AUM and is targeting a corpus of USD 1bn for its fourth flagship fund. Last October, a source close to the situation said “a significant share” of this had been raised.
There is also Capria Ventures, which recently combined with its India-based affiliate Unitus Ventures to operate globally under the Capria name. Its historical focus on fintech has branched into significant education, agriculture, and climate strategies. AUM is around USD 200m.
Flourish regards the capital structure flexibility that comes with having a single LP and its ambitions to build out a permanent capital base as points of differentiation. The firm also claims an edge in the form of a US footprint that accounts for about half of its portfolio. This is believed to support idea exchange between portfolio CEOs and potential US expansions for developing market start-ups going global.
“Because we are global, different teams have different penetrations in different regions, and we have the ability to sift through some of those nuances to see what makes sense for Asia,” Kaushik said. “That’s really unique from an investment thesis and mission perspective.”
Flourish has historically focused on financial inclusion-related models in areas such as digital banks, credit based on alternative data, and insurance. It is best known for its investments in embedded finance, including regional super-app Grab and Bangladesh B2B e-commerce start-up ShopUp.
Emerging segments of interest include regulatory technology, B2B cloud infrastructure, B2B software, cross-border payments, and climate finance.
In February, Flourish invested USD 1m in India-based StepChange, which helps traditional financial institutions manage climate data management functions. Much of the thesis is underpinned by new regulations in India requiring banks to track climate risk on their balance sheets and lending activity.
“We believe that financial services will be a means to an end in the overall action against climate change because financial institutions determine how the flow of capital happens, whether it goes toward cleaner and more sustainable assets,” Gupta said. “At the highest level, that’s the ultimate interest for us.”