The investment landscape in APAC is evolving. While large funding rounds often grab headlines, a new trend is quietly gaining momentum: smaller deals. Macroeconomic pressures, such as inflation and rising interest rates, have led to a more cautious approach to investing, focusing on smaller, targeted investments. These smaller deals are becoming increasingly attractive as they provide unique opportunities for Special Purpose Vehicles (SPVs) and funds to support startups innovatively.
Strategies for Navigating Smaller Deals
While the focus has shifted to smaller deal sizes, deal volume in the APAC region remains robust. According to a recent report, 677 deals were completed in the first half of 2024, setting a pace to exceed last year’s total by a significant margin. This trend opens up opportunities for SPVs and funds to apply strategic approaches that maximise returns and drive innovation. Here are key strategies for handling these smaller deals effectively:
1. Leverage Flexibility: The Key to Adaptation and Innovation
Smaller deals give SPVs and funds a strategic edge, allowing them to adapt and pivot as market conditions shift. This flexibility is crucial in today’s fast-changing economy. By focusing on smaller investments, SPVs help startups test new products, explore revenue streams, and innovate without the pressure to scale immediately. For funds, this means quicker decision-making, faster returns, and more efficient negotiations, keeping investors and startups agile in a dynamic market.
2. Focus on Value Creation and Profitability
Smaller deals shift the focus from rapid growth to operational efficiency and sustainable value creation. For SPVs, this means investing in startups with solid fundamentals and a clear path to profitability. Strategic investments in such companies align with the strengths of SPV structures, which support steady, scalable growth. By emphasising value creation, SPVs build solid, profitable foundations for both investors and startups.
3. Build Stronger Partnerships with Founders
Smaller deals create opportunities for deeper, more collaborative relationships. SPVs can provide more than capital—offering founders mentorship, strategic guidance, and hands-on support. Unlike more significant investments, smaller deals allow SPV-backed investors to engage closely with startups, helping refine products, enter markets, and scale efficiently. This collaboration ensures long-term success and strong alignment between the fund and the startup.
4. Prepare for the Long Game: Strategic Growth Over Time
Smaller deals require patience but pave the way for sustainable success. SPVs can support gradual expansion, allowing startups to build strong teams, refine products, and enter new markets thoughtfully. By prioritising steady growth, SPVs ensure investments remain resilient through market fluctuations, leading to reliable long-term returns.
Smaller Deals, Bigger Opportunities for SPVs
As the APAC investment environment continues to change, smaller deals present an exciting opportunity for SPVs and funds to reshape their strategies. These investments promote flexibility, operational efficiency, and the potential for deeper, more productive relationships with startups. By prioritising value creation and long-term growth, smaller deals allow SPVs to offer significant returns while mitigating risks.
Auptimate is here to support your next strategic move in the APAC region. Our platform streamlines the setup and management of SPVs, making it easier for investors and founders to navigate the complexities of smaller deals. From SPV formation to investor onboarding and compliance, we simplify the process, enabling you to focus on building successful partnerships. Ready to explore the potential of smaller deals with your next investment? Book a call with our team today.
