AI Race Heats Up

The stakes in the AI race have gone up with the latest entrant being none other than Japanese billionaire and SoftBank Group founder Masayoshi Son.?

Son is all set to raise US$100 billion for an AI chip venture to rival US-based Nvidia Corp., the trillion-dollar company whose chips power ChatGPT.?

The project—code-named Izanagi—is being seen as a shift in strategy for Son, one that focuses on creating an AI business rather than just investing in AI ventures. SoftBank Group Corp. is expected to bankroll US$30 billion of the total amount, while the rest of the funding may come from Middle Eastern investors.

The new venture aligns perfectly with what SoftBank's Arm Holdings does.?The British chip designer, acquired by SoftBank in 2016, had a blockbuster IPO last year. Son, who still owns 90% of the outstanding stock, is said to be teaming up with Rene Haas, CEO of Arm, for Izanagi.

If and when the raise is complete, it will dwarf Microsoft’s US$10 billion bet on ChatGPT-maker OpenAI, which is the biggest AI investment to date. Meaning, Son is going all out, believing firmly in the arrival of artificial general intelligence within the next 10 years.

Notably, SoftBank was a backer of Nvidia till it sold its entire 4.9% stake in January 2019 for US$3.3 billion. The firm lost out on the grand returns because, at current prices, it would have been worth over US$90 billion.?

Perhaps that has played a role in Son’s decision to create a US$100 billion venture to go up against Nvidia in the race to build AI chips.?

Parallelly, OpenAI CEO Sam Altman is seeking US government approval for raising billions of dollars for an AI chip venture that involves creating a network of factories in collaboration with unnamed chip manufacturers across the globe.

Back in Southeast Asia, Singapore is stepping up its efforts to get ahead in the AI race. It has just announced a new S$1 billion (US$742 million) investment for the AI industry development over the next five years.

With this money, the city-state intends to enhance its AI workforce, ensure the availability of essential AI chips, and collaborate with top tech firms to establish AI research centers.

The investment follows Singapore’s revised National AI Strategy, announced in December 2023, which also looks at cultivating the local AI talent while bringing in top overseas talent, among other things.

Singapore has also earmarked US$52 million for developing a large language model that can understand and generate responses in regional languages.?

Big tech giants already recognize Singapore’s potential as an emerging AI hub. Last month, Google and Enterprise Singapore , a statutory board under the Singapore government, partnered to help 100 Singapore-based GenAI startups in developing and commercializing their products.?

Well, that bodes well for the local startup ecosystem.?

On that note, let’s dive into this week’s recap.?

SEA Funds in Expansion Mode

A slew of Southeast Asian funds are on track to grab emerging opportunities in the region, which has caught the fancy of global investors.?

Malaysian pension fund Kumpulan Wang Persaraan (KWAP) has invested around US$21 million into the regional startup ecosystem . This is KWAP’s first bet on startups under its Dana Perintis program, which it announced in September 2023 to invest up to US$105 million over 18 to 24 months in the green economy, financial access, food sustainability, aging population, and efforts to address the climate crisis. The new deal pipeline includes direct investments in two Malaysian startups—car battery replacement and vehicle servicing platform Bateriku and online wholesale marketplace Lapasar—and venture capital (VC) fund commitments in global early-stage VC firm Antler and Malaysia-based Vynn Capital.

Southeast Asian early-stage VC fund Wavemaker Partners has reportedly secured commitments of around US$100 million for its fifth fund and is expected to reach the target of US$150 million within the next couple of quarters. Wavemaker's existing LPs like Temasek, the International Finance Corporation, and Pavilion Capital, have returned for the new fund, while new partners such as DEG and Siguler Guff have joined in. The new fund’s total amount surpasses the VC’s last fund, which was closed in March 2022 at US$136 million. Wavemaker Partners backs companies in enterprise, deep tech, and sustainability sectors and has already written checks for companies like Meiro, Vama, and Zuno Carbon from the new fund.?

Singapore-headquartered East Ventures' South Korea fund—which it launched in October 2023 in partnership with Seoul-based VC firm SV Investment—aims to raise US$100 million. The new fund will target local firms in sectors such as biotech and healthcare, future mobility, green tech, as well as media and content. The fund also plans to help South Korean companies go public in international markets and increase knowledge-sharing. East Ventures has recently appointed Sang Han as its first partner for its South Korea fund. Before joining East Ventures, Han was a partner at Cento Ventures. He also served as a senior executive director at Vertex Ventures and a managing director at Temasek Life Sciences Accelerator.

Buzzworthy Deals

• The US-based trillion-dollar global asset management Franklin Templeton has recently invested an undisclosed amount in Blockhead , a Singapore-based crypto news firm. A year-old startup covers the blockchain and digital asset industry, particularly in Asia. The investment will support the launch of BRN, Blockhead’s new research platform, among other initiatives. BRN will offer exclusive market intelligence, data-driven analysis, and insights into cryptocurrencies and digital assets for institutional investors and high-net-worth individuals. It will also provide insights into key tokens, emerging industry trends, and the broader macroeconomic forces shaping the digital asset landscape.
• Another investment that Franklin Templeton made recently was in Transparently.AI , a regtech startup based in Singapore, which is using AI to help companies fight against accounting fraud. While the exact amount remains undisclosed, the investment is part of a US$3 million pre-series A funding round that brought Transparently.AI’s valuation to around US$20 million.
• The parent firm of UNO Digital Bank Bank in the Philippines, UnoAsia has raised US$32.1 million in a pre-series B round . Gateway Partners, Creador Private Equity, and Nextinfinity Management participated in the fundraise, a mix of debt and equity. Overall, three-year-old UnoAsia has raised nearly US$75 million so far. Uno Digital Bank currently offers services such as savings, transactions, investment products, and insurance. With the new investment coming in, the company also plans to scale up its current product line while adding more offerings in the coming months. To that end, it is looking to roll out personal loans for retail and e-commerce purchases for consumers in the next month or two.?
• Investment platform focused on decarbonization GenZero received US$44.7 million from parent Temasek Holdings last week. Set up in 2021, the company backs projects in three focus areas—nature-based solutions aiming to restore and manage natural ecosystems, climate-driven tech aiming to reduce greenhouse gas emissions, and solutions that support the development of an effective carbon markets ecosystem. GenZero is part of the consortium that recently announced an investment of US$40 million in UK-based sustainable aviation fuel technology company Velocys.

Things That Stood Out This Week

A host of regulatory developments happened in Indonesia this past week.

Indonesia has passed a new rule that requires big online companies like Meta and Google to pay news outlets to share their articles and news content . This rule, called the Publisher Rights decree, will start in six months. It aims to help the news industry stay strong and healthy by making sure these digital giants support good journalism. They can do this through different ways such as paying for news content, sharing profits, sharing data, or other agreements. The idea for this rule came originally from the media companies and then supported by the government.?

TikTok Shop in Indonesia is still under watch by regulators for flouting rules . Late last year, TikTok acquired a 75% stake in Tokopedia valued at US$2.2 billion, which allowed TikTok Shop to resume its operations in the country in December after the temporary closure. Tokopedia now handles transactions on TikTok Shop in Indonesia. However, users can still make direct purchases through its social media platform, similar to before its ban in October 2023, in a clear rule violation, as per Teten Masduki, the country’s minister of cooperatives and SMEs.

Indonesia is now looking into Shopee for possible monopolistic business practices . The Indonesian Competition Commission (KPPU) is concerned because Shopee might be making customers use its affiliated shipping companies for deliveries, particularly its in-house logistics service, Shopee Xpress, instead of letting them pick other courier services. If found guilty in this investigation, Shopee could face a significant penalty. The fines range from a minimum of 1 billion rupiah (approximately US$64,000) to a maximum of either 50% of the net profits or 10% of the total sales made while the violation occurred.?

And that’s the wrap for this edition of #ICYMI . We will continue to curate the weekly highlights of the Asian tech ecosystem in case you missed what made the buzz in the week that just went by. You can subscribe to #ICYMI to get it every Thursday to stay abreast of noteworthy tech developments.