After the collapse of crypto exchange FTX, Singapore’s state-owned investment firm Temasek has significantly scaled back its involvement in early-stage startups, cutting investments by 88% over three years, as per a report.
The investment group pointed out that it has reduced its early-stage investments to 6% of its portfolio in 2021 because it is “cognisant of the risks and challenges early-stage companies face,” as quoted in the report.
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Temasek said, “We have seen a market pullback in investment flows into early-stage investing since 2022 and, as a result, have adopted a more cautious approach to new investments,” quoted Financial Times.
The firm's investments in early-stage startup companies declined to $509 million in 2024 from $4.4 billion in 2021 and this year, Temasek has committed $70 million to these companies, reported Financial Times.
However, this has become a trend as the number of active US venture capital investors has fallen since 2021, which was a peak year for the VCs, according to Pymnts report.
As per data from PitchBook, the number of VCs investing in US-based companies fell from 8,315 in 2021 to 6,175 in 2024, reported the Financial Times.
By 88% over three years. It dropped from $4.4 billion in 2021 to just $509 million in 2024.
What is Temasek focusing on now?
More conservative investments. It's putting more money into fewer companies that are more stable and closer to going public.
Conservative Approach Replaces High-Risk Betting
Temasek, which is one of the world’s biggest investors, has changed its strategy to focus more on conservative investments as it now makes bigger commitments to a smaller number of companies that are closer to going public, as per the Financial Times.The investment group pointed out that it has reduced its early-stage investments to 6% of its portfolio in 2021 because it is “cognisant of the risks and challenges early-stage companies face,” as quoted in the report.
ALSO READ: Ray Dalio joins Jamie Dimon in warning U.S. debt nearing point of no return, approaching death spiral
Temasek said, “We have seen a market pullback in investment flows into early-stage investing since 2022 and, as a result, have adopted a more cautious approach to new investments,” quoted Financial Times.
The firm's investments in early-stage startup companies declined to $509 million in 2024 from $4.4 billion in 2021 and this year, Temasek has committed $70 million to these companies, reported Financial Times.
Temasek's Shift After FTX Fallout
The Singapore-based company's strategy changed after it had to write off its $275 million investment in FTX, which went bankrupt in 2022, according to the report.
A Broader Trend Across Venture Capital
However, this has become a trend as the number of active US venture capital investors has fallen since 2021, which was a peak year for the VCs, according to Pymnts report.As per data from PitchBook, the number of VCs investing in US-based companies fell from 8,315 in 2021 to 6,175 in 2024, reported the Financial Times.
FAQs
How much has Temasek reduced its startup investments?By 88% over three years. It dropped from $4.4 billion in 2021 to just $509 million in 2024.
What is Temasek focusing on now?
More conservative investments. It's putting more money into fewer companies that are more stable and closer to going public.
