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.
