Singapore’s state fund Temasek has warned of reducing exposure to early-stage companies, after a series of bad investments. The new approach comes as a lesson from the implosion of the FTX exchange, where Temasek was one of the biggest investors.
The Singapore fund owned by the Ministry of Finance, will now de-risk by avoiding early-stage companies. The fund lost access to low interest rates after a series of bad investments.
FTX was a cautionary tale
One of the biggest traps for Temasek was FTX, which spent months spinning up the image of a reliable and successful crypto startup. The fund ended up writing off $275M, decreasing its workers’ compensation, and suffering reputational damage.
The fund was among the high-profile backers of FTX, which included SoftBank and BlackRock. SoftBank had to write off $100M from its FTX investment.
As a result, Temasek has become more bearish on early-stage unlisted companies, as reported by the Financial Times, according to sources with knowledge of the fund’s investment strategy.
Temasek also took a hit from the eFishery company, which wiped out $300M in value. The Indonesian agritech company collapsed after allegations of fraud.
Temasek has shrunk its investment strategy already, from $4.4B sent to early-stage companies down to $509M in 2024. Over the same period, the number of deals also went down, from 82 in 2021 to 11 last year.
The new strategy affects direct investments, where Temasek has been more conservative in curating a list of companies. The state-owned fund will still support startups indirectly through venture capital funds, though at a smaller scale.
Temasek has abandoned crypto startups since 2024
Temasek has already made 11 crypto investments, though its exposure to the FTX token had the biggest weight and influence. As a whole, the company has achieved 156% returns on its crypto VC tokens.
For Temasek’s $300B portfolio, the involvement in crypto was relatively small, though the crash of FTX had outsized reputational effects. Investing through a token also holds the biggest risk, as crypto trading cannot be stopped and assets’ value can collapse in minutes.
Temasek focused on a handful of crypto startups, but the FTX crash made the fund reconsider its strategy. | Source: Cryptorank
The latest crypto investment for Temasek was in Partior, a centralized crypto finance company. Previously, it also supported Animoca Brands with $110M, and ConsenSys with a Series D round for $450M. The fund’s focus was on crypto payment ecosystems and centralized exchanges. However, indirectly, Temasek has been involved even with NFT projects like Authentick, through the Menyala VC fund.
Temasek’s presence has been used to give exposure and boost the reputation of crypto projects. The state-backed fund left the space just before the next trend of companies holding BTC treasuries, and has not mentioned BTC in any relation to its portfolio. The last publicly announced investment in a crypto startup to originate from Temasek was in July 2024.
Some of Temasek’s early-stage investments were success stories, including current staple businesses like the Alibaba e-commerce platform and the US food delivery company DoorDash.
The strategy revision follows the general outflow of VC funding from crypto startups, where new deals continued to slow down well into Q2.
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