Vertex 2024 Review - “Exiting” strong from a tough year

As we approach the end of 2024, I thought it would be timely to reflect on our journey as well as larger industry trends so far.

External Environment in 2024

Globally, the VC industry and other private market venture players faced numerous challenges. Dealmaking remained sluggish, with total funding for private market venture deals, as well as deal count, likely to continue their downward trend (see Figure A). Geopolitically, ongoing tensions in US/China, Russia/Ukraine, Israel/Syria/Middle East are closely watched by the industry for any potential impact.

To adapt to the macro environment, global supply chains and investment patterns are evolving. As such, bright spots have emerged in regions that present less geopolitical risks, such as Singapore/Southeast Asia, India, and Japan, especially in sectors that are deemed sensitive, including AI and semiconductors.

Graph: Vertex Holdings / Data: CB Insights

Personal Reflections on 2024

Amid the tough macro conditions, our Vertex global platform persevered. On top of sharing my reflections, I am also proud to highlight some of our results.

1.        Strategy

At Vertex, our seven, independent network partnerships¹ collaborate closely, contributing to our success as a group. Our unique global VC platform enables us to back outstanding founders of disruptively transformational startups, providing consistently good returns for our investors over the years.
¹These seven network partnerships are: Vertex Ventures China, Vertex Ventures Israel, Vertex Ventures SEA & India, Vertex Ventures US, Vertex Ventures Japan (newly added this year), Vertex Ventures Healthcare, and Vertex Growth.

2.        Performance

Exits remain key for many of our portfolio companies to continue their growth journey, as well as for us to deliver outstanding returns to our LPs across the business cycle. This year, even amid industry challenges, we persevered and focused on achieving strong exits, such as IPO or M&A. I am pleased to share some of our results:

IPOs

• Horizon Robotics, which provides integrated smart driving solutions (via Vertex Ventures China and Vertex Growth Fund) - Achieved Hong Kong’s largest tech sector IPO since late 2021 when it raised USD$696M from its October listing this year (more info)
• Septerna, a biotech firm developing oral small molecule therapeutics targeting GPCR (via Vertex Ventures Healthcare). Closed its USD$331.2M upsized IPO on Nasdaq in October this year (more info)
• Boundless Bio, a next-gen precision oncology company developing therapies that target extrachromosomal DNA (via Vertex Ventures Healthcare). Raised about USD$100M on Nasdaq in March this year (more info)
• alt.ai, which develops Personal AI solutions in Japan including its flagship speech-to-text product, AI Gijiroku (via Vertex Growth Fund). Listed on the Tokyo Stock Exchange Growth Market in October this year, this company was VGF’s first investment in Japan (more info)

M&A

• EyeBio (via Vertex Ventures Healthcare) acquired by Merck for up to USD$3B (read more) to advance the development of treatments targeting retinal diseases
• Own Company (via Vertex Ventures Israel) acquired by Salesforce for USD$1.9B in cash, becoming Salesforce’s biggest deal announced since it bought Slack in 2021 (read more)
• Codefresh (via Vertex Ventures Israel) acquired by Octopus Deploy to bring CD, CI, and GitOps into one trusted platform (read more)
• Adaptive Shield (via Vertex Ventures Israel) acquired by Crowdstrike to boost SaaS security (read more)
• Evisort (via Vertex Ventures US) entered into a definitive agreement to be acquired by Workday, to broaden the applications of AI-powered document intelligence solutions (read more)
• AnHeart Therapeutics (via Vertex Ventures China) acquired by Nuvation Bio to launch new cancer therapies (read more)

These liquidity events would not have been possible without the hard work from our global Vertex team and our portfolio companies, as well as the trust that our external partners have in us. A huge thank you to all.

3.        Structure

As a global VC platform, we seek to leverage our strengths to contribute to promising start-up ecosystems around the world. One such promising geography is Japan, which has attracted industry attention globally for its government’s efforts to stimulate its start-up ecosystem.

Leveraging our synergies with both current and potential Japan partners and investors, we announced in May that we have set up Vertex Ventures Japan (VVJ). This is our seventh network partnership. VVJ’s inaugural JPY 10B fund will be anchored by us, and we look forward to launching our Japan investments via this fund soon. In doing so, we will also continue collaborating with our ecosystem partners, including the University of Tokyo and the Japanese government.

VVJ will focus on investing in early-stage startups in Japan. This complements existing activities by our other independently-run network partnerships – namely, Vertex Growth Fund, which invests in growth-stage Japanese startups; and Vertex Ventures Southeast Asia & India, whose focus includes early-stage Japanese startups with an eye on Southeast Asia expansion.

4.        Systems

We have systems that promote collaboration and information sharing among the network partnerships. Never one to rest on our laurels, we continue to explore and experiment, whether through partnership engagements or investing, to augment our VC network operations.

For example, this year, our Partnership Group continued developing in-house tools to enhance our efficiency and effectiveness in portfolio operations. These tools include Generative AI agents to accelerate research workflows, and using data science/AI to augment deal sourcing. These developments have strengthened our internal processes and delivered meaningful outcomes for our stakeholders – investors, founders, and partners.

On the investment side, our captive Vertex Exploratory Fund, which invests in early-stage, disruptive frontier tech, also made its first investments in startups breaking new grounds in composite materials and clean tech.

We look forward to doing more – to further invest not just in innovation, but also further evolve into an innovative global VC platform ourselves.

My 2025 Outlook

Despite the macro challenges facing the industry, I am proud that we “exited” 2024 strong. This is not just due to our strong exits via IPO and M&A, but also due to our perseverance in being faithful to our strategy, expanding our structure to new promising geographies, and strengthening our systems to add value to our operations.

For 2025, I am optimistic about the opportunities and possibilities. Ongoing geopolitical risks and evolving trade dynamics may nuance the recovery landscape in certain geographies. The AI fever also brings about risks of “AI-washing”, where some startups may overstate their AI capabilities without solid foundations. These require VC firms to be even more nimble and discerning.

With Vertex uniting as one global platform, I believe we can overcome these challenges, and capture the opportunities. Of course, we will not do this alone. We will leverage our global network and deepen our partnerships, as we seek to further support our portfolio companies, and provide our LPs with both strategic and financial returns.

In closing, I want to express my heartfelt gratitude to our investors, partners, and the Vertex global team. Together, we will continue building a robust, global VC platform that not only delivers strong returns, but also fosters innovation and drives positive change.