The group’s investments in these companies dropped from $4.4 billion in 2021 to $509 million in 2024 as it shifted its focus to more conservative investments, the Financial Times (FT) reported Wednesday (June 4), citing data from Tracxn.
So far this year, Temasek has committed $70 million to early-stage companies, according to the report.
The report attributed the investment group’s change in strategy to rising interest rates, its loss of hundreds of millions of dollars on some collapsed startups, and its belief that it is now harder for high-risk unlisted companies to go public.
Temasek told the FT that it capped its early-stage investments at 6% of its portfolio in 2021, adding that it is “cognizant of the risks and challenges early-stage companies face.”
“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,” Temasek said, per the report.
The investment group, which has a $300 billion portfolio, now makes bigger commitments to a smaller number of companies that are closer to going public, according to the report.
One of the investments in collapsed startups that sparks the change was Temasek’s write-off of its $275 million investment in the cryptocurrency exchange FTX, which went bankrupt in 2022. Temasek was one of the biggest investors in FTX, per the report.
After Temasek wrote off that investment, some of Singapore’s legislators questioned the organization’s due diligence, PYMNTS reported in November 2022.
In a statement posted on its website at that time, Temasek said it did the same due diligence with FTX that it does with other, similar investments, including regulatory and licensing due diligence as well as reviews of the firm’s audited financial statements and cybersecurity.
It was reported in January that the number of active U.S. venture capital (VC) investors had fallen since 2021, which was a peak year for the VC world, as cautious financial institutions shifted their money to Silicon Valley’s biggest startups.
The number of VCs investing in U.S.-based companies dropped from 8,315 in 2021 to 6,175 in 2024, the FT reported, citing data from PitchBook.
