Backing the Unhyped: Cocoon Capital’s Fund III Focuses on Robotics, Healthcare, and Industry

Singapore-based Cocoon Capital has reached the first close of its third fund, raising $30 million toward its $50 million goal. Building on its established presence in Southeast Asia, the firm plans to maintain its focus on backing early-stage enterprise and deep tech startups operating in critical but underrepresented sectors.

Cocoon Capital is sticking to its proven approach despite a challenging funding climate. Fund III aims to support promising startups from the ground up, offering both capital and close operational guidance to help them scale internationally.

The venture firm takes a unique investment approach by prioritizing healthcare, robotics, and advanced manufacturing. It targets startups that address real-world challenges instead of following market hype around trends such as AI or blockchain.

Michael Blakey, managing partner at Cocoon Capital, emphasized that the firm is committed to solving real challenges that have long-term impacts rather than investing in over-saturated sectors.

The firm has already secured US$30 million in commitments for the first close of Fund III and plans to raise the remaining US$20 million before the year ends. Cocoon Capital targets pre-seed and seed-stage startups With initial check sizes ranging from US$500,000 to US$1.5 million. It has been active in Southeast Asia since its founding in 2016, investing in 32 companies across various deep-tech and enterprise sectors. 

Both its first and second funds have been successful, with Fund II ranked among the top three in Southeast Asia for Internal Rate of Return (IRR). This solid performance has allowed the firm to build a strong foundation of limited partners, many of whom have increased their commitments to Fund III. The fund’s model of deeply engaging with portfolio companies and offering hands-on support has proven effective, with plans to make up to five investments per year.

The firm’s emphasis on long-term partnerships and value-added support sets it apart from other VCs. In addition to providing capital, Cocoon Capital offers its portfolio companies access to Cocoon Academy, a platform for governance, financial guidance, and coaching. This hands-on approach ensures that each investment has the resources needed to succeed and scale. With plans to invest in 20 companies over the next five years,

With Fund III, Cocoon Capital will maintain its focus on overlooked sectors across Southeast Asia and beyond, especially those ready for a digital overhaul. The firm identifies significant opportunities in upgrading legacy systems within industrial operations, financial infrastructure, and healthcare—areas that have traditionally lagged in innovation.

Cocoon aims to help its portfolio companies scale globally by focusing on these areas, using Southeast Asia as a launchpad for international growth. As Fund III continues to raise capital, Cocoon Capital is positioning itself as a key player in the region’s venture capital landscape.

Cocoon Capital’s first fund from the 2016 vintage has already achieved a 1x DPI (Distributions to Paid-In Capital), significantly above the Southeast Asia average of 0.04x for funds launched between 2016 and 2018, as noted in the e-Conomy SEA 2023 report. 

Headquartered in Singapore, Cocoon Capital specializes in early-stage investments in enterprise software and deep tech startups across Southeast Asia. Since its founding in 2016, the firm has backed over 30 companies and now manages more than USD 90 million in assets. Known for its “Dare to Change™” approach, Cocoon works closely with founders in the diagnostics, MedTech, climate technology and logistics sectors.