Sovereign wealth funds can seem like relatively sleepy affairs: managing giant sums of money, but largely passive in their investment approach.

Temasek Holdings—the Singaporean state-owned investment company with a portfolio worth $286 billion—isn’t like that. The company takes a more active approach to investing than its peers, as CEO Dilhan Pillay Sandrasegara told a Fortune audience of executives last week. He was speaking in Singapore, joining Fortune’s Clay Chandler and several other executives for a private dinner ahead of the Fortune Global Forum this November. 

“We’re not quite passive asset managers, where we just sit back and wait to see whether the stock price goes up,” he said. 

It was an insight into what’s driving Temasek as it continues to evolve from its inception in 1974 as a holding company for Singapore’s state companies, to the startup-backing investment giant it is today. 

Thirteen years ago, public equities and other liquid assets made up the vast majority—about 80%—of Temasek’s holdings. Now, that share is just 47%, with unlisted equities making up the remaining 53%. The private markets are where you could get some of “the biggest returns in the long run,” Pillay said last week. “Returns on private investments outstrip the returns in public investments over a longer timeframe,” as well as being less volatile, he said.

Of course, the danger of investing in startups is that they can blow up, and blow up badly. Two Temasek-backed startups flamed out last year. The first: E-commerce platform Zilingo, which abruptly suspended its CEO in March 2022 after the board accused her of financial irregularities. The second: the now-infamous–and bankrupt–crypto exchange FTX. 

Temasek had a difficult 2022 overall, reporting a negative 5% one-year return to shareholders for the fiscal year ending March 31—the investment company’s worst results since 2016. Still, it’s a decent performance compared to the markets: the S&P 500 fell by 10% over the same period. 

Temasek also turned to the “developed world.” China made up 26% of Temasek’s portfolio back in 2011, compared to 6% from the Americas and 5% from EMEA. Since then, the company has ramped up its investments in the U.S. and Europe where, together, they now outnumber Temasek’s investments in China: 33% in the Americas and EMEA, compared to 22% in China. (Singapore is still the largest home of Temasek’s investments, at 28% in 2023).

Last week, Pillay suggested Temasek’s shift was due to a more innovation-friendly economy and low interest rates, as well as the U.S. and Europe’s greater strength in life sciences.

But investing in China is also a tough bet right now, after years of COVID controls, a regulatory crackdown on the private sector, and a sluggish economic recovery. 

Then add geopolitics. The U.S. wants to stem the flow of capital into China, particularly towards strategic tech like artificial intelligence and quantum computing. Some U.S. investors can already see troubled waters ahead, as shown by Sequoia Capital’s decision to split from its successful and lucrative Chinese fund. 

It may just be too risky for a Singaporean-government-owned investment vehicle to run afoul of Washington by investing in China. Both Temasek and its sister sovereign wealth fund GIC have publicly talked about shifting their China investments thanks to geopolitics and possible U.S. controls. 

Temasek “won’t invest in areas that are in the crosshairs of U.S.-China tensions,” Rohit Sipahimalani, the company’s chief investment officer, said at the company’s annual briefing earlier this year. 

Pillay gave a warning to investors facing the rise of “de-risking” from China: Be prepared for a “more expensive” world. 

“I don’t think the word ‘resilience’ and ‘security’ is ever associated with low costs,” he said.

See you tomorrow,

Nicholas Gordon
Twitter: @nickrigordon
Email: nicholas.gordon@fortune.com
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Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- CG Oncology, an Irvine, Calif.-based bladder cancer immunotherapy company, raised $105 million in funding. Foresite Capital and TCGX co-led the round and were joined by Avidity Partners, BVF Partners, Janus Henderson Investors, Acorn Bioventures, Ally Bridge Group, Decheng Capital, Longitude Capital, Malin Corporation, and RA Capital Management.

- Healthmap Solutions, a Tampa, Fla.-based health management company focused on kidney disease, raised $100 million in funding led by WindRose Health Investors.  

- Neon, a San Francisco-based multi-cloud serverless Postgres provider, raised $46 million in Series B funding. Menlo Ventures led the round and was joined by Founders Fund, General Catalyst, GGV Capital, Khosla Ventures, Elad Gil, Snowflake Ventures, and Databricks. 

- Plotlogic, a Brisbane, Australia-based deeptech mining company, raised $28 million in Series B funding. Galvanize Climate Solutions and SE Ventures co-led the round and were joined by Innovation Endeavors, DCVC, Bentley iTwin Ventures, GRIDS Capital, and others. 

- Aulos Bioscience, a Larkspur, Calif.-based immuno-oncology company, raised $20 million in Series A extension funding from Apple Tree Partners.  

- Akkio, a Cambridge, Mass.-based generative analytics and machine learning provider to businesses, raised $15 million in Series A funding from Bain Capital Ventures and Pandome.

- Converge Insurance, a New York-based cyber risk management and underwriting company, raised $15 million in Series A funding from Forgepoint Capital.

- Silk Security, a New York-based cyber risk resolution company, raised $12.5 million in seed funding. Insight Partners and Hetz Ventures co-led the round and were joined by the CrowdStrike Falcon Fund and other angels.

- EPITERNA, a Lausanne, Switzerland-based life extending science company, raised €10 million ($10.97 million) from Prima Materia.

- Source, a Portland-based B2B marketplace for commercial construction products, raised $8.5 million in Series A funding. M13 led the round and was joined by Rise of the Rest, Rogue Venture Partners, Founders' Co-op, and Oregon Venture Fund. 

- Steg.AI, an Irvine, Calif.-based enterprise security platform for digital assets, raised $5 million in funding. Paladin Capital Group led the round and was joined by Washington Square Angels, the NYU Innovation Venture Fund, and other angels.  

- SnoFox, a New York-based business intelligence tool, raised $4.5 million in seed funding. Voyager Ventures led the round and was joined by Pale Blue Dot, Ponderosa Ventures, and Mudcake.

- MasterExchange, a Los Angeles- and Stockholm-based music investment platform, raised $2.7 million in funding. Vectr Fintech, Claes-Henrik Julander, and Rob Small invested in the round.

- Pelvital, an Eagan, Minn.-based women's health care company, raised $2.68 million in seed funding. Boomerang Ventures led the round and was joined by VisionTech Partners, Wisconsin Investment Partners, and founder and former CEO of Optum Edward Bergmark.

PRIVATE EQUITY

- Mercer Global Advisors, majority owned by Oak Hill Capital and Genstar Capital, acquired Private Asset Management, a San Diego-based wealth management firm. Financial terms were not disclosed. 

- Palmetto Exterminators, a CenterOak Partners portfolio company, acquired PestNow, a Sterling, Va.-based pest control services provider, and formed Entomo Brands. Financial terms were not disclosed. 

- PX3 Partners agreed to acquire Cofimco, a Pombia, Italy-based engineered air moving solutions provider, from Chart Industries. Financial terms were not disclosed. 

- Techmer PM, backed by Gryphon, agreed to acquire Advanced Color Technologies, a Dalton, Ga.-based color and additive compounder. Financial terms were not disclosed. 

EXITS

- Angeles Equity Partners acquired Custom Goods, a Carson, Calif.-based logistics platform, from Soundcore Capital Partners. Financial terms were not disclosed. 

PEOPLE

- Felicis, a San Francisco-based venture capital firm, promoted Teresa Chan to CFO and co-COO, Dasha Maggio to co-COO, and Katie Riester to managing director and general partner of its fund-of-funds investing program.

- Greycroft, a New York-based venture capital firm, hired Katherine Power as a partner. 

- JMI Equity, a Baltimore-, San Diego-, and Washington, D.C.-based growth equity firm, promoted Lindsay Mehta to director, investor relations and marketing, and Christian Kurth to principal.

- MidOcean Partners, a New York-based alternative asset manager, hired John B. Kahan as an operating partner. Formerly, he was with Microsoft. 

- Monroe Capital, a Chicago-based asset management firm, hired Jeff Kaye as managing director. Formerly, he was with Wells Fargo Capital Finance.

Correction: From yesterday's newsletter, Ayre Group acquired a majority stake in nChain for $570 million, not $750 million.