get funded

With en­trepreneurs and ven­ture cap­i­tal­ists seem­ingly aplenty, how far along are We in asia’s tech start-up revo­lu­tion, asks Justin Harper

Prestige (Singapore) - - CONTENTS - – Jonathan Ng

With en­trepreneurs and ven­ture cap­i­tal­ists seem­ingly aplenty, how far along are we in Asia’s tech start-up revo­lu­tion?

Sin­ga­pore is try­ing to es­tab­lish it­self as a hub for tech start-ups — in an ef­fort to be Asia’s an­swer to Sil­i­con Val­ley. The gov­ern­ment is throw­ing money at tech busi­nesses and has al­ready at­tracted some size­able ven­ture cap­i­tal­ists ( VCS) and in­cu­ba­tors here. Given Sin­ga­pore’s small size and ex­cel­lent in­fra­struc­ture, it makes it a good place to try things out. While it is still early days, there are al­ready pos­i­tive signs that en­trepreneurs are com­ing out of the wood­work, par­tic­u­larly in the tech­nol­ogy space.

The JTC Launch­pad @ one-north, bet­ter known as Block 71, is one ex­am­ple of the gov­ern­ment’s ef­forts to nur­ture Sin­ga­pore’s start-up com­mu­nity all un­der the same roof. Block 71 is a fac­tory build­ing in the heart of Sin­ga­pore’s start-up tech­nol­ogy hub and is cur­rently home to about 500 start-ups. Block 71’s up-and-com­ing firms have some great role mod­els nearby with tech gi­ants Face­book, Google, Ya­hoo, Paypal, Linkedin and Uber, who have all es­tab­lished their re­gional head­quar­ters in Sin­ga­pore. Rather than com­pete, these big play­ers at­tract ex­pe­ri­enced and tal­ented tech pro­fes­sion­als from all over the globe to Sin­ga­pore, re­sult­ing in a tech brain gain.

At the same time, more cap­i­tal is flood­ing into the re­gion with ven­ture cap­i­tal­ists lead­ing the charge, keen to fund these young techno­preneurs and un­earth the next Face­book or Google. Among the re­gion’s top back­ers is Far East Ven­tures (FEV), an off­shoot of Far East Or­gan­i­sa­tion. FEV started in­vest­ing in tech­nol­ogy funds and com­pa­nies in late 2014. More than 15 funds and start-ups have been funded so far. The vast ma­jor­ity (about 90 per­cent) of these are in the tech space. One well-known ex­am­ple is Red­mart, a Sin­ga­pore-based on­line gro­ceries plat­form which has se­cured fund­ing from mul­ti­ple funds.

Jonathan Ng, co-founder of Far East Ven­tures, says: “The grow­ing start-up cul­ture is a prod­uct of the sup­port from all

con­stituents in the ecosys­tem: Gov­ern­ment agen­cies, in­vestors and en­trepreneurs.’’ FEV is unique in the sense that the com­pa­nies it in­vests in can lever­age on Far East Or­ga­ni­za­tion’s ex­ist­ing busi­nesses, which span mul­ti­ple sec­tors.

An­other po­ten­tial fund­ing source is Bansea, a not-for-profit or­gan­i­sa­tion group­ing to­gether in­di­vid­ual an­gel in­vestors look­ing to in­vest in South­east Asia. It has a strong foot­print in Sin­ga­pore and has built re­la­tion­ships with many early stage or­gan­i­sa­tions in the re­gion and some glob­ally. It counts on about 50 ac­tive an­gel in­vestors that are look­ing for in­vest­ment op­por­tu­ni­ties.

It’s not just about pro­vid­ing funds, al­though cap­i­tal in­vest­ment can be a real com­pet­i­tive ad­van­tage for many com­pa­nies that are try­ing to scale-up and com­pete glob­ally. Jose Ca­ma­cho, CEO of Bansea, says: “Be­sides cap­i­tal, our mem­bers con­trib­ute their net­work and ex­per­tise for the funded start-ups. Ad­di­tion­ally, we play a role in shar­ing ex­per­tise with new or prospec­tive mem­bers as well as start-ups. For ex­am­ple, we work with ex­perts in le­gal and fi­nance to pro­vide work­shops and guid­ance on the im­por­tant as­pects to con­sider when in­vest­ing.”

He sym­pa­thises with start-ups and techno­preneurs as they go search­ing for fund­ing. “To­day, a lot of ef­fort, time and cap­i­tal is spent by en­trepreneurs in try­ing to find — some­times des­per­ately — early cap­i­tal. Of­ten, this ef­fort leads to ran­domly find­ing some­one with cap­i­tal. On the other side, pri­vate in­vestors are look­ing to in­vest in the next Face­book, and face a process and terms they are not fa­mil­iar with lead­ing to an in­ef­fi­cient ap­proach.”

One of the ben­e­fi­cia­ries of this ven­ture cap­i­tal and an­gel in­vestor in­flux is start-up Arc­stone, founded in 2013 and head­quar­tered in Sin­ga­pore. Arc­stone is fo­cused on op­er­a­tional­is­ing streams of data within an en­ter­prise through its unique plat­form. It in­te­grates with IOT sen­sors, ma­chines, ERPS, and work­sta­tion tablets to pro­vide fully au­to­mated pro­cesses in man­u­fac­tur­ing, ma­chine main­te­nance and ware­hous­ing. This leads to ma­jor cost re­duc­tions and qual­ity im­prove­ments for its clients. Arc­stone’s seed round con­sisted of YSS Cap­i­tal, 500 Star­tups, Wave­maker Part­ners and Global Brain.

Ex­plain­ing why he had so much in­ter­est from in­vestors, Will­son Deng, founder and CEO of Arc­stone, says: “We are uniquely po­si­tioned in the sense that we have a fairly com­fort­able rev­enue stream, which al­lows us to se­lect the right in­vestors to help grow across the re­gion. All fund­ing op­er­a­tions comes with its dif­fi­cul­ties but Arc­stone was able to se­lect the right in­vestors with the right con­nec­tions and the right at­ti­tude to­wards en­ter­prise growth to suc­cess­fully ex­pand.”

He had dis­cus­sions with around 30 dif­fer­ent in­vestors and VCS be­fore the fi­nal four were se­lected. Arc­stone’s seed round took about six months to com­plete, which in­volved meet­ings with in­vestors and VCS, along with fact-find­ing meet­ings be­fore a fi­nal de­ci­sion was made on both sides. Now that it has the cap­i­tal, Arc­stone’s main fo­cus is on ex­pand­ing across South­east Asia, in­creas­ing its pres­ence in In­done­sia, Viet­nam, In­dia, Malaysia and the Philippines.

But Deng has a few words of cau­tion about all the cash flood­ing into the re­gion for start-ups: “From an ecosys­tem per­spec­tive, too much easy money flow­ing into bad ideas can fos­ter a mis­aligned ecosys­tem that can have sig­nif­i­cant neg­a­tive im­pacts on how new com­pa­nies are en­cour­aged to start up and grow. This be­comes part of the re­spon­si­bil­ity of in­vestors to look at and fund truly in­no­va­tive, cre­ative and value gen­er­at­ing start-ups in­stead of copy-cats, repli­cates and lim­ited value-gen­er­at­ing com­pa­nies.”

An­other start-up that has suc­cess­fully at­tracted fund­ing is Hip­van, which was launched in 2013. Hip­van sells apart­ment fur­ni­ture and decor on­line that is priced up to 70 per­cent cheaper than brick-and­mor­tar re­tail­ers. It was partly funded by ven­ture cap­i­tal fund Golden Gate Ven­tures (GGV). Danny Tan, one of the co-founders of Hip­van, says: ‘’GGV likes the fact that we are ad­dress­ing a large and grow­ing mar­ket that is com­ing on­line quickly, due to the age­ing of mil­len­ni­als. I think they also like the fact that our found­ing team un­der­stands e-com­merce well from our ex­pe­ri­ences at Rocket In­ter­net and we run an ex­tremely data-driven or­gan­i­sa­tion.”

The founders boot­strapped Hip­van for six months be­fore de­cid­ing that they should look for ex­ter­nal cap­i­tal. ‘’I think more im­por­tant than the speed of rais­ing cap­i­tal is to make sure that we have a scal­able business model that can be ac­cel­er­ated with ex­ter­nal fund­ing. Af­ter all, the in­vestors are putting their money on the line, but as founders, we’re putting our time on the line, which I think is much more pre­cious,” added Tan.

Ben­jamin Twoon, a grad­u­ate of the Sin­ga­pore Man­age­ment Uni­ver­sity (SMU), launched his own start-up called Fund­nel, an on­line in­vest­ment plat­form that lever­ages data and tech­nol­ogy to sim­plify the way we in­vest. He is ac­tively in­volved with SMU Ea­gles, a

“The grow­ing start-up cul­ture is a prod­uct of all the sup­port from all con­stituents in the ecosys­tem: Gov­ern­ment, agen­cies, in­vestors and en­trepreneurs”

group of en­tre­pre­neur­ial grad­u­ates and alumni of the man­age­ment uni­ver­sity. He says: “There is much de­bate about how Sin­ga­pore­ans do not take enough risk and lack the en­tre­pre­neur­ial mind­set, but I must say that the start-up scene here is steadily grow­ing with a pal­pa­ble vi­brancy that is in­fec­tious. Part of the equa­tion in­volves the sup­port of gov­ern­ment agen­cies and in­sti­tutes of higher learn­ing, some­thing not as read­ily present in the neigh­bour­ing coun­tries. I do be­lieve that a lot more mil­len­ni­als are see­ing the im­pact that tech­nol­ogy is cre­at­ing in their lives — and they want to be a part of this revo­lu­tion’’.

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