Questions from the Audience
Q: What do you see as being the future of the venture capital (VC) industry? What do you think is going to happen to it in five to 10 years time? Is it going to be doing the same thing or is it going to be doing something radically very different?
Koichi: I think that would be different actually in 10 years in Southeast Asia. Now we are investing in tech startups and we are kind of waiting for the startups to be big enough and to sell and to make big money.
But in Southeast Asia again, I feel like there are a lot of opportunities in the offline base. I think there are more VCs here becoming like private equity (PE) players, investing in offline and online and then combining and then making it bigger, something like that.
I think for both PE and VC players, I think they are going to the same space which is investing in both offline and online. I think that would be the, I guess the future plan in the future.
Andrew: Personally, I believe the future trend will be CVC – corporate venture capital, rather than individually owned and raised from limited partners (LPs), I think CVC will play a major role in the next five to 10 years. As with me and Koichi, our funds have a life span but as for a CVC, they can structure an evergreen fund where they can keep on investing without exiting.
CVC will actually give one thing to the market which is the accessibility to their customers. They can provide that sandbox environment, the customer base, the market accessibility and the industry expertise to the company they invested in. What the startup can do for CVC is that they can help those companies, I believe there’s a lot of corporates now that is looking to adapt into technology.
The key challenges is not about adaptability, you cannot teach an old bird a new skill. Startups is going to give them one good thing called corporate innovation. They are going to assist them a lot in shifting their minds, looking at how technology is going to blend into everyone’s lives.
In terms of VC, you will start to see more VCs will be very specifically, vertically investing in a particular industry. For example, I have just setup a new US$16 million-fund whereby we are focusing on impact investing. Our investment metric is to provide basic healthcare to rural areas. We want to provide clean water to victims of disaster areas.
We want to provide clean water to rural areas, we want to invest in impact that is going to change the next three billion people’s lives. We want to look at agriculture, how are we going to use Industry 4.0, the big data and internet of things (IOT) to help agriculture on disease prevention. This is what my new fund is about. That is how I see in future, maybe VC will be very specifically investing in one particular vertical (segment)
and the rise of CVCs. Koichi: I agree on the rural part. The keyword ‘rural’ will be a trend in the future. The rural areas which do not have the infrastructure.
Janson: If you are looking for one, you are speaking to the right person because our organisation is basically involved in a lot of corporate venture exercises. We are heavily investing into some very good opportunities and potential markets.
If you are actually in search of such funds or services or a corporate that could actually help to bring you to the next level, we could talk about it. This is our current focus, at least for the next five to 10 years. Our organisation has actually made buffers for such venture capitals.
ZhenHui: From our standpoint, Captii Ventures is a CVC and it has collaborated with PE firms in investment deals. I think the current landscape that allows for this to happen is the cheque sizes that we write – that most VCs in the region write – may not really be enough to take an entire series B or series C round.
There’s a lot of collaboration and a lot of VCs in the region are pretty friendly with one other. I hope that won’t change in the future but frankly we are looking at the trends of new funds which are raising multi-US$100 million funds.
Eventually, as more and more exits are seen in Southeast Asia and LPs are a lot more comfortable taking risks in VCs, you might be seeing VCs going it alone in even late stage investments and they are not necessarily the corporate investors or the strategic investors.
Q: In the next five to 10 years’ time, how would e-commerce affect the brick-and-mortar stores? Will e- commerce totally kill the brick- andmortar stores? How could we save brick-and-mortar stores or make them online?
Andrew: E-commerce is never going to replace brick-and-mortar stores. In the future, you will see ‘ brick- and- click’, that is what I see. Humans still need that personal touch, we still need that experience. I think in the future, you will start to experience AI, facial recognition, cashless payments through QR codes, that is my view.
Can you imagine if e-commerce were to replace brick-and-mortar, what about those who do not understand about computers? Do you really buy your vegetables and fruits just by clicking on that computer? Don’t you feel that is so stressful as you have been working on the computer for days and nights and now you are getting your food through online as well?
You still need to go to the hypermarkets to feel the goods, the kids need to experience what the real food is all about. It’s all about experiencing.
To me, e-commerce has two business models. One business model is the ‘Amazon’ business model where they become the biggest aggregation of all the suppliers and yes, they have very high gross merchandise value (GMV) but they are also operating at a very high operation cost where the profit margin is very low. As I am from ebay, I prefer ebay’s business model like Alibaba. We are aggregating all the offline to go online while you still deliver your experience offline.
I believe in the future, you will walk to a shop where there’s no one serving you but you will just want to shop to experience the product.
Then you just scan the QR code or maybe through facial recognition, then you just click on your shopping and by the time your reach home, the things will arrive at your house. That is how I look at e-commerce (in the future).