Day: February 17, 2020

 

Angel investment is one of the more popular routes that startups are taking to secure their first external funding, as they come with many advantages.

However, pitching to an angel investor requires its own set of preparation. What are the things you should keep in mind to craft the perfect pitch? What are angel investors looking for?

In order to answer these burning questions for the startup community, e27 sits down with Eddie Ler.

A former World Bank consultant and angel investor, Ler has invested in pre-seed and seed stages of an enterprise and consumer tech startups. In his experience as an angel investor, his portfolio ranges from micro-mobility, sharing economy, SaaS platform, data analytics, and fintech. His investees have subsequently received backing from G7 sovereign wealth fund, listed investments firms, early-stage VCs, and family offices.

He explains the nature of angel investing –and why it can be tough.

Think big but start small

From the perspective of Ler, angel investing is more about backing the founder rather than the business idea. While he looks at the market risk and technical risks, it ultimately boils down to the ability of the founders to think big but start small.

Founders who move fast and demonstrate early traction with a path towards inflexion point will be interesting.

Market risks are all about how the product will fit in the market in the present and the future. Technical risks answer the question of whether the idea can be developed while founder fit refers to whether the founder fits well with the idea.

After making a holistic judgement based on the three risks, the next step is usually taken.

Spotting the “wannabe” entrepreneurs

In Ler’s opinion, a part of angel investing is also about finding the right startup founder. According to him, entrepreneurship is seen as a trend, a “cool thing to do.” What can be more impressive than having the title of founder or co-founder on your business card?

This makes it even more important for angels to distinguish the wannabes from the real deal.

Also Read:  Things startup founders can learn from the 10 most powerful people in the world

“Personally I look at how passionate this individual is, and whether or not he or she has a chip on their shoulder. Or in other words, if they are looking for something to prove. If entrepreneurs chase money, they won’t be successful,” he says.

Other than that, Ler also takes note of a founder’s energy level. This means that it is not the amount of experience that he is looking for in a founder, but rather the curiosity and the wit to enable them to get ahead of competition and trends.

“A 20-year experience does not matter. Tech moves fast,” he asserts.

When asked if the startup team would be an important factor to consider while seeking funding, he replies saying that the team “is never a perfect team during an angel phase.”

Unfair advantage

Eagle-eyed angels are quick to notice whether the founders have an unfair advantage. This means, apart from a great idea and a passionate founder, a startup also needs another factor that can put it ahead of the game.

This unfair advantage is usually in the form of a strong network of connections.

“A lot of times, you can’t put things on a pitch deck. To know about unfair advantages, I usually like to have a conversation with the founder,” Ler continues.

In order to put things into more perspective, he gives us the example of the infamous novel-turned-movie The Lord of the Rings.

“While the wizards, archers and warriors had powerful skills of their own, they could not solve problems all by themselves due to historical reasons. It turned out the small hobbits had the unfair advantage of being neutral, nimble and stealthy which was the missing link. They were uniquely qualified to kick off their epic journey with helpful characters in the story.”

Also Read:  Angel investor Mike Flache shares his tips to begin investing in startups

While Ler makes a clear point that different angels think differently, this is generally how an angel investor would decide if you are the perfect fit for their portfolio.

“You never marry the first person you meet. Just like dating, when you complement each other, you’ll know it,” he ends with a joke.

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Image Credit:  Jonathan Borba

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The technology space in Malaysia is widely perceived to be male-dominated. For years, the gender gap has been quite apparent in the number of female entrepreneurs active in the Malaysian scene. Despite the Malaysian government’s initiatives to address the lack of female participation in the industry, the current situation has not changed much, with only 23 per cent of startup founders in Malaysia being women.

However, some women are beating all odds and standing out in Malaysia’s tech startup scene. At AdEasy, an adtech startup looking to disrupt offline advertising, we are trying to make strides as a women-led tech company in Malaysia.

We started AdEasy in 2017 after spotting a gap in the offline advertising space. We aim to simplify the offline advertising process using the power of online marketplace technology. 

But before we can get into our story, let us have a look at some of the challenges faced by female entrepreneurs in Malaysia and around the world.

Gender-based stereotypes and biases

Being an entrepreneur comes with its own set of challenges, irrespective of gender and other factors. However, women face an additional challenge in surmounting gender-based biases, that pigeonhole female-founders into a gendered subset of fields.

In the UK, according to reports, startups started by women in gender-neutral industries such as advertising and wearables get around 54 per cent less funding than female-founded businesses that cater to women.

In fact, female-founded “gendered” businesses, such as makeup, retail, and fashion get almost 110 per cent of the funding. 

The funding gap

Last year, AdEasy managed to raise US$200,000 from angel investors. We were fortunate to find supportive investors in a challenging market, but we understand that funding can be one of the core obstacles for a female-led startup.

Also Read: Women in tech: A global evaluation

Funding for female founders stalled at 2.2 per cent of VC capital in 2018. The issue deepens in Asia, where women typically receive less financing than men.

Yet, it may not be just that investors are unwilling to fund female-founded startups. Based on a report by the British Business Bank, the proportion of female-led startups that received investment (four per cent) was roughly the same as those who asked for it (five per cent).

The problem, the findings suggest, is not that women are being overlooked for investment — it is that not enough women are coming forward with their ideas. So, why aren’t women asking for funding? After all, it seems that when they do, they do well.

Why do women hesitate to come forward?

From cultural conditioning to conservative life approach, there can be many reasons as to why women hesitate to come forward. In general, there is a tendency for young women to be raised to be overly reluctant to pursue risky ventures.

Furthermore, we tend to be more conservative in our approach to product development. We spend more time developing a business case and prototypes to ensure there is enough or valid reason to expend development resources, as opposed to the traditionally male-oriented, agile “fail fast” methodology that involves developing MVP, releasing it as quickly as possible, then moving on to the next thing.

Another place where the hesitation comes from is the fact that we tend to humanise our investors. We see investments as a sign of trust and honour, and feel responsible to ensure our investors get “paid back”. Eventually, we end up asking for less. 

Lack of role models 

At AdEasy, we believe that another challenge faced by women in tech here is the sheer lack of role models for women. As female influence in tech is relatively new, career blueprints are not as well defined, but things are changing slowly.

Young women now have the likes of Tan Hooi Ling, the co-founder of ride-sharing goliath Grab; Melanie Perkins, CEO and co-founder of Canva; and Ankiti Bose of Zilingo that they can look up to and learn from in the tech space.

Changing times

Despite these challenges, women are starting to thrive in the tech scene here, and their performance is staggering. In top-tier leadership roles, women have shown to perform better than their male counterparts. Last year, Malaysian entrepreneurs Sarah Chen and Joolin Chua made it to the Forbes 30 Under 30 Asia list. 

On the other hand, in the Dell Technologies’ 2019 Women Entrepreneur Cities (WE Cities) Index that ranks 50 global cities on their ability to foster growth for women entrepreneurs, Kuala Lumpur was listed on the 44th position. 

Also read: Women self-promote way less than men. But why?

Finding your feet in a male-dominated industry is never going to be an easy task. But with more women at the forefront of the tech industry, the tide is starting to change. As the barriers to entry continue to diminish, 2020 is becoming an exciting prospect for female entrepreneurs.

We started AdEasy back in 2017 when the female influence in tech was significantly lower. Now, the makeup of the tech industry in Malaysia is beginning to change. 

The Malaysian government is lending a helping hand with initiatives to address gender inequality. They have provided a portal to share best practices and techniques to help working women.

These are significant strides forward in supporting female entrepreneurs. Now, as attitudes change and funding is set to increase, more and more women are coming forward to work in the tech scene. It is safe to say that we are moving in a progressive direction.

While there is still a long way to go, the possibilities for female-led companies in 2020 are endless. 

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Skymind Global Ventures (SGV), an Artificial Intelligence-focused startup fund-cum-accelerator based in London, is planning to expand to Malaysia and Indonesia in Southeast Asia.

This is part of Skymind’s global expansion plans to focus on training and investment in new AI technologies.

In January, Skymind launched a US$800 million fund to back promising new AI companies and academic research across the UK and globally.

The fund is led by Founder and CEO Shawn Tan. Joining Tan is Skymind Co-founder and Eclipse Deeplearning4j creator, Adam Gibson, as Vice President. Gibson will manage Skymind’s software division Konduit, which delivers and supports Eclipse Deeplearning4j to clients, as well as offers training development.

Also Read: What you need to know about Artificial Intelligence and its compliments to data science

Skymind plans to train up to 200 AI professionals for its operations in London and Europe and eventually expand the programme into Southeast Asia.

The use of AI and industry acceptance has been growing steadily internationally, particularly in Southeast Asia. The region has been identified as one of the target markets for the investment fund, with a significant portion of the US$800 million to be made available to growing the region’s ecosystem.

“SGV sees strong potential in Malaysia and the Southeast Asian region to build a thriving AI ecosystem. From talent to incubating innovative startups, this region requires the tools and expertise to become a global AI hub,” Tan said.

Shawn also believes that Malaysia has a lot of untapped potentials to build AI talent and the ecosystem in terms of partnerships and implementing solutions. SGV will use its London base to back research and development and generate business opportunities across Europe and Asia.

SGV is a dedicated AI ecosystem builder, enabling companies and organisations to launch their AI applications and bring their business cases to life. It provides clients with supported access to Eclipse Deeplearning4j and other open-source tools as well as global capital funding and talent development.

 

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Standing in first place on the scale of the most innovative fintech hubs in the world, Singapore has always taken pride in its forward-thinking culture, with a triumvirate of top-notch human capital, an open economy, and investment in infrastructure, all of which contribute greatly to its position.

Yet, within an increasingly turbulent economic climate, there has been much debate on how Singapore can sustain its dominance as one of the region’s leading financial capitals as it continues to establish its footprint across the global financial ecosystem. 

With increased innovations in digital banking taking place on the ground, the discussion is now on how Singapore can continue to pioneer such developments to remain at the forefront of the industry.

From positioning Singapore as an attractive fintech hub to taking a more progressive albeit granular view in its approach to cryptocurrencies, as opposed to its other regional competitors, to promoting the use of technologies like blockchain, Singapore has put in place multiple plans to stay ahead of the game. 

Tipping the balance scale in innovation

While the push towards open banking has been ongoing for a while now, the past two years have seen accelerated growth in the digital banking sector, with many projects in the pipeline. In order to stay on par and even to further its position from fellow financial heavyweight Hong Kong, the Monetary Authority of Singapore (MAS) has looked to further develop and promote digital banking in Singapore.

Also read: Embracing Singapore’s digital bank shakeup in 2019 and its consequences

After all, to develop a thriving banking community that has both breadth and depth, one has to collaborate with multiple parties in order for the ecosystem to thrive.

With a view to this, Singapore launched the Bank of International Settlements’ (BIS) third innovation hub, following centres in Switzerland and Hong Kong, where the BIS-MAS partnership focuses on a two-pronged strategy of setting up a public digital infrastructure framework and creating a digital platform to link up regulators and solutions providers.

Additionally, efforts by MAS to innovate within the digital banking sector has seen positive results, with MAS providing open-source access to their codes from Project Ubin’s Phase 2, in which the South African Reserve Bank (SARB) employed this shared knowledge to develop Project Khokha. 

A significant talking point as of late is the much-anticipated digital banking licenses with major players such as Alibaba, a Singtel-Grab collaboration, and AMTD’s consortium which includes Xiaomi Finance all wanting a slice of the lucrative pie.

This move by MAS helps to lower the barrier of entry to the banking industry, giving room for non-banks and fintechs to play a larger role in the financial services arena. MAS’ efforts to ride the new wave of innovation through these licenses brought a breath of fresh air to a traditionally restrictive industry, now welcoming a proliferation of non-banking players who can now provide financial products alongside their core business offerings.

While this has perhaps caused some initial trepidation amongst legacy institutions who fear the loss of their dominion, a recent PwC digital banking survey found that 99 per cent of customers will intend to maintain their existing bank accounts rather than making a full transition, with only a reported 33 per cent transitioning to digital banking for their primary account.

Although we’re still months away from the estimated issuance date of the licenses this coming summer, what this shows is that the biggest winners of the day would be the customers. In truth, the digital banking licenses are less about competition and more so about choice, as customers are able to leverage the best of both worlds, combining the cutting-edge technologies of internet companies with the regulatory assurances offered by MAS.

This emphasis on a consumer-focused approach has extended to other countries across the region, with plans in the works by Malaysia’s central bank to issue five online bank licenses, and Bank of Thailand set to introduce more digital banking services to better serve its underbanked population.

Taking a regulatory stand

As Singapore looks to grow its financial ecosystem in the hopes of remaining in pole position across the region, it is also crucial to ensure that the industry is properly regulated so as to anticipate the risks of emerging technologies.

In line with this goal, MAS has laid the foundations through a series of regulations aimed at providing a structured framework for industry players. 

Taking a step forward towards an open banking future, the API (Application Programming Interface) playbook was mapped out, serving as a comprehensive guideline for financial institutions. This has provided a safety net for banks to experiment on API projects in a regulated environment, birthing an API economy. Lauded as the “World’s Best Digital Bank”, DBS inaugurated its Innovation Lab after the API playbook was released which saw the launch of its API developer platform, the largest by a bank anywhere in the world.

Customers are once again, the biggest beneficiaries of the open banking movement, as the introduction of APIs into the traditional banking system not only enables a far more seamless customer banking experience but also greater transparency and access. 

The recently enacted Payment Services Act is another such regulation that MAS has implemented, representing a pivotal step forward when it comes to progressive frameworks for digital assets. Designed to provide guidance and reassurance for companies and consumers in the country, the Payment Services Act addresses one of the most prominent financial innovations seen today, namely cryptocurrencies. With the Act, cryptocurrency firms and exchanges will have the ability to expand their operations in Singapore via applying for operation licenses, while ensuring their operations are MAS-compliant.

With guidelines to operate within, this promotes consumer confidence and trust in the next frontier of digital payments as consumers are reassured by the protection from risks associated with fraud and cybersecurity. As blockchain technology matures, this is an especially timely opportunity for digital payments as further explorations are made into its real-world utility.

It goes without saying that innovation is not without risk. As the finance landscape continuously evolves, institutions and tech companies alike will find themselves having to navigate uncharted waters in a regulatory environment where the pace of change varies greatly from economy to economy. 

As Singapore gradually transitions to a fully cashless society and progressive regulations follow suit to provide the necessary safeguards against the challenges of tomorrow, the future is certainly bright for financial innovation in the Lion City. 

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Jack Hill may not have foreseen the massive revolution telecommuting would create in the global work scene when he postulated a flexible working structure for workers who reside in distant locations in his book “Telecommunications-Transportation Trade-off”.

Today, remote work has become a fast-growing trend in the tech ecosystem with more start-ups using remote teams as opposed to resident staff, proving that remote work works.

Despite the difficulties in setting up such structures, remote work has proven that its benefits far supersedes the cost with visible evidence of increased productivity, progressive workforce, employee satisfaction, reduced cost of business operations and geographical impact.

This new wave seems to be thriving more in Southeast Asian than other parts of the world. 

Southeast Asia prides itself as the hub for telecommuters and digital nomads with countries such as Malaysia, Cambodia, Thailand, Singapore and Vietnam taking the lead. 

Over the years, these regions have emerged as the most popular pools for remote workers which have proven to be beneficial to the growth and expansion of local start-ups. This does not come as a surprise as these digital hotspots boast of a fast-paced tech scene, flexible organisational structures, efficient networking systems and an extensive pool of young talents.

Here are some reasons remote work has become increasingly popular recently in Southeast Asia.

Thriving tech and startup Ecosystem

Southeast Asia has made great strides in technology and digital innovation development. Regions like Singapore and Malaysia appear to be taking the lead in this highly competitive entrepreneurial scene.

Singapore ranks second in the list of countries whose market scene promotes ease of doing business, with Malaysia trailing behind in 13th place. These regions boast of an internet economy of over US$100 billion. Local start-ups are pulling their strings to become major disruptors in the global market.

This has attracted more financial investment and partnership with Chinese tech giants like Alibaba, Tencent, Softbank, and other US based companies which accounts for 25 per cent capital infusion in these regions.

This rapidly growing economy creates more opportunities for remote workers due to the need for increased human capital to foster innovative and entrepreneurial activities. With better infrastructure, resources, internet connectivity and training, it becomes easy to build formidable remote teams for effective growth and scalability of local businesses.

Access to a wide pool of creatives

Southeast Asia is not regarded as the home to talents of the future for nothing. Singapore, Thailand and Malaysia were listed among countries actively investing in the younger generation to build the tech scene. 

Its talent pool of young tech-savvy individuals accounts for over 50 per cent of its massive population of 660 million people and is said to grow by 10 percent each year. This implies more influx of young talents into the workforce which includes indigenously trained talents, remote workers, digital nomads, and students studying abroad categorised as the sea turtles who return to their home country to launch their career. 

With more start-ups springing up in this booming economy, it creates a conducive system, flexible work schedule and collaborative work structure to nurture these budding talents. This is geared towards building a well organised and tech-savvy network.

Exotic travel destinations

It’s no secret that Southeast Asia is the most beautiful place one would love to visit and live in. From the aesthetic cities, scenic beaches, cool weather, historic sights, mountains, and delicious cuisines; employees and digital nomads are often spoilt for choice. 

Cities like Thailand and Singapore offer urban scenery with a well structured public transportation system, free WiFi spots, and cafes. The bustling digital communities are filled with excellent co-working spaces that offer fast internet connectivity and lots of networking opportunities for remote workers and local entrepreneurs working from home.  

The pleasant ambiance creates a relaxed atmosphere for working remotely with a network of highly skilled professionals. Foreigners are constantly visiting and settling in these cities to have a taste of the exquisite lifestyle while living on remote or part-time work.

Low living costs

Finally, the cost of living in Southeast Asia is relatively low compared to other countries in the world like the United States, Europe, and Australia. 

One can afford decent accommodation, food, and a comfortable lifestyle while working remotely. The expenditure of a typical remote worker or digital nomad in regions like Thailand, Indonesia and Vietnam in a month runs into an average of US$1,000.

Also read: The future of remote work is happening now, here’s how to make it work for you

However, consumables in Singapore appear to be slightly less affordable than in other cities. 

Due to the reduced cost of living, local start-ups and businesses can easily set-up their offices and hire remote workers which requires a quarter or less of what it costs to pay a full-time qualified staff. These remote teams reduce expenses incurred on office overhead as workers won’t have to commute and work from the office daily.

This also creates room for other organisational expansion and investments which can be accessed at cheaper rates.

Conclusively, remote work is the future for startups. This trend of working with remote teams will possibly grow and spread to other global markets as more start-ups and businesses are keying into the new ecosystem.

As it appears, Southeast Asian will be at the centre of this disruption with an increased influx of young tech-savvy talents into their workforce as remote staff.

With their impressive tech scene, an extensive pool of creatives and reduced cost of living, there are more potentials for innovative growth and development.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

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