Day: April 4, 2020

The shock to the global economy from COVID-19 brings me back to the 2008 global financial crisis.

Although the nature of current shock is noticeably different than 12 years ago, I want to shed some light and share a story about how the 2008 crisis gave birth to fintech innovation. Probably … another great innovation might be born after the COVID-19 crisis is over. 

After the financial giant Lehman Brothers filed for bankruptcy in 2008, the face of the banking industry would completely change, ultimately leading to the creation of a new breed of financial institutions – fintech startups.

At the time, many couldn’t foresee how the demise of firms such as Lehman would lead to the beginning of one of the toughest financial crises the world had ever seen.

The consequences were slowly starting to emerge: people were losing their jobs, families were losing their homes, but most importantly to our story, everyone was losing trust in the institutions that were meant to offer us financial support. Trust in a system that was fundamentally broken.

This general mistrust of banking was just the tip of the iceberg.

What has changed?

The term fintech stands for financial technology; so in order for these companies to thrive, they needed to address two fundamental problems. Fintechs needed to reimagine traditional financial products and offer them by means of new and disruptive technologies.

Also Read: 5 reasons why 2020 is the right time to invest in fintech

While the rapid evolution of technology reduced the barriers to entry for many aspiring companies in the fintech space (the first iPhone was launched a year before the beginning of the global financial crisis), something also needed to change in the financial industry.

Consumer behaviour

For decades banks had little to no competition, which gave them the power to monopolise financial services. This is the reason why the banks were able to charge abnormally high commissions, add in hidden fees directly to the rates they offered, inflate foreign exchange spreads and more.

Back then, if you needed money, you went to the banks. Consumers had little choice when it came to financial service providers and so they had to play by the banks’ rules, simply because there were no other viable options.

But the events that started on September 15, 2008, with the collapse of Lehman Brothers instilled a general sense of anger towards the financial system, as well as a lack of trust in the banking industry.

The shift in consumer mentality created a demand that offered new players an opportunity to join the market and offer better.

An opportunity to innovate

In the aftermath of the financial crisis, many highly skilled people working in the financial sector decided to part ways with traditional banking and take on an entrepreneurial route to reimagining and rebuilding the industry as a whole.

Also Read: Afternoon News Roundup: Quona Capital closes US$203M to focus on fintech companies in emerging markets

This gave rise to a slew of innovators who started building their own companies that would soon become big enough to take on the very institutions they had been brought up with – this was also the case of Revolut, as Nik, our CEO and former trader at Lehman at the time, explains:

“Many of Lehman Brothers’ top employees who left in the aftermath of its collapse decided to start their own businesses. A generation of entrepreneurs rose from the ashes, but many were disillusioned with the financial system. At the time, I was working as a derivatives trader at Lehman’s when Nomura bought our division, but I ended up taking an offer from Credit Suisse, where I eventually met Vlad Yatsenko, Revolut’s co-founder and CTO. We were both frustrated with the fees charged to send money abroad and launched Revolut in July 2015 as a way to rebuild the industry from the ground up using technology. Fast forward five years, and Revolut is the world’s fastest-growing fintech unicorn, opening 25,000 new accounts each day with over 10 million customers across the globe.”

Focus on technology

Fintechs came to market with a technology-first approach which meant that these companies were hard at work developing new ways of managing our money, in the years following the collapse of Lehman Brothers in 2008.

They started building financial services based on the evolution of technology and the internet, which allowed them to provide faster and more competitive services – disruption of the financial industry was well underway.

New regulations

It’s said that innovation precedes regulation and this was certainly the case with fintech. The crisis triggered a string of sweeping changes and regulations in the financial sector, aimed at preventing such catastrophic events from happening again.

Also Read: How e27 is going to lend a helping hand for the startup ecosystem during the COVID-19 crisis

Since then, we have seen the introduction of e-money regulation and evolution of the Payment Services of Act. In Singapore, we have seen the transformation of the Monetary Authority of Singapore’s Payment Services of Act, which governs many fintech companies, including Revolut, and aims to create an innovative environment for fintech.

In the last ten years, we’ve also witnessed an overhaul of the payments sector with the introduction of the Payments and Services Directives, changes in investment products through the introduction of Markets in Financial Instruments Directives and more broadly, new ways of handling privacy and data protection matters via General Data Protection Regulation.

Altogether, the introduction of these new rules is playing a key role in the development of fintech.

What does the future hold for fintech?

Twelve years after the financial crisis, we find ourselves living in a world where fintech is becoming mainstream and many of them are taking on the big banking players of the pre-crisis era.

More and more people are choosing to trust fintech over their traditional counterparts these days, while competition over who can offer the fastest, most diverse and cost-effective range of financial services has never been more fierce – something that will only improve the state of the finance industry.

Nik Storonsky, Revolut CEO said: “We believe that increased competition should be treated as an opportunity. As long as there is innovation, there is room for more players in the space. If companies are constantly trying to create better financial products for their customers, we’ll improve the financial services industry as a whole.”

So, what innovation will the COVID-19 economy crisis give birth to this time?

–

Register for our next webinar: Best practices for communications during the COVID-19 crisis

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.

Join our e27 Telegram group, or like the e27 Facebook page.

Image Credit: Obi Onyeador on Unsplash

The post The global financial crisis gave birth to fintech. What will COVID-19 recession bring? appeared first on e27.

Antler plans to commit US$500K in funding for 5 startups addressing COVID-19 challenge

Antler announces that it will invest in up to five teams and deploy up to US$500,000 in funding for startups that address the COVID-19 challenge. The company opens the chance globally, inviting startups to propose solutions in ​mitigation (​masks, contact tracing, surveillance, data infrastructure), ​medical equipment (​test kits, protective devices, ventilators), ​remote health (​telehealth, remote patient monitoring, symptom checkers) and ​digital tools (​remote work, smart delivery, e-learning).

After a screening process, selected teams will be invited to a video pitch session. Following that, the finalists will pitch to Antler’s Investment Committee (IC) remotely.

The Investment criteria will take into account the relevance towards mitigating COVID-19, as well as how the startup works in a post-COVID-19 era.

Antler will help startups get their solutions off the ground and make them accessible to those who need them as quickly as possible. The call is open until April 15.

Accelerating Asia launches Gender Advisory Group (GAC) to provide strategic advice on gender initiatives

Accelerating Asia announces that it plans to recognise the impact of women in the tech ecosystem by maintaining 40 per cent of its portfolio with female-led ventures.

Also Read: Accelerating Asia unveils new cohort of 10 startups with over 40% female co-founders

A few female-led ventures in its latest cohort startups include:

Joni.ai, an AI-powered adaptive assessment platform that personalises education and helps students to make sense of their learning data.

Priyoshop, an e-commerce platform enabling small town micro-entrepreneurs to sell a wide selection of authentic products to customers without having to invest in working capital stock and get access to affordable financing.

Recyglo, a waste management platform that provides circular economy, zero waste management, traceability, monitoring and analytics and recycling solutions in ASEAN.

Romoni, a one-stop destination of beauty and lifestyle needs of women and a credit facilitation platform for micro and women entrepreneurs in Bangladesh.

With this GAC initiative, Accelerating Asia strengthens its commitment to building its cohort startups with 50 per cent women founders. Accelerating Asia’s applications for Cohort 3 is open until May 17.

Aerodyne strips interest in Danish wind turbine inspection company

Aerodyne Group announced that it has stripped its interest in Danish company AtSite, formerly Aerodyne AtSite, by selling its stake back to AtSite’s original shareholders Rene Merrild Holding Aps and Obling Rasmussen Holding Aps.

Also Read: Malaysia’s Aerodyne forays into US with the acquisition of drone inspection firm Measure

Elaborating on the divestment, Aerodyne’s Founder and CEO Kamarul A Muhamed said, “Aerodyne’s global expansion strategy places it in 25 countries around the world with international partners and companies that are able to cover all industry verticals. Now, after two years, we are looking to realign our objectives moving forward to our overall strategic blueprint, and as such, a divestment was the clear path forward.”

This divestment allows Aerodyne to better focus its resources to support its rapid scale-up strategy globally across all verticals it operates in.

Malaysia’s MVCA provides Startup Support Squad for advisory support

MVCA (Malaysia Venture Capital & Private Equity Association), an industry platform to support venture and private equity investments in the region, announces “Startup Support Squad’ initiative. It is designed to bring expert business and financial advisory to startups that are struggling with the sudden freeze in business activity due to the COVID-19 pandemic.

According to Digital News Asia, four venture capital firms, Vynn Capital, Cradle Seed Ventures, Kejora Ventures Malaysia, as well as RHL Ventures have been summoned by the MVCA to provide support to entrepreneurs and companies who have business operations in Malaysia.

The four VC firms will be providing advisory input on matters with regards to business operations and sustenance as well as areas around financing and fundraising.

MVCA said that the global recession will mean that more SMEs and startups will not be able to survive the downswing. As such, MVCA hopes to also help bring more knowledge and value to local businesses and attract overseas opportunities into the country.

–

Image Credit: Antler

The post Morning News Roundup: Antler pledges up to US$500K in funding to startups battling COVID-19 appeared first on e27.

Vietnam’s Finhay raises funding to help millennials make better financial decisions

Finhay, a wealth management platform in Vietnam, has raised an undisclosed funding from Jeffrey Cruttenden, Co-founder of American micro-investing platform Acorns, and Thien Viet Securities Company.

The startup, which helps millennials micro-invest in mutual funds in Vietnam starting from US$2.30, will use the money to expand market reach, enhance produce and for hiring.

Finhay also plans to invest in initiatives to provide Vietnamese people with the necessary knowledge on wealth management.

DailySocial.id launches fully online incubator DSLaunchpad with 100 startups

Indonesian tech news platform DailySocial.id has launched a fully online incubator called DSLaunchpad.

According to the company, it will incubate 100 tech startups completely remotely.

The programme will begin on April 20 and continue for four weeks until May 15.

The application submission is open from today until April 10 on Orchestra DSLaunch platform.

“We saw the imbalances between the events and tech education programme, as well as startups in Jakarta and other provinces. The main goal of DSLaunchpad is to give chance to every Indonesian to become startup founders,” said CEO Rama Mamuaya.

Also Read: Breaking the glass ceiling: These 6 women are making their marks in deep tech field

The mentors are Kevin Aluwi (Co-CEO, Gojek), Fajrin Rasyid (President, Bukalapak), Izak Jenie (CEO, Jas Kapital), Dyota Marsudi (Executive Director, Vertex Ventures), Dondy Bappedyanto (CEO, Biznet Gio), and Andy Zain (Partner, Kejora Ventures).

East Ventures, BRI Ventures, and MDI Ventures will be the VC partners in DSLaunchpad.

Bollywood star Aamir Khan reportedly invests in furniture rental startup Furlenco

Furlenco, a Bengaluru-based startup that offers online subscription-based furniture rental service, has raised US$10 million in a new round of financing.

Investors in the round include Vivriti Capital, Lightbox and undisclosed high-net-worth individuals and family offices.

According to local media, Indian move star Aamir Khan also invested in the company.

With the new round of funding, the company targets a more sustainable growth with an expectation of being fully profitable in the next 12 to 18 months.

—

Image Credit:  Sharon McCutcheon, Daily Social, Furlenco

The post News Roundup: Vietnam’s Finhay raises funding; DailySocial launches online incubator appeared first on e27.

COVID-19 pandemic has led to crisis all of a sudden, and the tech community has been forced to adjust and be creative. One thing that showcases strength and optimism in times like this is how the tech community is able to band together to get through the storm –founders, and policymakers altogether.

Being on the front line of the ecosystem, Startup Genome is launching the ​COVID-19 and Startup Ecosystems Series that is authored by JF Gauthier (Founder & CEO, Startup Genome) and Arnobio Morelix (Chief Innovation Officer, Startup Genome).

It also launches Global Policy Database for governments to learn from each others’ initiatives.

What happened in China

The first installment highlights the importance of looking at what happened to China as the ground zero of the crisis –and learning from the Chinese experience as a baseline for what can happen in the rest of the world.

Chinese VC deals with contracting between ​50 and 57 percentage points since the onset of the crisis in the first two months of the year, relative to the rest of the world. This is not surprising considering the ​importance of Chinese capital throughout Asia’s startup ecosystems and the start of the virus in Taiwan and Korea in January.

Also Read: {Updated} Indonesian founder develops CE-approved rapid self-test kit priced at US$10 for COVID-19

In numbers, if such a drop happens globally, it can result in approximately US$28 billion missing startup investment this year. Many startups will be unable to raise a new round of funding and for those who had started to fundraise in the last few months, they are now nearing the end of their runway before the crash.

It is difficult to assess how big of a percentage of startups will fail, but with startups needing to raise money every 12 to 18 months with three to six months worth of cash at closing, a six-month drought in VC deals could wipe out a large portion of startups – and worse if we consider the potentially fatal direct and indirect blow to one’s business model and operations (reduction in customer purchasing power, disappearing suppliers, etc).

However, Startup Genome emphasises on the imperfection of data in startup ecosystems. For example, funding rounds can take a while to show up in funding databases.

So to address that issue, in this report Startup Genome focussed on Series A and later rounds, which have lesser delays in reporting – unlike seed rounds. The trends we report here are supported by our partners and friends on the ground.

Now VS past economic recessions

The first installment of the report also compared what happened in just two months as a result of the pandemic to two previous economic recessions (the dot-com bubble burst of 2000-2001, and 2007-2009). The total drops in global VC investment during both past periods were between ​21.6 and 29.3 per cent over twelve months, or equal to up to US$86.4 billion, according to the IMF.

Also Read: The global financial crisis gave birth to fintech. What will COVID-19 recession bring?

As a result, after the past two recessions, global VC investments took one (2007-2008) and three (2000-2001) years to recover to pre-economic contraction levels. Specifically for technology IPOs in the US, it dropped by 90 per cent following the last two recessions, and tech IPOs in the US have not yet recovered to pre-Recession levels, with the number of IPOs in 2019 (34) being 55.3 percent lower than in 2007 (76).

Things are looking up

However, during the past two recessions, although fewer dollars were invested, more companies got funded. This suggests that ​businesses ​that are able to become cash efficient might become even more likely to raise money following a recession​, albeit at lower valuations and lower total funds raised.

In addition, ​over half of Fortune 500 companies ​were created during a recession or bear market, and ​over 50 tech unicorns including Airbnb, Asana, and Quora, collectively valued at US$145.2 billion,​ ​were founded during the 2007-2009 ​recession years.

Another thing that happened during recessions is how it created a lane for new and young firms as the main net job creators in the economy​because older firms had become net job destroyers. Startups might be able to create conversations and acquire talent in a way that was not possible during economic booms.

Recently, the US saw ​unemployment insurance requests hit 3.3 million people in a single week:​ the highest such number recorded since 1967 when the Department of Labor started publishing these figures. The need for net new jobs means ​the economy needs startups ​now ​even more than usual.

In regards to banding together, governments in many places around the world are helping founders through these difficult times. ​Denmark, ​for example,​ is covering 75 per cent of salaries for companies that do not cut staff​, while ​Germany is offering to cover 60 per cent of the new salaries​ for employees reduced from full to part-time.

Considering this scenario and the fact that startups are the ​number one engine of job creation in our modern economies​, it is imperative for governments and private leaders to learn from each other and act in a concerted fashion.

What now?

“The lockdown that COVID19 has imposed on the global economy is having a disproportionate impact on countries with larger informal and SME sectors. Emergency public health and food security programs are being initiated in many places such as Rwanda, to protect the most vulnerable and prevent a humanitarian crisis,” said Jean Philbert Nsengimana, Former Minister of Information Technology for Rwanda and Startup Genome Advisory Board Member.

Also Read: How can startups survive COVID-19?

“Digital entrepreneurs have joined the fight with solutions that range from education for behaviour change, crowdsourcing food, and medical supplies, enforcing social distancing, to building more sophisticated public health risk assessment capabilities. We need to be proactive in helping startups navigate these difficult times because they will be the engine for job creation and economic recovery once this wave of the pandemic subsides,” he continued.

Today, China, the place first hit by the virus, is slowly coming back to work: offices are being used again — and manufacturers such as Foxconn (the maker of most of iPhones in China) announced they will be back to normal production schedule around the end of March​.

Supporting this trend, LinkedIn data shows Chinese hirings slowly rebounding, though not anywhere near the previous levels.

—

Image Credit: Victor He on Unsplash

The post Report: COVID-19 might result in US$28B missing startup investment this year appeared first on e27.

Every tech startup founder believes their product is unique and will change the world. You have to believe that in order to persevere against the seemingly insurmountable odds. 

But beware! Even if you’re doing something disruptive and world-changing, don’t get fooled into believing the existing marketing rules don’t apply to you and simply disregard them. Many companies have died this way. 

It turns out that tech marketing isn’t unique. The fundamentals of marketing hold true universally, even for innovative tech startups. You must understand those fundamentals to build a strong foundation.

Then you can be clever and creative about how to build on them in unique and different ways.

What marketing fundamentals do you need to understand for your tech startup?

Know your market to capture it

The no.1 reason startups fail is a lack of market need. Therefore your first priority is to make sure there is a market that needs your product. And you need to know who that market is.

Also Read: Surviving COVID-19: How to adapt your digital marketing strategy amidst a global crisis

Often founders think they’ve validated their idea when they really haven’t. You personally have the need. Maybe you’ve talked to a few friends who say they like the idea. That is not validation.

To truly validate your idea, you should be interviewing many people in your target market who you don’t know to gain a deep understanding of their needs and degree of pain before starting to invest in a solution.

This will increase your likelihood of success from the get-go by ensuring that there is a need for your product. Those interviews will also help you develop the intuition you need to make the right product and marketing decisions for your business.

As Andy Rachleff, CEO and co-founder of Wealthfront and co-founder of Benchmark Capital, articulated well, “If you address a market that really wants your product — if the dogs are eating the dog food — then you can screw up almost everything in the company and you will succeed. Conversely, if you’re really good at execution but the dogs don’t want to eat the dog food, you have no chance of winning.”

If you can’t fill two pages with what you know about your target customer, their behaviours and their needs, stop whatever else you’re doing and find some prospects to interview now.

Clear and simple messages win

Once you understand your customer and their needs, you need to be exceedingly clear about what problem you uniquely solve for them. 

Also Read: Why every startup needs to embrace video marketing in 2020

Many companies make the mistake of focusing on their features and technology, “AI or Machine learning blah blah blah.” Technology can be complex and the plain truth is: nobody cares about your features. Nobody. 

Customers are looking for solutions to their problems and have a short attention span. To have any chance to win their business, you need to be able to quickly communicate your value.

If prospects have to work to figure out what you do and how you can help them, you won’t even have a chance at their business.

Focus your website and marketing content on what problem you are solving and how your solution will make customers’ lives better. Your message should be crisp, clear, and simple, so customers “get it” instantly.

Not sure if you have the right message? Run it by some customers. See if it resonates. Even better, test it against alternatives on your website or social media channels to see what works well. Best choice? Do both!

Be where your customers are

When you know your focus and messaging, you have to reach customers with it. Which channels should you invest in?

There is a multitude of channels. If you try to be present everywhere you’ll waste a lot of money and likely do a poor job. 

Also Read: I tried TikTok out and now I get why it is the future of digital marketing

This is why starting with the market is so important. If you focus on the right market segment and know that customers deeply, then you’ll know which channels are most likely to reach them. Do they go to specific conferences? Do they read certain blogs?

Do they gravitate toward Linkedin or Facebook? The right channels are the ones where your customers already are, the places where they look for information. 

Note: If your market really doesn’t have any common channels, you may need to reconsider how you are defining your target market or find a way to create one for them and get them there. But the latter will be a more challenging and costly undertaking.

Once you have a shortlist of potential channels, test them. Run some low-cost campaigns and messages in these channels and compare the responses.

Consistency and repetition

When you know the message and where to reach your customers, it is all about consistency and repetition.

Also Read: 10 digital marketing strategies for startups

All marketers know the “Rule of 7.” It states that a prospect needs to “hear” the advertiser’s message at least seven times before they’ll take the desired action. In fact, that number may be much higher, especially given the number of different messages bombarding consumers today.

You will get bored of saying the same thing over. But, no one is listening to you nearly as much as you are, except possibly your mother. The repetition creates familiarity. It helps the market remember your brand and know what it stands for. If people see different messages associated with your brand, they’ll either be confused or it won’t even register.

So when you are sick and tired of repeating your message, repeat it again. Your audience may not have heard it yet.

Authenticity 

Can you really do what you say you can? Making promises that you can’t keep guarantees unhappy customers and bad word-of-mouth. In an age where consumers have a platform to air their grievances, setting expectations you can actually meet is important and helps you avoid bad reviews, Tweets, etc.

More than that, the best marketing ROI comes from happy customers talking to other potential customers. That means you must focus on the problem you can actually solve and the customers you can solve it for.

And don’t be afraid to let your true personality show in how you engage.

Differentiating

Of course, you want to show your uniqueness and stand out from the crowd. The fundamentals won’t prevent you from doing this – they will help.

In a crowded space, clearly and simply articulating what differentiates your offering is how you’ll make it memorable.

Once you have the fundamentals covered, then, by all means, you can build on that and get creative with your tactics. Just don’t lose sight of those fundamentals.

–

Register for our next webinar: Best practices for communications during the COVID-19 crisis

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.

Join our e27 Telegram group, or like the e27 Facebook page.

Image credit: Blake Wisz on Unsplash

The post How to market your tech startup? appeared first on e27.