BukuKas, a digital ledger app for micro, small and medium enterprises (MSMEs) in Indonesia, has secured US$9 million in a pre-series A round of investment from a host of investors, including existing backers Surge by Sequoia India and Saison Capital.

Speedinvest, S7V, January Capital and Cambium Grove Capital also joined the round, which brings the company’s total funds raised to US$12 million.

BukuKas will utilise the capital to expand its product offerings and “build on its market leadership in Indonesia”.

Started in 2019 by Krishnan M Menon and Lorenzo Peracchione, BukuKas helps owners of MSMEs understand and manage their financial flows effectively with a free-to-use digital ledger mobile app.

Also Read: BukuKas makes book-keeping easy for Indonesian MSMEs to save money and time

Many small businesses in Indonesia still traditionally manage their finances using pen and paper. They struggle to get visibility and have no clue about the profits they earn.

The BukuKas app provides a book-keeping solution that can record sales, expenses, accounts receivable, and debt. With the app, merchants can gain better visibility on what drives their profits and cash flow, enabling them to actively improve their business processes.

The app also sends reminders to its customers to pay back.

According to the founder, the process helps small business owners achieve up to 20 per cent cost reduction and save two to four hours per day by avoiding manual calculations and reconciliation.

Since inception, BukuKas said it has partnered with about 800,000 small merchants and retailers and the app is used in over 700 cities and districts across Indonesia.

“The speed at which BukuKas has grown in the last eight months since launch has shown us that more than ever, Indonesian small businesses are ready to go digital. About 73 per cent of merchants are outside of tier-1 cities today — and very few products and services are built for them. BukuKas is committed to reaching them, they are the real Indonesia, the spine of our economy. And helping them prosper is our only goal,” said Menon.

Also Read: How working from anywhere is defining the next normal

BukuKas is also backed by several angel investors, including Amrish Rao (Pinelabs, Citrus pay), Edward Tirtanata (Kopi Kenangan), Willy Arifin (KoinWorks, Alternate Ventures), Nipun Mehra (Ula, Sequoia India), Patrick Walujo (Northstar Ventures), Sandeep Tandon (FreeCharge) and Jonathan Swanson (Thumbtack).

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Image Credit: BukuKas

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On 15 January 2020, the Monetary Authority of Singapore (MAS) and the Accounting and Corporate Regulatory Authority of Singapore (ACRA) launched the variable capital company (VCC), a new corporate structure under which investment funds can be created.

The VCC is regulated under the Variable Capital Companies Act 2018 (VCC Act) and is a new corporate structure for all types of collective investment schemes in Singapore. Under the VCC Act, foreign corporate entities may also be re-domiciled to Singapore, provided that the relevant conditions are satisfied.

As the CEO of Entail Holdings, a leader in the international fund management industry in Singapore, I have seen how the VCC structure has benefitted our clients, and I am happy to share some of the features of the VCC structure with you.

A VCC can be set up as a standalone entity or as an umbrella entity with multiple sub-funds. Each sub-fund may have different investment objectives and strategies, investors, assets, and liabilities.

This graphic is extracted from the PwC Singapore publication titled The Singapore Variable Capital Company – The game changer for asset management in Asia Pacific.

Also Read: MAS to introduce new corporate structure for investment funds next year

The new VCC framework has features that are on par with other global leading fund structures, such as those available in Luxembourg, Ireland, and Mauritius. I am optimistic that the VCC framework will elevate Singapore’s position as an attractive fund domicile centre.

In the above diagram, we highlight some of the critical features of the VCC structure.

Some of the benefits of a VCC include the following:

• Improved tax and operational efficiencies (including, the US “check the box” election);
• Financial statements of the VCC are not required to be made public;
• A VCC can be set up for different types of funds, including traditional mutual funds, private equity, hedge funds, and even real estate funds;
• A VCC may be used as pooling and investing vehicle, thereby dispensing multi-tiered fund structures;
• A VCC can be utilised to list funds as information listing and trading purpose; and
• The VCC structure is now an option for the wealth management industry.

Beneficial tax structures

Under the Income Tax Act (Chapter 134), the tax structure for standalone VCCs will be the same as a Singapore company with regard to the Enhanced Tier Fund (ETF) Scheme and Singapore Resident Fund (SRF) scheme.

The new umbrella VCC provisions have significant benefits and are distinctive. Certain economic conditions will apply at the level of the umbrella VCC and not at the level of the sub-funds. An umbrella VCC has only one set of economic terms applicable under the current ETF and SRF schemes.

For all VCCs, there are several tax and operational benefits, including:

• Availability of Goods and Services Tax (GST) remission for the VCC (even when it is not GST registered)
• Availability of a Certificate of Residence
• A withholding tax exemption
• The 10 per cent concessionary tax rate under the Financial Sector Incentive — For the Fund Manager
• No approval for additional sub-funds that are within the same investment scope (i.e notification process)

In my view, the new VCC framework is not a radical departure from the existing fund structures that fund managers and investors are familiar with, but rather, this product is evolutionary in nature, in that the VCC draws (and builds) on certain attractive features found in existing frameworks used in other fund jurisdictions. This is a masterstroke, and one which will cement Singapore’s status as a fund hub, both in Asia and the world beyond.

Also read: 4 things that makes Singapore a startup paradise

The VCC is bringing Singapore to the forefront of the investment world and is opening up many new options for fund managers to structure their investments. In addition, the VCC structure may now be used in conjunction with existing Singapore incentives such as immigration and business programmes, making Singapore an enticing location for investors who wish to set up their investment hub.

SME and startups

SMEs in Singapore contribute more than 50 per cent to Singapore’s GDP and provide employment to approximately two million people. However, these SMEs in Singapore are often confronted with industry competition, rising costs, and tight labour.

To support the sustainability and competitiveness of SMEs and startups, the Singapore government established equity financing schemes, cash grants, business incubation schemes, debt financing schemes, and tax incentives.

Furthermore, Singapore’s active technology ecosystem has attracted many venture capitalists and overseas investors to provide funding to locally based technology companies.

With a thriving venture capital ecosystem, startups can now access a wider variety of funding options and seek the necessary guidance for their future progress.

Disclaimer: The views and opinions expressed in this article are those of the author and do not represent the official policy, position, or views of any agency or department of the Singapore government (including the Monetary Authority of Singapore and the Accounting and Corporate Regulatory of Singapore) or PwC Singapore.

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Coming up with a new idea with huge potential is only half the battle. Equally important is finding one that fits you.

I try to explain that even the most innovative idea will fail if it is not a good fit for you at this time, so the question I ask is “why you now?” rather than “why this solution now?”

The right person can make any idea a business success, and the wrong one will always struggle. Hence are you the Right Person to Pursue Your Business Idea?

The reality is that I can’t judge any idea in your context, because I don’t know your passions, knowledge base, and experiences. If you show me a written business plan, I can assess it from a technical perspective, but that doesn’t tell me if you are the right person to create the business.

Thus, I can only recommend some context for you to make your own idea and business decisions:

1. Play to your passions and personal interests

Pick an arena that gets your creative juices flowing, rather than one that everyone says is the next big thing. If your goals in life revolve around social change or the environment, aim in that direction for your startup, rather than maximising revenue and profit. If you are not motivated you won’t succeed!

Also Read: The 9 critical stages of building a business

Entrepreneur Tony Hsieh, who founded Zappos, was passionate in his belief that he could “deliver happiness” to customers, before making a profit, through innovative moves like surprising 80 per cent of customers with free overnight shipping. He succeeded well in both.

2. Trust your background and intellectual strengths

The most successful entrepreneurs focus on solving a problem that they personally have experienced and are convinced they fully understand. The same applies to deal with the business elements, such as marketing, business operations, and finances. You may need a partner on this one.

Bill Gates learned to appreciate the power of computers at a very young age but was frustrated that available models were large and hard to programme. He helped to invent Microsoft Basic and Windows, snagged Steve Ballmer for marketing, and Microsoft changed the world.

3. Consider your access to resources for startup efforts

Take a realistic view of your ability to assemble the necessary funding and attract the right people.
Your strengths in physics and electronics may be excellent, but most of us could never attract the funding required for a new microchip process. Maybe you need to start with a smaller idea.

4. Assess the time and effort you are willing to commit

Most startup ideas will fail if you approach them like a hobby that you can work on occasion and on weekends.
It’s hard to win when other entrepreneurs are known to work hundred-hour weeks, and perhaps don’t have a family to balance. Your time is a critical limited resource.

5. Measure the depth of your relationships with key people

Most successful startups have deep relationships with experts who can mentor and support them or provide access to critical resources and funding.

There is no entitlement in this business. You need to enjoy building the new relationships you need and nurturing the ones you have to succeed.

Also Read: TruTrip looks to cash in on the massive business travel market as the world emerges out of the crisis

6. Check your interest in learning how to fill the gaps

No matter how experienced and knowledgeable you are, every startup is a new learning process. If you don’t enjoy learning, stick to ideas and businesses that are “cookie-cutter” versions of what you already know. Your success depends on enjoying the journey as well as the destination.

7. Test your ability to communicate value to others

Some of the highest potential ideas and businesses require a massive educational and sales effort, which may not be your forte or interest.

Very few ideas these days have such obvious value that “if we build it, they will come.” Most startups require leading a team of people and engaging customers.

So before you make those cold calls to me or any other constituency for an assessment of the viability of your next great idea, my advice is to take a hard look at your own drivers and resources, per the items listed here.

I’m convinced that there are more than enough startup ideas around, such that you can pick one to match your profile, and we all win with your success.

So are you the right person to pursue your business idea?

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The article was first published on nfinitiv.

Image Credit: Dylan Gillis on Unsplash

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Coronavirus pandemic has wreaked havoc on the global economy. Be it established businesses or startups, this outbreak has negatively impacted every area of the market. South Asian economy is no exception. Apart from this pandemic, South Asian startups have to fight one more battle that is the cash burn.

The formerly thriving South Asian startups sector is coming down to a halt. With economic activities paralysed, the majority of the tech and non-tech startups are looking forward to ways to cut costs. They are laying off employees as well as slicing wages and payrolls of those who are still working.

Their goal is to stay afloat by cutting off marketing costs and halting business expansion until the global market gets back to normal.

Market conditions before COVID-19 outbreak

South Asian digital startups expected in 2020 to be a promising year for unprecedented growth. That’s because, for the past couple of years, the technological sector of South Asia has been continually booming. From virtual wallets to online grocery shopping, the number of customers for digital services and financial technology had been rising with every passing day.

However, what they hadn’t expected was the worldwide coronavirus pandemic will impact everything from households to economies. The outbreak forced them into retreat. The measures that were taken to prevent coronavirus infections from spiralling out of control ground the society to halt.

As a result, consumerism had to take a back seat. This caused a massive decline in the growth rate of South Asian startups. As the pandemic intensified, the majority of the startup had to take strict measures to stay afloat.

They had to lay off the majority of the part-time employees, halt efforts of marketing your business in coronavirus and delay their plans for overseas expansion.

Also Read: 5 survival strategies for startups in a post-COVID-19 world

According to FOMO’s co-founder Zack Yang, this move enabled the company to reduce around 10 to 20 per cent of the total cost. He further added it has to be done since the capital market is far from positive these days. The situation of the global economy is getting worse as the pandemic prevails.

Transportation is another major sector that has been greatly impacted by the outbreak of coronavirus. The majority of the exporters have warned their customers to expect a delay in the delivery of goods because it is hard to find containers amid lockdown. The majority of these containers are stuck at ports making it hard for small businesses to make or receive shipments.

Why are startups losing investments?

 

Coronavirus pandemic has caused investors to reconsider funding in young startups. It has caused them to become more selective in where to invest. They are rather focused on conserving cash during the most uncertain of the times.

This is making it harder for startups to raise funds to keep their young businesses afloat. As a consequence, they have to layoff employees and pause their marketing efforts to conserve as much cash as they could.

While investors were already cautious about where to spend, the global pandemic made it even harder for small businesses to raise funds. As the capital market and the global economy fell, so did the South Asian startups.

GV Ravishankar, managing director at Sequoia Capital India, warned startups just as the pandemic hit, to expect very little funding during the next couple of months. He suggested them to cut their spending as “quickly and deeply” as possible.

Startup financing is expected to decline

Startup financing has fallen 22 per cent within the first quarter of 2020, said a Financial Times report. The global slowdown in startup investment has caused several young businesses and startups to close down. According to data shared by market intelligence platform CB Insights, various compounding economic factors have led to the acute decline in startup investment.

Also Read: gojek-backer Samsung Ventures invests in Indonesian proptech startup Travelio, to focus more in Southeast Asian startups

One of the most prominent of these factors is the economic uncertainty caused by the prevalence of coronavirus. When compared to 2019, the overall startup funding is expected to decline by 16 per cent. In 2020, the startup sector is going raise only US$77 billion as compared to US$92 billion in 2019 and down close to 12 per cent in comparison to US$87 billion in Q1 2019.

South Asian startups have been experiencing the detrimental effects of the Coronavirus pandemic for over five months now. A big number of small businesses have crippled in a matter of months. In India alone, a survey of 35,000 startups has revealed, over 71 per cent are experiencing a massive decline in the demand for goods and services.

On the other hand, 48 per cent of these businesses are facing disruption in supply as well as an increase in its cost. This disruption in supply and its cost has caused even more instability and uncertainty within the small business entrepreneurs community.

How South Asian startups are dealing with the impact

Surveys have revealed that the majority of the South Asian businesses will try to reduce the cost associated with workspace and operations. The majority of the employees will be asked to work from home. This will not only prevent the spread of the virus but also curb the cost of maintaining workspace and electricity bills.

Around 30 per cent of the respondents are willing to manage their expenses by cutting off on advertising or marketing costs, office rentals, and other operations. Around 37 per cent of these businesses haven’t experienced a significant impact of coronavirus pandemic, so they won’t be taking any such action.

The cost of business operations to be cut include:

• Discretionary expenses
• Reduction or exiting non-essential supplier project
• Reduction in the employee costs

Since the demand has gone low, it is a wise move to cut down on the supply that might not be needed. Various customers are also postponing their deliveries. This means startups don’t need to meet their demands right away. They can wait to purchase the new stock once things go back or close to normal.

Also Read: Top 5 promising media tech startups to look out for in 2020

How can the government help small businesses

There are various measures governments can take to curb the impact of coronavirus pandemic on small businesses and startups. One of these measures could be concessional working capital loans for startups, medium, and small businesses.

These loans should be granted based on one to three months’ average turnover of 2019. This loan can also be determined by the extent of disruption a business has faced in its demand and supply.

The government should also extend the period of payment to up to three months for:

• Utility
• GST
• Other statutory payments

The extension in the payment should not be impacted by the credit history of the business.

Why tech startups will thrive in the new normal

We are faced with an unprecedented global crisis. Even the most established corporations have taken a hit as Coronavirus infections spiral out of control. They have been incorporating smarter techniques to embrace the new normal. That’s what startups need to do as well. It’s time for them to rewrite their workspace culture and come out even stronger. Following are the way startups in South Asia can thrive in the new normal:

• Sought after exceptional tech talent:

For South Asian startups to grow and scale, it is important to hire employees with a bold vision and a strong grasp on the latest technology. These two factors serve as the key enablers for disruptive innovation. Start-ups need to keep pace with ever-rising users’ expectations.

With the advent of technology, competition in the market is getting tougher. Today, buggy UX means the loss of a massive number of potential customers. Therefore, startups need to replace their existing team with tech-savvy talent who is familiar with the latest tech stack and skills.

• Expand your market with offshoring: 

As a South Asian startup, you must have desired to grow your tech capabilities along with expanding your business. Don’t worry, you can kill two birds with one stone without having to go out of your pocket. You can build an offshore team within the region you want to expand your business to. This will not only help you to gain the initial exposure you need but will also help you break through the new market without having to spend a lot of time on research.

• Switch to remote working:

Lockdown imposed by the government across South Asia has made us learn that it is possible to run an office-less business. Coupons and promo codes turn out to be the best marketing strategy amid the lockdown. The majority of the investors are taking out their investment or reconsidering investing in South Asian startups. During these hard times, there is no better way to cut the cost of running your business other than going remote.

• Create a sense of balance:

To thrive in the uncertain times, we are faced with today, startups need to come up with ways to balance growth, cost, and quality that too at the same time.

Also Read: Why I chose to intern in the tech startups ecosystem

Medical science has been integrating the latest technological trends such as robotics to stop coronavirus. However, it’s not just the medical field that had been impacted by the outbreak of coronavirus. Established businesses to startups, every sector of the market has been influenced as the pandemic prevailed.

The South Asian startup market is no exception. This pandemic has caused various start-ups to lose sales or even close down. However, with a little help from the government and working smartly, these startups can continue to thrive during the pandemic.

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