Day: September 8, 2020

Fintech is Southeast Asia (SEA)’s largest in terms of VC investments, with US$1.6 billion being poured into the sector last year, compared with just US$200 million five years ago, reveals a combined study by MDI ventures, Finch Capital, and startup data provider Dealroom.co.

Much of the increased investment was driven by foreign investors, which grew 7x since 2015.

As per this study, titled The Future of Fintech in Southeast Asia 2020, the combined value of all the fintech startups in the region has reached US$108 billion in 2020.

Also Read: How fintech is disrupting the Southeast Asian payments market

The report is based on a data study on the internet and fintech economy, a deep-dive into specific countries like Indonesia, Singapore and Vietnam and an overview of VC investment and exit landscape in the region.

As per these findings, Indonesia and Singapore are the most valuable ecosystems, which are worth US$60 billion and US$35 billion, respectively. The two countries are also home to nine unicorn startups each.

There is at least US$10 billion of unrealised value in VC-backed startups in Southeast Asia. Strategic M&As with local tech companies have been the most common startup exits in the region so far, with payments and wealth management startups being the main acquisition targets. However, new targets emerged in insurtech and enterprise software in 2020.

Indonesia, Singapore and Vietnam are the most attractive fintech hubs. In Indonesia, the internet economy more than quadrupled to over US$40 billion in 2019 and is well on track to reach US$130 billion by 2025. The large number of unbanked and underbanked population make it ripe for digital penetration.

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

While cash is still the primary means of transactions in the region (about 70 per cent of SME merchants accept only cash in 2019), the COVID-19 outbreak has drastically accelerated the region’s shift to a cashless world, with unprecedented growth in the number of e-payment transactions amid a sharp decrease in cash withdrawals and deposits.

Alternative lending startups in Indonesia attract the most funding and secured the highest number of deals of any fintech segments, says the report. In 2019, lending startups raised 76 per cent of the total fintech investment compared to 16 per cent two years ago.

Since 2016, Artificial Intelligence and blockchain-enabled fintech firms in Singapore have gained significant traction. The number of such startups receiving VC investment has doubled between 2016 and 2019. The limited number of such fintech startups make them even more attractive to investors.

Almost 90 per cent of Vietnamese consumers opt to pay cash on delivery for their online purchases, a much higher proportion than other regional markets. However, digital payments technology is evolving rapidly. Payments through mobile banking services surged 144 per cent per year over the past five years.

Aldi Adrian Hartanto, VP of Investments of MDI Ventures, said: “Despite the rise of the fintech industry in SEA that have managed to produce multiple Centaur-level startups including some of our portfolios such as PayFazz, FinAccel and Nium in a relatively short period of time, we firmly believe that we are still just getting started.”

“In this report, we try to deeply dive into the next phase of the industry, understanding the future business model by learning from multiple countries in SEA development which Indonesia is leading the way with such a massive opportunity given our material gap in access to financial products for mass consumers and businesses along with the successful shift of nature from disruption to collaboration between fintech, financial institution, and other stakeholders. Hence, COVID-19 also has played an incremental role to accelerate this phase in the mid-term regardless of the cyclical impact in the short term,” he added.

Hans de Back, Managing Partner at Finch Capital, commented: “Indonesia has all the ingredients in place to play a pivotal role in the adoption of financial technology in Southeast Asia. The combination of favourable demographics, collaborative financial institutions, active local and foreign investors and digital savvy customer base, drives significant opportunities for entrepreneurs throughout the region.”

Also Read: Big banks and fintech startups: Rivals or allies?

“The exit market is maturing and sees a growing number of M&A deals in the FinTech space. Time to exit is significantly shorter compared to other regions, making early-stage investments around seed/pre-Series A particularly attractive for investors. Big tech companies in the region (Sea, Grab, gojek and others) also play an important role towards exits as they have the war-chest to make strategic acquisitions to consolidate the market,” Back shared.

Fintech in Southeast Asia is still in its early days, with current startups concentration still around traditional fintech applications e.g. payment and lending.

Wealth management, insurtech, and proptech are predicted to be the next wave along with the applications of fintech in the non-financial sector or embedded fintech.

Successful shifts from disruption to collaboration between fintechs and financial institutions are largely driven by the use of complementary business models (B2B2C) — enabling faster product market-fit and scalability across multiple channels.

As per the study, 100-plus fintech exits are expected to take place in the region between 2020 and 2023, to be largely driven by consolidation play around the payment space and later wealth management, with local tech companies to be the main acquirers.

The post Indonesia, Singapore, Vietnam the most attractive fintech hubs in SEA: Study appeared first on e27.

KL based SmartBite expands its corporate catering service to the Philippines

The story: SmartBite, a corporate catering startup based in Kuala Lumpur, has expanded its service to the Philippines, according to a statement.

More details: SmartBite is an affordable food delivery service for offices. Last year, the company pivoted its model from B2C food delivery in the corporate space to online catering. Some of its regional corporate clients in Malaysia include Zalora, Lazada and General Electrics.

The firm aims to provide companies with the option of providing safer solutions to employees by offering them in-house meals so that they don’t have to go out to eat, during the pandemic.

SGInnovate introduces new initiatives for job opportunities in deep tech

The story: The Singapore government-owned venture firm, SG Innovate, has announced two new talent initiatives for local students, fresh graduates and mid-career professionals, who are looking to enter a career in deeptech.

The initiatives: The first is a virtual talent showcase, called New Frontier: Deep Tech Opportunities and Jobs, where over 30 deeptech companies and startups will be providing apprenticeships and full-time roles. These positions will range from software development to sales and business development.

The second initiative is called Power X Robotics, a full-time nine-month-long deep tech traineeship program which aims to equip Singaporeans with “real-world skills necessary for a new career in the industry”.

Also Read: Singapore Budget 2020 and what it means for the tech ecosystem this year

To be considered for this programme, candidates must be university graduates with a background in Science, Technology, Engineering and Mathematics (STEM). They should also have basic programming skills and at least two years of full-time working experience.

Grab expands services to rural Malaysia

The story: Grab has announced that it will be launching a variety of its services to rural Malaysia. Some of the locations will include Mersing, Segamat, Cameron Highlands, Pantai Remis and Baling.

The plan: The services include GrabCar, GrabFood and GrabMart.

GrabCar will be available in Mersing and Segamat from end September 2020, followed by GrabFood and GrabMart services which will be launched in the fourth quarter of this year.

According to the company, this move is a part of Grab’s ongoing efforts towards contributing towards a digital economy.

—

Image Credit: SmartBite

The post In brief: Malaysia’s SmartBite takes its corporate catering biz to Philippines appeared first on e27.

Do Ventures, a new early-stage VC firm in Vietnam, has announced the first close of its first fund at more than half of its US$50 million target.

The Limited Parters include first-generation entrepreneurs in Vietnam and top institutional investors in South Korea and Singapore, such as Naver, Sea Group, Vertex Holdings, and Woowa Brothers, among others.

The final close is expected in 2021, Vy Hoang Uyen Le, one of the founding partners of Do ventures told e27, adding that the VC firm is quite conservative in its estimation due to the impact of COVID-19.

Do Ventures was co-founded by Manh Dung Nguyen (formerly with CyberAgent Capital) and Uyen Le (formerly with ESP Capital).

Also Read: Why is Vietnam going to emerge the strongest post-COVID-19?

Dung Nguyen has more than 12 years of experience investing in early-stage startups. He has successfully built many local startups and is the first investor in Tiki.vn, Foody.vn, Batdongsan.com, CleverAds, and Vexere.

Uyen Le has been a serial entrepreneur since the age of 13, as well as an e-commerce veteran with more than 10 years of experience. She has invested in 15 companies while at ESP Capital.

As per a press statement, Do Ventures will strategically invest in companies that tap on the fast-growing middle-class population, serve the massive young population, and employ the best-in-class execution. It will pursue the philosophy of ‘growing by doing’.

The plan is to invest in highly capable founders in relatively new sectors and support them to initiate new business models that tackle current market pain points.

The firm said that it will announce a number of deals within a month that are currently in the closing process.

Also Read: Indonesia, Singapore, Vietnam the most attractive fintech hubs in SEA, says study

The VC firm believes that the current environment presents an ideal opportunity to successfully invest in early-stage tech companies in Vietnam. From 2017 to 2019, the amount of capital invested and the number of technology deals done in the country have grown 6x.

Although Do Ventures is sector-agnostic, it is looking at investments in two tiers of companies with the following focus areas after COVID-19.

Tier 1: B2C platforms that complement an effective ecosystem of services around young customers such as education, healthcare, social commerce, etc. due to significant changes in customer behaviour after COVID-19.

Tier 2: regional-scaled B2B platforms that create synergies for tier 1 portfolio companies and enable these companies to scale regionally. After COVID-19, more enterprises would look for solutions to digitalize the companies.

“Therefore, Saas enterprise solutions, data enablers, or e-commerce enablers would have more opportunities to grow,” Uyen Le said.

Notably, tech investment in Vietnam reached the tipping point of almost US$900 million in 2018. 

Do Ventures seeks to invest in startups throughout various stages from seed to Series B.

“We follow a comprehensive investment approach and invest from US$500,000 to US$5 million for a well-performing startup,” Uyen Le revealed. “First, we would lead the seed round with an average check size of US$500,000. After the seed round, we would make follow-on investments in Series A and Series B round. Normally, we would follow another US$1-2 million for series A, and US$2-3 million for series B. In series A and B, we would also invite our Limited Partners and other funds in the region to co-invest with us.”

Do Ventures plans to back around 30 startups in total with the current fund.

It will also help set up an automatic reporting system that empowers founders to understand real-time performance of the business and enables the fund’s investment officers to gain a deeper understanding of the its overall operations.

From the data collected, it can offer in-depth tailored operations support in various key areas, including product development, supply chain optimisation, organisational design, sales & marketing enhancement, talent recruitment and overseas expansion strategy.

Also Read: Why 2020 is the year for tech startups in Vietnam

Beside internal supporting activities, Do Ventures also conducts a C-level mentorship programme to connect successful CEOs from large-scale startups in Vietnam with portfolio companies’ founders.

The programme aims to provide young founders with in-depth advice on growth strategies and operational know-hows in specific industries.

“The Vietnam consumption market is at its tipping point and ready to be captured by technology companies with innovative products. We are enthusiastic about the opportunity to boost the local economic growth at this very key circumstance,” said Dung Nguyen.

—

Image Credit: Do Ventures

The post Naver, Sea, Vertex invest in Vietnamese VC firm Do Ventures’s US$50M fund I appeared first on e27.

Mathias is speaking on Leadership through Crisis: Advice for startup pivot and restructuring in the new normal at e27’s webinar on September 15. For more details, click here.

COVID-19 has affected many a startup around the world, especially those in the tourism and hospitality sectors. However, the impact has not been even — while some like Sorabel and Blanja were forced to close shop, some others like YouTrip were prompted to pivot their core product/business model to stay afloat.

“Different sectors have been affected differently. Companies selling essential consumer goods have benefited from consumers shifting their purchases online,” says Ben Mathias, Managing Partner of Vertex Ventures (Southeast Asia and India).

Also Read: Need of the hour: How can startups be crisis-proof?

“Examples are HappyFresh, Licious and FirstCry. In line with this increased e-commerce spending came the need to strengthen supply chains and so companies such as Tjetak, Janio, Tanihub and Ace Turtle have seen increased demand,” he said.

According to Mathias, enterprise startups also suffered initially since their customers were in the lockdown. However, corporates realised that they had to rapidly digitally enable their operations in order to operate in the new normal. This has benefited companies such as Storehub and Active AI that help their customers with digital enablement.

“There is always an opportunity to be found within a crisis,” he believes. “Most nimble startups quickly adapted to the pandemic by upgrading their operations to be able to handle the new normal. Others used the slowdown as an opportunity to focus on their product.”

For example, Hotelogix (Vertex’s portfolio company), which sells software to the hospitality sector, took the opportunity of the downtime to merge with AxisRooms and RepUp which provide complimentary solutions.

Also Read: The architect, the sunbird or the integrator: What kind of entrepreneur are you?

“When the hospitality industry rebounds, which it inevitably will, it will have the world’s most comprehensive hospitality SaaS solution with features like contactless check-in that are required in the ‘new normal’”, he adds.

For others, the pandemic provided opportunities to use their product offerings in ways they had not earlier contemplated. For instance, StoreHub — which sells a PoS solution to small retailers, restaurants and cafes —  saw a drop in footfalls after the pandemic broke out.

But StoreHub started getting requests for home delivery and it quickly updated its solution to enable home delivery. So the crisis gave it an opportunity to dramatically increase the scope of their offering.

Similarly, soCash expanded its service to help SMEs within its network submit applications to banks.

“However, pivots are good only if they make longer term strategic sense. For example, a lot of players getting into groceries during the lockdown but it’s a tough business with limited margins. We evaluated this for one of our companies but decided not do pivot but instead strengthen the existing offering so that when demand comes back, the company will be ready with newer and more variety of products,” he explained.

Also Read: How proptech startup iMyanmarHouse remains profitable despite COVID-19

Mathias is also of a view that overall, this crisis is good for the VC industry for several reasons. Firstly, startups have been forced to be more efficient and have realised that they can still hit their business plans with far less expense. So path to profitability is quicker.

“Secondly, the pandemic has accelerated digitisation plans for corporates by at least two years. This will create new opportunities for startups. Finally, the shift to video conferencing has made it possible for us to meet a lot more companies. VCs are now more accessible to startups and vice versa,” he said.

—

Image Credit: Vertex Ventures

The post ‘There is always an opportunity to be found within a crisis’: Ben Mathias of Vertex Ventures appeared first on e27.

The global health crisis did not just disrupt the market; it also exposed the underlying cracks that have long existed in how businesses operate and the deficiencies in how they meet consumer demands.

Due to many processes being prone to inefficiencies and human error, the need for digitalisation has always preceded the pandemic. Now, the challenges have only intensified.

With social distancing measures being encouraged by most major economies, many businesses now rely on segregated teams. This means companies must adapt to remote work environments that allow for seamless and efficient operations, which require secure yet accessible data systems management.

This is consistent with the region’s current trends and key growth areas, as well as the Singapore government’s push for technology-driven innovation , ultimately accelerating the growth of a Smart Nation with an emphasis on digital and automated solutions.

Many transactions, services and government processes are becoming increasingly digital; businesses must keep up with this trend by streamlining their operations. To achieve this, they need to shift to a digital environment and explore developing IoT (Internet of Things) strategies.

As such, the need for a resilient and secure infrastructure, has never been more urgent.

Challenges of digitalisation and automation

Running a business is not easy and with the demands for digital transformation come even more challenges. Whether you are dealing with cash flow management, data transfers, internal operations, or upgrading to provide your customers with easy access to products and services, digitalisation can be tricky.

The three overarching concerns businesses have with digitalisation and automation plans are ensuring maximum uptime, optimum performance, flexible network scalability and security.

With more services moving online, businesses are rightly concerned about network reliability because disruptions would interfere more severely with day-to-day work. There is also a rising fear that increased digitalisation means a greater vulnerability to cyber attacks, exposing your organisation to higher risks of cyber threats that can compromise operations or data.

Moving towards IoT also begs the question of how deployment can be done quickly and cost efficiently to reap the benefits of automation and reduce manpower costs. There is also a valid concern about IoT device performance, especially for applications that require real-time responsiveness such as video analytics for surveillance purposes.

Because of these reasons an effective digitalisation and automation strategy depends on partnering with a secured, ultra-low latency and resilient network that can address these issues head-on.

A smart solution to overcome these challenges

Ensuring maximum uptime

A truly robust network should have high availability and in-built redundancy to enable smooth and consistent connectivity. That is why SPTel offers an alternative fibre network that is highly resilient and physically separated from other providers. Their unique fibre pathways combine leased SP Group infrastructure and owned fibre pipes, laid alongside the power network cables. In this way, SPTel’s network is not affected by disruptions caused by outages on shared network infrastructure.

“Delivering reliable services is key in an increasingly connected world. That is why our fibre runs through our secured infrastructure assets to minimise the risk of tampering from third-party entities. With exchange diversity for buildings connected by our fibre network enabled with SDN capability, traffic can automatically re-route to the next available link to maintain maximum uptime,” said Susan Loh, VP of Sales, Marketing & Business Development.

Optimising performance

SPTel utilises a 2-tier network structure to reduce the number of hops required for data to travel from point to point. This enables them to deliver ultra-low latency island-wide, creating what is essentially a superhighway for data and improving the responsiveness of connected devices.

Their Multi-Access Edge Computing (MEC) offers a hybrid solution that captures the best features of both on-premise and cloud systems, replicating the flexibility, scalability and “as-a-Service” model of a public cloud, paired with improved latency performance that comes close to the speed of an on-premise solution. By leveraging on this edge computing power, multiple locations within proximity can also tap on the same resource for cost and deployment efficiency.

This enables businesses to enjoy improved responsiveness and performance for their IoT devices without heavy investment and the added assurance of a resilient network backbone.

Strengthening defenses

What makes SPTel’s network particularly robust are its security capabilities. DDoS Attack Detection is provided as a default for SPTel’s Enterprise Internet plans so that customers are alerted when an attack is taking place, allowing for proactive mitigation.

“There are also additional cybersecurity features that can be provisioned virtually for faster order processing via our software-defined network and network functions virtualisation, supported by the fact that our network is monitored by a Security Operations Centre (SOC) managed by ST Engineering,” added Susan Loh.

ST Engineering is a leading provider of cybersecurity solutions with extensive experience in designing and building Security Operations Centres for customers around the world and across different sectors.

A catalyst for effective digitalisation and automation

SPTel is a joint venture company of ST Engineering and SP Group. Their mission is to improve the way people, places, and things connect with each other by providing advanced network infrastructure, enabling technologies, and building smart ecosystems to enhance business productivity and lifestyles through better connectivity in Singapore. They achieve this by helping organisations accelerate digitalisation as a digital service provider, offering reliable services with an edge.

SPTel recently won the Singapore Business Review Technology Excellence Awards 2020 for launching Singapore’s first end-to-end software-defined network with network functions virtualisation. This enables them to respond with greater agility to changing customer needs as they embark on their digitalisation journey.

For more information on SPTel, you may visit their official website here or sign up for their upcoming virtual event here.

—

This article is produced by the e27 team, sponsored by SPTel.

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

Image credit: Unsplash

The post Amidst uncertainty, digitalisation requires reliable connectivity appeared first on e27.