From the lush rainforests of the Amazon to the majestic Andean peaks, Latin America’s varied topography and diverse climate allow for a thriving agrifood sector that presents many opportunities to agribusinesses and agritech ventures.

However, despite the favourable natural conditions, the industry still suffers from structural weaknesses and underdeveloped technologies. There is thus a gaping hole to be filled by knowledge-intensive agritech businesses that understand the workings of the agrifood sector in emerging economies.

Southeast Asia’s agritech boom may just hold the key to the development of Latin America’s agricultural economy. While the two regions may be separated by geography, culture, and language, they both share the realities of emerging economies and developing agricultural spaces. The rapidly rising innovations and solutions in Southeast Asia’s agritech space may thus hold much promise for Latin America’s agrifood sector.

Latin America’s thriving agrifood sector

The Latin America and Caribbean region (LAC) is widely known for its diverse climate and topography, which allow it to produce a wide range of agricultural commodities. The region covers more than two billion hectares, of which 38 per cent is used for agriculture. It accounts for almost a quarter of global agricultural production and 23 per cent of agricultural and fisheries commodities exports.

Moreover, it receives 30 per cent of the world’s precipitation and generates 33 per cent of the world’s water. This renders the region a great reserve for both arable land and water.

Agriculture is one of the most important sectors of the economy, accounting for an average of 4.7 per cent of the region’s GDP in 2015-2017 and employing an average of 14.1 per cent of the total labour force in 2018.

The region is a major exporter of grains, sugar, coffee, fruits and vegetables, poultry and pork. However, the region is still mostly untapped, and it faces challenges related to sustainability, productivity, financial inclusion and value creation in a context of low international prices.

According to the IADB, climate change will affect agriculture in various aspects related to atmospheric and soil temperature, decrease in topsoil moisture, sea-level rise, CO2 fertilisation, rainfall patterns, changes in pests and diseases.

These, in turn, will make some areas unsuitable for specific crops and will reduce crop yields, increasing production costs. To prevent and mitigate the effects of climate change, innovation is needed in production practices, irrigation systems, soil conservation, water management, genomics, biological and precision technologies.

Also Read: Why agritech startups will call for the next e-commerce revolution

Southeast Asia’s agritech boom

Agriculture plays a pivotal role in Southeast Asian economies, contributing to almost half of the rural income in the region. From the world’s largest exporters of agri-commodities such as Thailand and Indonesia to the innovation hubs of research and development in Singapore, the region presents itself as a thriving agricultural centre.

According to AGFunder, the agri foodtech startup ecosystem in Southeast Asia is one of the world’s fastest-growing markets. The region reported a total of US$423 million invested into agri foodtech startups in 2019 alone, across 99 deals. The biggest deal valued at US$100 million, and YoY investment and deal growth is estimated at 33 per cent and 41 per cent respectively.

A growing number of innovative startups have been paving the way for the advancement and digitalisation of the industry. There are an estimated 100 million smallholder farmers in Southeast Asia, and the booming agritech startup scene has seen the rise of mobile app technology with the potential to aid farmers in utilising and maximising their resources for greater yield.^[9]

One such example is Proximity Designs, a social entrepreneurship in Myanmar designing tech tools at lower prices to help farmers improve farm yields.^[10] Other promising startups include Indonesian agtech firm eFishery that won the international Get in the Ring pitch competition in 2014, and also bagged VC funding of US$15M in its series B round for the development of its smart shrimp and fish feeding system.

DiMuto, an agri-food trade technology solutions platform from Singapore, has also been on the path of expansion with its recent entry into the Latin American market.

Fertile ground for partnership

As two emerging economies where agriculture plays a key role, Southeast Asia and Latin America are prime for partnership in the agritech space. At first glance, the two regions seem to be unlikely partners separated by geography, language, and culture.

However, take a closer look and we will find more similarities than meets the eye. Both regions have similar population sizes of close to 650 million, shared economic realities, and rapidly growing internet penetration rates that are fueling the accelerated adoption of new technologies.

In the agricultural space, a vast majority of farmers in both Southeast Asia and Latin America are smallholder farmers. Obstacles such as limited access to irrigation, the effects of climate change, occupying marginal lands, limited access to machinery and technical inputs, and lack of financial and insurance support plague farmers in both regions.

Also Read: A comprehensive guide to Indonesia’s agritech ecosystem

However, while Southeast Asia moves full steam ahead with agritech innovations and the adopting of technologies to try and address some of these issues, Latin America continues to trail behind. While agtech in Southeast Asia has received much attention and funds of up to US$423 million, agritech in Latin America continues to represent barely a per cent of overall VC investment in the region and remains one of the most undercapitalised sectors^[13].

As technologies continue to develop in Southeast Asia and more innovative startups enter the space, there is great potential for increased cooperation with Latin America. The shared similarities underscore the adaptability of digital solutions across both regions, and the rapid pace of arigtech developments in Southeast Asia holds much promise for the industry in Latin America.

Overall, there is much to be gained on both sides from increased cooperation. Southeast Asia possesses the resources and technological know-how that can advance Latin American society, while Latin America presents itself as a widely untapped market for expanding Southeast Asian businesses with a wealth of raw materials and human capital.

These conditions lay the fertile ground for a partnership between the two regions that may not seem so unlikely after all.

Soft-landing for agtech business expansion

Expanding to new markets presents a wide range of risk factors and obstacles such as cultural differences, language barriers, local business practices, unpredictable regulatory and political environments, valuation challenges and ever-changing tax regimes.

These should not be taken lightly, as the costs of not addressing them properly can outweigh the benefits to be earned. Few companies actually succeed at going global.

In a study done by the Harvard Business Review, the average ROA of companies selling abroad was minus 1 per cent and it took them 10 years to reach more than one per cent with only 40 per cent of the companies averaging more than 3 per cent.

To avoid ill-fated strategies, companies should consider deploying their business through soft-landing, which aims to minimise the risks of international expansion by supporting a controlled launch with limited resources and connecting the company to a network of local stakeholders.

Also Read: How COVID-19 will pave the way for deeper tech cooperation between Latin America, Southeast Asia

This process is best led by a local partner known as a soft-landing facilitator, who is experienced in helping companies scale in the new market.

Some of the benefits of soft-landing for agritech ventures include:

Cost reduction

When entering a new market, the cost of entry can be significant and many times it can exceed business budgets. According to the World Bank no Latin American economy ranks among the top 50 best places globally to do business, and this is in part due to high costs of entry that include paperwork, establishment fees, cultural barriers, and legal procedures among others.  Therefore, having reliable information and the support of a local partner can help avoid cost overrun.

Cultural adaptation

The cultural and business practices in each market determine the way

of doing business. Informality is one aspect of the Agrifood sector in Latin America that needs to be overcome. Language, communication peculiarities and specific local knowledge within each country are keys for a successful landing into a new ecosystem.

Time to market

The time it takes for each company to position itself within a new market will

depend on the level of preparation it has and the knowledge of the entry barriers into the new market. The soft-landing facilitator has local resources that accelerate the operational, commercial and legal establishment, providing access to strategic information, decision- maker contact networks, and talent.

Deployment and reputation

Having a well-reputed local facilitator vouching for the new entrant in the Agrifood sector is crucial when it comes to accessing institutions, local businesses and potential customers. This is why having local professional teams becomes critical for business development and facilitates integration from the beginning.

Peer to peer exchange

Facilitating the direct discussion between companies in the agrifood industry either looking to expand to Latin America or already engaged is part of a fluent and collaborative ecosystem.

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There are several exciting milestones that FlowerStore has achieved within the past few years.

Yes, the COVID-19 pandemic has been challenging for the Southeast Asian startup ecosystem. But for some, it actually opened up doors of opportunities. In May, as Metro Manila underwent a lockdown as a consequence of the global health crisis, online flowers and gifts platform FlowerStore Group actually managed to pull off a successful Mother’s Day campaign in May.

As most offline flowers and gifts retailers were closed, the startup seized this opportunity and managed to deliver tens of thousands of flowers to customers.

In August, at the height of the pandemic in Southeast Asia (SEA), the company announced its second office in Vietnam, a market that they have entered in 2019. Starting off in Ho Chi Minh City, FlowerStore expanded its presence to Hanoi.

“We see that from a demographic point of view it is pretty similar to the Philippines. But at the same time … the marketing costs are actually way lower than Indonesia, and the labour costs are way lower than Indonesia, Thailand, and Malaysia,” FlowerStore founder Saul Molla says.

In this interview with e27, Molla explains how the company sets itself apart and breakthrough a market in a challenging time.

Also Read: BloomThis CEO Giden Lim on the power of flowers and working with a co-founder spouse

A budding potential

FlowerStore Group was founded in July 2018 in the Philippines with the goal to bring affordable flowers to the emerging market.

This year, the company says that it sold out its 20,000 Valentine’s Day delivery slots one week before February 14. The milestone has encouraged the company to increase its Valentine’s Day slots to 100,000 next year.

“Being able to scale up at this level while generating significant positive FCF has always been a challenge in the industry due to high customer acquisition costs (CAC) and promotions to attract consumers. FlowerStore’s strong P&L due to its direct access to the producers will continue to help the company achieve its goals,” it explains in a press statement.

It also stated that its revenue continues to surge while generating positive EBITDA and Free Cash Flow (FCF) unlike traditional fast-growing e-commerce companies in the region.

According to Molla, the company’s focus on pricing and customer experience help them to get ahead of the competition. In addition to providing affordable flowers and gifts that were sourced directly from farmers and suppliers, it also tries to adjust to unique user behaviour in the market.

For example, cash-on-delivery (COD) remains a popular payments option for many markets in SEA. But considering the fact that most customers are buying flowers for gifts, FlowerStore recognises that it would be strange to have the flowers delivered to the recipient’s door and the delivery man asks for the payment.

“Basically, what we do is send one rider to pick up the cash from the customer … And then with another rider, we deliver the order –it is all about making it a seamless experience for the customers. This is something that has received very good acceptance from the market,” Molla says.

Also Read: FlowerAdvisor is building a million dollar business in flowers and gifts

Blooming to the future

Prior to founding FlowerStore, Molla was previously known as the CFO and Head of Business Development of Lazada Philippines, a position that enables him to get a good idea of the e-commerce scene in the region –and what it takes to win it.

With a background in aerospace engineering, he came to the Philippines in 2016 from Spain. He cited boredom of the European market as the reason for his move.

“Flowers and gifting are vertical that is already established in the developed markets. But it’s still completely unattended in SEA, without any market leader,” he explains.

Molla credited his experience at Lazada for enabling him to generate strong customer demand for FlowerStore within the first two years of its operations –especially with floral and gifting e-commerce industry being highly underpenetrated in the region.

In 2019, FlowerStore raised a US$1.5 million seed funding round led by “local family offices with large stakes in the agriculture and real estate industries.”

The company used the funding to fuel its Southeast Asia expansion plan and to strengthen its gifting category capabilities.

This year, FlowerStore plans to continue its regional expansion plan.

“We have reached some kind of a sweet spot which we actually weren’t expecting until now … we are at a scale that allows us to have a kind of flywheel of a business, a business that is generating money, that allows us to continue expanding,” Molla says.

“I thought that there was also a good moment, in the sense that it is good to bring kind of positivity to the community when, just a while ago, I was reading about another e-commerce in Indonesia closing down,” he continues.

Today, the company has over 150 team members and delivers thousands of orders across the Philippines and Vietnam.

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Image Credit: FlowerStore

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Singapore-based proptech startup Ohmyhome has announced its official launch in the Philippines, its third market after Singapore and Malaysia.

The company’s full suite of property services, including professional real estate agents and mortgage to renovation, will be available in the country.

It said in a press note that the expansion will bring in several benefits for Singapore property buyers and investors, including an avenue for sourcing real-estate investments in the Philippines.

Also Read: Can SEA’s proptech come back to its pre-COVID-19 glory? Experts speak

Conversely, with the Singapore listings accessible to house hunters in the Philippines, Singaporean homeowners and landlords will be able to reach potential tenants and kickstart negotiations earlier.

As part of the expansion, Ohmyhome will be applying its Machine Learning formula to in-market data to ensure “greater accuracy” for matching potential homebuyers and home tenants, while offering more granular insights into the property market.

Ohmyhome targets to have 2,000 listings and 40 properties transacted in the first quarter of its launch.

Started in September 2016 by sisters Rhonda and Race Wong, Ohmyhome  connects buyers and sellers directly at no cost. The platform boasts of features such as ‘ShoutOut’ and ‘Open House’ to enhance the overall user experience.

Operating on a hybrid model — a do-it-yourself (DIY) platform and fully-fledged agency services — the company aims to tackle traditional property pain points that are rampant in the Philippines real estate industry such as the lack of transparency, unreliable agents, slow feedback, and fragmented property services.

The burgeoning property market in the Philippines holds great potential. As per a recent report, Manila is the world’s top housing market for price appreciation at 22 per cent annually.

In Manila alone, the condominium saw a 11.9 per cent increase in annual average prices in the last three years alone. Metro saw a record 54,000 condominium units sold with steady year on year growth.

“We believe that the Philippines property market will remain resilient as there is a huge unmet demand for housing and investors are still interested in property for long-term investments. When Community Quarantine measures are lifted in the Philippines, we expect to see a surge in property deals arising from pent-up demand from buyers,” said CEO Rhonda Wong.

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

Ohmyhome launched in Malaysia in July 2019, as part of its expansion plans in the Southeast Asia region.

Since its founding, more than 5,100 homes have transacted through Ohmyhome which represents a combined value of over S$1.6 billion.

In September 2018, Ohmyhome raised US$2.9 million in Series A round of funding led by Golden Equator Capital.

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Image Credit: Ohmyhome

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SmartClean Technologies, a startup providing IoT- and AI-powered solutions for the cleaning industry, has secured SGD3.7 million (US$2.7 million) in a pre-Series A funding, co-led by SEEDS Capital (the investment arm of Enterprise Singapore) and an unnamed environmental services company in Singapore, its Founder and CEO Lav Agarwal told e27.

Other strategic investors who joined the round are Ecocare (a leading hygiene company in Indonesia) and co-CEOs of Oneberry Technologies (a security automation company in Singapore).

This round, which was closed earlier this year, brings Smartclean’s total funds raised to date to US$3.4 million, which also includes venture debt.

In addition, the venture had raised government grants in the early days of its operations.

Agarwal further added SmartClean is currently in the process of raising US$10 million in Series A from several investors, including a large VC firm with operations in India and Southeast Asia. This round is expected to close in March 2021.

The beginning

SmartClean was founded by Agarwal, Abhishek Mishra (PhD from NUS), and Stella Aw.

The idea for Smartclean occurred when Agarwal and Aw met in late 2016 to discuss the challenges faced by the cleaning company Spotless, which was co-founded by Aw in 2012.

Also Read: This on-demand cleaning startup adjusts with the needs of Singapore’s market

“We quickly realised that lack of tech adaptation is a major challenge and we sensed huge potential for a groundbreaking digital transformation in the cleaning industry,” he said.

The duo brought this idea to Agarwal’s friend Mishra and SmartClean took shape.

Launched in early 2017 at CapitaLand’s IoT accelerator programme, SmartClean is working on “reimagining the next-gen cleaning industry” and building IoT solutions which will monitor spaces, learn from the facility data and autonomously run cleaning operations of properties with a team of cleaners and robots.

“We are on a mission to fundamentally change how cleaning is done today. We equip facility management and cleaning companies with data-driven solutions to deliver the best,” Agarwal claimed.

A sidelined industry

According to Agarwal, cleaning and security form two of the biggest segments of facility management. While the security industry is tech-driven with automated surveillance and command centres, cleaning operations are still done manually, with cleaners going around and doing physical checks and cleaning on a scheduled and periodic basis.

“Cleaning is also seen as a dead-end job and hence there are very high attrition rates, thereby becoming a challenge for a cleaning operator to continuously train and deploy new cleaners,” he said. “It’s also hard to standardise cleanliness since there is no real-time visibility, and cleaners are only identifying issues during periodic checks.”

This is where SmartClean’s solutions assume significance.

“The system uses advanced data analytics, Machine Learning and predictive algorithm to compute usage and cleaning requirements, which are used to send alerts to cleaners with detailed work instructions and used by managers to plan resources in advance. This helps the industry to move from scheduled to on-demand operations, increasing productivity by over 30 per cent and improving service quality, resulting in net savings for the organisation,” he explained.

SmartClean is also rolling out a one-stop SaaS platform, called Matrix, for MSME cleaning companies to digitise their back-end operations, including workforce management, contract management, audit and payroll.

The clientele

SmartClean was commercially launched after a year-long trial in 2019 and has  expanded to both commercial and public properties, such as Mount Elizabeth Hospital, Jewel Changi Airport, State Court, NParks, Bus interchanges, and JTC Summit.

It also has ongoing projects in Singapore, India, the UAE, Indonesia and Malaysia, and is starting off in Hong Kong, Australia and Thailand.

Currently, the startup is employing 40 people and planning to grow this number to 80 by the end of this year.

The market size

The cleaning industry is a US$300-billion industry globally, of which 60 per cent is organised commercial cleaning segment. The industry employs around 50 million people and manpower drives 80 per cent of the cost.

Also Read: Singapore’s Solubots unveils self-cleansing disinfecting robots

About 1.2 million people are involved in cleaning operations in India alone, with a total market size of approximately US$10 billion.

Did COVID-19 hit your business?

“Well, cleaning is an evergreen and recession-proof business. In COVID-19 times, the need of cleaning and hygiene has only gone up. As cleanliness and hygiene gained priority, something that was good to have, became a must to have, and so did our solution,” Agarwal replied.

He also shared while SmartClean is seeing good growth, it has been facing challenges commercialising in low-labour cost markets like India, as it’s hard to justify the ROI.

“So, we have worked on market-specific pricing with sensor-as-a-service model which eases the procurement and justifies a positive ROI from almost day one,” he concluded.

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Image Credit: SmartClean

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Malaysia-based digital payments startup MyMy Holdings has raised over US$2 million from Koperasi Tentera (KT), one of the oldest co-operative banks in the country.

This takes MyMy’s total funds raised so far to US$2.9 million, valuing it at US$12 million.

The fresh capital will be used to introduce new digital financial services to its users, including dividend pay-outs, digital accounts, e-wallets and multi-currency solutions.

Also Read: Malaysia’s central bank grants approval in principle to fintech startup MoneyMatch

“With this large capital injection from KT, we will seek approval for an e-Money license from BNM to operate in the coming months. This is the first step in our journey towards securing one of Malaysia’s highly sought-after Digital Banking Licenses due to be released in 2021,” said Joe McGuire, Co-founder of MyMy.

Founded in 2018, MyMy is a digital payments startup that aims to remove traditional costs and hidden fees associated with financial services in Malaysia. It currently has 160,000 members.

Co-founder and COO Kishore Samuel positions MyMy as not simply an e-wallet but as a “financial services that combine modern technology with traditional values”. Yet is ambiguous on how exactly MyMy plans to do that.

“We aspire MyMy to be Malaysia’s first unicorn and shariah-compliant digital bank,” he told Fintech News Malaysia.

Ever since the onset of COVID-19, global fintech industry has seen an  accelerated growth. While organisations are adopting fintech to increase their efficiency, others are simply adapting to it because of the changes caused by the pandemic.

Also Read: Ecosystem Roundup: SEA leads fintech funding in APAC in Q2; Expect more investments, jobs despite COVID-19: Singapore minister; Vertex invests in Tjetak

MyMy is not the only company benefitting from the shift in trend. Malaysia ia not new to the fintech industry as there have been many players who have come and gone in the region. Some of them include GHL, MoneyMatch, Axiata Digital and more.

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Image Credit: MyMy

 

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