Every year, entrepreneurs anticipate how the budget announcements will directly impact their business. The budget announcements this year are especially important to startups, as many of them are still recovering from the financial instability caused by the pandemic.

Below, we explore three ways that startups and small businesses can make better-informed decisions based on Singapore Budget 2021.

Key highlights

Recruitment was at a standstill for many companies during the pandemic. This resulted in a rising unemployment rate as well as delayed growth within small businesses.

The Job Support Scheme will support partial employee wage for the next few months, in an attempt to encourage startups to resume hiring activities. The expansion and innovation among newer businesses will translate into a more vibrant startup community.

Job support scheme

This Jobs Growth Incentive Scheme seeks to create more opportunities for long-term employment for Singapore Citizens and Permanent Residents.

Also Read: Due diligence meets imagination: How SGInnovate plans to further support the deep tech ecosystem

For example, the tourism industry laid off experienced staff members during the past year and with financial assistance from the Jobs Growth Incentive Scheme, businesses can gradually begin expanding their staff count in anticipation of the increasing demand for local tourism.

In addition, business owners who hire new employees within the eligible time period below will receive wage support for 12-18 months.

More specifically, the Government will compensate businesses up to 50 per cent of the first S$6,000 (US$4,400) salary until September 2021, to further incentivise entrepreneurs to hire mature employees above the age of 40 years, persons with disabilities, or ex-offenders.

Jobs growth incentive scheme

Employer eligibility requirements between March 2021 and September 2021 include:

Business owners can also receive monetary benefits of up to 50 per cent wage subsidy for the next 18 months. Depending on your business needs, the Jobs Growth Incentive Scheme makes it affordable to employ college graduates or experienced professionals who are making a transition in their career.

Supplementary scheme for SMEs and startups

Singapore Budget 2021 aims to equip businesses to ride the digital wave. With the slowdown in economic activity, traditional businesses in food and beverage as well as retail startups can redesign existing jobs and build digital capabilities with the new initiatives in the Budget.

For example, retailers that are considering expanding their offering through e-commerce or hawker stalls can partner with food delivery services to increase revenue. Besides small businesses in the retail or food and beverage industries, startups offering services in the arts and sports sectors can also enhance their operational competencies with the S$45 million (US$33 million) Arts and Culture and Sports Resilience Package.

Steps that small businesses can take include offering their arts services in smaller in-person groups or enhancing digital capabilities to offer online alternatives.

Also read: How to outsource development for a startup on a budget

Another business area that will receive an increasing amount of financial support from the Government includes the sustainability sector. As Singapore increases its commitment to sustainability efforts, small businesses that provide innovative solutions that are environmentally friendly will receive additional assistance in the coming years.

Examples include businesses which are making solar power more accessible to the public, companies selling electric vehicles, and a mobile app that helps Singaporeans capture their carbon footprint.

Other initiatives

From 2023 onwards, low-value imported goods will be subjected to GST and small businesses with vehicles can anticipate a GST hike up to 9 per cent.

One way to plan ahead would be to consider stocking up on necessary operating equipment before the implementation. There will also be a 10-15 per cent increase in petrol prices, which means that businesses should account for this cost if they are in the delivery business or other business that relies heavily on transporting goods islandwide.

Increase in Tax/Duties

On a more positive note, all commercial vehicles are entitled to a 100 per cent Road Tax Rebate for one year to cushion the increase in petrol duty. Businesses that acquire new machinery will be able to expense acquisition costs from taxable income for both YA 2021 and 2022.

Reliefs Available for Businesses

The post 3 things all startups need to know about Singapore’s 2021 budget appeared first on e27.

Ganesh Rengaswamy, Managing Partner of Quona Capital

The terms ‘sustainability’ and ‘impact’ are increasing their mindshare among investors today.

From launching sustainability funds to adopting an “impact-first investment approach”, investors are increasingly applying these non-financial factors to their evaluation process, ensuring they support businesses that bring about a positive impact to the world we live in.

Despite all the buzz about impact investing, what exactly does it mean?

According to the Global Impact Investing Network (GIIN), impact investments are investments made with the intention to generate a positive, measurable social and environmental impact alongside a financial return.

Ganesh Rengaswamy of Quona Capital, a VC firm that invests in growth-stage fintech companies promoting financial inclusion within emerging markets, certainly knows a thing about the field. As Managing Partner, he oversees Quona’s investments in India and Southeast Asia.

Rengaswamy’s portfolio companies include BukuWarung, an Indonesia-based bookkeeping management platform for micro, small and medium-sized enterprises (MSMEs), and Ula, a B2B commerce and fintech marketplace. Previous investees include coins.ph (sold to gojek) and IndiaMART (IPO).

e27 sat down with him to learn more about how Quona measures impact in its investments, the extent to which impact metrics affect an investment decision and his hopes for financial inclusion within Southeast Asia.

Below are edited excerpts of the interview.

Could you run through the process of how Quona evaluates a startup?

We are focused on fintech and financial inclusion and like to invest in companies that leverage financial and digital innovation to deliver solutions that fulfil the needs of unserved or underserved segments of society. Therefore, we use our investment mandate as the first filter to identify startups we invest in.

After that, the key factors we look for are founder quality (in terms of expertise and vision), real market opportunity and moats against incumbents, potential to create an impact on low and middle-income segments, sustainability of the business model, and stage fit and overall investor syndicate.

Also Read: What investors look for before investing in a startup

We also study business-specific KPIs, which depends on the fintech vertical. For example, in a lending company, the non-performing assets (NPA) is a very important metric, whereas for a payments company the net margins on transaction volume are critical.

Given our focus on financial inclusion, we always pay attention to the impact on underserved segments, which we quantify through assessing the outreach and accessibility of the platform, product quality and overall market development.

Do you see a correlation between social impact and profitability (i.e. a company with a strong social impact will likely generate sustainable financial returns)?

We believe the social and financial impact of our investment in a company and the broader community are intertwined. Hence, we look for opportunities where social and financial drivers and returns are mutually reinforcing, rather than accepting a trade-off between the two.

We aim for risk-adjusted market returns while backing companies that are making the world a better place.

How do you measure the social impact for your potential investees and your portfolio companies?

All portfolio companies are measured and assessed against our “Access, Quality, Markets” financial inclusion impact framework, which was developed in partnership with industry leaders and is harmonized with the Impact Management Project (a forum for building global consensus on measuring, managing and reporting impacts on sustainability).

The framework is applicable across the fintech verticals we invest in, with some metrics being common across all our portfolio companies and some specific to a given vertical or company.

Also Read: Sustainability: the new business reality

This enables us to measure financial inclusion at the company level and to aggregate a set of core impact metrics across the portfolio and assess progress towards financial inclusion at a firm level.

We also measure and monitor impact throughout our investment process. The business objectives of the portfolio companies are expected to be aligned with our social mandate.

To what extent do you factor in impact returns when evaluating the performance of your portfolio companies? Were there instances where impact returns underperformed?

The KPIs established during the investment process are inclusive of impact, operational and financial metrics and indicators. Our investees report to us on a quarterly basis, with revisits conducted on an as-needed basis as business models scale and evolve.

Leveraging these insights and KPIs, we evaluate and reports on performance – inclusive of impact – on a quarterly basis. We also have internal deep dives, where we assess the overall performance of our portfolio.

Thus far we only had a rare occurrence where the impact returns were below what we expected. We believe that as our companies grow and scale up or add new products and geographies, their impact should amplify.

With over 290 million unbanked in Southeast Asia, what are some challenges you foresee in driving financial inclusion for them?

Southeast Asia is lagging behind in the growth of insurtech, financial advisory, embedded finance to address daily life needs through financial innovations, and holistic digital banking.

I hope the ecosystem and regulators can evolve and adapt to solving these issues. Progressive regulators play an important role in managing the digital infrastructure to ensure it can benefit both the supply and demand sides of the equation.

Do you think these challenges will be solved with time? Or do you think it is a larger and more complicated systemic issue?

Yes, I think so. I see many governments in the region, such as Indonesia, lifting regulation and investing in financial digital infrastructure. Large banks, insurers, and telco companies are now willing to partner with fintechs to harness the power of customer data and co-create solutions.

Also Read: Finantier raises funding in an East Ventures-led round to introduce Open Finance to SEA

We also expect digital-only banks to emerge through the issuance of new licenses, or permitting fintechs to buy regional banks in other countries. Covid-19 has been a significant wakeup call for the regulatory, ecosystem and incumbents, and is likely to lead to promising evolution of digital infrastructure.

What are some trends you are optimistic about within the fintech space in Southeast Asia?

Broadly speaking, we see growth in open banking platforms, embedded finance in different value chains like retail, digital banks, insurtech, and relationship-based, digitally-driven banking and financial services. I’m probably most optimistic about embedded finance.

–

Image Credit: Quona Capital

The post ‘SEA is lagging behind in the growth of insurtech, financial advisory, embedded finance’: Ganesh Rengaswamy of Quona Capital appeared first on e27.

1982 Ventures co-founders and managing partners Herston Elton Powers (L) and Scott Krivokopich

1982 Ventures, a Singapore-based early-stage VC firm, has entered into a strategic investment partnership with South Korean investors Infobank, C&Venture Partners, and BTC Investment.

As per a press note, the parties have signed an MoU to collaborate in pursuing investments in Korea and Southeast Asia and leverage their respective resources to support market entry for Korean startups into the region.

Listed on the Korean stock exchange, Infobank specialises in messaging services and has an investment portfolio of 120 companies. Meanwhile, C&Venture Partners is an early-stage investment firm that invests in emerging technology fields including 5G, Big Data and digital health. BTC Investment is an investor in early-stage blockchain and fintech companies.

Launched in 2019, 1982 Ventures focuses on investing in early-stage fintech start-ups across Southeast Asia. Its portfolio companies include Homebase, a Vietnam-based proptech company providing home ownership and financing solutions.

Also Read: ‘Access to institutional VC funding is a major concern in Philippines’: Herston Powers of 1982 Ventures

“We are pleased to announce our partnership with 1982 Ventures to pursue strategic collaboration in pursuing investments in Korea and Southeast Asia and strengthen our capabilities to execute in the region’s high growth markets. 1982 Ventures expertise in fintech was key in selecting them as our long-term VC fund partner,” said Moonkyu Lee, Managing Director of C&Venture Partners.

“Infobank, C&Venture Partners and BTC investments collective leadership in technology and venture capital in Korea will ensure 1982 Ventures is well-positioned to leverage the Korean startup ecosystem,” said Herston Powers, Managing Partner, 1982 Ventures.

“An increasing number of Korean investors and startups are starting to see the significant market opportunity in Southeast Asia and are looking for partners to support their market entry,” Powers added.

Korea is one of the leading startup ecosystems within Asia, with nearly US$4 billion invested in its startups last year. According to Statista, the country also ranks within the top five globally for the number of unicorn companies.

—

Image Credit: 1982 Ventures

The post 1982 Ventures partners with 3 Korean investors to help country’s startups enter SEA appeared first on e27.

Niklas Holck, former Chairman of Nordic Eye Venture Capital, has launched his own boutique VC firm based in Singapore.

Tradeworks.vc is an investment syndicate that aims to build an ecosystem of ‘digital trade enablers’, with the purpose of driving trade and economic development through innovation in logistics primarily, crossing into e-commerce.

Also Read: 5 reasons to be bullish on logistics tech in Asia

As per a press statement, Tradeworks.vc has raised US$1.5 million at launch. with Guernsey-based OracleVC being the anchor investor.

Tradeworks.vc has a global focus, targeting early-growth startups and scaleups at the seed to Series A funding stages and is looking to invest US$100,000 to US$2 million per deal.

It will announce its maiden deals in two logistics technology scaleups, based in Singapore and Chennai (India), shortly.

Global economic development has exploded in the past 40 years as trade lifted billions out of poverty. The world’s poorest countries have the highest logistics costs and connecting the millions living in poverty to the rest of the world through trade is the best way to improve their lives and unleash the potential of those developing economies.

Lack of innovation in logistics results in high costs, which stifles trade and limits economic and human development. Compared with e-commerce, logistics is significantly under-invested; it accounts for more than double the share of Gross World Product, but attracts less than half the VC investment.

Also Read: 5G and the 5 new things it will bring to the world of logistics

Logistics is still seen as a black box for many VCs, who currently focus on last-mile operators and digital freight forwarders.

“There has never been a better time to invest in logistics technology. The sector is at the bottom of the digitalisation S-curve, with a long tail of small businesses ready to embark on their digital transformation journeys. The high labour, capital and energy intensity that characterises logistics industries, provides significant potential for improving productivity and efficiency, and generating attractive VC returns,” said Holck.

Singapore saw emergence of a couple of micro VC funds in the recent past. In October 2020, AngelList’s India CEO Utsav Somani and its former top executive Wing Vasiksiri joined hands together to launch iSeed SEA, targeting tech startups in Southeast Asia.

In November, Beamstart, the company behind global entrepreneurial platform and resource database beamstart.com, launched a US$10-million digital accelerator fund for Southeast Asia.

—

Photo by Bernd Dittrich on Unsplash

The post Ex-Nordic Eye chairman’s new Singapore-based fund to back tech startups solving logistics challenges appeared first on e27.

LinkAja, one of Indonesia’s well-known fintech apps, announced today it has received an undisclosed strategic investment from ride-hailing giant gojek.

As per a press note, this deal brings LinkAja’s funds raised in the ongoing Series B round to the excess of US$100 million.

Interestingly, this announcement comes less than four months after the payments firm raised an investment from gojek’s close rival Grab as part of the ongoing round, with participation from Telkomsel, BRI Ventura Investama and Mandiri Capital.

The collaboration is aimed at strengthening the adoption of digital financial services and accelerating financial inclusion in Indonesia.

This integration builds on gojek’s existing partnership with LinkAja, which included payment for transportation and ticket reservation services.

As part of the partnership, LinkAja will be included as an additional payment method on the gojek app.

Also Read: gojek-Tokopedia impending merger. Is it a win or loss for Grab?

LinkAja, formerly known as T Cash, was launched as a scan-and-pay service by government-owned telecom giant Telkomsel.

In the current form, LinkAja is primarily focused on digital payments for retail, public services and other daily needs, with 80 per cent of its users coming from tier 2 and tier 3 cities.

“We are excited to have gojek join us as a  shareholder, following the investment made by LinkAja’s other prominent shareholders in our Series B fundraising. This investment provides LinkAja with greater access to the gojek ecosystem, which will further support LinkAja’s purpose to accelerate financial inclusion in Indonesia,” LinkAja CEO Haryati Lawidjaja said.

“The COVID-19 pandemic and its far-reaching impact have emphasised the importance of digital payments in our daily lives, which makes this collaboration especially timely. With LinkAja as a strategic partner, we hope to reach out to even more businesses and consumers and give them new ways to transact,” added gojek co-CEO Andre Soelistyo.

The fintech industry in Indonesia, the largest market in Southeast Asia with a number of unbanked and underbanked population, saw massive growth over the past few years. In the payments space alone, there are more than 60 companies. Among the major players are OVO (in which Grab is the largest shareholder), GoPay (owned by gojek), 2C2P, PayFazz, iPay88, and Shopee Pay. —

Image Credit: LinkAja

The post After Grab, gojek joins LinkAja’s US$100M+ Series B financing round appeared first on e27.