Day: June 2, 2021

Since the pandemic began roughly 12 months ago, distributors have reported a 20-30 per cent shift in business to online platforms across Southeast Asian countries. A  2020 study conducted by Bain & Company, monthly active users for select mobile apps have increased by 53 per cent, 43 per cent and 73 per cent in Indonesia, the Philippines and Vietnam, respectively.

The increase in acceptance of cashless payments beyond Tier One cities has been largely driven by fintech companies. Numerous fintechs offering greater inclusion, hassle-free onboarding, and affordable services have boosted both adoption and use of digital financial services in the last two to three years especially in markets such as Indonesia and the Philippines.

Today, more than 70 per cent of the new merchants being on-boarded by fintech digitalising payments are micro and small businesses (MSMEs), a segment that makes up over 99 per cent of businesses in these economies.

It is only a matter of time before mobile devices will become the default Point of Sale (POS) device for small business owners. The ubiquity of smartphones has expanded the ability to reach underserved communities easily. Today innovative embedded finance solutions offered by fintech that can leverage this mobile technology has eliminated the need for costly hardware and digitalise previously outdated payment acceptance points at a faster pace.

Fortunately, the transition is occurring at a time when moving online has never been easier. ASEAN governments have championed efforts to invest in core digital infrastructure in both rural as well as urban settings, where the vast majority of the region’s small and micro businesses are located.

The push towards improving internet speeds and bandwidth has also coincided with the rise of digital tools and technologies that can support small and micro entrepreneurs.

Also Read: How fintech startups can fast forward their growth

Beyond the development of infrastructure and proliferation of cloud-based software services, the pandemic has also served to dramatically accelerate awareness and adoption. In fact, suppliers have seen inquiries for online selling increase five times this past year.

Government agencies have also had to embrace this new normal. Governments across the world are increasingly partnering with fintech providers to better service the small and micro businesses through policy, regulation and infrastructure development. In 2020, we saw that the governments provided emergency financial assistance to millions of small business owners by using fintech services such as PayPal and Square in the US to PayMaya and Gcash in the Philippines as a reliable and secure disbursement channel.

I expect the share of the disbursement by governments through these channels to continuously grow from existing low five to 20 per cent in next five years making fintech a vital partner in facilitating the distribution of critical financial services.

Beyond government, various business groups are also starting to realise that fintech is no longer a matter of convenience but a necessity. There is an addressable market of at least 20 to 25 million retailer/consumer focused SMEs that will need digitalisation support in the next five years in countries such as Indonesia.

Fintech companies that are able to empower small business owners with the knowledge, tools, and support to help facilitate the transition from offline to online in all aspects of business, from procurement to book-keeping, and working capital financing and e-commerce will be at an advantage.

By enabling small and micro businesses to recognise, consolidate, and track their financial data, fintech mobile applications are able to provide an assortment of basic financial services digitally — such as non-collateral-based lending — by developing credit scores through alternative means. This assumes significance as most micro businesses are not able to pass basic Know Your Customer requirements of traditional financial institutions.

Also Read: Malaysian fintech startup Finology wins Seedstars World Competition

Fintech companies, on the other hand, are able to resolve information asymmetry that these business face, by connecting numerous data parameters from various sources to onboard business remotely, create a digital financial identity, and provide risk-based pricing for credit products to such businesses.

For small business owners, who were previously undervalued and ignored by banks, the solutions offered by fintech are a boon in an increasingly digital economy that they are now empowered to participate in.

In fact, after partnering with numerous online and offline distributors we have seen that approval rates for credit for purchases made by small and micro businesses have increased by 2-3x as compared to the low-teen percentages currently offered by traditional financial institutions. This is agnostic of the purchases made by the micro businesses through offline or online channels.

While working with distributors across industries such as telecom, consumer goods, health care in Indonesia and the Philippines, I see more of them willing to partner with fintech company that has the widest network of offline partners including chains of Indomaret, Seven Eleven, business centres, through which loan repayment channels can be easily accessed by borrowers.

This assumes significance when specific types of locations are not accessible, especially during this COVID-19 times. Such distributors keep their retailer network at the core of their strategy and offer fintech -powered solutions to their retailer network without any investment in licenses or technology It’s a win-win for all involved.

In fact, fintechs working alongside banks (large, cooperative and rural) as well as regulators are increasing transaction velocity within the digital ecosystem. Banks provide the most effective cost of capital while effective regulatory framework can help ring fence the defaults in repayments by micro businesses and instill confidence to lenders.

Also read: Indonesia, Singapore, Vietnam the most attractive fintech hubs in SEA: Study

I believe that at least 10 new fintech solution, with valuation in excess of US$100 million, will emerge in Southeast Asia by 2025. Just as Amazon did it retail industry, the fintech addressing one or more pain points – lack of credit bureaus, access to credit, high share of cash transactions, and lack of identity cards- will do it in micro and small business industry in the region. The journey has just begun.

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Diversity and inclusion are two topics that are rarely discussed at workplaces in Asia.

In many countries in the continent, for instance, neither society nor the law of the land has recognised and accepted the lesbian, gay, bisexual, trans, and queer (LGBTQ) community.

This minority community is still facing discrimination and harassment in public places and workplaces. Their voice is not heard even by the concerned authorities.

Things are changing, although slowly. Several people and organisations in Asia have taken up the LGBTQ cause. They are working to promote diversity and inclusion at workplaces and public places and to bring them into the mainstream.

Singapore-based Andee Chua is one championing the D&I cause in Asia. He is a culture builder at HubSpot and co-founder of Kampung Collective, a community for community builders across Asia.

Also Read: Being geek and gay in Southeast Asia: What startup ecosystem can do to foster diversity and inclusion

e27 sat with Chua, who is an avowed gay man, for an interview as part of Pride Month. Pride Month, celebrated every June mainly in the US, is dedicated to the uplifting of LGBTQ voices, a celebration of their culture and the support of their rights.

Edited excerpts from the interview:

How do you describe yourself?

I’m someone who is passionate about community building, diversity, and inclusion.

I believe in empowering, educating, and inspiring the ‘misfits’ to discover their true potential and find alternative paths to success through the power of community, collaboration, self-discovery, and personal development.

What is community building and why is it important? Why is there a need for a community for community builders?

Building communities is a crucial process that fosters connections among people and creates infrastructure for these connections to happen. It is all the more important in a pandemic situation like this. This is a time for people to come together to find support from their community and stay connected.

Community builders are often givers to their communities. They often do a lot for their community but lack avenues to talk about their feelings or don’t have a place to seek help. The idea of having a community for community builders is to bridge this gap.

What are the different aspects of community building? How are your initiatives helping during the COVID-19 crisis?

The pandemic may have forced us to restrict ourselves at home and keep a safe distance from one another, but it has also united the community in unprecedented ways.

The pandemic has caused severe disruptions to our economy, livelihoods, and way of life. However, it has also fostered a strong spirit of care, cohesion, and active citizenry in our society.

We have seen community builders in our community coming together, sharing resources, and collaborating to show their support for the migrant workers in Singapore. They pulled together their great network of resources to realise various initiatives, calling for volunteers and donations, which have received tremendous support and overwhelming responses.

Crisis or no crisis, community building is here to stay.

Could you talk about Kampung Collective? What are the different causes it is championing?

Kampung Collective is a community for community builders across Asia. It seeks to educate, gather, connect and build. These are our key drivers to achieve our vision of elevating community building as a credible professional career.

Also Read: How this SEA VC is rising to the challenge of gender inequality

We serve as a support network, a safe space for community builders to connect, share best practices, learn, grow and uplift one another in the community-building journey.

We have over 500 community builders in the group, from Singapore, Malaysia, Thailand, Indonesia, Vietnam, Hong Kong, China, to India.

In Kampung Collective, we have community builders building communities around topics like startup ecosystem, mental health, environmental sustainability, LGBTQ+ issues, women empowerment, and the ageing population.

Do you conduct any specific programmes for the LGBTQ community?

In my day job as a culture builder at HubSpot, we have the LGBTQ+ Alliance group. It aims to empower HubSpotters through the creation of a safe, respectful community.

We further envision a more thoughtful, informed, and inclusive environment for all HubSpotters through meaningful engagement and conversation with our peers. We also commit to improving the living experiences of others in the communities we inhabit.

On a personal front, as an openly gay man in Singapore, I advocate for change and create awareness around LGBTQ+ topics on my personal social media platforms like LinkedIn, Instagram, and Youtube.

I see myself more as a representative, sharing my life with my partner publicly as any straight couple would do, than an ‘activist’.

Do you think Southeast Asia’s employers have embraced/are embracing gender inclusiveness in their workplaces? Are these minority communities still looked down like in many parts of the world?

Honestly, I don’t think diversity and inclusion receive enough airtime in workplaces in Southeast Asia. You rarely see this as a topic being discussed in workplaces within the Southeast Asian region. You may not find specific roles within a company focusing on D&I.

Also Read: How to make gender equality training work

This is unfortunate and rather ironic, given the exceptionally rich breadth of people, ethnicities, and creeds in the region.

One of my core beliefs is that it is a moral imperative for us to champion diversity and inclusion within our organisations and workplaces. This is simply the right thing to do.

I am personally committed to ensuring that my employer allows people of all identities — in terms of gender, ethnicity, sexual orientation, disability, age, and national origin — to thrive.

Is there still an unwillingness/fear among LGBTQ communities to openly admit their sexual orientation? If so, why? How do you think we can address this as an educated society?

I see more people coming out as LGBTQ+ individuals in their social lives but not many in workplaces. There are a few factors for that. In Singapore, there is still a law, Section 377A, that criminalises sex between consenting male adults.

In that context, there isn’t a point of safety for gay people to come out and live their lives openly or simply express their love publicly as there is still discrimination.

In a workplace, the importance of a supportive social environment plays a huge role in a person’s decision to openly asset his/her identity. Leadership makes all the difference. Research shows that employees whose leaders publicly support LGBTIQ+ issues are 50 per cent more likely to be out to everyone at work.

Organisational policies and strategies that recognise the specific needs of, and sometimes just the existence of LGBTIQ+ people, are also key to creating an inclusive environment.

Also Read: This gay founder is creating a safe media platform for LGBTQ community in SEA

When LGBTIQ+ people work in a safe environment, they are more willing to come out.

Anything else to share with the startup communities in SEA?

Diversity and inclusion are essential in business today as a healthy variety of people from different backgrounds and cultures provides us with the balance of voices and diversity of thought that we need.

As the future generation of the workforce is getting more aware of the social injustice happening around the world and are already looking at companies they work for through such a lens, I think it’s time for startups to take a more proactive stance on employing a diverse workforce that reflects the real people of society today.

It’s becoming clear that when workers can bring their authentic selves to work, they are more productive and engaged. In a diverse and inclusive workplace, employees will be happier in their job roles; new ideas will arise, and productivity will increase. This will lead to greater successes within the business and allow the business to flourish and stand out amongst competitors.
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Image Credit: Andee Chua.

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Red Dot Analytics, a Singapore-based company that aims to help digitalise, optimise, and automate Data Centre operations with its tech solutions, today announced that it has secured an undisclosed seed funding round from IMO Ventures, Avior Capital, and GSR Ventures.

A spin-off of Nanyang Technological University (NTU), the startup has previously raised investment from Yincubator and grants from Enterprise Singapore.

Red Dot Analytics builds artificial intelligence (AI)-driven digital twin solution, also known as a cognitive digital twin, that helps transform data centre operations and management.

In a press statement, the tech is described as pivoting on a network of industry-grade digital twins, cross-calibrated with operational data from existing IoT devices by an AI agent.

The network of twins serves two purposes to synthesise a large volume of self-labelled operational data for AI model training and validate control policies derived from well-trained AI models, in a dual cycle loop manner.

Also Read: Dot Property acquires Hipflat to further penetrate into Thai proptech market

It enables data centre operators to apply AI-driven digital transformation to achieve energy efficiency without compromising its availability, which is described as a “big dilemma in the industry.”

The research and development work is led by Prof. Wen Yonggang, a full Professor and President’s Chair of Computer Science and Engineering at NTU.

He has won multiple industry accolades including the Data Centre Dynamic Award (2015), the ASEAN ICT Medal Award (2016), and the IEEE Industrial Technical Excellence Award (2020).

“Surging demand for digital services translates to more data centres being built, which naturally brings about concerns as to their associated energy consumption and the consequent impact on climate change,” said Prof. Wen.

“Our technology improves the sustainability of data centres in terms of their energy and carbon footprint, as it greatly increases the productivity, efficiency, and resiliency of a data centre’s facilities,” Prof Wen added. “Another benefit is that capital and operational expenditure investment in a data centre can be reduced.”

The investment into Red Dot Analytics is one of the latest raised by AI startups in Singapore. Before this, in May, Microsoft’s VC arm invested US$6.25 million into hyperlocal solutions provider NextBillion.ai.

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Image Credit: Massimo Botturi on Unsplash

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In order to set up a business, the first important problem that owners must address is the need for capital. Back then, business owners typically have to cough up their funding to achieve this. But with all the developments in the business ecosystem particularly within the startup tech world, founders now have access to an array of options for fundraising such as VCs, angel financing, crowdfunding, and many others.

Moreover, going beyond a company’s initial launch, fundraising is also vital for expanding businesses, developing new products and services, and exploring new markets. With the help of a good fundraising round, it opens up so many doors for promising startups to take their brand to a global stage and achieve their vision of success.

With all the possibilities that are opened up through fundraising, startup founders must be equipped with the necessary skills and core knowledge to create a compelling case for potential investors to be interested in. This will allow them the ability to fully grasp complex concepts regarding legalities and due diligence, develop strategies for pitching, and design persuasive pitch decks among others.

As such, the Malaysia Digital Economy Corporation (MDEC) launched the Founders Grindstone programme (FG) last year. MDEC’s FG is a capability-building programme with a keen focus on helping local tech entrepreneurs to enhance their knowledge in areas of fundraising and equip them with the right skills to increase their chances of securing investors.

MDEC understands the amount of raw potential that many promising startups possess, and through the FG programme, MDEC is committed to helping startups maximise that potential to open floodgates of opportunities for them.

Also read: How founder-CEOs can setup their startup for a successful IPO

MDEC’s FG programme entails intensive workshops conducted by leading investors, venture capitalists, equity crowdfunding platforms, and legal firms. This programme aims to equip founders with an understanding of regulatory, legal issues, investors’ requirements, pitch deck preparation, and other matters regarding the journey of fundraising. In addition, following the series of workshops, a pitching competition and business simulation are organised for twenty shortlisted startups, giving them an opportunity to highlight their business to potential investors.

A successful run with promising startups and leading investors

In 2020, the first FG programme was held in partnership with Draper Startup House (DSH) and a legal consultancy company, Izwan & Partners. At FG 2020, the top ten participating startups were connected to DSH-world’s largest network of VCs under Draper Venture Network, with connections to 24 global funds, and three startups were awarded scholarships to participate in the virtual Draper University entrepreneurship programme.

This year, they launched the first batch of Founders Grindstone 2021 in an even bigger and better programme that included a 2-hour mentoring session with RHL Ventures, The Hive SEA, and Tenggara Capital. Moreover, the top 10 companies from the pitching session enjoyed a 1-hour mentoring session with Damien Yee (Co-Founder of Epitome Global), with a select few being given the green lane for a pitching session at ASEAN Startup Meet @ Taipei, and awarding AWS cloud credits for selected startups.

FutureLab.my, an EdTech startup that provides mentorship software for corporates, learning institutions, and start-up accelerators, was one of the lucky startups to make it to the top 10. Brian Tan, CEO and Co-founder of FutureLab, explained “it was a good experience going through the programme, we got to meet investors that we haven’t met before, got insightful mentoring sessions, and got great feedback from the Taipei pitch day panel.”

Tan added that the programme gave them more opportunities to work on their pitch deck, enabling them to pitch and get feedback from investors. “We were in the process of fundraising during the program so the extra practice was valuable and I am happy to say that we got our term sheet signed by a couple of investors”, Tan said.

Meanwhile, Junya Yoshizaki, Chief Operating Officer of Chaintope Malaysia Sdn. Bhd. shared that the programme was a great opportunity to explore networks of top-quality investors. “We had a good meeting with the mentors which MDEC connected with us. We got some advice on how to improve our pitch deck to make it more attractive to VCs and investors. Mentors were from different backgrounds, such as VCs, successful startup founders. etc., and it was great to get advice from different perspectives,” Yoshizaki explained.

Also read: Here are the most promising startups in the 5G space

Chaintope is an IT blockchain company developing a hybrid blockchain called Tapyrus. Tapyrus Platform provides useful APIs for both FinTech and non-FinTech sectors. They are mainly focusing on the fields such as supply chain traceability, energy (P2P, REC), environment, government DX.

Yoshizaki added, “since our focus area is blockchain, company introduction typically becomes too technical, and it was quite difficult to explain to the audience about what we are trying to achieve. Actually, we just prepared a new version of the pitch deck in March when we joined another accelerator programme, and Founders Grindstone helped to brush up the deck even further.”

FutureLab and Chaintope are only some of the many exciting companies that benefitted greatly from the programme. Yoshizaki elaborated that “in this COVID-19 era, it is a tough time for startups, but at the same time many opportunities are opening up. MDEC’s Founders Grindstone programme helps startups to improve our fundraising strategies. [It also provides us with the opportunity] to pitch in global events [and obtain] global exposure.”

Meanwhile, Tan affirmed his trust in the FG 2021 by saying “I would recommend this programme for all startups that are looking to meet local and international investors. MDEC did a great job looking after us and gave us the space to [hone our skills] and at the same time have scheduled meetings with potential investors and mentors.”

Exploring valuation methodologies and market readiness of a company to fundraise

“Special thanks to MDEC for organizing this initiative. It was a great experience meeting all the startups in Malaysia, reminding us that Malaysian startups have plenty of potentials. All it takes are the right exposure and guidance for them to prosper, which is what Founders Grindstone is all about. We hope that through this initiative, we can see the startups go on to achieve great things and become Malaysia’s new generation of tech leaders,” explained Raja Hamzah, Co-Founder and Managing Partner of RHL Ventures.

With online avenues becoming increasingly mainstream, geographical boundaries are getting blurred. While this opens up ample opportunities for startups to expand beyond home markets, businesses are also faced with new challenges- from data security to compliance regulations and legal due diligence. In line with these emerging industry trends, FG 2021’s main focus this year is on equipping startups with various aspects of company growth, and providing tailored training classes according to their company lifecycle. This includes sharpening pitching skills and investors relations, fundraising for market expansion and also fundraising for growth-stage companies.

Also read: Scaleup Success: How can startups tackle the challenges of international expansion?

“Founders Grindstone is a fantastic initiative for the Malaysian Startup Ecosystem. It promotes knowledge-sharing between founders and venture funds like the Hive Southeast Asia and The Hive in Silicon Valley. As Investors, we gain a better understanding of the needs of Malaysian startups and together we can help build a richer ecosystem. Definitely a great initiative to prepare our Malaysian startups for their journey to become regional and global champions,” shared Shahril Ibrahim, Advisor of The Hive.

The second batch of FG 2021 that happened in the month of May focused on different valuation methodologies for startups ranging from early-stage to growth-stage and understanding the expected needs and readiness of a company to fundraise and expand from the point of view of a VC. The first workshop exploring valuation methodologies was held in collaboration with Equidam on May 5th. The next workshop on market expansion was a deep dive into market readiness, expansion strategy, product-market fit and market outlook, held on 25th May with AC Ventures who shared on regional expansion. In addition to this, The Hive will cover more on the global perspective in another workshop scheduled to be held on 1 June.

To join the next batch, visit the Founders Grindstone website.

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Disclosure: This article is produced by e27, sponsored by Malaysia Digital Economy Corporation

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Zenyum, a Singapore-based direct-to-consumer dental products startup, has raised a US$40 million Series B funding round led by L Catterton, a global consumer-focused private equity firm.

L Catterton invested US$25 million into the startup in this funding round.

Existing Zenyum investors including Sequoia Capital India, RTP Global, Partech, TNB Aura, Seeds Capital, and FEBE Ventures also participated in this funding round.

Anjana Sasidharan, Head of Growth Investments for L Catterton Asia, will be joining the company’s board following the investment.

This funding round followed a US$13.6 million Series A investment that Zenyum announced in November 2019.

In a press statement, Zenyum Co-Founder and CEO Julian Artope said that his team is looking forward to L Catterton’s “global expertise” in brand building.

Also Read: Innovating medical devices towards better dental patient care

“With this investment, we can accelerate expansion across Asia, deepen our range of products, and further develop our technology stack to be a true partner to dentists while building a category-defining company,” Artope said.

L Catterton over US$27 billion of equity capital across its fund strategies and 17 offices around the world. It has invested globally in the dental and consumer health space, with portfolio companies that include Ideal Image, ClearChoice, dentalcorp,
OdontoCompany, Espaçolaser, and 98point6.

Founded in 2018, Zenyum partners with dentists to provide 3D-printed Invisible Braces across seven markets in Asia.

“Every patient has an in-person consultation with a dentist from Zenyum’s large network of local dentists who will conduct a thorough examination, as well as an X-Ray and 3D scan, in order to develop a treatment plan specifically customized to each patient’s needs,” the company explains. “Zenyum’s app provides patients with monitoring and guidance throughout the process and serves as a touchpoint for patients during their Clear Aligner journey, ultimately reducing chair time in clinics.”

The startup said that it has seen a four times revenue increase in 2020 alone with its product offerings that range from aligners to electric toothbrushes.

In Singapore, other startups that are working in providing dental products or supporting their creation include Structo, which has recently announced funding to help develop digital additive manufacturing solutions for the dental industry.

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Image Credit: Zenyum

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