The evolution of VC in Indonesia: An eyewitness’ perspective by Adrian Li, Founder and Managing Partner at AC Ventures

So much has changed in the Indonesian VC ecosystem since I first started working on a fund in 2014. From an investor’s perspective, among the most apparent challenges previously was finding entrepreneurial talent and significant downstream funding risk.

But back then we were pioneering and starting venture capital as an asset class in Indonesia along with several other players in the market.

However, entrepreneurs faced bigger challenges than just securing funding. The entire market for the online space, payment and logistics infrastructure was still very nascent. Smartphone capabilities were also far from where they are now, and of course, without the penetration of Gojek, Grab, and Shopee, consumer confidence was much lower.

Just seven years on, things have entirely changed. The majority of consumers do not think twice about buying online given the prevalence of online shopping apps.

What the world of travelling will look like post-pandemic by KC Cheah, CEO at Alpha Red Services

With the growth of mobile technology, OTAs, airlines, and hotel groups are also investing in technology to serve their customers more directly.

The last two decades have brought numerous changes to the travel industry. Travellers can now book hotels, flights, read reviews, and gather information about where they are visiting from the comfort of their homes or anywhere they are.

The travel industry will never remain the same again after the pandemic, at least for the first couple of years. Henceforth, here are some of the travelling trends you should expect.

Will Robinhood’s IPO lead to more short squeezes like GameStop? by Oleg Spilka, Investor, Founder and CEO

Now, as Robinhood prepares to go public, could we see more short squeezes like GameStop emerging on a regular basis?

Since the beginning of the COVID-19 pandemic, Robinhood has rarely strayed from controversy. The app’s imposition of restrictions on the investor accounts in the wake of the GameStop saga drew criticism from investors and onlookers alike.

In May, Warren Buffett, one of Wall Street’s most famous figures, likened Robinhood to a casino. “American corporations have turned out to be a wonderful place for people to put their money and save but they also make terrific gambling chips,” explained Buffett.

“If you cater to those gambling chips when people have money in their pocket for the first time and you tell them they can make 30 or 40 or 50 trades a day and you’re not charging them any commission but you’re selling their order flow or whatever … I hope we don’t have more of it.”

Notes for startups

User retention strategy: Why you need to add social experiences into your app by Angelique Parungao, Content at Amity

While app developers go full throttle on their app user acquisition, they fail to realise that they need to prioritise how they can engage and eventually retain their users in this stiff competition –a concept known as user retention strategy.

After all, it takes five times to acquire new customers than to keep one. This number just shows how a clear user retention strategy can be a powerful tool to ensure the success of an application.

User retention is a significant factor in determining the success of an app. If you have an active user base that stays engaged with your product, you are more likely to retain those customers and increase your in-app revenue.

3 reasons why Asian tech startups fail by Georg Chmiel, co-founder Juwai IQI

In my experience, most investment and industry insiders estimate that about nine out of every 10 Asian startups will fail to reach their fifth birthday.

I have the privilege of examining hundreds of fundraising memorandums from Asian startups each year. I also have extensive experience on the board and in the C-suite of successful technology companies such as the Australian unicorn, the REA Group.

Here, let me walk you through the three most common reasons Asian tech startups fail and how founders can avoid them.

How should non-tech companies approach AI? by Andrey Koptelov, Innovation Analyst at Itransition

Democratisation of AI-based tech is now leading to even the least tech-savvy companies using this technology to their advantage. Companies operating in healthcare, travel, insurance, retail, education, and many other industries now embrace AI software development to streamline their decision-making and make workflows more efficient.

For example, Johnson & Johnson uses AI to discover new drugs and make vaccines. Bloomberg uses AI to automatically generate financial news articles based on companies’ financial reports. Costco has managed to attract millions of new customers by utilising AI to detect the most effective locations for their new store locations.

Other uses of AI firmly resemble decades-old sci-fi movie scenarios. For example, Ping An, a Chinese insurance company, uses facial recognition to detect dishonest clients. Potential borrowers can now apply for loans through an app by answering questions about their finances using a mobile camera.

Playing it safe

Mind the trust gap: How does a company develop consumer trust through data stewardship? by Rajeev Peshawaria, CEO of Stewardship Asia Centre

Big Data sets can be used to track and predict consumer behaviour and analyse group psyche to influencing and nudging political and social views as well as buying habits.

At the other end of the spectrum, data breaches and compromised data security have continued to hit news headlines. According to a report by Risk Based Security (RSB), cited by TechRepublic, the number of breached records jumped 141 per cent in 2020 to 37 billion.

Regulators are doing their part. But regulatory pressure alone has not prevented violations because in most cases, it appears that companies are trying to satisfy the minimum regulatory requirements. Some may even risk ignoring the rules because of cost.

The plethora of corporate data breaches has human consequences, with ordinary people falling victim to scams and online fraud. No consumer wants their private data falling into the wrong hands.

Crypto trading: How to be sure you are doing it safely? by Jeremy Choi, COO, ABCC Exchange

Crypto exchanges play a crucial role in determining your trading experience. Other than being the medium to purchase, sell and trade crypto assets, crypto exchanges also act as a convenient vessel to store funds.

Choosing a crypto exchange platform is fundamental to have a safe trading experience. A secured exchange that complies with the regulatory requirements and ensures protection for all users and projects onboard is necessary to ensure user protection.

When choosing a platform, new traders have to look beyond fee structure and token pairs, rather they should ensure to read into the security and safety processes of these exchanges to protect themselves from being easy victims of fraud.

Platforms like ABCC Exchange, allow for their users to securely trade through their unique multi-layered security infrastructure. An exchange with such a user-centric layout allows current users and other crypto-enthusiasts to feel safe diving into the world of cryptocurrency.

Emotional leadership in a post-COVID-19 business world by Lesley J. Vos

And while it’s common to see 23 to 30-year-old entrepreneurs and startup-ers who are millennials themselves and supposed to set the corresponding leadership style, some aren’t yet emotionally intelligent enough to deal with their ambitious and mindful mentees on the way to business success.

In the post-COVID-19 world, when so many people became more self-aware and revised their life and career goals, emotional intelligence turns to be even more essential in the workplace.

With remote work from homes, the ability to recognise, evaluate, and control mentees’ sentiments is critical for responsible leaders to master.

Here’s what young entrepreneurs and team leads can do to get the ball rolling.

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Vietnamese startup Kamereo, which offers an online platform for F&B companies to optimise their sourcing and purchasing processes, has received US$4.6 million in a Series A round of funding, co-led by conglomerate CPF Group, Quest Ventures, and Genesia Ventures.

The Ho Chi Minh City-headquartered startup will use the funds for expanding its team and operations into Hanoi next year, as well as to build a new warehouse management system to optimise daily operations.

A portion of the money will also go into upgrading the user experience and service quality of its website and mobile app (available on App Store and Google Play) and expanding tech coverage to allow the in-house engineering team to make fast, data-driven decisions.

Also Read: In a post-COVID-19 world, Vietnam is SEA’s latest hotspot for venture capital investment

In the long term, Kamereo aims to become a one-stop procurement platform for F&B businesses.

The platform was launched in 2018 by long-term Japanese expatriate Taku Tanaka with a vision to redefine the food business by letting chefs and restaurateurs focus on serving the best culinary experiences to customers while leaving the nitty-gritty of supplier negotiations, order processing and management to the Kemereo team.

Before launching the company, Tanaka held the role of COO at renowned restaurant chain Pizza 4Ps. It was here where he began to find problems to overcome with the food supply chain, particularly with efficiency. It was this experience that led to his founding of Kamereo.

Kamereo is a tech-enabled supplier for restaurants, hotels, cafes, retail shops and offices. It is a one-stop platform where farmers, producers, importers and buyers connect to trade a range of fruit and vegetable products at the best prices. It also has its own warehouse, delivery team and customer support team. Some of its most notable clients are Pizza 4Ps, El Gaucho, Sol Kitchen & Bar, and L’usine.

The startup claims it has grown by 15 per cent every month in the last 12 months despite mobility restrictions and the temporary closure of some businesses. It attributes this success to the surging local F&B industry, which has shown a steady compound annual growth rate of over 10 per cent, as well as segment players’ growing discernment on sustainably and ethically sourced goods, and the country’s overall positive management of the coronavirus pandemic.

Currently, the foodtech startup has about a hundred employees serving more than 400 active customers who buy regularly from the platform.

Montri Suwanposri, CEO of CP Vietnam Corporation, said: “We are pleased to join forces with Kamereo, combining our state-of-the-art production and highest food standards with their unparalleled B2B F&B expertise. Together, we are helping and elevating F&B entrepreneurs with hygienic, tasty, and innovative food as they strive to do better for their customers.”

Also Read: How the gig economy is empowering women in Vietnam

Goh Yiping, Partner of Quest Ventures, added: “Kamereo sits in one of the largest food production hubs of Southeast Asia, and there is much room to grow in solving many of the inefficiencies of the supply chain today, improving farmers’ livelihood outcomes and procuring the best products for businesses and homes.”

As per a new report, Vietnam is expected to be the ‘rising star’ in Southeast Asia’s startup ecosystem. The country will emerge as the third-largest startup ecosystem in the region in 2022, with stronger signs of VC funds putting more efforts into early-stage investments in the country, according to the report released by Golden Gate Ventures.

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Image Credit: Kamereo

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Desty, a startup providing social commerce solutions for Indonesia’s merchants, announced today it has secured US$3.2 million in a pre-Series A funding round led by Chinese VC firm 5Y Capital.

Formerly known as Morningside Venture Capital, 5Y is the backer of notable Chinese companies such as Xiaomi and Kuaishou. This marks 5Y’s inaugural investment in the archipelago.

Other participants in Desty’s latest round are Fosun RZ Capital, January Capital, IN Capital, as well as East Ventures, who is also Desty’s seed investor.

Also Read: YC-backed Super raises US$28M to grow its social commerce platform in Indonesia

The startup will use the funding primarily for team expansion and user acquisition. “We have our laser focus on serving online merchants and users in the ecosystem. We only have one goal, which is to make sure they can grow their business efficiently. Our team has over 15 years of experience with merchants and their digital operations, which we believe is key to the growth of the economy in Indonesia,” said co-founder and CEO Mulyono Xu.

Launched in October 2020 by Xu and Bill Wang (COO), Desty is a digital platform that helps merchants, influencers, and creators build a single online destination to promote and sell their products. Users can create landing pages optimised for links in bios and build their own branded online store in just several minutes for free.

Currently, the startup has two main offers: Desty Page and Desty Store. Desty Page is a landing page service optimised for links on social media accounts, especially Instagram, while the latter provides a platform for users to open an online store to complement their marketplace presence easily.

It has also established Desty Academy, a channel of information and training resources to help users grow their business with practical how-tos, best practices, and case studies.

Also Read: A look at the future of social commerce

It is essential for merchants and sellers to easily manage their multiple online presences in Indonesia’s dynamic e-commerce landscape. “We believe that as a merchant, users need options to do business, whether in the marketplace, in their own domain, and in social media channels. We are here to provide solutions for them, so that each channel can complement one another, instead of competing. This will result in less dependency on external parties and more sustainable business in the long run,” added Mulyono.

“Desty is creating a platform that enables merchants to go digital in five minutes. We have invested in similar companies in India and China, and these solutions create immense value. With a solid team behind Desty, we have no doubt it will change the whole landscape of small and medium enterprises in Indonesia and Southeast Asia,” said Tej Kapoor, co-executive president of Fosun RZ Capital.

“The Internet is all about links. Great internet companies build links. They link people to people, link online to offline, and link demand with supply. In the e-commerce world, there is a massive opportunity in linking social and content with e-commerce transactions. We have seen this great power when social and content meets e-commerce in China. We believe Desty can become the linking infrastructure in Southeast Asia’s e-commerce world and could contribute to a better ecosystem where social, content, and e-commerce transactions link closer and smoother,” said Hanson Hu, VP of Investment at 5Y Capital.

Desty’s launch and funding come at the perfect time to complement Indonesia’s massive e-commerce development during the pandemic. The nation’s online transactions jumped by 18.1 per cent to 98.3 million in 2020 while recording 12 million new e-commerce users.

Also Read: Leveraging social e-commerce to maximise your brand in China

In addition, Indonesian consumers’ most trusted shopping channels come in various platforms: marketplace (97 per cent), business’ own domain/website (91 per cent), and social media (82 per cent).

“Since our investment late last year, Desty has been paving the way for merchants, influencers, and creators to go online. As a result of the pandemic accelerating this shift to online, there is a continuously stronger use case for Desty and where they fit into the market. We are confident that Desty, backed by a team of experienced founders, will continue to create impact and provide value for the millions of Indonesian online sellers,” said Willson Cuaca, co-founder and managing partner of East Ventures.

Mulyono is one of Indonesia’s e-commerce veterans with years of experience at Alibaba Group, complemented by his expertise as a former VC at BAce Capital and President of EV Growth. His co-founder Bill Wang embodies 17 years of e-commerce experience under Alibaba Group.

Social commerce is a fast-growing industry in Indonesia. Thanks to the ongoing COVID-19 crisis, the social commerce sector is witnessing a boom, and many offline companies have set up their own digital stores on social sites like Facebook.

In April this year, Super, a startup that uses social commerce and a streamlined logistics chain to lower the cost of goods, raised an oversubscribed US$28 million Series B led by SoftBank Ventures Asia. Other social commerce companies in Indonesia include KitaBeli, ChiliBeli and Woobiz.

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Image Credit: Desty

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Philippine media conglomerate GMA Network is setting up a holding company, GMA Ventures, Inc. (GVI), to identify and invest in tech startups within and outside of the Philippines, with an aim to tap into new markets and revenue streams.

As per a press statement, GVI will lead the GMA Group in identifying, investing in, and/or building strong and sustainable businesses.

GVI will focus on sunrise industries with substantial growth horizons and industries that continue to expand.

Aiming to be at the forefront of technology advancement and the growth of the digital economy, it will likewise engage in mergers and acquisitions, strategic partnerships, and fund investments.

In May, during the GMA’s annual stockholders’ meeting, the investors of GMA had approved to put in P25 million (~US$500,000) into GVI. According to its chairman and CEO Felipe L. Gozon, GVI will serve as its vehicle in investing in non-core or non-broadcasting business activities that may provide the company with additional revenues and profits.

Also Read: Philippines creating US$5M venture fund for local startups

“Following the successful roll-out of our digital TV products and a banner year in 2020, we are looking at surpassing our own achievements not just in terms of our main media business and content production. We are actively looking for ways to diversify the company’s portfolio by investing in sustainable businesses and, ultimately, providing the best returns to our shareholders in the years to come,” said Gozon.

GMA President and COO, and GVI’s Vice Chairman Gilberto R. Duavit, Jr. added: “While we tirelessly work on maintaining GMA’s leadership position within the industry, we also intend to further contribute to the growth of the Philippine economy as we protect and increase our shareholder value. GMA Ventures will be our arm in identifying other viable sources of revenue and future profit pools.”

“We now set our sights on making GMA one of the major conglomerates in the Philippines. We are taking this significant step to future-proof the Network, champion innovative industries and business models, and be at the forefront of technology advancement and the growth of the digital economy,” said GVI’s President and COO Regie C. Bautista who is also GMA’s Senior Vice President for Corporate Strategic Planning and Business Development, Chief Risk Officer, and Head for Program Support.

GMA Network, led by two of the richest people in the Philippines, became the leading broadcaster in the Philippines since the shutdown of its archrival ABS-CBN in May 2020 as the TV network failed to renew broadcast license with the government.

In March, the Department of Trade and Industry (DTI) of the Philippines announced that it was creating a P250-million (US$50 million) venture fund aimed at investing in local startups. The fund is line with the Innovative Startup Act 2019 and is aimed at supporting product research and development, product manufacturing, sales, and marketing of startups.

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Image Credit: GMA Network

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With the boom of tech startups in the region, Southeast Asia has grown to become one of the global hotspots for entrepreneurship in the last few years. Across different verticals including ride-hailing, e-commerce, AI, machine learning, blockchain, and many more, the region is home to some of the most promising young companies in the world. One particular vertical that has seen tremendous growth is fintech. As recent global events have accelerated developments in the fintech space with the increased demand for neobanks, cashless payments, and e-wallets, the industry has experienced many strides.

With that, the expected market growth of fintech is estimated to be between $70 to 100 billion by 2020, according to a senior research analyst at Finovate. This upward rally continues even in times of COVID-19, when more users try new digital services for the first time. This has undoubtedly led to an acceleration of the digital economy.

Another factor that contributed to this vast potential for growth is the lack of financial inclusion in the region. As the World Bank points out that there is a gap in terms of access to comprehensive financial tools in Southeast Asia, this makes it difficult for people to save, borrow, and manage money. Among all countries in Southeast Asia, Malaysia presents an opportunity for growth given its relatively large unbanked and underbanked population, coupled with high rates of smartphone penetration.

With Fintech changing the way people and businesses transact, save their money, borrow, invest, and buy investment products, the most disruptive innovations are those that operate within the fintech space. Fintech has given access to different forms of finances for people in remote areas, boosting the economy, and stimulating demand. Moreover, many economies have implemented regulatory sandboxes to motivate innovation in the fintech sector.

Malaysia — a microcosm of SEA’s diverse tech ecosystem

Just like the rest of Southeast Asia, Malaysia has a diverse mix of racial groups which means that oftentimes, the country enjoys a healthy blend of different cultures in the workplace. People from all cultural backgrounds are welcomed to the bustling city environment where top-notch talents can enjoy the various employment opportunities that the country offers.

Other than that, Malaysia is also well positioned to leverage global connections into a local market. As the country sits in the heart of the APAC region, Malaysia is ideal for international business and global startups, given the kind of regulatory support offered by the government. Moreover, its close proximity to other time zones and Asian countries means that setting up a hub in the country won’t translate to logistical discrepancies with people working in neighbouring territories. Experts also point out that the country is becoming the centre of innovation for Islamic finance, which gives Malaysia a niche position as a leader in Islamic Finance in the world amid the growing demand for Sukuk and other Islamic financial products.

Also read: How SMBs grow their business with TikTok

One particular fintech company that finds Malaysia a well-suited entry-point to grow their business in Southeast Asia is HelloGold, a fintech startup whose mission is to democratise financial products and services for the unbanked and underserved in Malaysia.

“While there are much larger markets than Malaysia in the region, its demographics was right for us — 30+ million population; 1/3rd of which fall in our target age group — in that it was the right size without being too big for HelloGold to test our business model, product-market fit etc,” said Robin Lee, CEO and co-founder of HelloGold

He added, “for fintechs, a conducive regulatory and business operating environment is key. For example, we need to have a definitive view on what is permitted or what is not; on what the process for securing permission is. This enables fintech startups like ours to make informed decisions quickly and move forward. Fortunately, Malaysia is one of these markets where there is legal and regulatory certainty; and where regulators and agencies are highly supportive in listening to and answering our queries.”

The first Shariah-compliant mobile app that helps people achieve financial security

HelloGold was set up in 2015 to change the way investors buy, save, sell, and redeem using physical gold. As a B2B2C operator, it has transacted more than USD26 million in gold for consumers over the past two years. The company also has a strong partnership with major brands in Malaysia and other countries in Southeast Asia, which aligns with the goal to be an integral financial inclusion provider for partners in emerging markets.

“We launched with gold because it is a key building block towards faster financial inclusion — not only because it is one of the 3 most favoured financial products with over USD70 billion saved in emerging markets each year but also because it is also popular among the 18-38 year-old demographic, with 80% showing interest in gold investment,” said Lee. Not only that, but the company is now in the process of bringing to market gold-backed micro-insurance and loans.

Lee added, “HelloGold is well-positioned to support our partners as they build out their financial services portfolio. We manage both the development and maintenance of the digital gold platform as well as the physical operations of the gold — buying and selling of the gold from the market, the safe custody and distribution of the customer’s gold, and the management of the customer’s account. Depending on the partner’s preferences, we can support them with a number of attributes such as gold-specific marketing content, customer on-boarding, cash-out management (as not all e-wallets currently have the ability to enable their customers to withdraw cash).”

A unique model of integrating with e-wallet partners

HelloGold has been doing extremely well after being certified by the AAOIFI (Accounting and Auditing Organisation for Islamic Financial Institutions), which sets the Shariah standards for Islamic financial institutions and the industry.

The company is in a unique position in which it integrates with e-wallet partners. As the digital gold platform which manages the transactions of digital and physical gold, HelloGold can support partners with different attributes depending on their preference — be it lowering the entry barrier for investors to start saving in investment-grade gold with as little as USD0.25, creating gold-specific marketing content or implementing customer on-boarding and cash-out management, all services are made to remove inefficiencies for consumers and to help partners in enabling their focus on their resources to build out an ecosystem that addresses the needs of customers.

Also read: KoinWorks super financial app ecosystem sees growth in Q2 2021 as it helps boost SMEs amidst the pandemic

“Integration into our partners’ mobile applications makes HelloGold’s products more convenient for consumers. It removes the need for one more app on their phones. Overarching this, integration enables our partners’ customers to start to save immediately in investment-grade gold with as little as USD0.25,” shared Lee.

Furthermore, given gold’s traditional role as a simple but effective way to preserve purchasing power, it has a very relevant role in protecting savers in emerging markets from the effects of both inflation and currency depreciation. For example, the 20-year return for gold vs. the ringgit was 685%, equating to an annualized return in excess of 9% against the annual interest of 0.4% or less that is typically offered by most bank savings accounts in Malaysia. More than this, over the same period, the consumer would have been better off buying gold (685%) instead of the KLCI (475%) — even with all the dividends reinvested. This performance against cash and the main equity index is typically repeated not only on a 5-, 10-, 15-, 25-year horizon but also in several other emerging markets.

Pursuing growth in the larger Southeast Asia

One of the best indicators for HelloGold’s determination to revolutionise the fintech space is their recent partnership with Boost, a homegrown lifestyle e-wallet that combines lifestyle needs and cutting-edge digital technology. Through this partnership, HelloGold has made its products more convenient and accessible to its partner’s customer base. This is the company’s first wallet integration which is proving to be quite a feat as the company serves as the first investment tile on the Boost app.

Amidst all these developments, the company hopes to expand across Southeast Asia and, over time, beyond the region. There are three key reasons that make Southeast Asia so compelling — not just for HelloGold but for many fintechs:

• Population: its total population is more than 670 million with a median age of 30 years old and millennials making up 25% of the population
• Financial inclusion: many in the region remain either unbanked or underserved with too many financial products and services that are inaccessible and unaffordable
• Digital connectivity: more than 460 million people in the region are connected to the internet and over 887 million mobile connections.

Also read: India’s first accelerator and VC fund gears up for its maiden demo day series

With the help of the Malaysian Global Innovation & Creativity Centre (MaGIC) under the Ministry of Science, Technology, and Innovation (MOSTI), the company was able to participate in the 2017 Grill or Chill and the 2017 Stanford Go2Market. These programmes have been instrumental in exposing HelloGold to global markets, enabling them to learn key insights and strategies, showcase their groundbreaking products, and network with some of the key players in the industry.

“MaGIC has been proactive in identifying initiatives that HelloGold can participate in to help us build out our presence beyond Malaysia. Like many startups with the usual constraints on people resources, it is great that there is an agency that is looking to support your growth ambitions,” expressed Lee.

As Malaysia’s digital economy continues to grow, we can only expect greater things from local fintechs like HelloGold. Moreover, as the company explores new opportunities across the region, and given their extensive experience in Malaysia’s vibrant economy, we can only anticipate as HelloGold takes the world by storm.

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This article is produced by the e27 team, sponsored by MaGIC

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