Finding a promising startup and investing in it is no mean task. It takes weeks and sometimes months to find a good fit that aligns with an investor’s goals.

VCs consider many criteria before zeroing in a startup for a financial deal, including the team, product, target market, and many other things. Even if everything falls in line, the investment can still go wrong, and the VC may lose its investment.

Different VCs adopt different approaches and have different ways of finding out a potential investee.

In this article, co-founder and managing partner Kuo-Yi Lim shares how Monk’s Hill Ventures picks a startup for investment, its due diligence process, and investment thesis.

Edited excerpts:

What are the different methods/channels through which MHV sources the deals? Do you have any formal partnerships with accelerators and incubators?

Kuo-Yi Lim: We work closely with a wide variety of co-investors and partners. These include angel investors, incubators and accelerators, venture capital firms investing across different stages, corporates/corporate VCs, and government-related investors in the ecosystem. Our co-investors and deal flow partners include Y Combinator, 500 Startups, and SGInnovate.

Also Read: Monk’s Hill Ventures’s Peng T. Ong on how to get your startup ready for the new normal

We have also recently launched our MHV Venture Scouts programme, comprising over 20 venture scouts who will invest further in high-growth pre-seed and seed startups across Singapore, Indonesia, Vietnam, Thailand, the Philippines, and Malaysia.

How many funds have you launched so far/currently running? What is the corpus of the ongoing fund? Any new funds in the pipeline?

Kuo-Yi Lim: We have deployed and invested from two funds — Fund I (US$80 million) and Fund II (US$100 million). Fund I is fully deployed. We also manage an Opportunities Fund that focuses exclusively on later-stage investments of our portfolio companies.

We are actively deploying from Fund II in startups we’re very excited about, including Jenfi, CoderSchool, and Dagangan.

Can you explain your investment thesis? What is the average cheque size? How many deals do you do a year? How many firms have you invested in so far?

Kuo-Yi Lim: Monk’s Hill Ventures invests in early-stage tech companies, primarily Series A, in Southeast Asia. Our vision is to build a venture platform that allows founders and operators like ourselves to fund and support founders in Southeast Asia.

We take a first-principles approach in making investment decisions. We break down ideas and business models to understand the fundamentals. We then spend time understanding the team’s values, motivations, purpose, and ambition.

We get into conversations with founders with humility and a fundamental curiosity about why they are motivated to devote their lives and energy to the venture. By building conviction around these elements, we then seek the opportunity to partner with the founders. We are prepared to underwrite and support founders over a long period.

We usually do about five to six deals a year, and we have invested in over 30 startups so far. Our cheque size ranges between US$2 million and US$8 million, and we are focused on companies at the pre-Series A or Series A stages.

Do you actively reach out to companies for investment? Do you also receive inbound interests? Is your approach the same for startups in both these categories?

Kuo-Yi Lim: Both. Our investment team across Southeast Asia will regularly speak to and meet with founders. Additionally, the best way for founders to get in touch with us is through a warm referral in our network. Monk’s Hill Ventures typically likes to get to know our founders early (even before they are Series A) and build that relationship over time.

What are the essential criteria that you look for in a potential candidate? What is more critical — team, product, market, or something else?

Kuo-Yi Lim: All the factors are relevant, although we tend to index more towards founders. We look for teams that show maturity and level-headedness in their approach to addressing issues and challenges. The teams should also be highly motivated, ambitious, and purposeful. Alignment between the founders and us on building a sustainable business with a laser focus on fundamental metrics is essential.

We look for companies that are addressing potentially large markets with robust underlying growth dynamics. We also look for companies that have demonstrated some level of product-market fit, including early customers for enterprise-focused products or user adoption for consumer products and services.

What is the duration of your due diligence (DD) process? Can you also talk about the process? How do you do DD during the ongoing crisis?

Kuo-Yi Lim: Since the founding of Monk’s Hill Ventures, we have systematically and purposefully built out a team of investment professionals located across the region, with a presence in Singapore, Jakarta, Ho Chi Minh City, and Bangkok. Our team members are typically familiar with the ground and the communities. This approach has been constructive during the pandemic.

Given our long-standing relationships with many founders and ecosystem players in various countries, we continue to engage companies and actively invest. Due Diligence is still done very much on a local basis. In-person contact between our team members and the companies is still typical for us.

How do you determine the amount to be invested in a company? What are the different factors you take into account?

Kuo-Yi Lim: At the early stage, valuing startups can be more art than science.

However, we do take into account various factors. These factors may include taking a deep dive into the business model and the industry to understand better the amount a startup needs to scale at this stage to hit its milestones.

We will draw references from comparable transactions both regionally and globally within a similar space. We also assess the quality of the team and the startup’s overall growth potential.

Also Read: Monk’s Hill Ventures head of talent’s guide to startup jobs search in Singapore

The most crucial consideration is arriving at a valuation that will set the company up for success. This often means managing dilution on the founders’ ownership while ensuring that the valuation is supported by fundamentals that the company can meet.

Do you make follow-on investments in your portfolio companies? What are the criteria/factors that you consider here?

Kuo-Yi Lim: Yes, we typically would make follow-on investments into our portfolio companies. We don’t lead in the subsequent rounds and will follow the terms of the new investors.

Can you also talk about the mentorship process at MHV, especially the venture scouts program?

Kuo-Yi Lim: When we invest in a new portfolio company, it has a core Monk’s Hill Ventures team that will support the startup throughout their startup journey from financial, legal to operations support.

In addition, we have our head of communications to support our startups on anything marketing, PR, and branding-related. We also have the head of talent to help them with anything HR and people-related and a legal counsel to support our startups on any legal matters.

For the Scouts programme, our scouts directly nurture the seed startups while the MHV team is accessible to the founders as well. We have also built a community for our Venture Scouts to support each other and for us to provide any expertise or advice needed as they nurture these startups.

Do you want to share details about your exit strategies?

We believe in taking a sustainable and more patient approach towards exits. Even in the earliest days of investment, we encourage founders to think about unit economics and profitability even as they focus on growth.

Ultimately, we want to see that our portfolio companies build sustainable businesses of scale that generate intrinsic value and can stand up to the competition. We are prepared to support the founders on this journey over a long period – sometimes ten years or more.

Monk’s Hill Ventures believe that exit opportunities will present themselves naturally to such companies. Our primary focus is to help the founders to build great companies, and exits will take care of themselves.

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Image Credit: Monk’s Hill Ventures

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While all we know how challenging it is to secure funding to develop startup technology, there are investors who are always looking for portfolio companies. Here’s the list of investors who are looking for their next portfolio company, and the best part is, they actively respond to fundraising startup’s Connect requests:

1. AC Ventures

Investment: Angel / Pre Seed, Seed, Pre-Series A / Bridge, Series A

Verticals: All verticals

Recent News: Capria Ventures injects money into AC Ventures, to co-invest in its portfolio companies

Straight from AC Ventures: AC Ventures is an early-stage technology venture fund that focuses on investing in Indonesia’s digital disruptors. We leverage our industry insights, support services and global network to empower our founders to build impactful, significant and scalable businesses for Indonesia and Southeast Asia.

As an Indonesia VC, ACV primarily invests in companies with a focus on Indonesia or with the intention to win the Indonesian market. We research technology-driven business models which have demonstrated successful adoption in more mature and emerging markets such as the US, China and India to build a localised thesis for Indonesia.

At ACV we take a hands-on approach in providing support to our portfolio companies, ensuring that they are equipped with the best resources to succeed. Our portfolio’s success is our success.​

Also read: These 3 Taiwan startups are looking to expand in Southeast Asia

2. Antler

Investment: Angel / Pre Seed

Verticals: All /  Any

Recent Investment News: Bluesheets raises US$1.5M to further expand its business, enters new client segments

Straight from Antler: We are on a mission to fundamentally improve the world by investing in the world’s most exceptional people building the defining companies of tomorrow. 

We work with founders from the earliest stages to ensure that they have a big impact and to accelerate their growth through our investment, platform and network.

Also read: Connect with these X-Pitch 2021 startups through e27 Pro

We establish a relationship as a long-term investor with our portfolio companies. We are investing in founders from around the world and across a wide range of areas from emerging sectors like robotics and AI, to sectors such as healthtech, fintech and proptech. As our portfolio companies scale, we continue to invest in them alongside top-tier VCs in the later rounds. 

3. Cento Ventures

Investment: Series A / Series B

Verticals: All / Any

Straight from Cento Ventures: Cento Ventures (previously known as Digital Media Partners, DMP) is a venture capital firm specialised in under-invested emerging digital markets, primarily Malaysia, Thailand, Singapore, Indonesia, the Philippines and Vietnam. Since 2011. 

Our investments are usually at Series A, where we lead the round. This helps us establish a solid relationship with the founder, and to influence company strategy. We only invest once a company can show that a market exists for its product and that it is ready to use extra capital to scale.

We look for founders who want to build large digital companies that are leaders in their category. In a fragmented region, such as Southeast Asia, operating across multiple countries is often essential. Our preference is for business models that are light on physical assets and where the founders have ambitious plans to scale internationally.

4. Burda Principal Investments

Investment: Series A, Series B, Series C & Above

Verticals: Automotive, Consumer, E-commerce, Education, Finance, Food & Beverage, Healthtech, Human Resources, Marketplace, Mobile, Platform, Real Estate, Sharing Economy, Software as a Service, Sports, Travel

Straight from Burda Principal Investments: BPI is a division of Hubert Burda Media which provides long term growth equity for fast-growing digital technology and media companies. Hubert Burda Media is one of Europe’s largest media and technology conglomerates with a strong investment track record in internet-centric businesses, since 1998.

Also read: Gearing up for the new normal: What do VCs want and how can startups ace their funding applications

We have been partners of visionary entrepreneurs, leveraging Burda’s capital, brands and sector expertise, particularly in the areas of business expansion, internationalization and localization.

We are invested in a portfolio of highly successful consumer internet companies in Europe, the U.S. and Asia. In the past, Hubert Burda Media has invested in internet platforms such as Etsy, zooplus, HolidayCheck, or Xing AG.

Also read: Tech-for-good: How 4 tech companies are gearing up for an uncertain future

5. RHL Ventures

Investment: Pre-Series A / Bridge, Series A, Series B

Verticals: All / Any

Recent Article Contribution: Are biomedicine and healthcare coming of age?

Straight from RHL Ventures: Based in Malaysia, we are a multi-family private investment firm championing growth for the best businesses in Southeast Asia. 

RHL was founded in 2016 and is currently led by Rachel Lau, Raja Hamzah Abidin and Jo Jo Kong. Our firm aims to drive transformative growth in the ASEAN through investing in small and medium-sized companies in the region.

Our extensive investing, corporate advisory, and capital markets experience give us scope to add value to businesses in a variety of ways. As investors, we are looking to be long-term capital and strategic partners for businesses we invest in. As fund managers, we are on the constant lookout for outsized investment returns.

The Connect feature is exclusively available for Pro members. If you want to start connecting with these investors, get a Pro trial account now!

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Photo by Ketut Subiyanto from Pexels

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According to the latest edition of the Global Startup Ecosystem Report (GSER) by Startup Genome, and the Global Entrepreneurship Network, Asia is taking lead as the home of unicorn startups among the Top 100 emerging startup ecosystems with 36 per cent of such startups being based in the region. This number was followed by North America with 30 per cent and Europe with 27 per cent.

Asian startup ecosystems are now worth US$1.1 trillion in terms of Ecosystem Value or about 30 per cent of the global total.

The Top 100 emerging ecosystems themselves created 124 billion-dollar startups in the 10 year period of 2011-2020, with the majority created in 53 ecosystems. With this rapid development, the emerging ecosystems represent over US$540 billion in ecosystem value, which is a 55 per cent increase from 2020.

Of these emerging ecosystems, Mumbai once again topped the list by outperforming in areas of Performance, Funding, Experience, and Talent.

“… China and India continue to attract the lion’s share of venture capital, accounting for about two-thirds of Asia’s total funding. That is due to their vast consumer markets, rapidly growing economies, and development of global enterprises. Combined, China and India account for over a third of the world’s population: two-thirds reside within a few hours’ flight time,” according to Paul Ark, advisor at Gobi Partners, as quoted by the report.

“China and India also boast growing numbers of unicorn startups and are among the fastest-growing markets for smartphone penetration, 5G technology roll-out, and smart cities development (especially China),” he continued.

In general, the Asian startup ecosystems continued to rise in the ranking with Tokyo climbing up from #15 to #9, Seoul from #20 to #16, Shenzhen from #22 to #19, Bengaluru from #26 to #23, and Hangzhou from #28 to #25.

Also Read: At the early stage, valuing startups can be more art than science: Kuo-Yi Lim of Monk’s Hill Ventures

When it comes to the Knowledge factor, Asia also took four out of the top five spots with Beijing, Shanghai, Seoul, and Guangzhou coming in the list.

The state of the global startup ecosystems

The GSER report was made by researching 280 entrepreneurial innovation ecosystems and three million startups.

According to JF Gauthier, Founder & CEO of Startup Genome, the report was meant to serve as a foundation for deciding what policies actually produce economic impact and in what context.

According to the GSER, there are now 79 ecosystems generating over US$4 billion in value, more than double the number identified in 2017 while in 2019, the organisation predicted there will be 100 by 2029. A majority of the new entrants are in Europe.

North America continued to dominate the Global Rankings segment of the report with 50 per cent of the Top 30 ecosystems coming from this region, followed by Asia with 27 per cent and Europe with 17 per cent of the top-performing ecosystems globally.

Of this global ecosystem, the new entrant is Tokyo at number nine –up six places from last year’s standing. According to the report, this is largely due to an increased number of successful exits in Tokyo, contributing to a growth in their ecosystem value.

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Image Credit: fsstock

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SGRecycle, a Singapore-based social recycling startup, has secured US$1.4 million in a seed funding round led by recycling industry company Tai Hing Group. 

The startup plans to use the capital to expand its presence nationwide through scalable cloud computing and sensors deployed at its smart recycling stations. 

“The ultimate goal is to have all SGRecycle stations islandwide at the most convenient and accessible place, everywhere in Singapore to encourage the nation to practice the recycling habits,” said JacQueline Lim, managing director of Tai Hing Group.

Launched in 2020, SGRecycle is a network of SGRecycle stations placed around Singapore. It allows contactless recycling of paper waste by combining built-in sensors and cloud technology.

“This reduces the risk of COVID infection and also increases the general public’s awareness of returning their trash for cash at the same time saving our environment together,” said Looi, co-founder of SGRecycle. “Everyone plays a part in this ecosystem.”

SGRecycle stations allow the general public to receive cash incentives or merchant vouchers when recycling waste paper. Sensors will calculate the weight of the waste paper and credit points to people’s mobile accounts. 

Also read: How this Singaporean AI startup makes waste collection and recycling easy for cities, organisations

The startup claims it helps potentially increase 5-10 per cent of Singapore’s recycling rate, which has been at a 10-year low in 2020. This pullback is caused by the suspension of a sector (construction and demolition) with traditionally high recycling rates due to the pandemic. Singapore’s domestic recycling rate fell to just 13 per cent in 2020, compared to a domestic recycling rate of 32 per cent in the US, 46 per cent in the EU, and 67 per cent in Germany.

SGRecyle has piloted 30 stations at shopping malls, community centres, schools, and residential facilities in Singapore. The first SGRecycle station has been installed in Tampines, which strives to become a model Eco-Town by 2025 as part of Singapore’s Green Plan 2030.

The startup also plans to deploy more artificial intelligence (AI) and green components like facial recognition and solar panels in its stations. The firm could then utilise its data wall to analyse the big data received for recycling patterns and user behaviour insights.

Singapore aims to increase the domestic recycling rate from 22 to 30 per cent by 2030 and the non-domestic recycling rate to 81 per cent by 2030. 

To achieve this goal, Singapore has applied the Extended Producer Responsibility regulations for electronic waste this year and for packaging waste by 2025, which means that companies will be responsible for the material they produce and use.

According to the “Singapore Green Technology and Sustainability Market Report”, the green technology and sustainability market in the country was valued at US$6.89 billion in 2018. It is expected to grow at a CAGR of 26.8 per cent to US$36.31 billion by 2025. 

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Image credit: SGRecycle

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Intelligent Video Solutions (iVS), a video advertising enablement platform for Southeast Asia brands, has closed an oversubscribed US$3.2-million pre-Series B round led by Singapore-based Tin Men Capital.

Other investors are Philippines-headquartered Kickstart Ventures, besides Singapore’s Vulpes and SG Innovate.

The company will use the investment to foray into new territories in the Asia Pacific, namely Japan and Australia. iVS will also onboard more talent, including senior executive positions, in the coming weeks to aid this expansion strategy.

Established in 2016, iVS employs AI and machine learning to enable better monetisation opportunities and consumer engagement for publishers and advertisers in Southeast Asia.

It enables publishers to deliver and optimise their video advertising inventory without giving up control and customer ownership to third-party video platforms.

“We help local publishers and broadcasters retain independence and monetisation leverage while offering advertisers brand-safe in-stream video ad inventory at scale across markets,” said Hari Shankar, chief revenue officer of iVS.

Also read: Advertising with privacy: How SoMin employs AI to build brands and preserve anonymity online

The startup counts publishers such as the Philippines’s ABS-CBN, The Manila Times and Singapore’s Mothership, global media agencies such as Publicis, Dentsu, IPG, and brands such as Disney Plus, Netflix and Spotify, among its clientele.

iVS also improves viewer experience and video ads’ effectiveness through embedded (non-invasive) and engaging ads targeted contextually or through first-party data of individual viewer preference. This is also based on the advertising-based video on demand (AVOD) service model, where the revenue is earned from platforms or advertising agencies instead of users.

So far, the startup claims to serve more than 100 million unique visitors with access to over one billion premium video ad impressions per month.

iVS CEO and Tin Men Capital co-founder echo the opinions that there are large untapped opportunities in the Asia Pacific’s AVOD market. According to Digital TV Research, global AVOD revenue is predicted to expand significantly and reach US$56 billion by 2024 with the rise of advertising technology. This explains iVS’s recent launching of an in-stream video advertising marketplace in Southeast Asia, which aims to increases video inventory available to advertisers.

“Our focus remains on building out a business model with fully aligned incentives between media companies and vendors. This remains an ongoing challenge in markets where CPMs (cost per thousand impressions) are low, while costs of delivery are broadly the same as in mature markets like the US or Europe,” added Milan Reinartz, chief executive officer of iVS.

Since its last funding round in February 2019, iVS’s net revenue is reported to grow by 537 per cent despite the pandemic-induced slowdowns.

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Image credit: iVS

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