If you are reading this, I believe you would have already read through Part 1 and now know the importance of hiring a good lawyer, the basics of a financial model and key documents which can go in the data room in addition to some other fundraising tricks.

After the quick pit-stop, let’s resume my unsolicited (but, hopefully, welcome) monologue, starting with marketing materials.

Marketing materials for fundraising

There are several types of marketing materials used in a fundraising process. Here are the major archetypes:

• Teaser: five to 10 pages are used to entice investors to a pitch and further interact with the company.
• Pitch deck: 10–25 pages, is used for the company’s first formal pitch to investors and is often key to whether the initial interest will sustain and progress into tangible intent to proceed.
• Information memorandum (IM), 40–60 pages, together with the financial model and basic due diligence materials, are required to provide sufficient information for the investor to evaluate the opportunity and provide a Term Sheet.

I suggest build out the pitch deck first as it is more intuitive and summarise it for a Teaser and only, if required, provide more detail to make it an IM — IMs are more suited for larger fundraises and are increasingly being replaced by pitch decks (with a few additional slides).

Minimalistic materials do significantly better than text-heavy and cluttered materials. You aim to create a positive visceral gut reaction as the gut is where the decision is really made. The mind, the laggard it is, will unconsciously look for data/confirmation of what the gut has already decided.

Here are some quick tips:

• Use pictures, graphics, and charts to illustrate the opportunity as much as possible.
• Short, sharp, and conversational. As Winston Churchill once said, “let us not shrink from using the short expressive phrase, even if it’s conversational”.
• Try to alternate between emotional (qualitative) and factual slides.
• Share real benefits being delivered versus overly focusing on the features. People care about how you’re creating value for your users, not just what you’re using to do it.
• Aesthetics, can’t be stressed enough, make it easy on the eyes, less cluttered and pleasant-looking — it will go a long way.

Also Read: SOCAR raises US$55M in Series B funding round from new investors EastBridge Partners, Sime Darby

Outreach strategy. Market of one

“I learned the most important rule of raising money privately: Look for a market of one. You only need one investor to say yes, so it’s best to ignore the other thirty who say no.” – Ben Horowitz.

It’s been seven years since Ben Horowitz wrote that in his book Hard Things About Hard Things, and it still stands true as ever.

When it comes to fundraising, all you need is the one champion investor who will lead the round and build conviction for others to follow.

Sure, you will have to kiss many frogs before you find your prince, but the aim is to sift through the frogs quickly. Let’s explore some concepts.

• Go big when building the investor list using any sources available to you spanning online databases, news articles, industry reports and friends in the industry (this would also help in introductions later down the road);
• Now that you’ve got a comprehensive list of investors, ruthlessly tier each investor, i.e.,the likelihood of investment based on their past investment, preferred sector, cheque size, and focus geography;
• While the most intuitive approach may be to reach out to the tier one’s first, let me propose an alternative strategy — for the first wave, reach out and pitch to 10–15 investors who are unlikely to invest and don’t know you from before — this will help you to iterate in real-time to lock your pitch down plus offer lesser false positives;
• In terms of the investor feedback you receive, any single investor’s feedback may be highly useful or complete rubbish, so you want to look for the patterns of feedback, even down to determining what you need to explain or outline better — you won’t get multiple shots at an investor, so hearing from some of the early pitches that you need, as an example, to better explain how your revenue model works, or why your customers need your product is vitally important;
• Once the first wave at Normandy has been hit, then you rely on the age-old adages — quality > quantity and activity != progress — while it is a great sign that many investors want to speak with you and you’re spending a lot of time on pitches, but it does not necessarily mean you’re getting closer — instead, leverage on the interest and get closer to finding your champion investor by focusing your efforts on the tier one investors;
• First, always try to find a common connection and ask for an introduction when reaching out to an investor. This is a warm introduction and warmer, yet if you can get an introduction from your shareholder or a fellow founder — no warm or warmer? — then you hustle still to get an introduction, and only when you fail, do a cold outreach;
• Constant visibility is good, and you should continue to engage directly or indirectly through different avenues (LinkedIn, Twitter, Newsletter, Business Updates via Email) — sometimes you catch people at the wrong time, and you want to maintain mindshare to capture situations where investors have gone silent or are slow to respond; lastly.
• Maintain a negative list of investors, which could comprise of your competitors’ investors, timewasters, or even strategics competing directly with you — negative does not necessarily exclude these investors from outreach. Still, it is a marker so that you can be more thoughtful about the approach.

Pitch. It’s showtime!

With the outreach strategy locked in and everything else in place, it’s time to sing your song. In this section, we will cover off-pitch flow, basic mechanics, and some common etiquettes.

Also Read: Entrepreneurs, now is a great time to start companies and seek funding

Pitch flow and content

• Company’s overarching purpose
• Market dynamics which have opened up a substantial opportunity
• How does this translate for your customer in terms of opportunity or pain points
• Description of products and solutions uniquely solving these pain points, i.e. value creation
• How do you capture the value for yourself, i.e. business model
• Is this evidenced by customer adoption and current traction
• What would you have built-in five or ten years if all goes to plan not only in terms of size and metrics but also impact and market position
• Market size and why you will win against your competitors, and lastly
• Do you have the team to win, i.e. product-market-founder fit and intricate understanding of the market

Mechanics

• Sprezzatura or Studied carelessness means you have to put in more effort to make something appear effortless — effortless and elegant pitches are often the results of a large volume of effortful and gritty practice, so practice, practice and practice, and then maybe practice some more.
• Know your audience — do background research on the investor and the specific person beforehand so you can customise your pitch accordingly.
• Crowd balance — make sure not to overcrowd the call on your side, especially if it’s the first pitch, by only inviting people who are active participants but try not to exceed the other side.
• Get basics out of the way —  send the deck ahead of the meeting so the person can familiarise themselves with basics enabling you to have a deeper discussion.
• Time management — Ideally, you pitch for 30–45 minutes, then leave time for Q&A and next steps. However, you are likely to be interrupted during your pitch with questions, and that’s okay — manage your time and cover the main points. Remember, the objective of the first pitch is to deliver a second meeting and not an endless sermon.

Etiquettes/Questions to ask

• Ask how much time you have, don’t assume — increasingly, you’ve got people running 30/45-minute meetings instead of the standard 60 minutes (probably after reading a productivity hack on Twitter);
• Ask for a brief background on the firm and person — you might learn something which you missed or wasn’t there from your background research since everything is not public when it comes to private investors;
• Announce the intended agenda upfront, ask if they read the deck, how much they know about the industry and any specific areas they want to focus on;
• In the end, once you’ve covered your process, ask about the investor’s internal process and typical timeline — agree on the next steps and follow up at an appropriate time.

FAQs

You probably have a list in your mind already. A list of questions has been asked to you about your company so many times that the answer rolls of your tongue or your fingers can type it themselves. Convert this list into a FAQ document.

Also Read: SOCAR raises US$55M in Series B funding round from new investors EastBridge Partners, Sime Darby

Keep on adding to the list as you go through the pitches, fundraising conversations and informal chats. Do fortnightly releases of the updated Q&A via the data room.

It may seem tedious at first, but it gets the basics out of the way, saves everyone’s time, gives confidence to investors and creates the spectre of competitive tension.

Resources, databases and tech tools

There are several resources, databases, and tech tools you can leverage to make the fundraising process more efficient, spanning across investor selection, sector intelligence, investor tracking, due diligence process management, financial information and valuation support, cap table management and legal document templates.

• Investor selection and sector intelligence (1): Trackxn, Crunchbase, Pitchbook and Capital IQ are some of the database platforms to use when building the initial investor list — the first two being more bang for the buck and suitable for early stage fundraises
• Investor selection and sector intelligence (2):  e27, Tech In Asia, The Ken, DealStreetAsia, initially started as news portals, are now churning out some high-quality research — these are highly affordable, and you should have a subscription to these anyway
• Project management and investor tracking: Asana, Monday and Trello are some examples of project management tools that you can customise to track the progress of the preparation phase and marketing (investor) outreach space — they all have plugins to commonly used applications (e.g. Outlook, Slack)
• Document tracking: DocSend and HubSpot let you track documents sent via email — primarily applicable for when you send Teasers/Pitch Decks
• Due diligence process management and Virtual Data Room (VDR): A specialised VDR allows you to set different levels of permissions for each investor, track the data room activity in detail, encrypt your documents and disable them even if it’s taken offline and allow Q&A via the platform — Ansarada, Datasite, and iDeals are some options for this
• Financial information and valuations: Capital IQ and Pitchbook are the best-in-class when it comes to financial data for relevant public companies. VentureCapInsights, relatively new and limited regional coverage, is increasingly becoming a reliable source for private company data.
• Cap table management: Carta and Qapita are examples of some cap table management software solutions available to manage your cap table, ESOPs and valuation effectively
• Templates: Y Combinator, Index Ventures, and Kindrik Partners offer some high-quality document templates related to transaction documents in addition to guidance on various fundraising related matters

Like most tools, whether productivity, project management, research or templates — use it to serve you, not to serve it.

Every company will have different needs, so the right size of the offering per your need, and as long as these tools help you save time and work more intelligently, they have served a purpose.

Super angels

Super angels are the individuals you want to invite to become shareholders in your company. Why? Early on in your start-up life— you need seasoned advice, market validation and network.

The advice can be wide-ranging, e.g. business model (how to charge customers), human capital development (how to retain and incentivise employees) or regulatory (how to engage with the government).

Having well known and reputable individuals as shareholders makes for a great signalling effect that gives you instant market validation, especially when you are a first-time founder and relatively unknown commodity to the investors and larger community.

Similarly, these Super angels bring with them a solid network and “cut-que access” to potential investors, partners, and employees.

Some examples of Super angels include partners in venture capital funds, senior executives at large corporates, key employees of big tech companies, superstar founders who have built unicorns, and fellow founders running complementary startups.

Also Read: GlobalCare bags funding from VinaCapital to provide insurtech solutions to Vietnamese insurance firms, agents

While Super Angels, as the name suggests, predominantly invest in angel rounds — they are increasingly investing alongside institutional investors even in later stages.

Bukukas, a fintech startup focused on digitizing Indonesia’s small businesses, has executed an impressive Super Angel strategy by cornering senior executives of larger fintech and founders of regional startups.

Term sheet, transaction documents and closing

A term sheet is a non-binding document outlining key terms of investment to enter into binding legal documents subject to certain approvals, procedures and checks.

What are key terms to look out for? What happens between signing a term sheet to signing a legal document, and what are the key legal documents?

Let’s cover, at a high level, key economic terms to look out for in a preferred equity round:

• Right upfront, you would find the valuation stated something like “…at a pre-money valuation of US$20 million on a fully diluted basis with a price per share of US$0.3”. Pre-money is the valuation at which the investors value your company on an “as-is basis” (before their investment goes in), and a fully diluted basis means all shares if all options, warrants and convertible debt were converted to equity.
• Preferred shareholders can usually elect to convert their holding to ordinary shares at any time or can have it automatically converted to ordinary shares at the time of a qualified public offering (IPO) — definition of qualified is outlined in the term sheet (e.g. the market cap of at least $US100 million). This is fairly normal, and there is no push back required (or expected) from you but the point to remember is that the preferred shareholders can convert their holding at any time to ordinary shares.
• Liquidation preference and participation is probably the most important term after valuation to look out for “1.0x and Pro-Rata Participation with Ordinary Shares”. It means that preferred shareholders have priority to be paid back their initial investment (or more) first over ordinary shareholders (and previous round’s preferred shareholders) in case of a liquidity event such as a trade sale, merger or liquidation on winding down. In the given example, participating preferred shareholders get to participate proportionately with the ordinary shareholders in the proceeds from the liquidity event after they have got their initial investment (or more). This is when it gets tricky and onerous for ordinary shareholders like yourself and your early backers. In a nutshell, change the “and” to “or”; do anything you can to avoid the “double-dipping” scenario. As mentioned previously, precedence means everything when setting terms, so negotiate well from the start (seed round).
• Incoming investors will ask for expansion of the stock option pool to bring it to a certain percentage of shareholding (see ESOP section) and ask for this to come out of the existing shareholders’ pockets (including yours), which means your dilution is not only tagged to the incoming investors’ funding but also the expanded ESOP pool. This is an acceptable ask, but you do have some room to negotiate to fund the ESOP expansion pro-rata with the new investors (post-investment)
• Investors may often ask founders to invest their outstanding shares in disincentivising founder(s) from leaving the business. In principle, this is ok since you are a big factor in their decision, rightly protecting their investment. Still, they do not readily put all shares out for vesting but rather retain a proportion based on year of inception and year of investment.
• Redemption rights is an uncommon ask and should be avoided where possible; “At the election of the preferred shareholders, the Company shall redeem the outstanding shares on the third anniversary of this Agreement …”. From an investor perspective, this is downside protection and exit certainty. Still, from a founder’s perspective, it is an unnecessary headache and liability on her company — push back, but if you have to concede on this one, be very mindful of the redemption triggers, especially if it’s not time-based.
• At its simplest, pro-rata rights are the right of the shareholder to participate in future fundraisings proportionately to maintain their shareholding level — no problem. It gets interesting if an investor, usually a strategic investor, start asking for super pro-rata rights which effectively gives them the right to disproportionately participates in future fundraising, e.g., take 60 per cent of the next round even when their shareholding is, say 20 per cent. For the strategic investor, this is a great optionality play. Still, from your perspective, these are handcuffs that could potentially lock you out from your own company and alienate new investors.

There are a few important control terms to look out for, such as voting rights, veto rights, reserve matters, board seat and protective provisions — I can cover this off in detail another time, but the principle to follow is to keep it standard and clean unless you’re getting something valuable in return or running out of options.

Also Read: Touchstone Partners injects US$1M seed funding in telemedicine platform Medigo 

The term sheet will also outline an exclusivity or “no-shop” period, asking you not to invest actively with other investors. In contrast, this investor conducts confirmatory due diligence and runs internal approval processes. Typically, this should be 60 days or less — do not give anything more.

You may have also been asked to fulfil certain conditions for the transaction to close, known as conditions precedent. Some examples are completion and provision of audited accounts and expansion of stock option pool.

During the Exclusivity Period, you would also start negotiating the binding transaction documents, mainly the Share Subscription Agreement (SSA) — between the investors and the company formalizing the terms of investment and Shareholders Agreement (SHA) — between the investor, existing shareholders, and the company to govern the relationship between these parties.

By now, I am hoping you have a good lawyer, and she can take charge of the negotiation here but learn to read and understand these agreements for yourself — very important.

I won’t go into the details here, maybe just a quick tip, insist that you create the first draft of these agreements rather than the investor — remember, the foundation is key.

Valuation, dilution and round size

How much you raise is as important as the valuation as both affect your shareholding (dilution).

I know it sounds simple, but we often obsess over the valuation, which underweight the round size and percentage dilution.

So how much should you raise? Ideally, you raise enough to reach profitability, so you are in a much stronger position if and when you go out to raise the next round, but some business models don’t work like that and need regular funding over several years to break even and that’s ok.

A good thumb rule is to raise as much to reach the next funding milestone, which can be a certain revenue threshold, the number of customers or market share— no less than 12 months of runway, about 18 months is ideal.

Valuation, especially for early rounds, is largely a matter of perspective. Investor’s perspective on the founders’ pedigree, size of the opportunity and market conditions spurring on your sector.

They also need to play within the boundaries created by themselves, such as standard shareholding thresholds and cheque sizes, by you, such as the financial projections and capital markets, such as the relative valuation multiples.

Despite all the analysis and factors at play, guesswork and FOMO both play a big part. Your absolute goal is to drive demand, secure multiple term sheets, close the round and move on.

Subject to the amount being raised and the valuation sorcery, you will typically accept dilution between 10–25 per cent for your first couple of rounds.

Adjust either or both variables but no more than 25 per cent, please.

Also Read: Digital Media Nusantara raises Pre-Series A funding round from Malaysia Debt Ventures Berhad

Workforce communication

Keeping your workforce informed on the fundraising plan and process is the right thing to do and an effective strategy. Here is why.

Every team member hopes for a big payday when joining a startup. If you are transparent and convincing about the path to the exit and a fundraising plan to get there, you will hire and retain great talent.

You would also need to call in for their help with fundraising as investors progress with due diligence and ask for deep dives in key areas (e.g. product demos, marketing strategy). Having employees who are well informed, incentivized, and “bought-in” will ensure a smooth process.

Now you do not need to do weekly or even a monthly update, but I suggest announce your plans before embarking on the raise, give an intermediary update and once the transaction is closed (but before the market knows).

Exit. Study the endgame.

“To succeed, you must study the endgame before anything else” – Peter Thiel / Jose Capablanca

As you can imagine, returns and exit analysis is a big factor in any investment decision — an early-stage investor’s business model is based on realising disproportionate returns from your company to provide proportionate returns to their own investors while paying for other failed investments.

You need to spend some time here and draw out an exit strategy— now, this is at least five years down the line if you’re an early-stage startup, so no one is looking for specific answers but rather a plan of the plan.

Strategic sale and public listing are the two most common exit avenues. For the former, you should have a good understanding of the potential acquirers and their businesses, recent M&A activity in the industry and acquisition rationale/your value proposition.

For the latter, please learn about the potential listing destinations (exchanges) and their requirements and thresholds, structures available (e.g. SPAC merger, direct listing, and listed comparable companies.

As you progress through fundraising rounds, the exit strategy will need to be constantly refined and upgraded; you will have to develop relationships with potential acquirers, perhaps, first as a partner or a customer; and you may also want to start speaking with bankers and/or directly with exchanges around Series B/C — to be aware of the market developments and plan if nothing more.

Plan Y, Z. What can you do when everything fails?

It’s been between four to six months since your first outreach, and you have spoken to over 100 investors with no success. You’re not alone.

Per a Report by Cento Ventures — In Southeast Asia, after raising a seed round, 25–40 per cent companies raise a follow-on round, and 10 per cent raise around after that (and five per cent after that), which means you are part of rapidly decreasing minority as you raise subsequent rounds.

What happens if you find yourself in the majority? Press pause.

Pause and reflect on the feedback — I suggest you compile and find the recurring themes from the feedback, e.g., “highly competitive market”, “unproven business model”, “low monetisation/margins”, “conflicted”, “not a focused geography”, “too early”, “uncertainty due to COVID-19”.

Also Read: Entrepreneurs, now is a great time to start companies and seek funding

Tag each of these recurring feedback themes into either controllable — can change with effort and time (e.g. unproven business model) or non-controllable — not yours to change (e.g. don’t understand the business model).

Check if the high-frequency uncontrollable feedback exceeds the controllable and if not, best to ignore it, and if yes, ask yourself — will the market evolve soon to look at it differently? For the high-frequency controllable feedback, ask yourself — can you solve this, and how long will it take to solve?

After you have mapped out the feedback and believe there is light at the end of the tunnel, go back to the drawing board and draw a map of the tunnel but first, you may need to chart out a plan of survival.

It may mean that you have to raise funding from shareholders or put in money yourself, failing which, scale back operations to essentials-only. If that is not feasible either, file for liquidation and if you still have it in you, start again.

If you have read through both parts and reached the end of the post, congratulations — you can now continue your journey of becoming an absolute fundraising legend.

Remember and take comfort in knowing that no matter external factors at play, it is ultimately your resilience, execution, and vision that will get you the deserved success.

This article first appeared on LinkedIn.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.

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For entrepreneurs, making profits is more than just a matter of accumulating wealth –it is also a matter of managing said wealth.

Having a good understanding of wealth management can either make or break one’s financial situation. While there are experts that can help us entrepreneurs in this matter, it is always great for us to have a basic understanding of how it works.

Meet Dimitry Farberov, a Certified Financial Planner and Chartered Financial Analyst at Miracle Mile Advisors LLC, who helps successful entrepreneurs make long-term plans for developing and diversifying their financial portfolios.

In this episode of the We Live To Build podcast series, we will listen to his advice on how entrepreneurs can start managing their wealth in a better, more advantageous way.

We will start with understanding the difference between CFP, CFA, and CPA; the pros and cons of working with wealth managers; the difference between asset and liability; what it means to diversify your portfolio; and even the psychological impact of having a massive amount of money at a short time.

Also Read: Peter Thiel’s Valar Ventures leads Singapore wealthtech startup Syfe’s US$30M Series B round

If you don’t see the player above, click on the link below to listen directly!

Acast
Apple
Spotify
Stitcher

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This article about managing wealth for entrepreneurs was first published on We Live To Build.

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Japanese e-gifting company Giftee and its Malaysian and Vietnam subsidiaries have announced an investment into TADA Network, a loyalty and rewards platform provider in Indonesia.

The TADA investment marks Giftee’s second significant investment outside of Japan and is part of its expansion in Southeast Asia.

TADA will allocate the funds to enhance its loyalty and rewards platform and expand in Southeast Asia.

In addition, Giftee Malaysia and Giftee Mekong started a business collaboration with TADA in Malaysia and Vietnam. As the first step of the collaboration, TADA’s platform has been linked to the e-gift service of Giftee Malaysia and Giftee Mekong. This will provide new solutions that help improve customer loyalty for Giftee Malaysia and Giftee Mekong’s customers.

In addition, Giftee will expand the eGift Service and eGift Platform business in Southeast Asia beyond the Malaysian and Vietnam market in collaboration with TADA.

Also Read: Canada’s WeCommerce acquires Singapore’s loyalty SaaS startup Stamped for US$110M

Founded in 2010, Tokyo Stock Exchange-listed Giftee provides an end-to-end solution, from e-gift issuance to distribution.

In 2018, the company set up the subsidiary Giftee Malaysia. In 2021, Giftee Malaysia and Mekong Communications Company formed a joint venture in Vietnam, called Giftee Mekong.

TADA is an end-to-end loyalty and rewards platform that helps businesses accelerate growth sustainably and develop and execute loyalty and rewards programmes. Additionally, TADA connects businesses to collaborate within its network. It is a solution integrated with other platforms to create an ecosystem around customer funnels. The company also has a presence in the Philippines.

With over 400 clients, TADA is currently serving companies across verticals, from banking, insurance, consumer goods to restaurants, other service providers. Its clients include AXA, Allianz, DBS, UOB, Castrol, Exxon, Kalbe Nutritionals, and Erha Dermatology.

Last year, Giftee invested in AdEasy, an online marketplace for offline advertising in Malaysia.

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Image Credit: Giftee

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As insurtech companies grow in influence, they are revolutionising and reinvigorating the legacy insurance industry.

With the use of advanced technologies such as blockchain, AI, chatbots, big data and other digital tools, insurtech is systematically making insurance more accessible to more people than ever before.

These innovative companies are streamlining many traditional insurance functions and creating new product offerings that appeal to younger, digitally savvy underbanked consumers and micro-business owners.

One example of insurtech streamlining services is their use of robo-call channels to stay connected with customers and sign them up for new insurance policies, leading to an impressive conversion ratio of more than one per cent.

From my experience of working with them in Southeast Asia, it is clear that insurance products will continue to be offered not only in offline retail stores but also through a customer’s journey on mobile apps and websites.

This focus on hyper-personalisation, which offers contextual micro-insurance products with low coverage periods and low premiums, is key to the sector’s future success.

Also Read: How insurtech is changing the game in Southeast Asia

In 2020, insurtech in Southeast Asia registered growth of more than three times in gross-written premiums in 2020 compared with 2019. I expect to see in the near future more investment in the InsurTech sector, such as the recent investment in bolttech.

There will also be a surge in the creation of joint ventures and long-term strategic partnerships between insurance companies and digital platforms, such as the tie-up between Tiki and AIA in Vietnam, while there will be an accelerated expansion of US and China-based insurance companies in the region in 2022 and beyond.

The business models of insurtech will evolve based on the insurance coverage and the regulatory framework in different countries.

Broadly, these will include aggregator platforms that connect the insured with insurance companies, as well as the introduction of broker licences that leverage offline and online distribution channels and a model of underwriting based on digital substrates and the rewriting of insurance policies.

Who does what in the new insurance model?

It will be incumbent in the months ahead for insurtech and legacy insurers to sort out their roles and responsibilities to better serve the industry as a whole. Insurtech companies, for instance, are partnering with other digital companies such as lending and payment platforms.

The latter are transaction driven with a high level of customer engagement and large customer networks.

The partnerships help leverage strong distribution and marketing channels with innovative, bite-sized insurance products. The focus on innovation in distribution models will be key in low insurance coverage countries such as Indonesia, Vietnam and the Philippines.

As they evolve, these platforms will leverage behavioural and transactional data to create more personalized forms of insurance.

For their part, the legacy insurers are more skilled in underwriting risks, have more experience with the regulations and possess strong balance sheets, which enable them to better address unpredictable events and disasters.

At the same time, they will push for risk-based pricing for micro-insurance and auto insurance products as the losses will be calculated for each identified customer segment level.

What’s ahead for the insurance industry

The partnerships will not be without challenges. Insurtechs should focus on launching specific products for different customer segments as the approach of legacy insurers of one product fit-for-all segments is not sustainable.

Margins in countries such as India and Indonesia will be low, but protection and health products will still have margins as high as 50 per cent.

Also Read: ‘SEA is lagging behind in the growth of insurtech, financial advisory, embedded finance’: Ganesh Rengaswamy of Quona Capital

Indeed, throughout the Asia-Pacific, roughly 90 per cent of consumers who own auto, home, health and life insurance policies “are open to the idea of an ecosystem of services”, according to a 2019 report titled Making the Most of Asia’s Insurance Boom by global management consultant Bain & Company.

Both insurtechs and legacy companies alike must be mindful of the existing regulatory framework and, in particular, raise a flag over data protection considerations.

To deal with such concerns, a number of jurisdictions have set up so-called regulatory sandboxes. The Monetary Authority of Singapore, for instance, defines its sandbox as a place that “enables financial institutions and fintech players to experiment with innovative financial products or services in a live environment but within a well-defined space and duration”.

The State Bank of Vietnam, the country’s financial regulator, also plans to open a regulatory sandbox for fintechs in 2021.

The regulatory framework in India and Southeast Asia will eventually recognise the convergence of business models of different categories of players in the insurance industry.

For instance, online aggregators offering insurance products from other insurance companies will likely get a broker license and open offline retail stores to provide experience centers for customers to help resolve their queries or service requests.

To participate in the growth of the insurance sector beyond tier 1 cities in Asia, insurtech and insurance companies will need to contribute to the development of an ecosystem to provide diverse product suites that are relevant for underbanked and unbanked consumers and micro-businesses.

They will also have to innovate in the distribution of their insurance products.

The existing broker community of legacy insurers may transition as influencers that could see customers approach them for micro-insurance products. However, they will continue to sell complex insurance products in the near future.

While engagement with customers will increasingly be through digital channels, the acquisition of high-value customers is likely to continue as face-to-face interactions for the next five years.

Despite the expected growing pains and regulatory hurdles to overcome, the convergence of insurtech companies and legacy insurance firms means that millions of previously excluded people will finally have access to simpler, more personalised and affordable coverage options.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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Clevai, a Vietnamese after-school tutoring platform for K-12 students, has secured US$2.1 million in a pre-Series A financing round led by Singapore-based Altara Ventures.

Existing backers including Vietnam and SEA-focused VC FEBE Ventures and New York-based marketplace investment firm FJ Labs also joined, according to DealStreetAsia.

The fresh funding will be utilised to strengthen Clevai’s live-streaming infrastructure and improve AI-driven personalised learning capabilities. The startup will also press ahead IP with the goal of serving 20,000+ students. It claims to receive supports of advisors from Harvard, Oxford, and Google for this target. 

e27 has reached out to the company to find out more details about the funding round and their plan.

Founded in 2020 by CEO Tran Manh Thang and two other co-founders, Clevai is an AI-enabled, after-school tutoring platform for students from kindergarten (K) and the 1st through the 12th grade (K-12). 

The edutech startup’s flagship product, Clevai Math, provides live-streaming classes in mathematics with teachers from the country’s “top-tier schools”. It also offers assistance from AI to help students do additional and practical exercises.

Also Read: Edutech is surging, but here are the 3 issues it is facing

According to the company’s website, its adaptive learning approach will analyse the learning history of each student and deliver custom learning experiences through timely feedback, resources, and pathways to ensure the best individual progress.

As per a Bain & Company analysis, Vietnamese parents view education as the primary means towards a successful career. The average Vietnamese family spends approximately ~20 per cent of disposable income on education, compared to 6 – 15 per cent in other Southeast Asian peers.

As the pandemic forces students to stay at home and schools to massively adopt online learning, a slew of Vietnamese edutech startups have raised capital in 2021. They include educational services provider Equest (US$100 million investment from KKR), AI-powered language app Elsa (US$15 million Series B led by Vietnam Investments Group), Educa Corporation (US$2 million Series A from Alibaba-backed eWTP), Marathon Education (US$1.5 million in seed funding), and most recently CoderSchool (US$2.6 million pre-Series A led by Monk’s Hill Ventures).

By the end of 2023, the Vietnamese e-learning market is expected to be worth over US$3 billion, according to Ken Research, with the increase in the number of foreign players entering the market.

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The founder of a company not only needs to study the market well, come up with an excellent business idea and understand how to generate income with its help but also find money to launch a project. There are various options for raising funds, each of which is associated with certain consequences.

In the late 2000s, a new alternative for people looking to start a business became available: crowdfunding. Since then it is still gaining momentum. For instance, in May 2021, the Tencent-backed Chinese startup Waterdrop, known as the leading GoFundMe-style crowdfunding platform for medical bills, raised US$360 million through its IPO on the New York Stock Exchange.

Crowdfunding is a method of raising funds when large groups of individuals combine tiny individual investments to generate the cash required to get a business or project off the ground.

Individuals, non-profits, or startups can launch campaigns for specific causes, to which anybody can donate.

How does an entrepreneur procure funds for a startup? 

Funding a startup

Obtaining funding for your startup is difficult, especially if you have no product or service to sell. People will not believe your concept.

The bad news is that you won’t get funds for your business from anyone who doesn’t believe in your concept. There are a few typical sources of seed funding that can help you kick-start your business.

• Personal investment 

Self-financing, also known as self-funding, is the initial stop on their entrepreneurial path for many businesses, not only startups. There are no debts or sponsors involved, only you and your commitment, which gives you complete control over the company and is an excellent alternative if your startup is at the concept or pre-seed stage. 

• Friends and family

You can also start your search with the so-called three F’s: Friends, Family, and “Fools.” These folks have the most faith in you with the least amount of proof, so If you choose this pathway, try to be upfront about the dangers and never ask for more than somebody can afford to lose.

• Venture and angel capitalist 

They are often high-net-worth investors who want to support startups with both money and skills. They frequently like taking on the role of advisor and being hands-on with the growth of their portfolio company. 

• Grants for small businesses

Small business grants, which are often considered the closest thing to the “free money” you could ever get for your startup, are a form of startup finance that does not require repayment, unlike debt, and does not require a part of your equity, as opposed to venturing capital.

• Startup incubators  

Most business incubators offer coaching, office space and even assist startups in meeting with angel investors. Generally, they merely incubate and mature businesses for them to apply to accelerator programs.

• Crowdfunding 

Crowdfunding is one of the most secure methods of raising cash because no one is going to ask you to return it. They just want the goods or services that you committed to providing.

Check out Kickstarter, Indiegogo, and Patreon, and you’ll find that these are some crowdfunding sites that allow the audience to get items to help support a company.

Also Read: In brief: SEEK invests US$48M in JobKorea, ZILHive Accelerator unveils new cohort, Rodeo raises crowdfunding

Crowdfunding for startups

Most fledgling companies struggle to obtain funding. Venture capitalists reject many early-stage firms for several reasons and borrowing money from banks or wealthy family members is not a good strategy.

Crowdfunding changes the game by reducing dependence on conventional and sometimes exclusive means of financing.

If you need funds to get your project off the ground and personal finances or friends and family aren’t an option, crowdfunding could be the way to go.

This type of financing has grown in popularity over the last decade, so much that the transaction value is expected to show an annual growth rate (CAGR 2021-2025) of 2.62 per cent resulting in a projected total amount of US$1.2 billion by 2025, notwithstanding that sites, such as Kickstarter and GoFundMe are pre-financing of products, art, music, and films, software, or scientific research, are based on tiny contributions.

Trending right now (September 2021) tabletop roleplaying game set Avatar Legends: The Roleplaying Game pledged a US$50,000 goal raising more than US$9 million.

After you’ve launched your campaign and proposed your idea, anybody who believes in it can give, lend money, or purchase equity shares, depending on the sort of crowdfunding you choose to employ. The goal here is to have an engaging origin narrative that will entice contributors or investors. 

Crowdfunding for startups works by collecting donations in exchange for a particular incentive, it can be in the form of free items, special discounts, early access to new products, premium merchandise, the opportunity to join the team, or even becoming a big capital investment.

It may be accomplished through several channels, most notably social networking sites or crowdfunding platforms.

Although many companies and campaigns have found success by using this financing technique, bear in mind that selecting the correct form of crowdfunding is critical to achieving your goals. 

Common crowdfunding mistakes

Crowdfunding can be an excellent way to generate funds for your new startup, but there are some common mistakes that startups should avoid. The most common error a company makes when entering the world of crowdfunding is to believe that it is all about money. That, however, is not the case.

Eugene Zhukov, the founder of Joon July, the company that helps startups to prepare for crowdfunding, observes that one thing that people should understand about Kickstarter is that it’s a great place to find all sorts of things, sometimes useless, but very cool and unusual nevertheless.

The project made “just for fun” has the best chances of success. A common mistake happens when companies come to do something serious.

They invest a lot of money and time to fine-tune the product quality, in the hopes that it will bring in millions for their must-have gadget.

Also Read: How your face can determine the funds you raise (while crowdfunding)

The main challenges, especially for tech founders, are marketing and sales. If you don’t know how to get media coverage– no one will know you or what’s more, give you any money. Last year, already there were around 1,000 campaigns launching each day.

All media outlets are overwhelmed with press releases. Some journalists at TechCrunch and Engadget typically receive anywhere from 3,000 to 5,000 press releases every day.

So if you planned to spam them, there is some bad news. Even with the very best of press releases and PR agencies, no materials are not being read. 

Crowdfunding has become a big industry, and marketing expenses have exploded. Still, the press remains the driving force for such campaigns. Zhukov gives an example that when his company had worked with Looksery (was acquired by Snapchat for US$150 million), their Kickstarter was solely a press and marketing story, and it had not received any substantial investments before that.

Another key to success is a crowdfunding campaign pitch. On the online platform, it’s the only page that tells supporters about your campaign.

You’ll never accomplish your goal if you don’t pay attention to creating that proposal one-of-a-kind. The entire presentation is essential, from developing a suitable storyline to creating a decent video and pledge chart. 

“There are so many parts of a journey of a creative project that often people don’t focus on”, says Kickstarter CEO Aziz Hasan. “It’s hard to make businesses that really try to create that type of value for fuzzy ideas rather than very clear projects that are ready to be sold”.

Don’t underestimate the influence of social media marketing in today’s crowdfunding campaigns. It’s more than simply a platform to collect leads.

It’s a location where you can boost your credibility. For instance, merely creating a Facebook page with frequent activity will not help your campaign.

Instead, if you try to spend money on Facebook advertising to get more people to sign up for your campaign launch, you will be able to build a list of prospective backers.

“A crowdfunding campaign can be just another opportunity for founders to make their startup more recognizable, demonstrate their product, test their skills and services before the actual market entry”, suppose Tressa Whitman, a marketing director of digital agency Reverence Global.

Many companies neglect pre-marketing campaigns, which are crucial since they perform the best for outreach. You can raise awareness faster before you launch if you use the appropriate services.

As a result, on launch day, you will be able to immediately capture the attention of potential supporters who were previously intrigued by your campaign. 

Also Read: In brief: Vynn Capital invests in Velotrade; Babydash raises US$300K crowdfunding

Using the crowdfunding strategy, several credible businesses have found success. Here’s what you can get from Kickstarter, in order of probability and value:

• Declare your product to the market
• Acquire feedback from the audience
• Build a community
• Get money

Many people, unfortunately, are looking for things in the opposite order, points out Zhukov. Investors in Silicon Valley, also,  often suggest trying a crowdfunding campaign to fully understand whether anybody actually wants the product.

Getting feedback is much cheaper this way than pouring millions in production and marketing. So you need to decide for yourself: Is it all for the money, or the glory?

Crowdfunding initiatives are also distinct in their potential to pique the curiosity of new users and increase engagement.

Because it is necessary to engage the audience to be successful, campaigns give an excellent platform for raising awareness for a company, brand, item, or service.

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Upstage raises US$27M in Series A funding round

The company: Seoul-based artificial intelligence startup Upstage announced that it has raised US$27 million in Series A funding round led by SoftBank Ventures Asia and Company K Partners. The funding round also included the participation of other investors such as TBT Partners, Premier Partners, Stonebridge Ventures, and Primer Sazze Fund.

The plan: The startup plans to use the funds to recruit “a large number” of AI specialists and developers to accelerate the development of its ‘AI Pack’.

The company: Headquartered in Seoul, Upstage enables companies to easily adopt AI solutions that standardise and automate their key tasks. The is developing the ‘AI Pack’, an integrated AI solution.

Mobile Premier League raises new funding, values at US$2.3B

The story: Mobile Premier League (MPL), Bangalore-headquartered e-sports and skill gaming platform, announced that it has raised a Series E round of financing led by Legatum Capital at a pre-money valuation of US$2.3 billion. Existing investors including Sequoia, SIG, RTP Global, Go-Ventures, Moore Strategic Ventures, Play Ventures, Base Partners, Telstra Ventures, and Founders Circle Capital also participated in the round.

The plan: MPL will use the funding to support its global expansion plan, invest in its homegrown technology, and drive continued growth in the Indian market.

The company: Headquartered in Bengaluru, MPL also has offices in Jakarta, Pune, New Delhi, Singapore, and New York. It has over 85 million users across India, Indonesia and the US. It was founded in 2018 by Sai Srinivas and Shubh Malhotra. The gaming platform currently employs over 800 personnel.

Also Read: Crowdfunding for startups: Where to begin and how to go about it

1Export raises US$800K in seed funding round led by Foxmont Capital Partners

The story: 1Export, a tech-enabled exporting company based in the Philippines, has raised a US$800,000 seed funding round led by Foxmont Capital Partners. The funding round also included participation of a consortium from the Manila Angel Investors Network and Kerubin Capital, IdeaSpace Foundation, Singapore based Iterative and other private investors.

The plan: With the new investments, 1Export aims to develop and improve its order handling capabilities, marketing services, financing, and other third-party integrations within its platform.

The company: 1Export was founded in 2016 to help MSMEs in the Philippines grow their business and expand in different countries using digital tools and platforms. In June 2021, the company said it generated around US$500,000 in export sales, accounting for 0.2 per cent of the total Philippine exports. It currently lists 450 supplier partners on its platform and distributes an overall volume of 4,000 tonnes of products, which are a mix of food and non-food products. 1Export plans to expand to 60 countries by the end of 2022.

BuzzAR raises US$630K in funding from Choco Up

The story: Singapore-based deep tech startup BuzzAR announced that it has raised US$630,000 in funding from Choco Up, a revenue-based financing and growth platform.

The plan: This funding round will enable BuzzAR to further develop localised marketing campaigns across APAC, the US and China as the firm ramps up B2B partnerships in response to rising demand.

The company: Founded in 2018, BuzzAR is a technology firm offering AR and AI solutions to Fortune 500 companies in Singapore and China. It is part of the Singapore Tourism Accelerator 2020/2021. BuzzAR’s vision is to augment places and faces, connecting the next billion users by 2025. Through its AR Billboard, BuzzAR has offered gamified wayfinding to its Fortune 500 enterprise clients.

Also Read: 500 Startups is now 500 Global, closes US$140M global flagship fund

Asumsi raises US$700K from East Ventures

The company: Indonesia-based multiplatform media company Asumsi announced a US$700,000 funding round from existing investor East Ventures.

The plan: The investment aims to further expand Asumsi’s media operation and escalate the engineering team to create a more interactive platform. The company is targeting to launch a live-streaming platform by mid-2022.

The company: Asumsi is a multi-platform digital media company that covers current affairs, politics, and social issues and targets the Indonesian youth segment. The company said that it reaches more than 10 millions audience per month through various social media channels.

It also said that its revenue has grown 10 times (year-on-year) since its last funding round in September 2020, which was also led by East Ventures.

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It is a well-known fact that owning a car in Singapore can be costly for the average customer. Luckily, there are startups in the market that aim to make it more accessible. Car-sharing platform Tribecar is one.

Tribecar was started as a platform to help private-hire vehicle (PHV) drivers obtain cars for their trade. “Later on, the general public began to discover the convenience and affordability of Tribecar’s service through word of mouth. The competitive pricing of renting at S$2 an hour combined with the accessibility of the vehicles made Tribecar’s service very attractive to the general public,” says CEO and co-founder Adrian Lee, in an email interview with e27.

But then the COVID-19 pandemic struck, forcing customers to change their behaviour, eventually opening up new opportunities for the company.

“This is when we noticed more people are shifting to private cars for their daily commute, either to run errands or to send their children to school. Private cars have become a safe travel bubble for people who are concerned about their health and safety due to COVID-19 and as such,” Lee says.

To respond to the demand, especially in September, Tribecar introduced a subscription service that allows customers to rent a vehicle for only S$88 a month –instead of the usual price of S$128. It also introduces an initiative where new drivers (e.g. P-Plate drivers) can sign up for this subscription service without paying for an additional New Drivers’ Surcharge during the included free hours.

This subscription model will complement the existing ad-hoc car-sharing model.

How does this subscription model help the business forward, especially in a challenging time like this? How does Tribecar differentiate itself from other services using this model? What is next for the company?

Also Read: How Malaysia’s first unicorn Carsome practiced compassion to grow in the face of adversity

Find the answer in this interview with Lee.

Sustainability for both the business and customers

Before explaining the subscription model and its role in growing the business, Lee talks about the two types of Tribecar users — commercial drivers and the so-called “leisure drivers.”

“The commercial drivers are PHV drivers and courier and food delivery drivers who use our vans, lorries and motorcycles for their jobs. Leisure drivers include new drivers who have yet to purchase their first car, as well as young families that are looking for a vehicle to run errands or ferry the kids to school,” he elaborates further.

The subscription model is meant to make it easier for these two groups of users to get the right kind of service for their needs.

“Tribecar believes in striking a balance, which is why we have launched a new subscription service to complement our usual ad-hoc car-sharing services. We believe that meeting our customers’ demands requires flexibility, and we want to give our customers the best of both worlds,” Lee explains it from the users’ point of view.

“Additionally, our new subscription service also provides a more predictable cash flow as opposed to ad-hoc usage, since members who sign up with us have their subscription renewed monthly for their convenience,” he shares.

In addition to making car ownership more accessible for the Average Joes and Janes, in the long run, Tribecar also hopes to create a more sustainable future.

“When we started Tribecar, we did it intending to make driving affordable, which is why we feel budget shouldn’t be a roadblock to being able to have the convenience and flexibility of ‘owning’ a car. With this increased convenience, we believe that we will be able to convince our customers to let go of their privately-owned cars and work towards a green, sustainable future,” Lee says.

Nowadays, with the acceptance of ride-hailing services that Uber has popularised, one might think of companies such as Grab and Gojek when they are thinking of the modern way to commute. As a car-sharing platform, Tribecar doesn’t see ride-hailing services as competition. In fact, some private hire drivers even use Tribecar cars.

“Additionally, our members are also using our service to run errands and are often making multiple stops. Unlike taxi or ride-hailing services that charge more for multiple stops or are typically used to get from point A to point B, our platform allows users to have the freedom and flexibility to plan their time and destinations without having to pay more. Typically, for an errand run with four to five locations. At around S$10 per taxi trip, the trip would cost around S$50 in total,” Lee stresses.

Also Read: Adatos nets Series A for its AI-driven remote sensing solution for agri, carbon markets

“But, with our hourly rental, they may pay as little as S$6 for three hours of use for the same errand run.”

The next destination

Based in Singapore, Tribecar is run by a team of more than 50 members. Before founding the company, Lee and co-founder Paul Tan have worked together to build Drive.SG in 2011. Remaining consistent in the transportation sector, the co-founders then started Tribecar to use the concept of car-sharing rental on an hourly basis to cater to the rise of ride-hailing in Singapore.

Nowadays, Tribecar even has a partnership with Drive.SG, aiming to support environmental sustainability by including Tesla cars in its long-term car leasing initiative. According to a statement, although Tesla cars are not part of Tribecar’s fleet, Tribecar members will be able to lease them at an affordable price and experience “owning” a car with zero down payment.

Tribecar is currently a self-funded company. However, Lee states that it is open to the possibility of raising external funding.

As for its goals for the future, the company aims to put customer satisfaction first by continuously looking for ways to add value for customers.

“As such, Tribecar is constantly looking at how we can make commuting safer, more affordable, and more convenient for our customers. We will continue to invest in new technologies and will be expanding our team to provide better services to our customers,” he says.

“To do so, we are expanding locations beyond the recently added customer-requested locations at petrol stations, shopping centres, and HDBs. It will bring greater value as we did by introducing the subscription plan and providing long-term leases at wallet-friendly rates,” the CEO continues.

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Image Credit: Tribecar

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Launching a startup in good times is hard enough. Now, imagine launching one amid a global crisis such as the COVID-19 pandemic. However, don’t let the current challenging times deter you from chasing your entrepreneurial dream. History shows us that several iconic corporations and entrepreneurs were born during major economic upheavals.

For example, Hewlett-Packard was founded in 1939, at the tail-end of the Great Depression and just before the Second World War broke out. Proctor & Gamble and General Electric were established during the Panic of 1837, a major financial crisis in the US that triggered a six-year depression in the country.

And there are several more examples that could inspire and motivate entrepreneurs to launch their dream startup— now.

Opportunity for entreprenurs in a time of crisis

Despite the altered landscape we are operating in, optimism reigns in the Indian startup ecosystem. According to a recent report, India produced eleven unicorns in 2020, and the number is expected to touch 100 by 2025.

Startups in the areas of edutech, fintech, insurtech and the payment industry sped up innovations, responding to the changing consumer behaviour triggered by the pandemic.

Further, the unprecedented adoption of AI by large corporations and MSMEs over the last year is likely to be a trend that will continue unabated in the post-COVID-19 world.

Numerous startups have caught onto the AI trend and are exploring the untapped opportunities in this space. AI will remain a critical tool that will fuel innovation and product-market fit to enhance the customer experience.

It was also a stellar year for the cloud-based SaaS industry, which promises to be the next big export from India, bigger than the software and IT services sectors. There is exuberance among investors for SaaS.

Also Read: Alibaba-backed eWTP fund enters Indonesia by joining insurtech startup Fuse’s Series B round

A host of Indian SaaS startups, such as Zoho, Druva, Icertis, Postman and Freshworks, among others, capitalised on the growth of the SaaS industry and focused on how to become a competitive differentiator in the long run.

In other words, the pandemic has thrown open the floodgates to a plethora of opportunities for startups. Based on my observations, the best time to launch a startup is during opportunities like the current one, when multiple sectors are struggling to stay afloat.

Now is the opportune moment for new businesses to be established, offering customers better products at more competitive rates. As per recent reports, the gloom and doom of the pandemic have resulted in a surge in entrepreneurship across the globe.

For instance, in the US alone, business startups shot up from 3.5 million in 2019 to 4.4 million in 2020, witnessing a 24 per cent jump. However, a word of caution here.

While entrepreneurs need to seize new opportunities, they should act swiftly. These opportunities may not stay open for very long. Soon, the lucrative business prospects may dwindle.

The new reality of the funding ecosystem

The path to fueling a startup’s inorganic growth is through a robust funding mechanism. I urge startups to find the key pockets of opportunities; quickly test their product and get it to market; find the early customers and iteratively arrive at the right product-market fit. This is the mantra they should follow before turning their attention to raising funds.

It is pertinent to mention here that startup ecosystems have evolved to the point where they are no longer just incubators and accelerators. They are also a funding ecosystem that attracts multiple avenues of funding—venture capital, angel investments and crowdfunding.

One of the key trends that dominate today’s funding ecosystem is agility.  VCs are more amenable to coming in early as they are scouting for diamonds in the rough. For example, Sequoia Capital offers an early-stage rapid scale-up program for startups in India and Southeast Asia called ‘Surge’ that seeks disruptive new ideas to create new categories and industries.

Venture Capital advisory firm Chiratae Ventures has launched a seed fund initiative called Chiratae Sonic that guarantees a 48-hour turnaround time on pitches for investment. Shortlisted early-stage founders will get investments less than or equal to US$500,000.

Also Read: Coping with consumer behaviour during the COVID-19 crisis

Likewise, the Telangana government is in the process of creating a ‘T-Fund,’ with the assurance of making the funding mechanism simpler for early-stage startups.

Another unique phenomenon witnessed in the current funding ecosystem is the strong VC interest in funding high-potential startups at the bottom of the pyramid. The rising number of entrepreneurs mushrooming in Tier-2 cities and beyond has diverted VC funding from larger metros to smaller towns.

In my view, this is a healthy trend that demonstrates India’s focus on nurturing a robust local entrepreneurial ecosystem that is a thriving subset of the larger ecosystem.

Undoubtedly, it is a great time to leverage the maturation of the funding ecosystem across India and build big enterprises for the global market. The US$10.14 billion funding that Indian startups attracted in 2020, despite the pandemic, is a testament to the faith foreign investors have in our entrepreneurs’ capabilities.

However, one of the drawbacks of the shifting funding landscape is the sharp divide that exists between the blue-eyed startups that raise millions of dollars of funding and those whose coffers have almost dried up.

Amid the pandemic, risk-averse VCs preferred betting on those startups in their portfolio that held the promise of coming out stronger on the other side.

The true heft of a startup ecosystem is not measured only by the number of unicorns that exist or the mammoth funding that top-of-the-line startups receive.

The more critical parameters would be the number of startups that are founded every year and the distinction between metro and non-metro business entities.

This approach will pave the way for a more egalitarian funding ecosystem that will aid in finding local solutions to longstanding societal problems.

Engage in the process of discovery

The keywords in a period of crisis are ‘opportunity’ and ‘agility’. Clearly, the established corporates lack the agility to move forward quickly and take advantage of the new opportunities that have emerged amid the pandemic.

Several opportunities left unaddressed by large corporates are seized by nimble entrepreneurs that move fast in challenging times.

I believe an innovation ecosystem can realise its true potential only if large corporates collaborate with startups to leverage the advantages offered by emerging opportunities.

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Global investing firm Capria Ventures has invested an undisclosed amount in Indonesian VC firm AC Ventures.

As per a press release, the partnership aligns with Capria’s plans to invest and impact in Southeast Asia, India, Latin America and Africa.

Capria will look to co-invest directly in the portfolio companies, alongside AC Ventures, in breakthrough solutions with global potential.

AC Ventures is Capria’s fifth fund manager of Capria in Asia, which has 14 partnerships globally.

“AC Ventures and Capria share a similar approach as hands-on, value-adding investors bringing hi-octane capital that supports founders with collective experience, network and resources,” said Dave Richards, co-founder and managing partner of Capria. 

“Capria’s global experience in startups from the 14 partnerships bring an edge to identifying and understanding emerging market ventures. AC Ventures’ proven leadership in sourcing local startups at an early stage along with their track record of supporting founders reinforced our investment decision,” he added. 

Formed in 2019 as a merger between Convergence Ventures and Agaeti Capital Ventures, AC Ventures has a total asset under management of US$300 million. 

The VC firm is currently raising a new fund of about US$120 million, which is expected to be closed this year. It aims to invest between US$1 million and US$10 million in early-stage companies in Indonesia and Southeast Asia across sectors such as e-commerce, logistics, fintech, MSMEs, and digital media-enabled businesses.

Since its first close at US$80 million in 2020, AC Ventures Fund III claims to have achieved over 2.5x gross return on invested capital in unrealised gains and witnessed over 25 follow-on funding rounds into its portfolio startups. 

Capria is a global VC firm with expertise investing in fintech, edutech, jobtech, logistics/mobility, agtech/food, and healthcare in the Global South. It invests in regional soonicorns and also backs local and regional fund managers with capital and strategic support. 

Capria has offices in Seattle, Bangalore, Nairobi, Santiago and Washington D.C.

Indonesia’s internet economy has been growing with an average annual growth rate of 49 per cent since 2015. This growth pace has exceeded all expectations and is on track to cross US$130 billion by 2025. With this acceleration, Indonesia has welcomed six regional unicorns so far, including Gojek and Tokopedia (which have merged into GoTo Group),  Traveloka, OVO, Bukalapak, and J&T Express.

 

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Image credit: AC Ventures

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