Decentralised finance (DeFi) is gaining increasing attention thanks to mainstream interest in crypto, such as Bitcoin. With billions of dollars flowing into DeFi protocols, offering alternative financial solutions, it’s giving people a way of earning money with the aid of innovative contract technology.

Although this industry is slowly growing in popularity across the globe, it has a much stronger appeal in the Southeast Asia (SEA) region mainly because of its potential to solve one of the region’s biggest challenges– equal financial opportunities for all.

A large chunk of the population in Asia is mainly unbanked, and one of the main reasons is steep barriers to entry. For example, banks require a minimum deposit fee or upfront charges to start their bank account. Other reasons include high transaction fees.

According to a report from the World Bank, ASEAN is home to an unbanked population of about 290 million, with only 18 per cent having access to credit, financial services, or investment products, leaving a large part of the population underbanked.

DeFi’s core technology can eliminate intermediaries, thus making transaction costs much cheaper and faster than any other digital banking service, making it a much more appealing alternative.

But then why hasn’t mass adoption of DeFi in the region still take place?

One of the key reasons is that many people still do not understand the concept of DeFi because of its rather complex nature. Even Mark Cuban, a billionaire investor well known from Shark Tank, who has been experimenting with DeFi, shared with the Defiant that it takes a lot of time to understand how to use DeFi protocols.

As a storyteller and communicator working closely with DeFi companies, I can impart a few insights into the promise of this industry to give context to it and offer tips on how to keep up.

Also Read: Ecosystem Roundup: Aspire lands US$158M funding; SG gets new US$75M crypto, blockchain fund; Ascend Money is now unicorn

A new financial system without centralised banks

As institutional investment into bitcoin and cryptocurrencies flow into the market signalled by Tesla, Square, PayPal, Mastercard, among others, it’s time for the world to start paying attention to the financial mechanisms DeFi has enabled.

DeFi platforms or protocols such as Compound (lending and borrowing), CREAM Finance (lending), and Uniswap (decentralised exchange) are enabling users to invest, borrow, lend, trade, and transact peer to peer using cryptocurrencies or digital assets.

They achieve this without needing to go through a bank or a centralised platform. This can all happen thanks to innovative contract technology created by Ethereum.

Digital lending and borrowing are not new; blockchain technology allows faster and cheaper transactions by cutting down intermediaries.

Beyond value transfers, the main growth driver of the DeFi sector is “yield farming”. Yield farming is the practice of lending crypto assets to generate high returns in the form of cryptocurrencies.

This is similar to locking money in a fixed deposit account to generate interest after a set amount of time, whereas the “financial” work is done automatically via protocols.

Though it’s highly risky, the DeFi rewards are much higher than the 3 per cent interest one might earn from a bank, and the dividends get paid out daily.

One thing that might take new users to get used to is that most of these protocols are “web3.0 native” and fully decentralised, meaning that they are run by decentralised autonomous organisations (DAOs) that have inbuilt governance systems.

Ultimately, it comes down to whether you trust a centralised organisation run by a central authority or a decentralised organisation where no single party can control the network.

We are now also seeing the first signs of these yield-bearing technologies being embedded into everyday applications such as offline map provider MAPS.ME.

As startups in this space grow, they are also receiving more attention from crypto investors and mainstream institutions, like Thailand’s oldest and largest bank Siam Commercial Bank (SCB).

Early this year, SCB launched a US$50 million fund via its investment arm SCB 10X to invest in early and growth-stage blockchain, digital assets, and DeFi startups. Calling it a “disruption”, the firm said that “it is preparing for the potential day that DeFi upends traditional banking”.

Expanding the fintech horizon

The fintech industry now needs to expand its horizon to consider DeFi, and CeFi (centralised finance) systems, as both ecosystems will play an essential role in shaping the future of finance. CeFi refers to centralised systems that bridge legacy finance platforms with the new digital asset industry. These include exchanges like Coinbase or crypto lenders such as Nexo.

The current sentiment in the market is that DeFi is multiplying and will eventually “eat” CeFi. While we will see the gap between DeFi and CeFi narrow, the natural next bridge is to the fintech industry.

Also Read: Taiwan’s blockchain ecosystem’s moment towards mass adoption

The fintech industry has come a long way with an ecosystem of challenger banks that have consumer-friendly applications and widely used products.

All it will take is one fintech to enable DeFi features on its platform to see the domino effect of fintech products and DeFi offerings collide. Fintechs should start learning about the benefits of DeFi and start integrating with projects today to stay ahead.

Keeping up with DeFi

The DeFi industry is growing fast.  In January 2020, it had a US$500 million market value. As of September 2021, its market size is nearly US$166.45 billion in Total Value Locked (TVL). Keeping up is a job on its own, which is why education is key to everything.

Allow me to share some newsletters and platforms you can start with to watch this lighting speed innovation.

Firstly newsletters like Defiant and Bankless help a lot with learning about what is upcoming. To track the activity of the growth of Defi, there are wallet platforms such as DeBank that has a good analysis tracking site; there’s also Defi Llama and DeFi pulse with variable data.

CoinGecko, the go-to crypto price and analysis tracker, is another source to consider. The top leading exchanges are Uniswap and SushiSwap, which have the most volume.

A typical inside joke in the industry is that the amount of knowledge we absorb in one month in crypto is equivalent to one human year. Cryptocurrency’s promise is to make money and payments universally accessible to anyone, no matter where they are in the world.

To see cryptocurrency fulfil this promise starts with people getting educated about industries like DeFi, holding cryptocurrency, and eventually using it in our day-to-day lives.

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Komunidad, a provider of environmental intelligence services in the Philippines, has attracted US$1 million in a seed financing round.

Wavemaker Partners led this round, which also saw participation from ADB Ventures.

As per a press statement, this transaction will pave the way for Komunidad’s further expansion in the Philippines and the rest of Asia.

“Our expansion in Asia will focus on the Philippines, India and other emerging and developing countries where the risk index is higher. The investment will be used to grow our collection of weather and environmental intelligence datasets and to develop a more robust and intelligent platform to be released by Q1 2022,” said founder Felix Ayque.

Founded in 2019 and located in Singapore and the Philippines, Komunidad started as a tropical cyclone email service. It later evolved into a web-based environmental intelligence platform.

A SaaS company, Komunidad aims to help businesses and communities adapt to the consequences of climate change. It focuses on weather and environmental intelligence information services, with a team of meteorologists, data scientists, software developers and business development managers spread across Southeast Asia and India.

Also Read: Need of the hour: How agritech platforms can protect farmers from climate change

The startup’s proprietary platform helps environment-critical industries make informed decisions regarding safety, operational efficiency, business continuity, and natural disaster preparedness. It allows relevant weather and environmental data “to be quickly organised” into visualisations, reports and alerts that users can access via a dashboard and use to build the most suitable decision-making tools to support their operations.

Komunidad currently provides services for clients in the utilities, agriculture, mining, education, business process outsourcing, and local government sectors in Southeast Asia and India.

“The Philippines, because of its geographic circumstances, is highly prone to natural disasters, such as earthquakes, volcanic eruptions, tropical cyclones, and floods, making it one of the most disaster-prone countries in the world,” Ayque said.

“I grew up in the southern part of the Philippines, where all these events happen annually. I have seen their impact on people’s lives and businesses. On top of that, the world around us is changing. Climate change is widespread, rapid, and intensifying, according to the latest studies. It will impact the way we live, work, and do business in the future, and many countries in Asia will be most affected,” Ayque explained.

Before closing the seed round, Komunidad won contracts with local governments and companies in the utilities/energy, agriculture, mining, and business process outsourcing industries. Most recently, Komunidad won a contract in an Indian State for its impact-based weather monitoring and forecasting system.

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Image Credit: Komunidad

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Vouch, a Singapore-headquartered travel-tech company, has received US$1.1 million in a seed investment round led by Singapore’s institutional seed VC firm Forge Ventures.

The startup will use the funds to innovate its new product line of guest experience platforms and expand its business into global markets, including Hong Kong, Macau, South Korea and the UK. 

Vouch has also set up its third in-country branch in the UK to mark its entry into Europe. 

Founded in 2016 by Joseph Ling, Vouch offers digital solutions for hotel operation, aiming to transform the technology of the hospitality and travel industry in the area. 

By incorporating Vouch into their operations, businesses managing attractions and malls can strengthen productivity, increase revenue and upgrade the overall guest experience.

The firm noted in a press statement that its technology serves as an “enabler” for properties to “have the freedom and the ability to focus on things that truly matter.”

Also read: PouchNATION to launch contactless hospitality tech beyond Asia after the undisclosed bridge round

Vouch’s new guest experience platform leverages both AI and chatbot-based technologies. It allows guests to scan a QR code on their mobile phones to check-in, make room requests, order food and beverage and receive instant answers to commonly asked questions. This process steers clear of the need to download an app for a short-term stay.

During the height of the COVID-19 pandemic, hotels apply Vouch’s solutions to minimise their physical interaction with guests during check-in and other administrative tasks and navigate social distancing requirements in those premises.

“There is a genuine need for a solution that helps hotels improve manpower efficiency, and the pandemic has accelerated this need,” said Ling.

The startup claims that its services have covered more than 25 per cent of hotel rooms in Singapore, with brands such as Frasers Hospitality, Pan Pacific Group and Hyatt Hotels joining the network.

Digital transformation in the hospitality segment has become a global trend. The applications of online, mobile, cloud, IoT, blockchain, AI technologies make their marks on all fronts of the industry, including hotel management, customer service, distribution, CRM and marketing. 

According to a survey by Statista in 2020, providing a consistent, high-quality customer experience is the main business priority of travel and hospitality companies worldwide. 

Consumers also pay close attention to which aspects of the guest experience hoteliers would digitalise. Another survey conducted between July and August of 2020 showed that 73 per cent of hotel guests would use an app to open their room door. 

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Image Credit: Vouch

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Sky Mavis, the creator of the popular NFT-based game Axie Infinity, has attracted US$152 million in a Series B financing round led by US-based VC firm Andreessen Horowitz (a16z).

Accel Partners and Paradigm also joined this round.

The Vietnamese startup will use the money to build a global team, scale infrastructure, and build its distribution platform to support game developers in creating blockchain-enabled games.

The new deal follows a US$7.5 million Series A funding in May. Led by Libertus Capital, the round also saw participation from investors, including Collab + Currency, Blocktower Capital, Mark Cuban, Alexis Ohanian.

Also Read: Metaverse is around the corner and you should play a role in it

Axie Infinity was founded in early 2018 by Aleksander Leonard Larsen, Nguyễn Thành Trung, Đoàn Minh Tú, Hồ Sỹ Việt Anh and Jeffrey Samuel Kim Zirlin.

Sky Mavis invented the play-to-earn (P2E) concept for people to play, live, work and earn within virtual worlds. Its first P2E game is Axie Infinity, where players breed, battle, and trade digital pets called Axie.

NFT-based P2E games are decentralised, meaning that the players own the in-game assets that they purchase and can generate real-world rewards for their in-game activities.

Axie Infinity says it has helped create income-generating opportunities for underserved people worldwide; 25 per cent of players are unbanked, and 50 per cent have not previously used cryptocurrencies.

Axie Infinity has amassed players worldwide, with more than 1.8 million daily active users logging into the platform in August. It claims to have achieved US$33 million in everyday transactions, for a total volume of over US$2 billion.

The Mavis Hub distributes games on both PCs and Macs and will connect to Sky Mavis’s proprietary Ronin Blockchain. In addition to supporting Axie Infinity, The Mavis Hub will help game developers build and distribute blockchain-enabled games.

Also Read: Vietnam’s Sky Mavis receives US$7.5M Series A to grow its blockchain game Axie Infinity

Arianna Simpson, the general partner at a16z, said. “The Axie team has unlocked a new way to build and play games that are already completely redefining this category. The game’s growth is a remarkable testament to how deeply this model resonates with people around the world. The Axie team has triggered an earthquake in gaming, and the industry is now forever changed.”

“We are on a mission to create economic freedom for gamers. We are making this happen by turning players into owners of in-game assets unlike the traditional model where publishers, distribution platforms and game developers retain control and benefit the most,” noted Trung Nguyen, Sky Mavis CEO.

Previously, Sky Mavis raised US$1.5 million from several backers such as Animoca Brands, Hashed, Pangea Blockchain Fund, Consensys, and 500 Startups Vietnam.

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In the new normal, there is a distinctive lack of ability for different parts of the Southeast Asia tech ecosystem to reach out to each other. We used to have thousands of offline activities happening monthly, connecting various local and regional ecosystems, connecting startups, corporates, governments, and investors. Even our very own Echelon used to bring in more than 10,000 people over two days to achieve these meaningful, often serendipitous, connections. 

This is a real pain especially if you are new to the ecosystem and do not have existing networks that can introduce you to new connections. Online webinars and conferences seem to alleviate this issue temporarily, but we find the ecosystem to be craving for more.

e27’s vision has always been to assist startup founders in their journey and we have to go back to our roots, starting from fundraising. Building up the e27 Pro onto the existing e27.co platform to achieve this, today, we have served over 3000+ connections between startups and investors,  starting new conversations, and updating on each other’s progress.

To further accelerate this process and keep it as a permanent fixture of the Southeast Asia ecosystem tools, we have partnered with accelerators to further assist the startups’ in their engagements and conversations with regional investors. 

How e27 and ScaleUp Malaysia are collaborating

ScaleUp Malaysia portfolio companies are expanding their presence in new markets beyond Malaysia, with many actively raising capital from investors across the region. Using e27’s Pro capabilities, early-stage VCs can access a diverse group of emerging startups from Malaysia who are looking to scale up and take their business to the next level. 

“When I was running my last startup, e27 provided a truly valuable platform for me to connect with investors and partners from around the world. And over the last year, we have met several great companies from all over the world through e27 Pro. This is the same aspiration that we have for our companies at ScaleUp — to build their networks and be ready to expand beyond our shores,” said Aaron Sarma, Co-Founder and General Partner of ScaleUp Malaysia.

Also read: Kawasaki Heavy Industries invites innovators to co-create solutions to global challenges

“Through this partnership we aim to help investors and partners connect with some amazing scaleups without having to board a plane!” 

ScaleUp Malaysia’s partnership with e27 helps bring together the global technology ecosystem so companies and investors can efficiently collaborate, connect, and crystalise opportunities. 

Backing the best entrepreneurs in Malaysia

In 2019, ScaleUp Malaysia saw a gap in the Malaysian technology ecosystem. Many startups were unable to get beyond ideation and initial product market fit to the next stage of growth. Founded by 6 entrepreneurs and industry veterans, ScaleUp Malaysia formed to help companies build businesses with strong fundamentals towards a path to profitability, raise follow-on funding, and expand geographically. 

To date, ScaleUp Malaysia has announced investments in 21 companies within various industries from smart farming, education, services, logistics, and impact-driven scaleups. ScaleUp aims to help 100 companies through their programmes with a target to invest in 50 by 2023. 

ScaleUp Malaysia recently launched Cohort 3 of their programme targeting high growth scaleups in partnership with two venture capital firms, Singapore-based Quest Ventures and US based Indelible Ventures. Collectively these firms bring access to partners, investors and other networks in Southeast Asia and the United States of America, accelerating targeted growth in new times. For Cohort 3, ScaleUp Malaysia is looking towards working with more scaleups eyeing the regional and global stage.

ScaleUp Malaysia continues to champion Malaysian entrepreneurs and aims to uncover more underrated, untapped, and unknown startups in the ecosystem who deserve a shot at building high growth, sustainable businesses. 

ScaleUp Malaysia’s portfolio companies

With its commitment to fostering a strong ecosystem, ScaleUp supports a diverse array of companies hoping to push for business growth. With that, here is a list of companies from ScaleUp Malaysia’s first and second cohorts

ATX – A pioneering digital payments service provider with 8 years of track record that provides a solution to help micro SMEs participate in the digital economy.

Auto Craver – A cloud-based end to end management software called “Turbo” for car dealers to automate processes and facilitate car sales.

Batik Boutique –  A premier Malaysian gift brand with an artisanal story that creates social impact by empowering the B40 segment through education, training and job creation.

Iimmpact – An out-of-the-box technology solution that enables digital payments to over 100 billers inclusive of mobile top-ups, utility bills, entertainment portals, local councils and many more.

Kwikcar – A peer-to-peer car-sharing platform that aims to change the future of mobility and car ownership.

AOne – An educational platform for learning centres to manage their classes, teachers and students through scheduling, fee collection and process automation.

BiiB – A community platform that creates gamified virtual events for runners and transforms running into a team sport.

Agiliux – A cloud-based core insurance platform with extensive policy and claims management capabilities.

Also read: Industrial IoT startup Sophic Automation set to scale up Industry 4.0 projects in the region

Tripcarte – A travel technology company that provides a distribution platform for travel activity and attraction tickets.

Recqa – A platform that preserves collective knowledge so that organizations can connect and align people, processes, and best practices.

ERTH – (e-Waste Recycling Through Heroes) is an award-winning social enterprise that specialises in collecting and recycling electronic waste (e-waste) from households and businesses.

Fefifo – Fefifo is pioneering digitalised, standardised farming in ready-to-farm modern farmspaces called co-farms, to make sustainable, profitable smallholder farming commonplace in South East Asia.

Hauz – Hauz is a data-driven enterprise solution that manages and monitors mobile workforce operations in the service industry, be it in Malaysia or regionally.

Homa2u – Homa2u is an online to offline (O2O) building materials and interior finishes marketplace where you can find a wide range of high quality, branded and bargain materials for your house project.

Kiddocare – Kiddocare is an online platform that connects parents with trained Malaysian baby sitters and early childhood education providers for personalised, on-demand services.

Load2Go – Load2Go offers an on-demand logistics platform for booking big trucks for large freight, construction and manufacturing industries.

MMC – MMC is a food-based company that operates several different businesses, including a central kitchen, food mart, cafe and vending machines. Their businesses are tracked and run on a proprietary technology solution.

MyBump – MyBump media is a car wrap advertising company that matches brands with drivers (Brand ambassadors) for data-backed creative execution outdoor advertising.

Pomen – Pomen is SaaS automotive maintenance platform that specialises in fleet companies and vehicle owners to connect with workshops and service providers to benefit them with the valuable vehicle and financial insight.

Quadby – Quadby is the Nextdoor for universities. They are a community app for students to find and chat with peers on campus.

About ScaleUp Malaysia

ScaleUp Malaysia is an accelerator that focuses exclusively on growth-stage companies in Malaysia – helping them position their business for exponential growth. ScaleUp Malaysia is founded by a team of experienced entrepreneurs, professionals and seasoned investors.

Also read: Protégé Ventures as a gateway for VCs to invest in the future

Championing the concept of building “Pegasus” companies of building fast-growing profitable businesses, ScaleUp Malaysia companies go through a program that includes in-class training, one to one coaching, and equity investment for selected companies. You can visit them at their official website at www.scaleup.my or their official social media pages, Facebook, Twitter, and Linkedin.

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