In the digital era, rapid advances in technology have managed to transform the way the world works. While some industries find this environment particularly favourable, other companies still have ways to go in engaging the right digital architecture.

It is undeniable that digitalisation is crucial to business longevity, especially in a post-pandemic world. The home renovation sector is no different.

Amidst the lockdowns, the renovation industry is flourishing. In Hong Kong, the traditional renovation market is worth HK$14 billion (US$1.7 billion). Yet, more than 40 per cent of the industry does not even have a digital strategy in place.

With a bulk of the market still conducting business in a traditional setting, this presents an opportunity for those ripe for disruption to migrate their operations into the digital workspace.

Untapped potential in the renovation market in Hong Kong

With most of the world confined to their homes, home renovation services have soared in demand as people want to create the perfect living space. In Hong Kong, homeowners here are more willing to spend on renovation projects.

Where apartments are packed and space is scarce, constructing the right house plan can transform the way people live.

Paired with the increasing transactions involving Home-Ownership Scheme (HOS) flats amounting to HK$17.6 billion (US$2.2 billion) in the first half of 2021, the housing and renovation landscape in Hong Kong is slowly picking pace.

There is an opportunity in the market right now to build better infrastructure to accommodate increasing demand. Most homeowners are also digital natives. To get in on this first-mover advantage, contractors need to prepare their services to survive in the new playing field.

Leveraging the latest technologies to resolve diversified renovation needs

As such, HKDecoman, a technology-powered marketplace for renovation services, has placed synergy at the forefront of its strategy to digitally transform the industry. At its core, the platform allows homeowners to find traditional renovation companies that provide the services they need.

The Hong Kong-based startup works on a model of smart matching and big data. With an extensive knowledge base of about 1344 videos, 2648 articles, 905 case studies, 1479 floor plans, the system depends on big data to refer potential customers to suitable suppliers using an algorithm-based selection process.

Also Read: How proptech startup iMyanmarHouse remains profitable despite COVID-19

To illustrate, the AI-powered matching system defines the abstract needs of house owners into a set of parameters, which is used for matching with a database of over 1000 design and renovation suppliers. The companies on the platform would have gone through an interview where their services and specialisations are stored in a built-in algorithm.

The content on HKDecoman also generates a significant amount of traffic from search engines and social media, forming a foundation of the community. Not only does the system enable consumers to search for and find valuable recommendations businesses can also reduce the cost of lead generation through a scalable model.

With more valuable matches, the design and renovation firms can also boost their reputation by taking on projects within their expertise, essentially creating a win-win situation for both parties.

Creating synergy in the home improvement ecosystem

Besides simplifying a multi-structure renovation process using smart features, having an end-to-end solution has a synergistic effect on the ecosystem as a whole. In a time where businesses are looking to rebuild the economic downturn from the pandemic, HKDecoman seeks to provide multiple functions across players in the industry.

Alongside smart matching between homeowners and renovation companies, they offer a one-stop O2O decoration shopping platform via three channels: An online portal, a smart vending machine and a self-service showroom.

The company also owns Deco Academy, a learning centre that offers online and offline courses, 24/7 free Q&A with expert consultants, and a Deco Charter which mediates between two parties in dispute.

To illustrate the synergies within this environment, clients using the AI-based marketplace will proceed to buy materials from the shopping platform. Mall clients, on the other hand, can look for installation services via the smart matching software or learn DIY home repairing techniques from the Academy.

As a result, each advertising dollar spent not only benefits a single business unit but also drives traffic to others.

The impact of COVID-19 on the industry

In the past year, many brick-and-mortar businesses had to cease operations due to a decline in footfall. Traditionally, renovation retailers and suppliers go about their operations offline, from home inspections to sales meetings and the purchase of products.

Digital businesses, or those that were quick to pivot to online models, were able to avoid the bulk of these challenges with alternatives to old practices.

Also read: The world of proptech and its fate in a post-pandemic world

As an O2O online platform, HKDecoman managed to see a slight increase in leads during this time. However, due to more careful spending, especially on big-ticket items, the lengthened decision cycle lowered their sales for a while.

To ensure business continuity, the team took this opportunity to expand the infrastructure, establishing the solutions as a gateway for design and renovation companies to go digital and scale-up.

A pandemic-led slump has drastically shifted consumer spending and behaviour. Because of this, the recovery is expected to be a gradual revival rather than a sharp change. In particular, Hong Kong is facing a lot of other changes.

The emigration outflow, for instance, is a factor that has led to decreased demand during this period of time. On the other hand, pent-up demand plays a huge role in ramping up post-pandemic business activity.

On a macro scale, Southeast Asia represents a fast-growing internet sector. As the region moves to the online space, consumers will not only expect but demand digital services. With the proven business model, the right go-to-market strategy and potential synergy, HKDecoman has established itself as a leader in Hong Kong’s online renovation services.

The time is ripe for the startup to venture into the flourishing SEA economy, bringing its services to local markets, with the help of accelerator programmes such as 500Startups and the blueprint for a renovation ecosystem.

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Talino Venture Labs, a global venture studio for inclusive fintech, has secured US$1.25 million led by Wavemaker Labs, a next-generation corporate innovation fund investing in North America and Southeast Asia.

Foxmont Capital Partners, Johnsen Global Business Ventures, and Manila Angel Investors Network (MAIN) also joined the round.

The Philippine startup will use funds for technology R&D and working capital.

Talino Venture Labs also announced that it has launched an equity crowdfunding campaign on Wefunder.com and received commitments of over US$270,000 from almost 100 investors.

Also Read: Edukasyon investor Foxmont joins Philippine proptech startup AHG’s US$1.1M seed round

Born in the intersection of Silicon Valley and Southeast Asia, Talino Venture Labs is on a mission to bridge financial inclusion for over 1.7 billion people around the world. It uses the venture studio model to build repeatable, scalable, and profitable fintech companies that empower underserved, underrepresented groups around the world with financial access and mobility.

Talino has already incubated six fintech startups, such as BayaniPay, Neotech, Asenso, Saphron, Unawa, and DevCon. They together serve ~10 million customers within the US and Asia corridor.

“Talino Venture Labs started almost three years ago with the mission to become a venture studio for inclusive fintech,” said CEO Winston Damarillo. “While our venture studio has already been able to raise US$7 million in venture capital for our portfolio companies and operate profitably with over US$2 million in revenue since 2019, our latest funding round and our equity crowdfunding campaign signal a new chapter in Talino’s history.”

“Now, we’re making Talino itself accessible to retail investors who want to invest in innovation with impact. For as little as US$100 on our Wefunder campaign, they can be part of our journey to empower the emerging middle class with inclusive fintech innovation. This is closely aligned with our own mission of inclusive finance as we make financial opportunities available to more people around the world,” he added.

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Image Credit: Talino Venture Labs

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You have come up with a great startup idea. You have spent months vetting the idea with dozens of customer interviews. You have even written some code to build a quick and dirty prototype.

However, when you met with some angel investors to getting funding for your company, they told you that you need to have a business co-founder. Luckily, it turns out that your college classmate who has an MBA really likes the idea and wants to join the effort.

He wants to join as a founder and get founder equity. But it doesn’t seem fair to split the equity 50/50. After all, you came up with the idea and did a lot of work to get the idea off the ground.

So, how much equity should you give your co-founder so that he feels motivated to join and work long hours to make the company successful?

This is a question that I commonly get asked by founders as they build out their management team. There is no magic formula that you can plug numbers into that will spit out an equitable founder equity split.

However, in this article, I can share the general principles that you can apply to come up with a reasonable equity split that you can use for the basis of negotiation with your co-founder.

Employee option pool

Before you split up equity with your co-founder(s), you need to first set aside an Employee Option Pool to grant options to employees that you hire. Most VCs will require you to set aside between 15 to 20 per cent of the company’s equity for an option pool.

The best way to determine this percentage is to develop a budget outlining how many employees you plan to hire in the next two years and assigning how much equity you would give to each position.

For example, members of your management team might get between two to three per cent of equity whereas entry-level employees would get between 0.1 to 0.2 per cent equity.

Also Read: SEA tech founders playbook: A to Z of becoming a fundraising legend (Part 2)

Cash investment

If you and/or your co-founder(s) are planning on investing actual cash into the company, it should be treated like any other outside investment. You can then select an appropriate valuation for the company and then calculate the equity that each of you would get as a result.

To determine an appropriate valuation for the company, you can consult with local angel investors to get their feedback on the company’s valuation based on the team and the progress you have made.

Let’s say that you invested S$50,000 into the company and your co-founder invested nothing and you valued the company at a S$1 million valuation. You should get $50,000/$1,050,000 or around five per cent of the company. The remaining equity can then be divided based on the rules outlined below.

Idea development

Ideas can be a dime a dozen as a startup’s success will depend largely on execution. However, if you have spent a few months seriously validating the idea before recruiting a co-founder, then you should get some credit for developing the idea.

Or perhaps, you are a technical founder and you have already developed a prototype for your idea. Idea validation should get you a five to 10 per cent premium whereas IP development should get you a 20-25 per cent premium depending on how much time you have invested in developing the IP.

CEO’s role

If there are two co-founders, you can’t split the equity 50/50 as you could end up in a tie in deciding contentious issues. Since the CEO is the final arbiter of decisions, he or she should receive more equity.

Investors also value the CEO role compared to other roles in the company and will grant more equity to a CEO if they are hiring an external CEO. The CEO should get a five per cent premium for taking on that role.

Doing the math

Let’s take the example so far to see how the equity should be split up. The two founders both start off with a 50/50 split in terms of shares or 50 shares each out of 100 shares. Since you are the CEO, you get an additional five shares.

You have also done the idea validation and built out a prototype – as a result, you should get an additional 25 shares. So, you end up with 50+5+25 = 80 shares and your co-founder ends up with 50 shares. This means that you get 80/130 = 62 per cent and your co-founder gets 38 per cent of the founder’s equity.

However, you still need to account for the employee option pool and the equity you should get for investing S$50,000 in the company. This means that you allocate 20 per cent to the option pool, another five per cent for your investment leaving 75 per cent of founder equity to split up.

You will get 62 per cent* 75 per cent or 47 per cent and your co-founder will get 28 per cent. Your total equity stake will now be 47 + 5 = 52 per cent and your co-founder will get 28 per cent. This means that you get twice the equity as your co-founder which seems fair.

Also Read: Exceptional founders to nurture, invest in promising startups as part of Monk’s Hill Ventures’s new programme

Utilising a neutral arbiter

You can do all the math in the world to come up with an equitable equity split. However, you could still end up in a difficult negotiation with your co-founder(s). I, therefore, recommend that you find an experienced and well-respected founder or investor to come up with the equity split recommendation that all of you have to abide by.

That person can interview each of the co-founders to understand their contributions and then recommend the equity split that you should follow. This will result in significantly less contention and bad feelings among the founders.

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GDP Venture joins Easy Crypto’s US$12M Series A

The story: New Zealand-based crypto startup, Easy Crypto, has secured US$12 million in a Series A round of funding led by Nuance Connected Capital.

Investors: Indonesian VC firm GDP Venture, New Zealand-based Pathfinder KiwiSaver (a retirement fund), Icehouse Ventures and Even Capital, and US-based Hutt Capital and Seven Peaks Ventures.

The plans: The funding will be used to expand into new markets, particularly Indonesia and Southeast Asia.

What is Easy Crypto: Founded by siblings Janine dan Alan Grainger in 2018, it trades more than 150 types of crypto assets. So far it has recorded US$750 million in sales. It currently has operations in South Africa, Australia, the Philippines, and Brazil.

Japan’s SmartRyde nets US$1.6M in Series A 

The story: SmartRyde, a global airport transfer marketplace in Japan, has raised US$1.6 million in a Series A funding round.

Investors: Angel Bridge (lead), SG Incubate, Yamaguchi Capital, SMBC Venture Capital, Hiroshima Venture Capital, Iyogin Capital, Inventum Ventures, individual investor and serial entrepreneur Shouji Kodama, Nobuaki Takahashi (NOB LLC), and Optima Ventures.

What is SmartRyde: It’s creating a marketplace to connect local transport operators and online travel agencies (OTAs). As of August 2021, it has collaborated with more than 650 transportation operators and more than 25 OTAs, including top global players such as Booking.com, Expedia, Trip.com, Traveloka (Indonesia), and Despegar (Argentina).

Plans: It will strengthen system integration with OTAs on the demand side, build a booking management system for transportation operators on the supply side, and promote digital transformation.

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Image Credit: Easy Crypto

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StratifiCare, a predictive medical diagnostic solutions startup in Singapore, has raised S$1 million (US$729,000) in seed funding from ADB Ventures and early-stage venture capital Sprout. 

Other participating investors are Jeffrey Tiong, CEO of PatSnap, and Quek Siu Rui, CEO of Carousell.

Using the fresh capital, StratifiCare will set up pilot manufacturing facilities. It will also carry out clinical trials for its Dengue prediction test, StratifiDen, in the diseases-affected Asian nations. 

The company also plans to collaborate with clinical partners to test out StratifiDen in the Philippines, Sri Lanka, and Vietnam.

“This could have a very significant impact on the way Dengue treatment is managed in Asia and beyond,” said Yichu Zhang, investment associate at ADB Ventures.

Also read: Are biomedicine and healthcare coming of age?

Launched in 2015 by CEO Anthony Chua and friends, StratifiCare develops a broad range of predictive in-vitro diagnostics (IVD) solutions to power personalised medicine. The company says each solution can minimise hospital (re)admissions, reduce the usage of ineffective treatments, and enhance patient outcomes.

StratifiCare claims that by detecting the concentrations of particular proteins in the patient’s blood, StratifiDen can assist doctors in diagnosing severe disease complications (such as internal bleeding) and the hospitalisation needs of Dengue patients.

According to a joint study published in 2019 by four American universities, global warming, increasing urbanisation, and mosquito geographic expansion would put one billion additional people in temperate zones at risk of Dengue infection by 2080. 

The World Health Organization (WHO) also estimates that 390 million people are infected with Dengue fever each year.

Given that less than five per cent of hospitalised Dengue patients develop severe complications, StratifiDen helps assure hospital resources are reserved for severe cases during major outbreaks while also reducing the financial burdens on Dengue patients and their families from unnecessary hospitalisation. 

According to figures from a University of Washington health economics research, StratifiDen adoption would save Dengue-affected developing nations throughout the world around US$7.6 billion of direct medical cost savings per year, claims the company. 

“StratifiDen ensures that scarce hospital resources are reserved for severe Dengue patients during large Dengue outbreaks,” said StratifiCare co-founder and CEO Dr Anthony Chua.

Also read: Predictive analytics is shaping the modern life

Apart from the Dengue prediction test, StratifiCare has also expanded its offerings to include cancer medical diagnostic tests by leveraging the knowledge and infrastructure built to develop predictive medical diagnostics for StratifiDen.

According to the McKinsey report, the medtech market in Asia-Pacific is expected to expand to over US$133 billion in 2020, up from US$88 billion in 2015, surpassing the European Union as the world’s second-largest market.

Industry Insights Research also stated that the medtech sector contributed S$13 billion (US$9.4 billion) to Singapore’s GDP. 

The number of homegrown medtech firms in Singapore has increased from 100 in 2014 to more than 250 in 2018, with several recent Neuroglee Therapeutics, One BioMed, and  Leben Care deals.

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Image Credit: StratifiCare

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