Asia has been an attractive tech hub for investors from around the world for the past few years now. With tech hubs like India, China, Singapore, Malaysia, Indonesia, and Vietnam among others producing unicorns and decacorns every year, the investment scene in the region has been bustling with VCs ready to ride the digitalisation and tech disruption waves. 

However, 2020 has brought about a shift in VC sentiment. With the coronavirus pandemic bringing life as we knew it to a halt, many sectors almost shut down while some like edtech, fintech, and healthtech soared. Emergent trends in the tech scene in Asia have changed and so has the overall approach of investors.

We spoke to several regional investors who helped unpack the current VC climate and shared how startups can rely on technology to leverage due diligence for better fundraising.

What the new fundraising landscape is starting to look like

There are three key changes to fundraising, according to Alex Toh, fintech investor of SC Ventures’ Innovation Investment Fund. 

Firstly, VCs have been looking more inward in their portfolio for potential internal rounds before looking for new deals. Secondly, VCs tend to scrutinise startups more carefully and with great focus on cash flow and paths to profitability. Thirdly, due diligence has been limited to virtual and as such, most deals that are done during this period are with companies that investors have already met and shortlisted.

“While there are ‘pure virtual’ deals done where investors have never met the founders in person, these are rarer and we may see less ‘new’ cross border deals for now,” Toh added.

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

With that, key areas of focus for startups looking to raise funds, grow business, and scale have also changed. 

In the new normal, agility is key. Being open to understanding the changing landscape and pivoting accordingly while being ready for due diligence is the way forward. The investor approach towards risk-taking has naturally changed — VCs are more inclined towards startups that have a future-proof plan in place, who show openness and preparedness for due diligence, and who lean on business safety and success.

This is where startups can leverage technology to eliminate human errors, maximise data analytics, and create a robust and secure data room that helps them attract funds that enable them to survive, scale, and succeed in a post-pandemic world. 

Improving fundraising efforts in terms of due diligence

Christopher Quek, a Managing Partner at TRIVE, a Singapore-based VC firm focused on Impact tech startups, shared, “Due diligence is a critical and minimum obligation for institutional VCs who are responsible for the funds given by LPs (Limited Partners). It is crucial in alternative investments as well where not all information is public. At TRIVE, we have rejected deals after stringent due diligence in the past. Due diligence also includes checking with fellow VCs and ecosystem players on the background of the founder and the startup.”

Startups, SMEs, and even big corporations can leverage technology and embrace digitalisation to help improve the overall process of due diligence. Although the efficacy of this largely depends on the nature of the business, VCs believe that tech startups tend to be easier in terms of due diligence as compared to traditional businesses that lack any form of digitalisation. In the new normal, due diligence in traditional sectors such as material sciences, food, and pharma is even more challenging due to the restrictions in visiting physical spaces.

Quek shared, “To help facilitate a smooth due diligence process, startups need to have set up data rooms ready to be released and updated as and when potential investors are keen to review. This instils confidence within the investors and helps establish a good rapport with the founders from the get-go.”

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

Toh also stressed the importance of having organised data rooms. “As a startup’s traction changes very quickly, a good practice would be to segment your data rooms for each investor so you know what you provided to each and at which dates. A quick video conference call after can help address any concerns and questions the investor may have on the data.”

There are tools that help startups do this. For startups that need to quickly organise hundreds of documents for potential and even multiple investors, a data room with AI-enabled document categorisation and integrated redaction features will allow them to be ready in less than a day.

Organised data rooms are also helpful when it comes to customising your approach, which is another important thing startups should do, according to Toh. Startups should not just simply fire off information to a large number of investors, but should take time to research each investor before reaching out and provide a customised introduction or pitch deck. “While it is tempting to do a ‘spray and pray’ outreach to all VCs as more investors are willing to speak over a video conference, a customised note still differentiates your company.”

What will VCs be looking at in the new normal: Why due diligence is key

Moving forward, startup founders need to be as transparent as possible. Hiding any material information about the company and their backgrounds are never a good idea, and transparency is going to be more crucial in a post-pandemic world where the economic climate is still volatile and unstable.

“Founders also need to remember that integrity is vital in the startup journey. TRIVE has rejected startups before after receiving negative feedback on the founders from external sources,” Quek shared. 

Speaking on key areas that businesses need to focus more on in the new normal, Joe Zhang of TNB Aura, Singapore-based VC company focused on tech startups, shared, “A lot of investors are now looking at unit economics and profitability more extensively, so that is crucial. Founders also need to address the “elephant in the room” as in have a few COVID points in the pitch — how did they adjust, how did they transform the economy of their business, how are they better and safer today? Investors are more inclined towards founders who learnt their lessons, adapted and have come out with a better plan prepping for the post-pandemic world.”

Paolo Limcaoco, the Southeast Asia Investment Officer for Accion Venture Lab, Accion’s seed-stage investment initiative, shared that due diligence is key to making any investment. Amidst the global shift due to the pandemic, Accion Venture Lab has had to shift its ways of doing diligence, moving it mostly digital and remote.

Also read: Meet these 4 founders who are raising millions and redefining the way businesses are done

“Now, when looking to invest, while we look to understand the product-market fit and financial inclusion aspect of the business, as early-stage investors, an integral part of our diligence is evaluating the founders and the rest of the team, making sure that they are thoughtful, mission-aligned, and dedicated. With the pandemic, face-to-face settings are not possible anymore. So, the focus on digital meetups with the team in both formal, as well as informal settings, has become even more crucial for due diligence.” 

Limcaoco further added that while scalability remains important, sustainability has become just as crucial. He believes that highlighting the viability of the business model and operations in the future will be key for founders in the new normal. 

“Investors will want to know how your business was affected, how you survived, and what are the steps you have taken to be a company that will thrive moving forward, so startups need to be prepared to answer these questions,” he said.

One of the most important things startups should do is to research — who the investors are, how their investment portfolio looks, are they a good fit — even before reaching out. And when those questions are answered, it’s best to include that in their pitch or introduction. 

“We are strategic investors and it is very helpful to know how you can or are providing strategic value to the bank even before we start diving in on financial returns,” said Toh. “Do they know how we can help? For example, SC has a strong presence in Asia, Africa and the Middle East and if your future growth market is there, it would be a very strong alignment and we see this with most of the investments we have made.”

Leveraging technology for better due diligence

Startups need to understand that moving forward, there are a few fundamental changes that have reshaped the current climate and will have impacts on the near future as well:

• How businesses communicate has changed. Businesses across Southeast Asia are unable to meet or interact physically and this has made the entire process of due diligence more time consuming and challenging
• VC sentiment has also shifted. VCs have become more cautious of their existing portfolios. They are not as keen to make new investments as before, hence the drop in fundraising across the region in Q2 and Q3; they would rather focus on maintaining existing startup cohorts. 
• The new scope within different sectors. While sectors such as edtech, online entertainment, and eCommerce are thriving, travel, and hospitality are among those that were the worst hit. However, investors are more conservative in general, so not necessarily an increase or decrease in each of these sectors can be seen.
• Initial approach is just the hand that knocks and not a foot through the door. Depending on how prepared you are and how open you are to sharing information, VCs may choose to open the door or keep it shut.
• A structured and well-kept data room is very telling. It speaks volumes about how prepared you are to not only share important information but also to keep the fundraising process going by making it easy for investors to see all the necessary information needed to determine what your long-term growth plans are.

Due diligence is the very foundation of the marriage between startup founders and VCs. An investment is at least a three to five-year-old relationship and it can be very painful to dissolve that relationship if things go wrong. This is what due diligence eliminates — it helps establish trust, transparency, and a two-way communication channel between involved parties. 

Moving forward in the new normal, startups need to understand the changing VC sentiment and be prepared, organised, and ready to share information and documents with potential investors instantly for conducting due diligence and raising funds for business growth and scalability. 

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This article is produced by the e27 team, sponsored by Datasite.

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SOCAR raises US$55M Series B from EastBridge Partners, Sime Darby
Investors are South-Korea-based EastBridge Partners and Malaysian multinational Sime Darby Berhad; The Malaysian car-sharing platform plans to use the funding to support continuous tech enhancements, the introduction of clean mobility initiatives, and further development of its P2P car-sharing marketplace TREVO.

E-commerce firm Blibli to acquire Ranch Market operator in Indonesia
Blibli, which is backed by Indonesian conglomerate Djarum Group, will buy more than 797.8M shares of Supra Boga Lestari; Kusumo Martanto, CEO of Blibli, said in a statement that the acquisition was made to strengthen the company’s ecosystem and accelerate business expansion.

Growthwell Foods raises US$22M Series A to manufacture plant-based meat, seafood for F&B businesses
Investors include PE firm Creadev, GGV Capital, Iris Fund, Temasek and DSG Consumer Partners; The startup plans to use the capital to accelerate its business expansion and product development efforts within Southeast Asia.

Wealthtech startup Ajaib set to be unicorn with DST-led round
The online brokerage platform is understood to be raising over US$100M in its latest funding; It would be the company’s third round in this year alone, including a US$65M in March and a US$25M round in January.

SCB Abacus raises US$12M Series A to accelerate product development, talent acquisition
Backers include Openspace Ventures (lead), Vertex Ventures, and CAI Partners; SCB Abacus is a fintech spin-off in the local banking industry that enables the company to combine “the resources of a leading national bank with the expertise and scale-up experience of international venture capitals.”

Tokopedia CEO defends merger with Gojek to lawmakers
William Tanuwijaya said the merger was never intended to control the domestic market and that people still have abundant choices for similar services offered by both Tokopedia and Gojek; Reuters first reported that Indonesia’s anti-trust agency’s plans to scrutinise the merger to check for potential monopolistic behaviour.

Singapore taps Temasek, EDBI to boost SGX appeal
Gan Kim Yong, minister for trade and industry, revealed four core plans: establishing a co-investment fund, setting up a growth fund for initial public offerings, enhancing the Grant for Equity Market Singapore (GEMS) scheme, and forming a strategic partnership model for SGX.

How Tribecar aims to build business, environmental sustainability with a subscription-based car-sharing model
Tribecar has 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 runs an initiative where new drivers can sign up for this subscription service without paying for an additional New Drivers’ Surcharge during the included free hours.

Ackcio nets US$3M Series A to expand industrial monitoring applications
Investors include Atlas Ventures, Enterprise Singapore, Wavemaker Partners, and Aletra Capital Partners; Ackcio provides cutting-edge, long-range, mesh-based wireless monitoring solutions to industries such as construction, infrastructure, rail, and mining.

Vietnam’s Clevai bags US$2.1M to bolster AI-driven adaptive learning
Investors include Altara Ventures, FEBE Ventures and FJ Labs; Clevai is an AI-enabled, after-school tutoring platform for students from kindergarten to K-12; Its Clevai Math product provides live-streaming classes in mathematics with teachers from the country’s top-tier schools.

Tokyo Stock Exchange-listed Giftee invests in loyalty, rewards platform TADA
The TADA investment marks Giftee’s second investment outside of Japan and is part of its expansion in Southeast Asia; Tokyo Stock Exchange-listed Giftee provides an end-to-end solution, from e-gift issuance to distribution.

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

E-payments continue to drive the Philippine economy post-pandemic
The government aims to increase customer preference for digital payments by converting 50% of total retail payments to digital form and increasing the number of financially included Filipino adults to 70% by onboarding them to the formal financial system via payment or transaction accounts.

Choco Up invests US$630K in Singapore augmented reality startup BuzzAR
BuzzAR provides location-based solutions that allow retail and commerce firms to create personalized AR experiences for their customers; It also offers an AR wayfinder, which uses a point cloud to help users navigate shopping malls and view shop details with their phone cameras.

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Healthcare is all the rage. In 2020, venture funding into health tech companies nearly doubled, reaching a record US$14 billion. In the first quarter of 2021 alone, another US$7.2 billion was poured into the sector globally. For too long, healthcare has been seen as an industry too complex, too manual, too regulated, and too unwieldy for innovation.

As the world moved on to become more productive with the help of tech, globalisation and Moore’s law, healthcare remained analog, local, and inefficient– all of which had driven up the cost of healthcare. 

Then came the year 2020, when a pandemic forced the entire healthcare industry to rethink the many broken and ossified aspects of it– vaccines were made and approved at record speed, data-driven healthcare became a norm, and telehealth utilisation more than quadrupled from figures that had taken over a decade to achieve.

Technology is now seeping through healthcare systems that had revolved around brick-and-mortar facilities– hospitals, research laboratories, and care homes, just to name a few. In this article, we discuss some of the most exciting trends that are set to change everything we know about healthcare. 

Virtual care

When it comes to healthcare, there is (was) no remote working. Earlier use cases of virtual care were largely limited to niche, low acuity services. Thanks to unprecedented regulatory approvals, virtual care has now woven into a much broader set of care models across the entire acuity spectrum such as remote monitoring of blood sugar levels for diabetics, teleconsultation in family medicine, digital triaging at the emergency department, and even remote ward rounds in hospitals.

The implications are massive, as the maturation of virtual care will fundamentally change patient/clinician interactions and redefine healthcare supply/demand dynamics. Competition among clinicians will no longer be local, and home-based care may soon become a norm.

Imagine consulting a physician from the comfort of your home, and have your care team organise care workers, medical supplies, and equipment delivered to your doorsteps. 

Also Read: Pharma entrepreneur Thomas Miklavec shares his journey on expanding his startup across SEA

Data-driven healthcare

Healthcare data has long been kept within the walls of healthcare systems and electronic health record (EHR) providers. Such practices have limited the power of data and encouraged top-down, heuristic decision-making in clinical medicine. The rise of virtual care and the unbundling of healthcare services will force the migration of patient data out of EHRs and into a cloud where all providers can access it.

At-home care, home-diagnostics, virtual care, patient-reported outcomes, remote patient monitoring, genetics, social factors all contribute to a more holistic and longitudinal understanding of patients health, and are infinitely more valuable together than they are apart.

Rich and holistic patient data will in turn lead to higher precision in clinical medicine, faster research for drug development, better underwriting of risk for health payers, and ultimately – better patient outcomes. 

Value-based care

For many, allocating a significant portion of their retirement savings for old age medical treatment is a perfectly reasonable thing to do. As alluded to in my previous paragraphs, healthcare suffers from an intractable cost-disease. Having to spend a quarter of one’s savings for major surgery or millions of dollars for novel oncological therapies is simply unsustainable for both governments and individuals. 

A major driver of ever-increasing healthcare costs is the misalignment of incentives between payers, patients, drugmakers, and providers. As healthcare becomes more transparent, competitive, and tech-driven, it is almost certain that we will usher in an era where patients will pay for therapeutic outcomes (performance) rather than inputs (doses, consultations).

For healthcare systems, value-based care practices will encourage greater focus on improving, rather than attracting patients for more procedures and longer stays.

For patients, novel therapies may come in shorter therapeutic windows at a lower cost. For payers, the benefits of healthier policyholders are all too obvious. 

Bio at the crossroads

The sheer potential of biology in the coming decade probably warrants an article of its own, but we will try to cover as much as possible. 

Like healthcare (among industries), biology has long been seen as a laggard among the sciences. Compared to the many breakthroughs in physics, chemistry, and even computer sciences, much of what researchers do in biology have remained the same since the first major small molecule drug, Aspirin, was discovered in the 1890s.

As biology lacks constants and predictability, such complexities, coupled with a vast number of unknown unknowns, meant that drug discoveries are often highly bespoke and artisanal processes. However, as material sciences and computational power approach a certain level of maturity, they are beginning to allow for the unlocking of biology.

Last year, researchers at London’s Google Deep Mind unveiled the Alpha Fold A.I. system that is capable of accurately predicting up to 99.1 per cent protein folding patterns at speed. The breakthrough was touted by Arthur Levinson, CEO of Genentech, as a ‘once in a generation’ advance in biology.

Also Read: Moving mental health out of Freud’s era and beyond the couch with big data

Alpha Fold demonstrated how computational methods hold the potential to transform life sciences research and speed up drug discovery. A new generation of industrialized biology platforms is now poised to enable ‘plug and play’ medicines, or new therapies that leverage a common foundation and reuse programmable components.

One such example is Moderna, whose technology will have likely a lasting impact on drug discovery timelines.

The time is ripe for us to completely rewrite the playbooks for one of society’s most critical industries that is healthcare. The transformation will take time, but if technology is applied right, we may be able to solve many of healthcare’s problems within the next decade.

As venture investors, the critical task of choosing who and what to fund for the future of healthcare will be paramount. 

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The Singapore government and its sovereign wealth fund Temasek will establish a new co-investment fund, starting with SGD1.5 billion (US$1.1 billion) in the first tranche.

Called Anchor Fund @ 65, this fund will support promising high-growth enterprises and market leaders in their public fundraising in the city-state’s public equity market, whether through primary, secondary, or dual listings.

In addition, it will provide pre-IPO financing to catalyse the growth of target enterprises and support them in their journey towards an eventual public listing.

Also Read: Temasek, DBS team up to launch growth US$500M debt financing platform for Asia’s tech startups

65 Equity Partners, a wholly-owned investment platform of Temasek, will manage the fund commercially. In addition to anchoring the investee enterprises’ public listings, Anchor Fund @ 65 aims to drive good corporate governance and facilitate shareholder value creation.

Additionally, EDBI, the investment arm of the Singapore Economic Development Board, intends to establish a new Growth IPO Fund to invest in later-stage enterprises, typically at two or more funding rounds away from a public listing.

Through this fund, EDBI will partner with companies to grow their operations in Singapore and work towards an eventual public listing in Singapore.

Starting with a size of up to SGD500 million (US$370 million), this fund will bridge the gap between EDBI’s typical growth-stage investments and the investments of the Anchor Fund @ 65, strengthening end-to-end access to financing for companies in the Singapore ecosystem.

Lastly, the Monetary Authority of Singapore (MAS) said that it would enhance the Enhanced Grant for Equity Markets Singapore (GEMS) scheme to expand the scope of support for the Listing grant and Research Talent Development grant.

The GEMS scheme, introduced in February 2019, aims to strengthen Singapore’s equity capital market through a Listing grant, a Research Talent Development grant, and a Research Initiatives grant.

The Listing grant helps issuers defray some of their listing costs. At the same time, the Research Talent Development grant aims to groom equity research talent through the co-funding of hiring expenses and enrich research coverage of Singapore-listed companies.

Also Read: SGX, Temasek team up to advance digital asset infrastructure in capital markets

On the other hand, the Research Initiatives grant intends to support crowd-sourced initiatives to propel the development of Singapore’s equity research ecosystem.

Last month, Banking major DBS and Temasek signed an agreement to jointly launch EvolutionX Debt Capital, a US$500-million development-stage debt financing platform. Based in Singapore, EvolutionX aims to accelerate growth and nurture the next generation of technology leaders.

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Image Credit: Temasek.

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Have you ever woken up and seen an email saying your personal data got hacked? I bet that’s happened to you too and, sadly, there’s nothing we can do about it … yet. I definitely don’t want my special meal data out on the dark web. Sigh.

This post aims to shed light on the problem with the internet today and how blockchain technology is redefining web 3.0.

A brief history of the internet

Do you know what the internet is? If not, I highly recommend this short video by Vox. 

In short, whenever you type a URL into the web browser (let’s say www.nattariya.com), the web translates that data into bits (a string of zeros and ones) and transmits your query to open that website to your wi-fi router in radio waves.

The router then picks up the signal and sends the query to the Domain Name System (DNS) to look up where www.nattariya.com is hosted so that they can fetch the data on that website and show it on your laptop. 

Also Read: Why Malaysia is quickly becoming a cybersecurity hub for the rest of the world

If the data is hosted in another part of the world, the Internet Service Provider (ISP) will route your query over internet cables (yes, actual cables that go underwater) to get that data from the server somewhere in the world.

Once the data is fetched, it will return the data to the ISP, and the ISP will send it to your laptop the same way. And, all of this happens in split seconds.

The problems with the internet today: State and security

In truth, your data is not stored on ‘the cloud’, but rather at data servers somewhere, and that data is owned by the applications you’re using, rather than you.

Typically, the applications would use data servers offered by ISP or some big tech companies, such as Google, Microsoft, and Amazon. Big names promise big trust that they will be able to store and guard our data safely. 

This leads to a major problem with the internet today: you have to trust that the applications and companies you’re dealing with will be able to safeguard your private data and, more importantly, trust that they will not sell your data to the wrong people. 

The reason why the internet has this problem today is because of two things:

The internet is a stateless protocol

It doesn’t know who owns what and who sends what to whom. The family of protocols that the internet is built on, such as TCP/IP for data transmission, SMTP for the transmission of emails, or HTTP for the transmission of Hypertext, regulates data transmission, but not how data is ‘stored’. 

As a result, applications such as Facebook, Youtube, and Google are built on top of the protocols to store and manage data.

Therefore, these applications record and manage the ‘state’ and hold valuable user data. This is why selling user data to advertisers is the most common business model for Web 2.0. 

The internet was not designed with ‘security in mind

It was designed for transaction speed. Because data is stored and managed by centralised applications, the data on these servers is protected by firewalls, and system administrators are needed to manage these servers and their firewalls.

Trying to manipulate data on a server resembles breaking into a house, where a fence and an alarm system provide security. If you know how to jump the fence and break the alarm, you can get the data easily. 

The lack of security is an issue, as reflected by ransomware and data leaks.

AT&T lost the private data of 70 million users, Bangkok Airways faced a breach that took customers’ data, including passport numbers. We have come to accept those limitations as part of our lives and can’t do anything about them. 

How does blockchain fix the ‘state’ and ‘security’ problems in Web 3.0?

The internet, or what we typically call Web 2.0, stores data on a client-server model. The data that you store or query is stored on a server owned by a centralised entity somewhere. Blockchain allows ‘state’ to be recorded and stored in a decentralised way.

Also Read: Practical tips to protect your business from cyberattacks

Applications built on the blockchain will be able to utilise this ‘shared data layer’, which means that applications can no longer own or monetise user data. It also gives us availability, integrity and authenticity guarantee: we can always access data, and no one can change it.

On the other hand, encryption technology enables data ownership as it allows data to be transferred securely. For example, if A sends bitcoin to B.

Only B will be able to access the bitcoin because he has a private key. This concept of sending and receiving value on the internet was impossible because we lacked a worldwide ledger system (a.k.a. blockchains).

The recent breakthroughs in blockchain and encryption technology combined make it possible to transfer and store data differently. 

For the first time in history, we have the ability to add ‘secure properties’ to the internet. If you want to steal data, you would need to break into multiple houses around the globe simultaneously, which each have their own fence and alarm system, to breach them.

Web 3.0 is essentially a new way for individuals to use the Internet without giving up their privacy and valuable data. 

Can we use blockchain today?

The most important challenge in blockchain today is scalability. Contrary to traditional computers, the capacity of blockchains does not grow with demand. When you’re buying a new laptop, you’re adding to the worldwide compute capacity.

When running a blockchain node, you’re not increasing the network capacity. This is a major issue. Compared to a laptop, Ethereum’s performance is only 10 Kilohertz, whereas your laptop can process as fast as 3-4 Gigahertz.

For perspective, 1 GHz = 1000000 kHz. That’s right, your laptop is hundreds of thousands of times more powerful than Ethereum and makes Ethereum look like a nice little calculator. 

What use cases are suitable for blockchain technology?

Since blockchain, coupled with recent encryption and cryptography breakthroughs such as homomorphic encryption and zero-knowledge proofs, gives us secure computing, it makes sense to use it for use cases that require high integrity and security, e.g. financial services, first. In the future, once the technology scales, why not use the internet that comes with security guarantees for every transaction?

In 20 years, we’re going to expect everything to be secured. We’ll see those niche use cases expand as the network scales. The security-enabled by these new technologies will likely extend all the way to the hardware level. 

Also Read: How should SMEs and startups prepare to handle a ransomware attack?

You might not be using an iPhone but instead, a ‘secure phone where your information remains yours.

How do you interact with web 3.0?

In Web 2.0, Windows or iOS is a way to interact with programs developed by third-party applications. You install an app, visit a website, or install software and things happen on your device.

In Web 3.0, the model is flipped on its head. Instead of many devices executing many software instances, the network itself operates a single and secure instance of an application.

Today, the most common way to interact with secure computers is through sending and receiving tokens, and the standard of interaction is ERC-20. So start trying out Web 3.0 today by downloading Metamask and sending tokens from your exchange wallet to Metamask wallet.  

Welcome to the age of Web 3.0!

This post first appeared on www.nattariya.com and was inspired by a chat with Guillaume Le Saint of Atato on the Asian Fintech Podcast.

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Dagangan, a social e-commerce platform that supplies fast-moving consumer goods (FMCG) to underserved rural communities in Indonesia, has secured US$11.5 million in Series A funding led by Monk’s Hill Ventures.

MMS Group, K3 Ventures, Spiral Ventures, and PnP also participated.

Dagangan will use the new capital to grow its in-house white-label products such as frozen foods, groceries and homeware appliances.

A portion of the money will be used to expand its digital product features such as pay later, logistics pick-up and delivery, talent acquisition. Dagangan will also grow partnerships with community leaders, key opinion leaders, local entrepreneurs, and village chiefs.

In addition, Dagangan plans to expand its footprint in tier-3 cities and tier-4 villages, including Java, Sumatra, and Kalimantan.

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

The new round comes about three months after Dagangan bagged an undisclosed amount of pre-series A funding from CyberAgent Capital, Spiral Ventures, 500 Startups, and Bluebird Group.

Founded in 2019 by Ryan Manafe and Wilson Yanaprasetya, Dagangan supplies FMCG through its Android app and partnerships with community leaders. It uses a tech-enabled hub-and-spoke approach to reach out to key opinion leaders (KOLs) in a new market. For example, village chiefs, microentrepreneurs, or community heads in critical areas.

After establishing these key relationships, Dagangan will work with the supply chain, including FMCG producers and wholesalers or warung owners (shop owners), to deliver group orders cultivated by the KOL to consumers within 24 hours.

The group orders are placed on the company’s app. Dagangan also produces its private-labelled products such as groceries through its partnerships with local farmers.

To remove the need for multiple distribution layers and create a more efficient supply chain, Dagangan also enables direct product delivery from manufacturers or farmers to users.

Its group-buying model aggregates demand based on location, enabling users to make a joint purchase with other buyers, assisted by agents who will facilitate the end-to-end user experience.

To date, Dagangan has covered more than 5,000 villages in over 50 regencies. It has also distributed over 20 local products from smaller farmers and distributors to a broader market.

It distributes more than 20 private-labelled products, such as rice, brown sugar, and snacks items. Today, Dagangan has more than 20,000 active users that manage over 3,000 SKUs.

“Supplying basic daily necessities to rural communities in Indonesia continues to be one of the most complex problems to solve with existing inefficient supply chains and logistics networks. Dagangan’s hub-and-spoke model has shown impressive traction and an early proven track record that is impacting communities,” said Peng T. Ong, co-founder and managing partner of Monk’s Hill Ventures.

Super, another social commerce platform serving rural Indonesia, recently attracted a US$28 million oversubscribed Series B round led by SoftBank Ventures Asia.

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Image Credit: Dagangan

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The COVID-19 pandemic has pushed e-commerce technology ahead by two years and driven a revolution in how people pay for things.

According to the Mastercard New Payments Index, 94 per cent of consumers in the Asia Pacific region say they’ll consider using at least one emerging payment technology in the next year.

Nowhere is the shift toward emerging payment trends truer than in this region, where 88 per cent of people surveyed said they used at least one new emerging payment type in the last year.

Among that group, two-thirds (64 per cent) said they tried a new payment method they would not have tried were it not for the pandemic.

The findings from the Mastercard New Payments Index make clear that consumers want contactless simplicity with an easy interface.

For many, that’s meant adopting QR codes. In the Asia Pacific region, QR codes have gained solid traction compared to the rest.

Of those who used QR codes for payment, 63 per cent said they used them more frequently in the last year than they had in the past. According to the new research, the number is 64 per cent, above the global average of 56 per cent in both Thailand and India.

Furthermore, majorities of respondents perceive new payment methods like QR codes to be cleaner (76 per cent) and more convenient (71 per cent) for in-person payments.

Also Read: Here’re the most-used digital payments across APAC in Mar-Apr 2020

QR (short for Quick Response) technology isn’t new– the codes were invented in 1994 in Japan to help manufacturers track parts on automobile assembly lines– but smartphones are what have driven them into widespread use.

It’s now easy to scan a code and be directed to a payment, advertising or other gateways online. The technology feels simple and safe as it doesn’t require fishing for one’s wallet or providing personally-identifying information.

As a result, use cases within and beyond payments are proliferating. Fintech in China, India and other countries have expanded the use of QR codes for peer-to-peer money transfers and as a way for smaller merchants, who traditionally accepted cash largely, to use more digital payments.

Larger payments technology companies like Mastercard have created QR codes that offer global interoperability, increasing their accessibility as a way to pay.

Adjacent to payments, the technology has become useful for many purposes ranging from contact tracing for COVID-19 (as it’s used here in Singapore) to pay for taxi fares to directing diners to online menus at restaurants.

Small codes make a big difference for small businesses

But for many micro and small merchants (MSMEs) in these and other markets in the region, there are still pain points hindering their technology adoption.

Many of these businesses rely on home deliveries and transient storefronts to run their businesses.

Without counters with room to display a QR code, or POS machines that issue paper receipts, providing a QR code to customers to receive payments requires a merchant to print it out and carry it around on a flimsy piece of paper or to display it on a smartphone screen (which not everyone has).

To address this market segment, we recently introduced a Mastercard QR on Card solution in India – called ConQR – in partnership with BOB Financial Solutions Limited (BFSL).

This patented technology combines the convenience of paying with a credit or debit card and the ease of receiving payments via a QR code in one payments instrument.

Also Read: Telling the fortune of digital payments in 2021, CNY style

The innovation creates a portable and safe way for MSMEs to both pay and be paid, does not require a smartphone for them to use, and is an easy and cost-effective digital payments solution that can help them grow their businesses and establish a credit history.

Technology solutions like these will help small merchants better prepare for post-pandemic life because, quite simply, consumers now value businesses that offer more touchless payment options.

As Mastercard’s Index revealed, 74 per cent of consumers in APAC said they would shop at small businesses more frequently if they offered more payment options.

This shows that customers like paying with emerging payment methods like QR codes. They also expect businesses to provide these options and reward those that do with their loyalty.

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CoderSchool, a Vietnamese startup providing online coding courses, has secured US$2.6 million in pre-Series A funding led by Monk’s Hill Ventures.

Returning investors Iterative, XA Network and iSeed Ventures also joined.

The funding will be used to create more educational content and technology infrastructure for CoderSchool’s technical education programmes. It also plans to hire an additional 35 instructional staffers by Q4 2022 to support online operations.

Founded in 2015 by Charles Lee (CEO) and Harley Trung, CoderSchool offers full-stack web development, machine learning, and data science courses to Vietnamese. In 2020, it switched to online mode. It claims to record 100 per cent quarter-over-quarter growth in fully online enrollments since then.

Also read: Rocket Academy rakes in US$1.1M to tackle global software engineer shortage

“We’re obsessed with creating an exceptional remote-first learning experience with better results, for more people, at a lower cost,” said CEO Lee. “Coding is the future. At CoderSchool, we believe everyone in Southeast Asia deserves a chance to be part of that future. “

CoderSchool’s centralised platform employs data analytics to manage classrooms at scale and improve individual student performance. It also enables software to automate tedious day-to-day teaching operations, including student progress tracking, submission grading, class attendance, and course personalisation.

The startup guarantees job placement for students through its assistance in counselling, mock interviews, mentor introductions and workshops with technical experts. 

CoderSchool boasts that over 80 per cent of its full-time graduates landed a job within six months of graduation at leading local and global tech companies such as Momo, Tiki, Shopee, Microsoft and FPT Software.

“The need for strong engineers and developers in Southeast Asia has never been as pertinent as it is today with the growth of tech companies and digital businesses,” said Michele Daoud, partner at Monk’s Hill Ventures. 

To date, CoderSchool claims to have clocked over 2,000 alumni and recorded a tripling number of enrolled students.

According to a report of Vietnam’s IT recruitment platform TopDev, Vietnam is currently short of 500,000 IT personnel, especially high-skilled engineers. Meanwhile, only around 5,000 IT students graduate annually from universities, of which the training programmes do not fully meet businesses’ requirements.

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Image credit: CoderSchool

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Indonesia’s leading insurtech startup, Fuse, has extended its Series B financing round by raising capital from a clutch of investors, including eWTP Technology and Investment Fund, CE Innovation Capital, and Saratoga.

This tranche comes just over a month after Fuse announced the closing of the Series B round led by GGV Capital, with participation from returning investors, including East Ventures (growth fund), SMDV, Golden Gate Ventures, Heyokha Brothers, and Emtek. According to a Deal Street Asia report of June, Fuse raised US$30 million in that round.

The company will use the new funds for further expansion in Southeast Asia.

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

“As a leading insurtech player in Indonesia, Fuse has a unique value proposition that empowers traditional sales channels by connecting numerous and scattered insurers with a large agent network, providing agents/brokers with a comprehensive lineup of insurance products. In addition, Fuse has demonstrated an ability to leverage new and innovative insurance products from other countries to create a distinct competitive advantage,” said Jiang Dawei, Partner and CFO of eWTP.

Fuse was established in 2017 by industry veterans Andy Yeung and Ivan Sunandar to solve Indonesia’s last-mile trust gap in the insurance industry (97 per cent of Indonesians are underinsured for lack of trust in the current system). The startup has adopted an agent-focused model.

With over 60,000 agent partners on its platform, Fuse claims it offers instant closing and rapid claims processing. Its total gross written premium (GWP) exceeded US$50 million (IDR 720 billion) in 2020.

It has partnerships with more than 30 insurance companies and 300 insurance products on the platform. It covers everything, from employee benefits to digital insurance embedded in e-commerce platforms.

In 2018, it supported Tokopedia in launching its first transactional top-up micro-insurance product.

In October 2019, Fuse secured “a couple of million USD” in Series A round from investors, including EV Growth.

Also Read: Fuse raises Series A funding from EV Growth, to multiply presence across country

“Fuse seeks to address the trust concerns of 97 per cent of Indonesians who are still uninsured. We believe Fuse is on the right track to scale up the business in the long run. Given the relatively low penetration of insurance products in the country, promising population growth prospect, and the increasing demand from customers post the pandemic, we have full confidence in Fuse’s next phase of growth,” said Xiaolin Zheng, Partner of CEIC.

eWTP, an Alibaba-backed fund based in China, aims to tap startup opportunities in emerging markets. The US$600-million fund was set up in 2018 and has investments in India, Vietnam, and Thailand. Fuse is eWTP’s first foray into Indonesia.

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Image Credit: Fuse

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Global accelerator-cum-venture fund 500 Startups announced today it has rebranded as 500 Global, following the closing of a US$140 million global flagship fund.

This marks 500 Global’s largest fund to date, bringing its total assets under management to US$1.8 billion.

Under this new fund, 500 Global will expand its investment strategy beyond the accelerator and seed-stage to the later stages of a company’s growth. It also offers later stage co-investment opportunities to limited partners to expand its investment strategy.  

Founded in Silicon Valley 11 years ago, 500 Global invests in early-stage startup founders building fast-growing technology companies. The firm’s sectors of interest include markets where technology, innovation, and capital can unlock long-term value and drive economic growth.

According to a press statement, 500 Global has invested in 33 startups, which have attained unicorn status with valuations above US$1 billion. More than 120 startups in its portfolio are valued at over US$100 million. 

Also read: 500 Startups, Enterprise Singapore launch programme for emerging entrepreneurs to build startups from scratch

Some of its prominent portfolio companies are Talkdesk, Canva, Grab, Shippo, and more. It also joins pre-seed to IPO round of e-commerce startup Bukalapak, which has just enjoyed Indonesia’s biggest-ever listing in August.  

“As venture capital continues to globalise and the percentage of unicorns from outside the US increases further, 500 Global has deep expertise and a strong track record of investing in markets around the world,” said Christine Tsai, CEO and founding partner of 500 Global.

The firm boasts a network of 6,000 founders representing more than 2,500 companies across 77 countries. 

Not only does it have a presence in Silicon Valley, but 500 Global has also broadened its activities in Latin America and East Asia in 2011, the Middle East in 2012, Africa in 2013, and Southeast Asia in 2014. Last month, 500 Startups has rebranded its Southeast Asia fund from 500 Durians to 500 Southeast Asia.

According to Refinitiv data, buoyed by the pandemic-induced digital transformation across the world, global VC funds have invested record-breaking US$268.7 billion so far in 2021, exceeding their total investments of US$251.2 billion a year earlier.

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Image credit: 500 Global

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