Singapore is well known for having one of Southeast Asia’s most attractive startup ecosystems. Its flexibility in foreign ownership and low tax rates make Singapore an accessible location for investors.

Within the third quarter of 2021, Singapore startups raised SG$11.2 billion, and just in the fourth quarter of 2021, two of Singapore’s most popular startups, Carousell and Ninja Van, attained unicorn status.

Of the fifteen Singaporean startups that have attained unicorn status over the years, two of them, Trax and Acronis, are Software-as-a-Service (SaaS) companies.

Trax, a retail analytics company, founded as recently as 2010, attained unicorn status in May of 2019 and is valued atUS$2 billion in 2021. Meanwhile, Acronis, a cybersecurity vendor, which was founded in 2003, attained its unicorn status in September 2019 and is valued at over US$2.5 billion in 2021.

SaaS companies have proven an attractive investment. This is due to its business model, which allows SaaS companies to own recurring revenue. On top of that, they offer predictable revenue, have a lower barrier of entry for their clients, and scale quickly.

The range of products made available by SaaS companies has also made investing in them very profitable, leading to many venture capitalists actively investing in SaaS startups. According to Growthlist, the top VCs in the world investing in SaaS startups are sure of the massive potential that SaaS has.

Basic framework for evaluating SaaS companies

Software-as-a-service (SaaS) companies operate with a distinct business model. SaaS companies spend an upfront marketing cost (also known as customer acquisition cost) to generate prospects.

Upon signing up, the customer will pay a subscription fee (usually on a monthly basis) to use the software product. With continued satisfaction with the platform, the customer will renew their contract or purchase additional software features. If the platform is unsatisfactory, the customer leaves or churns from the platform.

This business model gives SaaS companies certainty over their revenue as they can expect a certain group of customers to continue paying for their subscription over the contract time. SaaS companies typically measure monthly recurring revenue (MRR) as their key metrics.

With an understanding of a SaaS company’s business model, how would investors evaluate the attractiveness of different SaaS companies? What are the key metrics that SaaS founders should note to prove their business’ viability?

Also Read: How can you build a living, thriving community around your SaaS product?

This article will explore an investment evaluation framework that acts as a guideline that investors follow when evaluating SaaS companies.

Does the company provide a valuable service to its customers?

Investors first evaluate if the SaaS provides services well received in the market.

Four key metrics that investors pay attention to are:

• Monthly recurring revenue/annual run rate
• Renewals
• Churn
• Non-financial metrics such as net promoter score (NPS) and user engagement score

Monthly recurring revenue is the total revenue generated from all active subscriptions within the month. This metric is important as it helps to predict incoming monthly cash flows.

Annual run rate (also known as revenue run rate or sales run rate) is a method of forecasting future revenue over a more extended time period (often one year) using previously generated revenue.

Run rate assumes that current recurring revenue will continue and uses that information to forecast a company’s annualized recurring revenue’s future performance. The annual run rate can be calculated as monthly recurring revenue multiplied by twelve times.

The renewal allows investors to gauge the number of repeat customers or sales upon contract expiration. It also indicates if the SaaS company fulfils users’ needs compared to its competitors. This is because users would already have done a comparison before renewing their contract upon expiration.

Churn measures the number of customers or amount of sales that have been lost. A SaaS company with a high churn rate indicates the company’s inability to meet users’ needs, and it could work on improving its products/services.

A net promoter score (NPS) measures how likely customers will recommend the product, which will lead to future sales. User engagement score measures the number of time users spends on their platform, indicating future churn or renewals.

Is the business model sustainable?

When evaluating SaaS companies, traditional GAAP accounting is not useful due to its revenue nature.

With most SaaS companies, acquisition (CAC) costs such as sales and marketing and other operating expenses are expensed upfront, but revenues are recognized evenly over time.

Investors assess the sustainability of the SaaS companies using:

• Gross profit margin
• EBITDA before sales & marketing cost
• The” Rule of 40”

The gross profit margin is indicative of the cost to serve customers. The lower the margin, the less scalable the SaaS company would be.

EBITDA pre-sales & marketing cost (operating profit, including R&D, spent, with depreciation, amortization and sales and marketing costs added back) measures underlying profitability if investment in growth is halted.

The “rule of 40” accommodates a loss-making business if growth is fast enough and a slowing business if profitability is large enough. The general rule is that Revenue growth rate + EBITDA margin should be greater than 40 per cent.

Is there a product/market fit in an attractive market?

Investors use three key metrics to evaluate if the products/services of SaaS companies have product/market fit in an attractive market.

The following three key metrics are:

• Growth
• Average selling price (ASP) trend
• Market size

Investors would measure the growth of a SaaS company by looking into its booking growth, which measures the value of the contract signed and is indicative of future revenue.

In addition, investors would also measure MRR growth, which measures the level of recurring revenue over a month, and churn rate to evaluate the growth of the SaaS company.

ASP trend helps investors evaluate if there is an attractive market or not. A low ASP cannot support long sale cycles or the high cost of acquiring customers (CAC).

Also Read: What metrics to monitor as a B2B SaaS company?

High ASP indicates greater marketing effort, beyond inbound marketing, is required to win customers. Increasing ASP indicates that customers are more willing to pay for services, meaning an improving quality of service.

Investors pay attention to the total addressable market by using market size as a product/market fit metric. The total addressable market must be large to support long term scalability potential, and the market should also be expanding to accelerate SaaS companies’ prospects further.

Can the company scale profitability?

Investors take on a holistic view of the company, considering both qualitative and quantitative factors when gauging if a SaaS company can scale profitability or not.

First, investors would understand the deployment model and sales efficiency and margin to get insight into the business’s scalability, viability, and efficiency.

Second, investors would understand the Go to Market (GTM) strategy. An effective GTM strategy is highly significant given the profitability of delivering a standardized software service.

The acquisition cost should also be compared against the customer lifetime value (LTV) to gauge how effective the marketing spend is. LTV measures the amount of profits that a customer will generate over their expected period of usage of the software.

In general, for every dollar incurred in acquiring the customer, lifetime value should be three times or higher for a business to scale profitably.

What is the company worth?

Determining the valuation of a SaaS company is ultimately the most important decision for investors. Using the framework mentioned above, investors could solely focus on the quantitative metrics or both quantitative and qualitative metrics in determining the valuation of a SaaS company.

Putting all these factors together will help ascertain the fair valuation multiple of the SaaS company.

This article is co-authored by Charles Phan (Project Lead) and Darrell Su (Senior Analyst), Capital Advisory at Paloe.

–

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

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image Credit: metamorworks

The post How do investors evaluate SaaS companies? appeared first on e27.

Technology today goes a long way towards humanising the insurance industry. Insurtech has been a catalyst for growth for the sector, but arguably even more so since the pandemic’s start. Traditional insurance companies have been forced to reach out to customers by alternative means with restrictions and lockdowns.

As with every other industry, the insurance sector is becoming more technologically advanced to meet growing customer expectations. Competitive market pressures also increasingly challenge the industry to innovate its processes or be left behind.

Despite much market volatility, which has disrupted industries worldwide, the digital insurance market has rapidly grown, giving rise to insurtechs. Tech-first insurance companies are revolutionising the industry with innovative offerings that deliver simplified, fast-paced, and affordable insurance for the masses.

In 2022 and beyond, let’s look at some of the key trends paving the way towards insurance 2.0.

Big data in product development

Over the past few years, consumers have become more digitally savvy. This has resulted in an increasing preference for innovative insurance products delivered in a seamless and digital-first way.

We have also seen the emergence of technological advancements and shifts that are reshaping products. Insurers are now starting to put customers at the heart of everything they do, leveraging big data and underwriting innovation to understand what products need to be improved and determine the correct pricing to develop on-demand and value-for-money insurance policies that truly cater to their needs.

Also Read: Insurance 4.0: Harness your data reservoir for genuine impact

For example, micro-life insurance and in-patient products offer individuals tailored coverage at lower values starting from 8,000 rupiahs (US$0.56) per month.

Delivering delightful customer experiences through personalisation

While “insurance” and “love” might not be commonly used together, changing the public’s perception and making insurance delightful is important for the new generation.

A key part of customer-centricity is personalised services. With customers wanting to feel special and not just another face in the crowd, personalisation is the best way to achieve that.

Incorporating chatbot AI systems can help personalise the customer service side of insurance. The use of machine learning enables the chatbot to identify ways to personalise the conversation, making it feel natural and, at the same time, accurately answering customers’ queries.

Rise of AI-powered claims processing

Lesser human intervention is involved in manual processes like automation, and AI solutions roll out across every domain in the industry and join forces with front-end customer experience technologies to increase efficiency and deliver higher customer satisfaction.

Despite this, many traditional insurers are still spending disproportionate time manually handling their claims processes.

Insurers today will need to leap utilising AI and advanced algorithms to simplify claims processes and spot “red flags” in fraudulent claims, to effectively increase efficiency and accuracy.

From the moment a customer opens an insurance claim, AI technology can streamline the administrative process through automation, processing claims in an average of just 18 seconds.

Collaborations to fill gaps and expand market reach

Generally, the insurance process is complex, time-consuming and lacks transparency.

With the increasing competitive challenges to attract and retain customers, insurers will need to develop and use a broader distribution ecosystem that engages customers when and how they want and meet them at their point of need.

Through a multi-channel strategy, they must create an ecosystem of connected channels, using a range of digital capabilities to connect with customers.

Insurtechs with new and innovative products are blowing their traditional counterparts out of the way by leveraging partnerships and ecosystems across many different areas of the distribution spectrum.

Also Read: Regional insurtech Igloo’s AI-driven capabilities drive customised products and seamless customer experience

We are also starting to see partnerships form within the industry with insurers leveraging new marketplaces to expand reach and companies including Gojek, Shopee, and Xiaomi becoming channels for insurance.

Together, the partnerships represent a powerful distribution ecosystem that places insurance products directly in the path of customers’ life journey events, where relevant and needed.

Greater focus on increasing financial literacy for the community

The global pandemic has heightened awareness of the importance of insurance protection.

In particular, it has drawn attention to the predicament of large uninsured and under-insured populations, especially in emerging markets within Asia, where a lack of financial literacy and mistrust of financial institutions hinders greater insurance penetration. However, it is precisely in countries like Indonesia where insurance can make a difference in the lives of everyday people.

With the widening protection gaps, insurtechs are leading the charge in making insurance more accessible and affordable for all through microinsurance policies that are low in cost and efficient in administration.

From mobile-based insurance apps to remote services via AI-powered digital assistants, insurtechs are improving their outreach to customers in rural locations and offering advice on insurance through digital channels.

In a world of digital transformation, leveraging emerging technologies and data sources to drive efficiency and expand capabilities may be the thing to enhance the customers’ experiences.

Insurers and insurtech firms must continue focusing on accelerating their digital journey, streamlining processes through automation and providing customised services are needed to remain relevant in the long run.

Insurance can be delightful, and we want to bring the words “insurance” and “love” closer together.

–

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

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image Credit: studioroman via Canva Pro

The post The power of insurtech: Reshaping the insurance industry in 2022 appeared first on e27.

With a growth of 49 per cent YoY in their GMV in 2020, the potential of e-commerce in Indonesia has become one of the most talked-about by many people.

A study by Google-Temasek reported that the GMV of e-commerce in Indonesia is predicted to grow at a CAGR of 37 per cent from 2020 to 2025 to reach a GMV of US$146 billion in 2025.

However, despite the high growth potential predicted by many analysts, several concerns might inhibit e-commerce in Indonesia from reaching its full potential. One of which is the high unpenetrated population in non-tier-one cities in Indonesia.

Reports from KataData and Kredivo in 2020 stated that two-thirds of the total e-commerce transactions in Indonesia are coming from tier-one cities in Indonesia, which only account for 13.85 per cent of the total population.

Whereas a report from Alpha JWC Ventures and Kearney stated that in the next five years, there will be two to three potential unicorns from e-commerce, lending, and SME services that will emerge on the back of the growth of tier-two and -three cities.

This fact indeed leads to a big question on why it’s even possible and what leads to such a huge gap. The low participation of lower-tier customers in Indonesia is not strange, given the unequal adoption of technology and digital literacy between urban and rural cities in Indonesia.

Nielsen, Kearney’s analysis even stated that more than 80 per cent of the population in the non-metropolitan areas are considered laggards when it comes to adopting technology. This figure contrasts with tier-one cities where the percentage is just under 20 per cent.

The high internet penetration rate in Indonesia, which is 73.7 per cent, does not necessarily change customers’ behaviour in Indonesia easily. Therefore, those unpenetrated customers play an important role in determining Indonesian e-commerce success.

Lately, we have seen many startups target lower-tier customers with an approach to empower offline sellers and local communities that already exist. This certainly indicates that community trust and the word-of-mouth advertisement method are still the most effective in determining customer buying decisions in those regions.

For example, startups such as Mitra Bukalapak and GrabKios are trying to digitise local mom-and-pop stores, or social commerce players such as Chilibeli, RateS, and KitaBeli that utilise agents in the area to market their products.

The quite striking characteristic difference between the tier-one and non-tier-one customers has become an important foundation for the Indonesian e-commerce giant in finding a way to boost adoption for the unpenetrated customers, mainly from the non-tier-one region.

Also Read: How can you get ahead of the game with e-commerce in the Australian market?

In recent years, e-commerce players in Indonesia have been trying various ways to attract lower-tier customers into e-commerce, such as by building an entertaining platform to boost traffic, trying to maximise word of mouth strategies, and even introducing cash-on-delivery services to the smooth buying process.

Live stream feature to boost engagement and trust

Are we on air? Great!

Hello, everyone watching online; today, we have a lot of great deals for you. All the products today just for 100 NTD sounds great. So make sure you watch the entire live stream today and quickly let us know which products you are interested in in the comment section.

Back in April 2020, I worked as a live-streamer in an online shop selling various products through Facebook live streaming to Indonesian migrant workers in Taiwan.

Before working here, I didn’t understand why a certain type of people would like to spend their time watching long-hour live streaming to buy the products they want if online shopping can be as simple as click and buy.

Later that I know those prospective buyers like it if we as sellers could demonstrate the products we sell, such as using them or showing further details.

More than that, other viewers can sometimes give testimonials about the products. At the same time, we promote these products, so this can encourage potential buyers to be more confident and convinced on buying the products.

Live shopping was initiated back in 2016 by the Chinese e-commerce giant Taobao and slowly began to gain popularity since it mixed the convenience of online shopping with real-time engagement, such as communication between customers and sellers that could boost customers’ trust in purchasing products.

In the last few years, other players such as TikTok, Pinduoduo, and Kuaishou began adopting the same feature.

Contributing to ten per cent of total China e-commerce GMV in 2020, live shopping in China is predicted to grow double in their presentation to total e-commerce GMV in 2022 to become a 28B yuan business, according to HSBC and Qianhai Securities.

E-commerce players in Indonesia began implementing live shopping in 2019, and many use public figures, KOLs, and actresses as talents to generate traffic.

Tokopedia did this in the early days of their live shopping feature, namely the Tokopedia Play. By the time Tokopedia Play was released, they had designed this service exclusively for official sellers. They packaged it as an entertaining platform before opening the service to all sellers as it is today.

Nowadays, the average live streaming audience from the official store at Tokopedia that collaborates with KOL as talent can be watched by around 88,000 people. Tokopedia also stated that the overall live streaming could lead to an increase of up to 262x in-shop visits and drive up to 100 per cent shop’s daily orders.

Then, what is so special about the live shopping feature so it can become a new trend that shakes e-commerce?

Arun Sundararajan, an Indian economist, once mentioned in his book, The Sharing Economy that the explosion of crowd-based capitalism must also be balanced with the ability to build a “digital trust infrastructure”.

In a non-face-to-face setting, building trust involves establishing authenticity and assessing intentions.

Also Read: Are social sellers missing an important piece of the data puzzle?

The introduction of live shopping in e-commerce apps allows customers to assess product authenticity and sellers’ intentions to build trust in online shopping.

The solutions offered in answering doubts about shopping online are the main contributors that could further attract new target customers and boost sales.

In-app TikTok like video sharing feature as promotional content

Short video sharing services with vertical formats have become a new trend among the world community in recent years. Yes, TikTok, as the social media that initiated this feature, has now evolved into one of the social media with the most users in the world.

In Indonesia itself, TikTok is also a very popular platform, with the number of users reaching 92.2 million users. Based on Statista data, TikTok Indonesia’s monthly active users are the second largest globally, with 22.2 million, just behind the United States with 65.9 million.

One of the Indonesian sellers and influencers on TikTok, Natasha Surya, shared tips on how she was able to sell 7617 fur carpets in less than 2 hours through her Tiktok live streaming feature.

Natasha said that a few days before the live, she always made a short video review within 60 seconds of the products that would be sold on live streaming via her Tiktok.

The videos that are made always explain the advantages and disadvantages of the product, the unique selling point of the product, and the amount of discount offered. Natasha argues that this aims to facilitate the decision-making process of prospective buyers.

Seeing the trend of selling using video-sharing as a promotional method is considered quite effective. One of the e-commerce giants, Shopee Indonesia, released the in-app TikTok-like video sharing feature in Q4 2021.

This new feature is intended to help sellers promote their products in the Shopee apps. To optimise this video-sharing feature as an effective promotional tool for attracting potential buyers, Shopee Indonesia even makes the Shopee video section one of the buttons on the main page.

Shopee video also implements a similar concept to TikTok for-your-page (FYP), where users can watch various short videos randomly distributed according to the audience’s preferences.

To attract fans of short video services to switch from TikTok to Shopee video, Shopee does not limit the uploaded content always to be related to promotions and sales. Still, Shopee video encourages various types of video content that are entertainment, like TikTok.

Opening access to everyone by cash-on-delivery feature

Since the cash-on-delivery payment method was adopted by various e-commerce in Indonesia in 2018, this payment method has increased significantly.

The COD method has become the majority of payment methods in Indonesian e-commerce, with 78 per cent of the total payment methods. This percentage is almost four times higher than all digital payment methods combined, such as bank transfers, cards, or digital wallets.

Based on data released by Central Statistics Bureau in 2019, it disproportionately shows that out of the 34 provinces in Indonesia, only the capital city of Jakarta has a preference for digital payment methods (Bank transfer, Card, or digital wallet) higher than 50 per cent.

Meanwhile, the other 33 provinces still rely heavily on the cash-on-delivery payment method. Seeing the cash-on-delivery payment method that is so dominant today, can you imagine what Indonesian e-commerce was like before this payment feature was implemented?

Uniquely, every e-commerce in Indonesia has its strategy for introducing the COD feature in its apps. For example, one of the leading e-commerce in Indonesia, Tokopedia, utilises the COD feature only as a method to gain trust and form shopping habits from new target customers. That is why this feature is only available for use a maximum of six times for each user.

On the other hand, Shopee can be said to be at the forefront of promoting this COD feature by providing a free shipping fee for the first six deliveries and even the lowest service fee compared to its competitors, which is two per cent of the total transaction value for subsequent deliveries and even coverage delivery areas are available throughout Indonesia.

Shopee does various ways to attract new target customers to use this feature. Apart from promoting free shipping, Shopee is also campaigning for the COD payment feature through advertisements on local Indonesian television.

Also Read: Indonesia’s GoTo aims to raise US$1.11B in IPO

Using a jingle from an old Mexican song called “La Cucaracha”, they turned the lyrics into an offer to use the COD feature because it offers free shipping, and we can pay for the products we buy as soon as they arrive in our hands.

The ad also features a well-known senior Indonesian comedian carrying an orange box and singing energetically as he delivers the package to the customer.

With lyrics that are so interesting and simple, Shopee wants to make this advertisement attractive marketing psychology for potential customers to be able to sing along and finally understand the message that Shopee intends to convey.

Making advertisements with unique concepts like this is a mainstay of Shopee in attracting customers’ attention. Of course, we still remember the megastar Cristiano Ronaldo who danced baby shark in one of the Shopee advertisements a few years ago.

Big four e-commerce competition and TikTok as a newcomer with significant advantages

With the four big players controlling 91 per cent of the total e-commerce GMV, it is certainly interesting to see how the strategy of each marketplace in winning the competition becomes the best.

Shopee and Tokopedia are currently considered tier-one, while Lazada and Bukalapak are in the second tier with a large gap.

In terms of monthly active users, it was reported that Tokopedia outperformed all other marketplaces with 129.1 million. However, in terms of their transaction amount (GMV), it can be seen that Shopee slightly outperformed with US$14.2 billion, followed by Tokopedia with US$14 billion.

The data attached above certainly cannot conclude who will be the winner of e-commerce in Indonesia in the next few years. With the market for non-tier-one customers still wide open, the competition becomes very interesting. Anyone who can maximise this potential can certainly be a game-changer who will play a significant role in e-commerce in Indonesia.

Tokopedia play, which uses KOL and influencers as talent in live streaming, has succeeded in attracting customer traffic to enter its apps, as seen from the high monthly active users.

While the effectiveness of the Shopee Video in bringing new customers will also become something interesting to see, considering its efficacy on TikTok in encouraging smoothness in the buying process.

On the other hand, TikTok is also very serious about entering the e-commerce industry. This is evidenced by the introduction of the shopping cart feature and Shopee Seller University, which is a place for TikTok to educate its sellers on how to maximise their TikTok account as a platform for them to sell their products.

Also Read: 2022: Making the year of the tiger a roaring success for payments

The availability of live-streaming and shopping cart features will open up opportunities for TikTok influencers to sell their products directly to buyers. Seeing the number of active TikTok users today, which has reached 92.2 million, is certainly a valuable competitive advantage for TikTok in attracting target customers.

Various strategies implemented by existing e-commerce players in Indonesia to attract unpenetrated customers, the emergence of social commerce startups that focus on tier-two and tier-three, and the participation of social media platforms such as TikTok in enlivening e-commerce in Indonesia make me believe that e-commerce in Indonesia will grow rapidly in the upcoming years.

In terms of market share, I would expect the big four to drop in their dominance percentage due to the many new players entering the market.

On the other hand, the competition will also be tougher, as big players’ features, strategies, and approaches become more and more similar to one another.

Reflecting on the past, the majority of startups in SEA are willing to “burn a lot of money” as their surefire strategy in attracting new users, and in the end, only the one with the most money will survive and excel.

This is certainly a very positive thing from the customer side because shopping at e-commerce becomes easy and close to them.

The opening of COD access to all provinces in Indonesia and the high penetration of social commerce in their area will make customers better off because they have more choices and power to compare prices.

–

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

Join our e27 Telegram group, FB community, or like the e27 Facebook page

Image Credit: Canva Pro

The post How Indonesian e-commerce players are attracting lower-tier customers? appeared first on e27.

Although 21 per cent of the US millennials are actively collecting NFTs, the industry is still struggling to grasp real adoption among the masses. For instance, the process of creating and collecting NFTs is tedious and technical to the average user, let alone understanding the underlying utility. Similarly, there is also a loose link between NFTs and the inherent value they represent. All of these technical hurdles are slowing down mainstream adoption despite the huge potential.

But on the brighter side, new technological advancements in the industry are solving these challenges, bringing an array of novel opportunities. Location-based NFTs are disrupting user experience and utility, making NFTs easier and more ubiquitous to access by all levels of users. Moreover, location-based NFTs add a new layer of scarcity by requiring users to physically go to a specific location, drawing potential on how NFTs can empower new business models.

Location-based NFTs explained

Location-based NFTs, also known as geotagged NFTs or Area NFTs, are a class of digital content, albeit pieces of metadata, that are tagged to real-world locations. These non-fungible tokens secured by smart contracts can represent digital identities of social media profiles, a concert ticket or even an exclusive voucher for a local restaurant. The location part comes in to enable business logic that encapsulates geocoordinates. For instance, in order to access these NFTs, users need to travel or be within the radius of the specified coordinates as in the case of Lost Worlds, a mobile-friendly platform for location-based NFTs.

Making location a key aspect for unlocking NFTs creates a new breed of possibilities in rewarding loyal customers and users. Think about fans who can unlock branded merchandise only when they are present at a live music concert. “Binding NFTs to a real location allows shared experiences to be blended through the interaction of the physical and virtual worlds. By allowing any business to expand their offerings to consumers with unique geotagged NFTs, we see more value behind the utility of NFTs for many sectors including fast-moving consumer goods, retail businesses, restaurants and entertainment,” says Quaison Carter, CEO & Co-Founder at Lost Worlds.

Also Read: Demystifying NFTs and DeFi

Location-based NFTs drive new businesses models

Entrepreneurs are still catching up with how NFTs can help revive their offline businesses, especially after the pandemic’s disruption of consumer behaviour. That’s why 41 per cent of businesses are trying to pivot from offline to online operations, even though most of their revenues are generated from in-store purchases. Fortunately, location-based NFTs can help revive the existing habit of in-store experiences that consumers are almost giving up on and transform into a hobby.

A majority of NFTs making recent headlines are primarily seen as another “profile picture” collection that offers little utility beyond art. But the truth is that NFTs are more than what meets the eye, especially now that geolocation technology is in play. This technology expands shopping experiences to become part of hobbies or turns daily outdoor activities into lasting rewards.

Geolocation NFTs are merging the real world with the metaverse to make Web3 apps accessible to more users. With a typical smartphone and a free Web3 wallet, anyone can start using NFT platforms like Lost Worlds. This empowers brands to engage and connect with consumers in innovative ways that drive content ownership, monetization, and redemption, as well as shared digital experiences with friends and family.

“Besides a fluid user experience, attractive rewards remain a key driver for customer retention and acquisition. With location-based NFTs, businesses can invite users to redeem exclusive rewards only when they physically mint them at select places. This concept will help drive consumers to visit physical stores, unlock redeemable content in the form of NFTs, and in effect drive more revenue for offline retailers,” says Quaison.

Rethinking consumer and brand interactions

Location-based or Geotagged NFTs are just starting. Their practicality opens up many use cases to disrupt all industries, as long as location can be fused into the user engagement model. For instance, the music industry can adopt location-based NFTs to redefine the experience of acquiring, using and interacting with artists and their content. Fans flock to events when they stand a chance to collect exclusive giveaways, as a means to emotionally connect with their favourite celebrities. These giveaways, in the form of NFT merchandise redeemed at select locations, are now reinventing how fans engage with artists.

Similarly, record labels can leverage this technology to stimulate new revenue streams for their artists. By leveraging location-based NFTs and shared experiences, record labels can create digital experiences that directly connect fans to music artists. For example, record labels can host events that bring communities together based on regional or seasonal events. These communities create a ready market for NFT-driven campaigns that upgrade the overall fan-artist experience.

Also Read: NFTs provide new ways to handle IP management, empower content creators: Inmagine CEO Warren Leow

Expanding the potential of NFTs

“One of our goals is to encourage business owners to tap into the full potential of NFTs that bring new engagement models for their end users,” says Quaison. Consumers are already intrigued by NFTs and are more inclined to see how they can spend, redeem, or unlock them as rewards. It’s just a matter of time before NFTs become closely integrated as the new normal.

—

The content was first published by The Human & Machine.

Image Credit: The Human & Machine

The post Disrupting new business and consumer engagement models with location-based NFT technology appeared first on e27.

Indonesia-based fintech startup JULO today announced that it has raised US$80 million in funding from Credit Saison, a Japan-based company that provides digitalised and localised financial services to the underserved market in Southeast Asia and India.

This funding includes a mix of US$30 million equity and US$50 million debt fully funded by Credit Saison.

In a press statement, the companies stated that the investment round was structured to scale JULO’s growth with a two-pronged approach.

The US$30 million equity will be used to advance JULO’s analytics, for product development, marketing, and customer acquisition plans by hiring additional talent across their developer, data scientist and business intelligence teams. Meanwhile, the US$50 million debt will be used to fuel finance loans on the platform.

As the only corporate investor in the startup with a global lending business, Credit Saison stated that it will play an active role in JULO’s hyper-growth phase and provide governance direction as the company scales. Both companies will also explore preliminary opportunities to expand into other emerging markets together.

For Credit Saison, the investment is aimed to accelerate its expansion to the Indonesian market. The investment strategy builds on its existing activities in emerging markets via Saison
Capital, the corporate venture capital arm with a focus on discovering startups with an opportunity to build embedded finance capabilities.

Also Read: The 27 Indonesian startups that have taken the ecosystem to next level this year

“Credit innovation requires a deep understanding of local consumer behaviours and needs in order to truly improve the financial health of all. JULO has emerged from the past few years as a resilient and COVID-19-proven business with more than US$300 million in disbursements under its belt to date. We look forward to joining hands with them in this next phase of growth to accelerate financial products that will drive truly meaningful change for individuals in Southeast Asia,” said Kosuke Mori, Senior Managing Executive Officer and Head of Global Business at Credit Saison.

JULO is one of the earliest in the Indonesian market to offer a virtual credit card service.  In 2021, it launched a digital credit card which claimed to have seen 97 per cent of users utilising non-cash features to top-up e-wallets, top-up phone credits, pay utility bills, and process payments on e-commerce sites.

Previously it raised a US$60 million Series B funding round in February.

Its investors include Skystar Capital, Saratoga Investama, East Ventures, Quona Capital, Central Capital Ventura, MDI Ventures, Gobi Partners and others.

—

Ready to meet new startups to invest in? We have more than hundreds of startups ready to connect with potential investors on our platform. Create or claim your Investor profile today and turn on e27 Connect to receive requests and fundraising information from them.

Image Credit: JULO

The post JULO raises US$80M from Credit Saison to further expand in Indonesia appeared first on e27.