Now that we’re clearly in a recession, many investors are closing the door on blockchain plays for time being. The ‘crypto winter’ we now find ourselves in is largely to blame.

However, I urge investors not to paint with ‘too broad a brush’ in dismissing blockchain-based opportunities. Instead, try to recognise the far broader relevance of blockchain to our future, rather than just looking at it as mere architecture for cryptocurrencies.

In May, one of the market’s largest stablecoins, TerraUSD, lost more than 90 per cent of its value in just one week, despite being touted as a coin that’s “pegged to the US dollar.” This triggered a proper crash and losses of more than US$300 billion for investors across the ecosystem.

At the end of June, Coinbase shares plunged 75 per cent before Goldman Sachs downgraded it to a sell rating.

Reports around that time also indicated that Goldman was looking to raise US$2 billion from investors to buy up distressed assets from troubled crypto lender Celsius. Simultaneously, industry stakeholders discussed a possible deal to see crypto exchange FTX buy out crypto lender BlockFi for pennies on the dollar.

Incidents like the TerraUSD crash are not exactly isolated, with the price of Bitcoin dipping sharply over the past few months. Back in June, its price hovered around US$20,000, 32 per cent lower than the month before and far from the all-time high of US$69,000 in November 2021.

But despite the market’s current doom-and-gloom outlook, blockchain as an agent of change remains key to the world’s digital and financial future. Investors should gather their wits and start shopping now, during this market correction.

Embracing decentralised ledgers

In the context of financial services, blockchain offers a variety of disruptive possibilities. The first and most apparent is bolstered transparency. For nearly every financial service company today, all business activity is built on transactions within a traditional corporate database.

Also Read: Helping crypto native companies navigate turbulent waters

Lots of ink is spilt in the press about ‘what blockchain is’ and ‘how it works.’ If you’re not already in the know, let me sum it up concisely: blockchain tech, while among other things, the foundation of crypto, on a much broader scale, does away with consolidated silos of power by replacing them with decentralised ledgers.

Perhaps the more powerful point is that it enables far frictionless and generally less expensive transactions of all sorts.

Decentralised ledgers are automatic records of transactions maintained across many computers (nodes) that are linked in a peer-to-peer network. For anything to be recorded or executed, a consensus is required across all nodes.

This simple concept is the basis of three global financial revolutions, all taking place at the same time. Apart from crypto, the others are decentralised finance (DeFi) and Web3.

DeFi is a term used to describe peer-to-peer financial services on public blockchains, primarily Ethereum. Web3 is an idea for a new iteration of the internet itself, based on blockchain. Like the other two, it incorporates concepts like decentralisation and token-based economics. We can save explanations of things like NFTs and DAOs for another time.

Another important component of blockchain is lowering transaction costs. The financial services sector is chock full of intermediaries (such as banks) that enter the equation to create trust between transacting parties. Blockchain is a way to create trust without such middlemen.

For example, if you’re a lender seeking to verify the creditworthiness of a potential borrower, running data through a dispersed network of parties on a blockchain for consensus may be more attractive than putting all your eggs into the basket of one credit reporting agency. In such a case, blockchain cuts out the go-between in favour of the crowd and lowers your cost of doing business at scale.

For investors and entrepreneurs alike, these are just a couple of down-to-earth examples of how blockchain can be used to build a better future for everyone.

A rational entrance

Here in Asia, our firm has already begun making in-roads into the global blockchain game by investing in a company called NOBI, one of Asia’s top asset management platforms for crypto assets. The startup helps casual investors who want to diversify their wealth with crypto but don’t exactly know how.

Also Read: Does investing in Bitcoin still make sense?

We believe in this company because it comes with strong fundamentals, addresses a real and long-term demand, and is not dependent on market hype, speculation, or a paper-based valuation.

That said, even with the recent meltdown, at the time of this writing, the total crypto market volume over the last 24 hours was still worth around US$915 billion. Meanwhile, the global crypto market is estimated to surpass US$6.7 trillion by 2025. We believe investors and founders who shy away from it now will lose out in the long run.

If you do have cold feet today, don’t worry. You’re not alone. After all, crypto is volatile. But now is actually an ideal time for investors and founders to venture into the blockchain. Recessions breed rationality.

As a venture capitalist, I look forward to the next few quarters, as blockchain deal prices will be quite reasonable. While formal financial institutions tighten their purse strings, the blockchain ecosystem can leverage opportunities that emerge from this disruption.

Keep in mind that the fluctuating value of crypto is part and parcel of the game itself. Even when prices were at their record highs in 2021, daily price changes across all tokens were not uncommon.

For example, even Bitcoin faced multiple drawdowns before the crash of this year, with six dips of 50 per cent or more from 2012 to 2021. With this in mind, those who can stomach such swings will gain in the long run.

Thesis-driven blockchain in Asia

Ultimately, blockchain is here to stay. We already see clear signs of the crypto market trying to pick itself back up.

For those of us in Southeast Asia, blockchain will continue to transform our financial sector in fundamental ways.

Some countries in the region already recognise the potential of crypto and are willing to welcome it. Singapore, for example, enacted stricter guidelines on cryptocurrency advertisements and passed a bill that provides regulatory frameworks for crypto companies, demonstrating its readiness to adapt to the new financial paradigm.

At the end of the day, smart investors put money on the table shortly after a correction. That time is now. Institutional players should start looking today at Asian venture funds that are thesis-driven on rational blockchain plays.

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Singapore-headquartered Graas today announced that it had raised US$40 million in a Series A funding round led by Galaxy (Kejora-led SPV), Performa (multi-billion European Asset Manager-led SPV), Integra Partners, Yuj Ventures (Xander Group) and AJ Capital.

According to a press statement, some Southeast Asia (SEA) and India’s “best-known angel investors and industry leaders” across deep tech, retail, adtech and private equity have also participated in the round.

In addition to the funding round, the company also announced that it had acquired Indian D2C and data specialist Shoptimize and SEA marketplace specialist SELLinALL. Following the acquisition, the founders of both companies have joined the board of Graas and will continue to be a part of the combined entity.

The funding will also support the expansion into SEA and India.

Graas was founded by serial entrepreneurs and martech veterans Prem Bhatia and Ashwin Puri.

Also Read: Alpha JWC leads Filipino parenting e-commerce startup edamama’s US$20M Series A round

Its proprietary platform integrates previously siloed e-commerce data to reduce operational complexity and enable real-time decision-making. The AI engine helps predict trends and deliver actionable recommendations that span marketplace storefronts, social and conversational commerce, performance marketing, inventory management, warehousing and last mile logistics.

Graas said that it already serves over 250 customers today, and its AI predictive engine processes over 45 million data points every month across more than four million stock-keeping units (SKUs).

The company is run by over 350 employees across 11 offices in seven countries.

“While India and SEA are the fastest growing regions for e-commerce in the world with US$200 billion in GMV, they still account for less than 10 per cent of all retail in the region. There is significant headroom to grow, however, brands are finding it increasingly difficult to manage profitability. Given the increase in number of marketplaces, revenue shares with various platforms, advertising and customer acquisition costs (CAC) and fluctuating warehouse and last mile costs, margins are under threat. Doing business has become more complex and Graas is here to offer the solution,” said Prem Bhatia, Co-Founder & CEO of Graas.

“Graas’ vision is to demolish data silos, increase brands’ speed to market and create a streamlined, informed approach to marketing, inventory and content management – all in one dashboard. Our plugand-play algorithmic solution gives brands the equivalent of an in-house data scientist. As a result, we are already seeing exponential increases in our clients’ growth via our solution and that’s why we have defined a new category for Graas: ‘Growth-as-a-Service’,” added Bhatia.

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As an institutional VC for over a decade and a startup guy before that, I’ve learned a few hard lessons about building companies across economic cycles. Churchill once said, “Never waste a good crisis,” and for startups, a recession is a great time to build.

Necessity is the mother of invention

When I graduated from university in 2003, the US had yet to emerge from the tech winter which followed the dot.com boom and bust. I distinctly recall interning in the tech M&A group of a Silicon Valley investment bank where I came to work one day to learn that all of my colleagues in the private equity team had been dismissed.

We all thought the world was coming to an end. And yet, while many unsustainable Web1 e-comm companies like WebVan and Pets.com went bust, emerging platforms like Google developed defensible technology (e.g. search algorithms) to create business models that could scale profitably, raising substantial funding in a challenging climate.

Many years later, as I graduated from business school in 2010, the world was again reeling from the Great Recession. I spent half my MBA summer interning with a private equity fund where we were buying and levering up sunset assets like newspapers at deep value discounts, and the other half at Microsoft Xbox where cloud gaming was beginning to upend traditional boxed software.

My colleagues and I all wondered when the economy was going to turn back to growth. And yet, while some over-leveraged financial institutions like Lehman Brothers shut their doors, new cloud-based Web2 platforms emerged in digital payments, social media and content delivery to generate tremendous value, startups like Facebook and games-as-a-service pioneer Zynga, which I joined as a PM, staying through their IPO.

Expect the best, prepare for the worst

There is no question that we are now in another tech winter. The Nasdaq lost 25 per cent in YTD June 2022 before bouncing back slightly, and multiples are predicted to compress another 25-30 per cent, suggesting valuations will come down further.

Also Read: How to survive a recession and thrive afterward

Moreover, high inflation is disincentivising savings and investment. Federal funds reached 2.25 per cent in July and is expected to hit three per cent by the end of year, leading to the highest borrowing costs since 2019. Technical recession is two quarters of negative growth, and on a macro basis we are absolutely in the thick of it.

However, startups are all about micro execution bucking macro trends. In addition to the examples above like Google, Facebook and Zynga; here in Asia, Alibaba and Taobao were forged in the midst of the Asian Financial Crisis while Grab and Uber were both founded during the Great Recession.

In the Southeast Asia of 2022, we have the benefit of a young, regional population, rising middle class purchasing power and strong and growing employment (as does the US which despite everything, just added 528,000 jobs in July).

Certainly, many fledging SEA companies will fail, but startups with strong leadership and a path to profitability have the potential to thrive. Some may even gobble up their competitors, establish market leadership, disrupt incumbents and accelerate the transformation of the industries in which they compete.

Three tips on how to build stronger in this recession

I expect that founders and management teams that do the following will be best placed to succeed:

Use inflation to maximum advantage

Where possible, increase pricing. For services businesses, wage inflation tends to trail consumer price increases, so inflation can increase short term margins. Where price hikes are not possible, lock customers into longer tenure contracts at prevailing pricing, and use that demand visibility to manage costs by batching or building inventory ahead of input price hikes.

Also Read: How small companies can prepare for recession

I recently spoke to a resourceful entrepreneur in the Indonesian food sector who shared that as his input prices such as seed costs increased, he shifted product mix toward lower cost and lower quality vegetables, and in doing so defended margin without passing price hikes on, enabling him to take share. These are the teams who know what it takes to succeed in tough environments.

Obsess about the balance sheet and statement of cash flows

In good times, most startups tend to focus on the top half of the P&L, specifically GMV and revenue. In tough times, cash is the only king. Financially savvy operators keep a tight rein on unit economics and the cash flow cycles of their businesses.

Cash management entails delaying payables and collecting receivables aggressively, even if it means causing friction with vendors or customers unaccustomed to tougher terms, or giving away some margin to factoring costs. Tight control makes for longevity.

Capitalise creatively

Companies that don’t follow the fairy tale of successive up rounds can often be shunned as failures rather than lauded as survivors. Savvy founders know to identify and avoid these external and internal biases, starting with openly acknowledging that raising at a flat or down round is a sign of maturity and adaptability and by finding VCs who share the same mindset.

I’ve heard some SEA VCs express they would rather make a new, small “club” bet on a seed team going after the same challenged business model than do the hard work of recapitalising a struggling or pivoting Series B startup that has fallen out of favour. Until you’re profitable, runway is crucial to survival, and you want VCs who are fighters, not cheerleaders, in your corner.

When the macro is correcting 25-30 per cent down, down rounds and recaps are necessary parts of fortifying the capital base; rather than fight it, partner with an experienced institutional VC willing to do the cap table surgery work, even if it means restructuring, giving up more dilution at a lower valuation or potentially causing friction with earlier investors unaccustomed to having their shareholdings substantially diminished.

Seize the moment

At the end of the day, opportunity is greatest during times of volatility. As Darwin said, “It is not the strongest of the species that survives, nor the most intelligent; it is the one most adaptable to change.”

For those with that attitude, this is a great time to build. At Altara Ventures we look forward to building Southeast Asian startups with resourceful founders who like getting creative as they face the challenges and opportunities ahead.

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Supply chain has a problem. Several of them, actually. The most recent being those that the COVID-19 trade disruptions have revealed such as the need for digital and paperless trade procedures to facilitate cross-border movement of critical goods during global health emergencies while maintaining open trade regimes for equitable access to essential goods.

But while global supply chains have largely bounced back as economies reopen borders and rebound, the supply chain issues have not gone away.

Trade costs continue to rise, with international shipping costs recently surging to an all-time peak according to the Asian Development Bank. This may further disrupt the international supply chain with its heavy reliance on sea freight transport.

But rising costs have a larger snowball effect on inflation in countries that import more, as well as those who typically pay higher freight costs including island states such as Indonesia.

Solving global logistics pain points

The archipelago nation has birthed many logistics startups, but most of these only operate in one vertical or a subset of the global supply chain. Not Andalin. The startup, which was founded in October 2016 by Rifki Pratomo (CEO), Ivhan Famly Gunawan (CTO), and Saut Tambunan (COO), aims to simplify international trade in Southeast Asia through a single platform that integrates international shipping, financial services, distribution and procurement services.

Speaking to e27, Pratomo said: “International trade is the backbone of the world’s economy. However, it’s a complex and very fragmented industry that is built upon three main activities: movement of goods (shipping); procurement and distribution (buying and selling goods); as well as financial and insurance services. Each of these activities has its challenges.

Also read: How accessible robotic solutions enable business efficiency

“In international shipping, businesses face unpredictable shipping schedules and space availability, inconsistent and volatile pricing, and inefficient management through manual coordination via hundreds of emails, resulting in lack of traceability.

“In procurement and distribution, there is no single comprehensive platform that provides a curated list of trading partners with online transactions, that is also integrated with shipping and trade service capabilities. Thus, buyers and sellers have limited options when looking for new trading partners.

“On top of that, international trade finance is still heavily dominated by conventional banking infrastructure, which lacks flexibility and speed to address the high dynamics of international trade requirements,” Pratomo illustrated.

Andalin believes that Southeast Asia is ripe for revolutionising, given that its intra-regional trade accounts for 25% of global trade, a massive market with a huge economic potential to capture.

Evolving into digital freight forwarders

International trade and international shipping have always been managed manually through multiple chains of emails between 12-15 different stakeholders for a single transaction.

Andalin co-founders got together in 2016 to start building the platform, starting with digital international shipping solutions, and in 2017 launched a marketplace connecting freight forwarding companies with cargo owners.

Pratomo recounted, “As we grew, we found that marketplace approach is not the right scalable model for this region and acquired the license to operate as a freight forwarder. In 2020, we launched our digital freight forwarding business, developing our platform to simplify and synchronize the shipping process for our clients, our team and our partners.

Also read: Strengthening cybersecurity measures in the face of Web 3.0

“The successful combination of the right technology, process, and human capital has allowed us to provide superior service which resulted in our continuous growth till today, gaining the trust and business of over 150 medium to large sized enterprises in Indonesia.

“From Day 1, Andalin does not consider itself to merely be a logistics provider. Unlike the current solution in the market which tends to provide service only in a single domain (e.g. freight forwarding solutions focusing on international shipping services only), Andalin views the international trade problem, solution and opportunity holistically,” Pratomo emphasised.

“In the future, we will explore and introduce other services into the platform, which potentially includes trading, financing and insurance services, to fulfil our vision of providing an end-to-end platform for international trade in Southeast Asia,” he said.

Make it simple and easy

Andalin aims to reform and simplify the complexity of international trade activities through its integrated end-to-end digital platform – also on mobile via the Andalin Go launched in May 2021.

Through its in-house developed technology customised for international supply chain needs, Andalin has provided better service levels compared to industry standards. For example, Andalin can issue price quotations to clients within 24 hours, compared to the industry norm of five to seven working days.

The digitisation of otherwise cumbersome manual tasks and shortened time taken have resulted in Andalin clients benefitting from up to 50% reductions in manual administrative work and at least 15% lower costs compared to their previous freight forwarding service providers.

“Our shipping schedule and price integrity, supplemented by our platform’s transparency, have enabled Andalin clients to better plan for their supply chain activities, minimising the risk of manufacturing downtime and/or delayed distribution,” Pratomo said.

To date, Andalin’s freight forwarders have covered shipping routes to over 160 countries in the world, with the most popular routes in the Asia Pacific and Southeast Asia. Its clients include well-known names such as Wings Group, Kawan Lama Group, Kino, Rentokil, and REDAChem.

The next building block, integrated solutions

As Andalin’s profile continues to grow, Pratomo and his team have been on a launching spree over the past year, rolling out services that are targeted at different supply chain pain points, while continuing to integrate global trade markets.

In May 2021, Andalin Go was launched, empowering customers to operate and monitor their shipments on the go, get instant quotes, and discuss operational technical details with the Andalin team in real-time. 

This was followed in November 2021 by Andalin Get, which addresses the scarcity of container cargo along the busy Indonesia-U.S. trade route. Andalin Get converts shipments that were previously FCL (full container load) into several smaller shipments (LCL or less container load), to ensure delivery of goods is not hampered. Andalin also guarantees LCL space availability as well as on-schedule departures.

The results? From February to December 2021, Andalin’s monthly revenue grew by 690%, while recording a 10.6x increase in total containers shipped.

Also read: Optimising business solutions through customer-centricity

These innovations quickly drew the attention of investors, and in February 2022, Andalin secured a US$4 million round led by Intudo Ventures. Two months later, Andalin signed an MoU with Vietnam’s leading industrial developer Becamex IDC Corp, to boost trade between Indonesia and Vietnam.

To build a complete foundation of doing international trade activities, Andalin has just recently launched the Andalin Trade platform in June 2022. The platform enables manufacturers and distributors across Southeast Asia to buy and sell from each other. Through Andalin Trade,  manufacturers and distributors simplify the process of sourcing, supplying, and negotiating for products with international counterparts. Users can bid and transact online, and instantly procure Andalin Shipping services from the platform.

“The integration does not stop there, as we will open our platform to collaborate with other businesses and institutions which provide services related to international trade, hence allowing us to reach our grand vision of establishing a one-stop integrated platform that simplifies international trade activities in Southeast Asia,” Pratomo said.

To explore Andalin’s various trade and logistics offerings, visit andalin.com

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This article is produced by the e27 team, sponsored by Andalin

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Singapore-based health tech startup MiyaHealth today announced that it had raised an undisclosed sum in additional funding from HealthXCapital, Central Capital Ventura, and SEEDS Capital after raising S$6.5 million (US$4.8 million) in Pre-Series A in February.

In a press statement, the company said that the funding would be used to drive MiyaHealth’s aggressive growth strategy in product development, hiring and expansion of operations globally.

“Following our successful Pre-Series A fundraise, we are delighted to onboard new investors to further scale our product capabilities and expand our operations globally, starting with Europe and Southeast Asia,” says Dr Ramesh Rajentheran, CEO & Co-Founder of MiyaHealth.

“The pandemic has accelerated the need for governments, corporates, and insurers to contain health costs and improve health care outcomes. Patients are also more aware of and are increasingly vocal about the quality of their healthcare journeys. Having built our technology and established strategic relationships with ST Engineering during the pandemic, we are benefitting from this increased focus from payors and patients post-pandemic. At Miya, patients are at the heart of what we do, and that patient-centricity comes through in the products we have built.”

The company is also planning to kick off its Series A fundraise in the next six months to develop its product suite further, expand its operations globally and continue embarking on collaborations with key stakeholders moving forward.

Also Read: Traveloka ex-CMO’s healthtech startup Diri Care closes US$4.3M seed round

Since its inception in 2019, MiyaHealth has launched a suite of products that include MiyaPatient, a patient navigation platform with a predictive and personalised system that helps patients with chronic diseases cope with daily challenges; MiyaPayor, a platform that incorporates AI-driven claims processing, provider network management and predictive analytics to reduce costs for payors; and MiyaProvider, an upcoming product that improves patients’ experience in hospitals and clinics.

The company said that MiyaPatient is currently being deployed in Europe, and MiyaPayor and MiyaProvider platforms are being deployed in Indonesia and the Philippines. This follows the commercialisation of the MiyaPayor platform in Malaysia last year.

It has partnered with over 3,000 medical providers and 12,000 physicians to date for its flagship platforms, including its partnership with a leading hospital group in Indonesia.

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