In an era of rapid innovation and entrepreneurship, startups find themselves at a crossroads in seeking financial backing to fuel their growth. Traditionally, the paths available to these fledgling companies have primarily been through securing venture capital or pursuing traditional bank loans. However, both routes come with distinct challenges and constraints, from dilution of ownership to stringent credit requirements and collateral. 

This continuous challenge in getting access to funding resulted in a 30 per cent year-on-year decline in startup fundraising in Southeast Asia in 2023. More substantially, the total capital raised by venture-backed companies in the region fell 53 per cent to US$7.72 billion.

Thankfully, the landscape of startup financing is undergoing a significant transformation with the emergence of alternative funding options.

Breaking the mould

For decades, venture capital has been the go-to source for startups needing significant capital. This method injects substantial funds into the business and opens doors to networking, mentorship, and further business opportunities. However, the cost is substantial – losing equity. Founders often relinquish considerable control and future earnings, betting on long-term success driven by external partners.

Similarly, traditional bank loans offer another path but come with their hurdles. Startups, particularly those in the nascent stages without solid credit histories or substantial collateral, find this path steep and sometimes impassable. Moreover, the fixed repayment terms set by banks do not account for the volatile nature of startup revenues, posing a substantial financial strain during lean periods.

A fresh alternative for startups

Revenue-Based Financing (RBF) offers a fresh alternative for startups, particularly for those with consistent revenue inflow but who remain reluctant to part with business equity or are unable to satisfy the stringent conditions of traditional banking. It also allows business owners to access capital that might be tied up in payment cycles or to free up capital that can be better spent elsewhere.

RBF allows companies to receive upfront capital in exchange for a percentage of their future ongoing revenue, incorporating a cap on total repayment. This dynamic arrangement means repayments decrease during lower revenue months, creating invaluable flexibility.  

Also Read: Navigating the shifting landscape of Southeast Asian funding: An analysis of H1 2024 trends

This model offers several compelling advantages:

• Adaptable repayment terms: Repayments are tied to real-time revenue, accommodating the ebb and flow of business cycles and providing breathing room when needed.
• Preservation of control: Entrepreneurs retain full ownership and creative control over their startups, avoiding the equity dilution often associated with venture capital investments.
• Swift and accessible funding: RBF processes are typically less cumbersome and faster than traditional loans, making them ideal for seizing timely market opportunities. 

Crossing the finish line

Consider the case of Cheak (formerly known as butter), a Singaporean activewear startup launched during the pandemic. Cheak initially relied on bootstrap financing as a young brand in the capital-intensive retail industry. However, this method struggled to cover the significant upfront funding required to fulfil orders.

Facing challenges such as supply chain disruptions and shipping delays and being unable to meet the stringent requirements of traditional financial institutions, Cheak’s co-founders turned to RBF through Choco Up. This strategic decision marked a turning point, enabling Cheak to generate six-figure revenue in its first year and ultimately lead to its acquisition by Love Bonito.

Catalysing innovation through diverse financial instruments

The rise of RBF indicates a larger movement towards varied and accessible funding models tailored to the unique needs of modern startups. Malaysia serves as a prime example of this shift in the financial landscape. Peer-to-Peer (P2P) and Equity Crowdfunding (ECF) platforms in Malaysia raised over US$1.6 billion in 2022, significantly challenging the traditional venture capital model.

This substantial capital flow through alternative platforms is a testament to their growing popularity and effectiveness in supporting a wide range of industries beyond the typical tech-focused ventures. Each ecosystem offers distinct benefits and enables startups to tailor their financial strategies to best fit their operational and growth objectives.

The evolution of startup financing reflects a broader democratisation of entrepreneurship. As we continue to rethink capital, the landscape for startup success becomes increasingly diverse and inclusive, breeding more innovation without the constraints of traditional capital sources. This shift not only empowers founders but also enriches the entire startup ecosystem, fostering more sustainable business growth and innovation.

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Our story at NalaGenetics began with a deep commitment to advancing genetic testing, particularly in the field of pharmacogenomics — the science of identifying the right medications based on an individual’s DNA. However, as our company grew, we quickly realised that delivering these tests alone was not enough to truly impact health outcomes. To create lasting change, we needed to build a sustainable business model that integrated preventive care with genetic insights.

This shift in focus led us to restructure internally and expand our scope beyond delivering cutting-edge genetic tests. Inspired by the success of wellness and beauty clinics, which offer a more consumer-friendly approach to healthcare, we began exploring ways to make genetic testing more accessible to out-of-pocket payers. This marked a pivotal moment for us as we transitioned from a purely product-centric model to one that combined both product and service.

Looking forward, we see insurance reimbursement as a crucial milestone for the future of genetic testing. While the U.S. took decades to reach this stage, we are optimistic that other markets will follow suit, opening significant opportunities for growth and wider adoption.

Challenges and resilience: The startup’s journey

Like many startups, we encountered numerous challenges along the way, particularly in the rapidly shifting landscape brought about by COVID-19. The pandemic accelerated adoption in some areas while stalling it in others, forcing us to adapt quickly.

One of our most significant hurdles was the prevalence of unvalidated genetic testing products on the market. Many of these tests offered risk predictions with little to no actionable insights, eroding consumer trust. We made the difficult decision to prioritise quality over speed, ensuring that our tests were both scientifically sound and meaningful to users. It took time to find the right product-market fit, but we remained steadfast in our commitment to delivering reliable, actionable results.

Throughout our startup journey, we learned that the product alone is not enough to ensure long-term success. It became clear that a service layer was essential to help consumers interpret their results and make informed health decisions. This realisation led to the birth of NalaCare Clinic, which has become a cornerstone of our offering. This hybrid model, blending product innovation with personalised service, has proven highly effective. Consumers are more engaged when they feel supported, and the clinic model ensures that they receive actionable insights from their genetic tests.

Also Read: Bridging healthcare gaps in the Philippines: Innovation and opportunities beyond telehealth

Navigating the healthcare startup ecosystem: Short-term goals vs long-term vision

As a healthcare and biotech startup, we’ve had to navigate the delicate balance between short-term goals and long-term vision. While we believe that genetic testing will eventually become a universal need, in the short term, we’ve focused on segmenting our market to reach those who will benefit the most from our services.

For example, a large study with 6,944 individuals has shown that 93.5 per cent of people carry at least one actionable variant for pharmacogenomics, making it a cost-effective solution at the population level. However, current practice often limits the use of these tests to patients with indications of medication resistance. By focusing on those who need it most initially, we ensure that the resources spent are maximised while continuing to innovate for more affordable and comprehensive genetic testing for broader use.

Product-market fit in one country can be achieved with a slightly different algorithm based on the country’s ancestry and the availability of follow-up services. By tailoring our approach, we ensure that our solutions are not only well-researched but also capable of delivering long-term value to both our business and customers.

Zurich Innovation Championship: A transformative experience

Participating in the Zurich Innovation Championship (ZIC) 2024 has been a pivotal moment in NalaGenetics’ journey. ZIC is an annual program coordinated by Zurich Insurance Group for startups and entrepreneurs around the world to bring innovative solutions that can address pressing challenges in the insurance industry. We were honoured to be selected as one of the nine global winners for this year.

While insurance is traditionally seen as a slow-to-change industry, Zurich proved to be forward-thinking as they are willing to explore how genetic testing could benefit their customers and the broader healthcare ecosystem.

What made this experience truly transformative was the close working relationship we developed with Zurich’s Malaysia business unit. We didn’t just collaborate from a distance; we became an integrated team, working together towards the common goal of improving health outcomes for their customers. This level of cooperation helped us refine our approach and create a more cohesive product offering.

Also Read: How to tackle employee mental health to build a resilient workforce

Success in the Malaysian market: The pilot

As part of the ZIC’s accelerator phase, one of our most successful initiatives has been our collaboration with Zurich in Malaysia. In a survey of 200 Malaysian residents, 90 per cent were willing to participate in a genetic testing and wellness program. Additionally, over two-thirds of respondents expressed comfort with insurance companies offering genetic tests as part of a health program, seeing it as a proactive way to enhance their quality of life.

We successfully launched the first batch of our genetic testing and wellness program with Zurich’s customers in Malaysia, serving 42 customers who were willing to participate in this profiling exercise, within nine days of recruitment. This early success has encouraged us to continue rolling out the program in subsequent batches, demonstrating the potential for genetic testing to become a key component of preventive health programs when aligned with insurance offerings.

One customer shared their thoughts on the program, saying, “The program helped me to understand myself better and how I should prepare physically and financially for my future. Although I am still worried about my health conditions, I know I am being supported.” This kind of feedback reinforces our belief in the value of what we are building, especially in showing how health and financial wellbeing go hand in hand.

Insurance agent feedback: A new perspective on customer care

One of the most inspiring aspects of our journey has been the feedback we have received from agents who have been involved in our wellness program. One agent remarked, “It’s not just about selling a product; it’s about showing love and care for individuals and their health.”

This sentiment perfectly captures the heart of our mission and aligns with Zurich’s commitment to innovation and customer-centric solutions. We’re not just providing a service—we’re helping people take proactive steps to improve their health in a meaningful and supportive way.

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Artificial intelligence (AI) has revolutionised many aspects of our personal and professional lives, but prompt engineering is one often overlooked skill in the AI world. This essential skill ensures you get the most accurate, relevant, and creative outputs from AI models. In this article, we’ll dive into the one rule that governs all effective, prompt crafting, breaking it down step-by-step so you can master this essential skill.

Step one: Understanding the importance of prompt crafting

Before diving into the rule, it’s essential to understand why prompt crafting matters. AI models are powerful, but they rely on clear, structured, and thoughtful inputs to generate useful outputs. A well-crafted prompt can save you time, ensure more relevant results, and enable you to fully leverage the AI’s capabilities.

Why is this important?

Without a clear prompt, the AI may give you broad or irrelevant answers, forcing you to refine your queries repeatedly. Effective, prompt crafting minimises this back-and-forth, providing precise results from the start.

Step two: Introducing the rule — Clarity is king

The one rule that underpins all prompt crafting is clarity. When crafting a prompt, the clearer you are, the better the response you will receive. Whether you’re asking for a specific piece of information, generating creative ideas, or solving a complex problem, a clear and unambiguous prompt is key to getting the best result.

Example:

Instead of asking:  “What can AI do?”

Ask:  “Can you list five ways AI can help improve customer service in small businesses?”

The difference is night and day. The second prompt is specific, targeted, and leads to actionable insights.

Step three: Structuring your prompts for success

Once you grasp the importance of clarity, the next step is structuring your prompt. A well-structured prompt contains three essential elements:

• Context: Give the AI background information
• Task: Clearly define what you want
• Format: Specify how you’d like the answer to be structured

Also Read: Why AI will be critical to brand strategy

Example:

Instead of: “Tell me about AI tools.”

Try:  “For a small e-commerce business, list five AI tools that can help improve customer experience. Provide a short description and a key feature for each tool.”

This structured approach gives the AI the context (small e-commerce business), the task (list five AI tools), and the format (short description and key feature). This clarity helps the AI deliver precise and useful information.

Step four: The ultimate prompt – A prompt to create prompts

Sometimes, even with the best strategies, we may struggle to come up with the perfect prompt. That’s where the “prompt to rule them all” comes in. This technique allows you to ask ChatGPT to generate prompts for you, creating a recursive system of improvement and refinement. Essentially, you’re using AI to help you interact more effectively with AI.

Here’s the ultimate prompt to guide ChatGPT in crafting prompts tailored to your needs:

The prompt to rule them all:

“You are an AI expert in [specific field], with [X years of experience]. Your task is to create a prompt that will generate [desired outcome], ensuring the response is tailored to [target audience or purpose].

For example, if you want to generate blog ideas for a marketing audience, you would prompt ChatGPT like this:

Example prompt:
You are an AI expert content creator with 15 years of experience in digital marketing. Your task is to create a prompt that will generate blog post ideas for small businesses looking to improve their social media presence.”

ChatGPT would then respond with a list of tailored prompts that you can further refine and use.

This technique enhances your productivity and ensures that the AI consistently provides relevant and focused outputs. It’s especially useful when you’re unsure how to approach a complex question or need inspiration for creative tasks.

Step five: Iterating and refining your prompts

Even with a well-crafted prompt, it’s sometimes necessary to refine it based on the AI’s response. This process is called iterating. If the response isn’t exactly what you need, tweak your prompt until you get the desired outcome.

Example:

Initial Prompt:  “Explain AI.”

Response:  “AI is a broad field of computer science…”

Refined Prompt:  “Explain AI in the context of customer service automation, focusing on chatbots and sentiment analysis.”

Also Read: Adobe’s APJ Digital Trends Report 2024: The rise of generative AI

By narrowing down the context, you guide the AI to focus on specific areas, ensuring that the response is aligned with your needs.

Step six: Practical applications of effective prompt crafting

Prompt crafting is not just a theoretical skill –f it has numerous practical applications across industries. From improving workflows to generating content, here are some ways clear prompts can make a difference:

• Content creation: Generating blog ideas or drafting articles based on clear prompts
• Data analysis: Summarising large datasets or identifying trends with targeted prompts
• Customer support: Automating responses and troubleshooting with well-defined questions

In all these cases, the clarity of the prompt determines the usefulness of the AI’s output.

Conclusion

By following this step-by-step guide and applying the one rule of clarity, you can ensure that your AI tools work smarter for you. Whether you’re automating tasks, generating content, or solving complex problems, mastering this skill will help you get the most out of AI technology. Don’t forget to leverage the “prompt to rule them all” to enhance your productivity by having AI assist you in generating effective prompts.

In the evolving world of AI, the ability to craft clear and structured prompts will give you a competitive edge, enabling you to unlock the full potential of these powerful tools. Happy prompting!

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