Chris Sirisereepaph, Partner at Saison Capital
Last week, Japanese consumer finance giant Credit Saison announced the launch of its corporate venture capital (CVC) arm Saison Capital, that is set to invest up to US$55 million to early-stage startups in India and Southeast Asia (SEA).
The move complements the company’s existing foray in the regional tech ecosystem, where it has invested in major names such as Shopback and Grab. It has also been a limited partner in various funds such as Cyberagent Ventures, East Ventures, Gree Ventures and Beenext.
To understand more about the firm’s investment philosophy and plans for startups in the region, e27 reached out to Chris Sirisereepaph, Partner at Saison Capital.
The following is an edited excerpt of the interview:
Can you explain Credit Saison’s motivation to launch its own venture fund, in addition to its existing partnerships and investments in the tech scene?
One trend we have observed in the equity financing landscape is that well known VC funds that were originally seed-stage funds have now raised larger funds and started placing more emphasis on later-stage rounds. While a good signal that the ecosystem is growing, it created a situation where founders had limited options when it comes to institutional investors willing to invest at the seed stage.
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This was also a gap in our own financing ecosystem, as while we had a good track record of deploying growth-stage capital into startups such as Shopback and Grab, we had not deployed seed-stage capital on our own before.
Our own decision-making process internally was also not appropriate for doing seed deals, where founders prioritise speed over most other factors. Hence, we decided to create a new vehicle with a specific mandate to target seed deals, with a quick decision-making process and a team that can relate well to the founders we want to work with.
Ultimately we believe that while there is higher risk, investing at the seed stage also puts us at the forefront of the innovations happening in the region.
What notable trends do you see happening in the region’s fintech space lately, and how do you plan to tap into it?
SEA has an advantage in that you can look at the trends that have happened in China and India, and try to work out if those trends may happen here as well. For example, Indonesia has seen a boom in alternative lending over the last two to three years. What usually follows is startups emerging to target other financial services such as personal finance management, insurance and other investment products.
One outcome of this trend is that companies with a core business in a non-fintech space start thinking of how to integrate this range of financial services into their platform to better serve the users in their ecosystem. They could do this on their own, or they could partner up with any one of these emerging pure-play fintech players. For pure-play fintech players, this solves a big problem for them: Customer acquisition cost.
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This is the core of our thesis and the reason the fund has a sector agnostic mandate.
We anticipate that most startups with data and customer reach will have an extent of fintech integration eventually. These founders will be experts in their verticals, but where we can complement them would be our deep expertise in financial services in developing markets as an institution, and our team having had fintech operational experience as well.
Can you explain your investment philosophy? What are the qualities that you look for in a founder or potential investment?
We are thesis-driven, so we form a thesis around a vertical or business model before making an investment. This means that when we find suitable founders who believe in the same thesis, we can move very quickly and conclude the investment with funds transferred within a couple of weeks from the first meeting.
As to what we would define as “suitable”, I would say we look for founders who are ambitious when it comes to thinking about scaling, and also data-driven when it comes to making decisions despite the chaotic environment most startups will operate in.
As our fund is an evergreen vehicle, we are not in a hurry to exit the investment but plan to work with our founders for as long as we can still add value to them. Hence, some level of personal chemistry must also be there, and the founders should also be certain they will enjoy working with the Saison Capital team over the next few or many years.
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Financial inclusion is a big mission for your firm and its portfolio. What do you think is the greatest hurdle to achieve it? How do you plan to solve it?
My personal belief is that technology is both the greatest hurdle and the greatest solution. It depends on who wields the tool and how it is used.
While access is the key to inclusion, more conversations need to be had around what type of products or services create positive social impact and should have increased access. It is also important to be aware if the access is artificial and generated by subsidising or mispricing the product, rather than possible and sustainable because technology has lowered costs.
What this means for us is that we back founders who have a consciousness of whether their product encourages financially productive behaviour. For founders that believe in that, they can be assured that we will be aligned with them as an investor. Koinworks, our portfolio company that provides financing to underbanked businesses is a good example of that.
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Image Credit: Saison Capital
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