CapBay, a Malaysian multi-bank supply chain finance and P2P financing platform, has secured RM30 million (US$7 million) investment from Kenanga Capital Islamic (KCI), a subsidiary of Kenanga Investment Bank Berhad (KIBB).

The investment will help CapBay grow its Shariah-compliant supply chain finance arm CapBay Islamic.

“The injection of funds will help accelerate the growth of Malaysian SMEs. With the launch of our Islamic receivables and working capital financing solutions, we believe that this will add another dimension to our efforts in supporting the SMEs in the country,” said Mohd Mokhtar Mohd Shariff, chairman of CapBay.

Also Read: CapBay bags US$20M Series A to scale its multi-bank supply chain finance, P2P financing platform

Founded in 2017, CapBay enables SMEs to obtain flexible and cost-effective financing through a digital platform. To date, it claims to have financed more than 14,000 transactions worth over RM1.4 billion (US$330 million), serving over 800 SMEs.

It has partnered with several large corporates, banks and institutional investors to offer the solution.

In January, CapBay announced a US$20 million in Series A round from Singapore-based KK Fund and several Malaysian angel investors.

Last year, CapBay acquired a 49 per cent stake in KCI to create an Islamic supply chain finance fintech. KCI benefits from predicting risk in each transaction beyond just financial statement analysis and utilises machine learning to assess thousands of data points such as historical relationships, payments, contract quality and other patterns. This data-driven approach helps invigorate the Islamic supply chain finance solution for the underbanked.

“We have been collaborating with CapBay to develop an Islamic fintech to serve a wide range of SMEs through a digital platform that enables a faster and more convenient process,” said Chay Wai Leong, group MD of KIBB.

As the SME financing market continues to grow rapidly, the demand for a Shariah-compliant option has increased. According to the Association of Islamic Banking and Financial Institutions Malaysia, it predicted that half of Malaysia’s banking assets to be Islamic by 2030 as the industry’s growth outpaces conventional banking.

Also Read: Kenanga Investors launches frontier fund to connect retail investors with hard-to-reach early-stage startups

“The adoption rate of Islamic financing in Malaysia is growing: this is a clear reflection of the demand for Shariah-compliant products in the country. We noticed many of our clients seeking an Islamic alternative to our products, and we are catering to this growing demand,” added Mohd Shariff.

A report by Fintech News Malaysia shows that out of 233 fintech firms operating in Malaysia, CapBay is part of the small 4 per cent that are Islamic fintech companies.

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Malaysia’s Iris Capital Partners today announced the launch of arguably the country’s first privately led venture debt fund worth RM160 million (US$37.8 million).

The new vehicle, dubbed Iris Fund, aims to finance high-impact startups in Malaysia and the ASEAN region, regardless of sectors or funding stages.

As per a statement, Iris Fund will empower local startups to scale beyond the local market and support Asian companies to expand into the Malaysian market. 

Alongside Iris Capital Partners, South Korea’s Hanwha Asset Management Co. will also co-manage the fund, marking the group’s maiden venture debt partnership in Malaysia.

“We do look for companies with comprehensive business plans and projections that have clear strategies for long-term growth prospects,” said Wan Kamaruzaman Wan Ahmad, chairman of the Iris Fund.

Also read: Finance your startup: 10 types of investors you should know

Launched in 2020, Iris Capital Partners was established under Malaysia’s Dana Penjana Nasional programme, a government-backed startup investment fund worth RM600 million (~US$141.9 million). Applying the Fund of Funds (FOF) mechanism, Iris Capital brings in funds that will be matched on a 1:1 basis between government-backed Penjana Kapital and many other institutional and high net worth investors.

“This fund aims to offer more accessible financing to startups and SMEs while allowing founders to control their dilution better,” said Kimo Kim, partner of Iris Fund.

The primary beneficiaries of venture debt funds are early-stage startups with validated business models and clear market growth opportunities. This financing option often minimises shareholding dilution, enhances financial liquidity, and supports fundraising rounds throughout the region. 

Startups, therefore, maintain more autonomy over their assets while still being able to access financing that will bolster their exponential growth over shorter periods.

In September, Iris Fund made its maiden investment by joining the US$22 million Series A round of Growthwell Foods, an alternative meat and seafood protein provider for F&B businesses in Singapore and ten other countries in the APAC region.

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Singapore-based digital trade finance network Contour has announced that Japan’s TIS INTEC Group has invested in the company. 

Other details of the deal haven’t been undisclosed. However, a DealStreetAsia report said several regional and global trade banks, including Citi Ventures and Bangkok Bank, also participated in the Series A extension round, pegging the amount at US$4.9 million.

Also read: How to create a new normal for trade finance with blockchain

This round follows Contour’s previous US$13.41 million Series A round with participation from Japan’s Sumitomo Mitsui Banking Corporation (SMBC), Taiwan’s CTBC, the UK’s HSBC, Bangkok Bank, France’s BNP Paribas and Sweden’s SEB.

In a statement issued on December 13, Contour said the Series A+ financing would support its further adoption of a network covering 13 banks in 25 countries. The startup also has plans to grow its Singapore-based innovation lab to provide other trade finance product offerings beyond the current digitised Letter of Credit (LC) service.

Contour intends to double its in-house development team next year to assist this expansion, besides growing the global talent pool.

“With this investment, we move ever-closer to realise our vision of becoming the new global standard for trade finance by simplifying and removing barriers in the trade ecosystem, making the industry economically, environmentally and socially sustainable,” said Contour CEO Carl Wegner. 

Founded in 2020, Contour applies enterprise blockchain technology to unite buyers, suppliers and banks on a decentralised digital trade finance platform.

Also read: Banks and fintech: An arranged marriage built on trust, but does it last long?

Acquiring LCs is often perceived as time-consuming due to heavy paperwork, high administrative costs, inefficiencies, and barriers to financing. Contour’s primary purpose is to simplify and digitise the management of the LC processes. It helps reduce the paper-based documents involved in trade transactions, significantly shortening the settlement time.

Japan is reportedly one of Contour’s critical markets to strengthen its foothold due to its large trade volumes in sectors, such as commodities, large equipment and automotive — all of which rely heavily on trade finance products.

 

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SMEs are a driving force in SEA’s economic development. Across each country in the region, these businesses account for an average of 97 per cent of all enterprises, employ 69 per cent of the total workforce, and contribute to 41 per cent of the Gross Domestic Product (GDP). 

Even though they play such a vital role in fuelling the economy’s growth, 51 per cent of SMEs (equal to 36 million businesses) are underserved by financial institutions in SEA, resulting in a US$320 billion funding gap in terms of their financial needs, which has yet to be filled. 

This became an even greater concern during the pandemic as sustaining their cash flow was the biggest challenge SMEs faced to keep their business afloat. 

As SMEs look for ways to keep the lights on, 90 per cent of SME owners use their savings to fund their business needs rather than to look for financing through traditional means.

A study on Malaysian SMEs found that 64 per cent of those who tried applying for bank loans during the country’s Recovery Movement Control Order between June to August 2020 ended up getting rejected. 

Government filling in the gap

Governments across the region have launched many initiatives to help bridge this financial gap for SMEs. Enterprise Singapore, a government agency, worked with financial institutions to approve US$13 billion worth of loans for 21,000 enterprises amid the pandemic, representing eight per cent of all SMEs in the country.

Thailand’s Central Bank granted US$4 billion worth of loans to financial institutions, which supported 73,000 SMEs out of the total 3 million in the country. The Malaysian Ministry of Finance approved a US$3 billion soft loan scheme which would benefit more than two per cent of Malaysian SMEs. 

Even though governments are launching initiatives to provide financial support, most businesses remain unattended as there is only a handful of SMEs that the government can reach through these schemes.

This led to more than half of owners expressing that they will likely explore alternative financing options within the next three years. 

In this two-part article, we will explore a few common equities and debt financing options to help bridge the gap for SMEs. 

Also Read: Digital transformation for SMEs, Part 3: Data analytics in the enterprise

Equity crowdfunding

Equity crowdfunding (ECF) is a form of financing that allows SMEs to raise capital by offering equity in their business to the public. As this is a highly regulated space, companies would work with a licensed ECF provider who facilitates the fundraising campaign to ensure the compliance and safety of all parties involved. 

ECF provides individual investors with the opportunity to partake in the share offering of private companies and become a shareholder (or indirect shareholder through nominee arrangement) by investing in the overall fundraising amount.

To start a campaign, business owners must first decide how much capital they want to raise and determine the valuation of their businesses. 

Benefits	Drawbacks
Access to the pool of individual and institutional investors on the ECF platform  Greater control over the terms of the deal (e.g. how much equity to sell)  Less dilution for business owners compared to other equity financing options	SMEs can only receive the raised capital if the final amount meets the target at the end of the campaign  Have to make available business information such as financials and business plans publicly so that investors can make an informed decision

The global market size for equity crowdfunding financing is expected to grow by US$196 billion between 2021 to 2025. Asia will be the biggest contributor, attributing to 62 per cent of the total growth, due to increasing demand from investors.

On top of that, regulators across SEA have increased ECF adoption among SMEs. The Malaysian government allocated US$12 million in 2020 and US$19 million in 2021 for grants to encourage SMEs to raise capital through ECF (and Peer-to-Peer, which we will delve deeper into the next article). 

The result – 2020 saw a 199 per cent increase in total capital raised from 2019, reaching US$30 million in one year. The first half of 2021 experienced a 151 per cent jump compared to the whole of 2020, with the total amount raised hitting US$75 million.  

Indonesia’s Financial Service Authority (OJK) first introduced ECF rules back in 2018, with only three platforms permitted to operate by the end of the following year. 

New regulations were released when the pandemic hit, which expanded the type of businesses allowed to raise capital through this form of financing. 

In addition, more licenses were handed out, increasing the number of ECF providers to 7. This helped to develop the ECF market in the country as the funds raised in 2021 reached US$25 million by November, a 90 per cent increase since the start of the year. 

Other countries in SEA have more recently opened up to this form of financing, with the Philippines approving the country’s first ECF platform earlier in 2021 as they look to support underserved SMEs. 

Also Read: Digital transformation for SMEs, Part 2: Understanding its maturity cycle

Vietnam is also looking to develop an ECF platform as its Prime Minister announced plans to boost the development of SMEs in the country. 

 

Venture Capital

This form of financing commonly consists of direct investment by institutional investors, known as Venture Capital (VC). These investors focus on high growth SMEs in industries with promising exit opportunities and return potential. 

Each VC will have its strategies in terms of the industry it invests in, investment size and stage of financing round (e.g. early stage, growth stage, late-stage). SMEs of high growth can opt for VC investment as a financing option.

In SEA, most VC funds started to be tech-focused. However, we are seeing more funds gearing towards high growth non-tech companies as an investment focus. 

Benefits	Drawbacks
SMEs can potentially raise more significant amounts of capital through VC than ECF.  Existing VC investors may help with future fundraising rounds  Access to VC’s business network and community  Potential expertise contribution and portfolio collaboration from VCs	Process of fundraising from VCs may be lengthy depending on the fund’s profile and the number of investors involved in around  Greater dilution for business owners with the possibility of losing majority control after multiple fundraising rounds

 Global VC investments have been on the rise, as it is on track to hit an all-time high, with the total amount invested reaching US$580 billion in 2021, which is nearly 50 per cent more than the previous year.  

SEA’s VC investments are still relatively small compared to the rest of the world, reaching US$4.4 billion in 2021 across this region. The number of deals completed in SEA reached a record high of 393 in 2021, which was 20 per cent higher than the same period in the previous year showing good signs of growth.  

VCs play an important role as their investments into businesses not only help them grow but spur a country’s economic growth, job opportunities, and innovation. Governments across the region recognise this value and want to stimulate more opportunities for businesses to raise capital through this form of financing. 

Also Read: Is omnichannel commerce a fairy tale for SMEs in Singapore?

The Malaysian government launched an initiative called ‘Dana Penjana Nasional’ in 2020 – a US$142 million matching grant into VCs investing in local SMEs. More recently, the Indonesian president announced plans to launch a new VC, backed by state-owned enterprises, to focus on SMEs with Indonesian founders in the country.

In SEA as a whole, total VC investment has grown substantially, with US$52 billion being invested in the past 10 years and out of that, US$8.2 billion was from 2020 alone. 

An example of VC financing success is Indonesia’s Gojek which started as a small business in 2010, connecting consumers and motorcycle taxis through their call centre. 

The company then experienced accelerated growth as they began to raise funds from VCs across multiple rounds, reaching a US$1.3 billion valuations six years from launching. They later merged with another VC-backed business,

Tokopedia, to form one of the largest tech companies in Indonesia, contributes two per cent of the country’s US$1 trillion GDP.  

There may be a consensus that VCs only invest in technology companies, that is not always the case. Technology companies most commonly have qualities that enable scalability, which meets VCs’ investment parameters. 

Kopi Kenangan started as a single brick and mortar store grew rapidly with the financial support they received from VCs. The business secured its first round of funding just one year of launching, raising USD 8 million from Alpha JWC Ventures. 

Needing to further fuel their growth, they later received an additional US$129 million in financing from other VCs, which helped them expand to more than 500 stores in just four years after launching. 

Our next article will explore the different types of debt financing available for SMEs. 

This article is co-authored by Kevin Rozario of kipleX. 

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Fantico, a premium licensed digital collectible platform, has raised an undisclosed sum in a private financing round from Hong Kong-based tech unicorn Animoca Brands.

Individuals, including Hemant Tucker, segment head for technopreneurs and market head (South Asia & Middle East) at Bank of Singapore, also joined the round.

The capital will be used to build a platform for creators, designers, developers and enthusiasts to launch its own metaverse, besides creating NFT assets and accessing several pre-populated world elements.

Fantico is a digital collectible platform catering to celebrated movies, artists, musicians, and sports for the Indian market. A portfolio company of Singapore-based diversified media and entertainment firm Vistas Media Capital, it builds its own version of metaverse, dubbed VistaVerse.

VistaVerse consists of virtual land, blockchain games, curated and user-generated experiences, and an NFT marketplace. It will be launched in the coming months with premium curated experiences, including from top Indian celebrities.

Also Read: HK accelerator Brinc lands US$130M funding led by Animoca Brands to foray into Web3

The marketplace has already been launched, focusing on both crypto and non-crypto user bases with marquee items to pique the interests of both segments.

The metaverse firm will leverage the parent company’s content, such as movies, music, and gaming resources, to build an experience-first approach.

Dhruv Saxena, chief strategy officer, Vistas Media Capital, said: “We want to leverage the appeal of Web 3.0 and gamefi to make it relatable to those new to the space and build this out responsibly.”

Yat Siu, executive chairman and co-founder of Animoca Brands, commented: “Our goal is the creation of an open metaverse that is also culturally diverse and inclusive. Fantico, armed with the legacy of Vistas Media Capital and its portfolio companies, will be able to draw on a wealth of Indian culture that will enrich the broader metaverse ecosystem.”

Vistas Media Capital is a Singapore-based content media and entertainment investment holding company. Its key businesses include content production and distribution across films and series — from India (across languages) to Hollywood, animation and VFX, gaming, media-tech, OTT platform, live entertainment events and digital media marketing.

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Praktis, a data-powered supply chain solution for direct-to-consumer (D2C) brands in Indonesia, has secured an undisclosed amount in pre-series A funding led by East Ventures.

Local conglomerate Triputra Group also participated in the round.

Praktis will use the money to accelerate technology enhancements, team building, and launch new products.

Praktis — erstwhile PTS.sc — provides an end-to-end solution to manage D2C brands’ backend operations, covering sourcing and production activities, logistic and fulfilment, and order management systems. Brands get complete visibility of all their supply chain processes. This way, they can optimise the production planning and inventory control process to make it more cost-efficient.

Also Read: East Ventures appoints Roderick Purwana as Managing Partner as it takes charge of EV Growth

Additionally, Praktis also captures procurement orders from B2B and business-to-government brands.

“Juggling between managing procurement, logistics, and store management on top of designing and marketing great products can be such a major headache for SME D2C brands. This is where we come in, offering seamless operations management,” said Dipta Imanto, co-founder of Praktis.

“We are seeing a promising D2C market in Indonesia. It is reflected in our monthly revenue, which is experiencing over 12x growth (YoY) in 2021 with an estimated 24x CAGR and 31 per cent CMGR based on eight months from January to September 2021. As a single point of contact, We enable D2C brands to be more focused on their core competencies, leading the brand to far higher growth in revenue with efficient working capital utilisation. Shortly, we are anticipating a 6x revenue growth,” said co-founder Adrian Gilrandy.

By 2025, the Indonesian D2C markets in fashion, food and personal care, as well as furniture and appliances, which currently become Praktis’ primary focus, are expected to grow a total of US$36 billion annually.

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The cryptocurrency boom has led to users seeking new ways to keep the private keys to their digital assets safe. But with advancing technology making it easier for hackers to break into digital systems, coupled with the growing lack of password discipline among crypto users, cold storage has become more important than ever before, and UKISS Hugware strives to be the solution to this — except cooler.

With this gap in the market and all existing challenges faced by crypto users, UKISS Technology is proud to present a revolutionary hardware wallet that doubles as the key to a suite of digital security applications, complete with a smooth and worry-free recovery process.

Designed and developed in Singapore, UKISS Hugware is built on the latest patented technology that utilises cryptography for its security. It comes in pairs, with one being the Authentication Key, or A-Key, which generates and provides safe offline storage of private keys, while the other is the Rescue Key, or R-Key, which functions just as the name describes it.

Advantages of the UKISS Hugware

The R-Key can be used to reset passwords or provide recovery in its simplest and most secure form in the event that the A-Key becomes lost or damaged. This feature is a great alternative to the more common function of complicated 24-word-long recovery phrases that are required among all the hardware wallets in the market.

The purpose of R-Key will eliminate the existence of phishing attacks and human errors. Set to launch in Q1 2022, UKISS Hugware bridges the gap between vulnerable hot wallets and inconvenient cold wallets, the ‘plug and play’ design is suitable for even the least tech-savvy crypto users out there.

Each UKISS Hugware device is also tamper-proof and will be issued with a Certificate of Authenticity that will be signed and recorded on a blockchain. A five-year warranty is guaranteed for each device so crypto users can sleep soundly at night.

Also read: Is your team growing like never before? You might want to start fixing your business spending now

Moreover, UKISS Hugware is more than just a hardware wallet, it acts as the key to safeguard private and confidential data, and can be easily paired with an ever-expanding suite of digital security applications that will be available on a subscription basis, such as U-Hide, which provides encryption of sensitive files, and U-Archive, which provides safe and encrypted backup of documents on Cloud. The subscription model can be paid through their very own digital currency, KISS Token.

The UKISS Hugware technology has been patented in more than 20 countries, including Singapore, and most major markets across the United States, Europe, China, Japan, India, and Southeast Asia.

Changing the game of digital security for crypto users worldwide

UKISS Technology has officially formed a strategic business partnership with IBM®, joining the IBM PartnerWorld ecosystem in developing and distributing new, innovative solutions that address fast growing and emerging technology paradigms including Digital Assets Infrastructure, Artificial Intelligence, “X” As-A-Service, Internet of Things, Cyber Security, and Blockchain.

“Our partnerships with some of the world’s leading technology firms such as IBM are empowering us to realise our company’s vision to make top notch digital security accessible for everyone. We embark on high potential markets together with the intention of developing game-changing solutions that redefine the blockchain industry and to enhance security for the new era of Metaverse,” explained UKISS Technology CEO, James Gan.

Also read: MRANTI to drive higher “return on ideas”

Founded and incorporated in Singapore, the UKISS Technology team is made up of veterans with over 30 years of experience in the security, blockchain, and IT industries. Redefining enterprise-trusted technology for the consumer market, UKISS Technology aims to establish a decentralised security framework for the Metaverse, making it a safer space for users by offering a ‘survival kit’ that protects decentralised digital identity, crypto assets, and also one’s documents and contracts. It is complexity made simple – the UKISS Digital Security Ecosystem offers users a one-stop; secure yet simple gateway into the world of DEFI, Metaverse, NFTs and more.

For more information, visit UKISS Technology’s website.

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This article is produced by the e27 team, sponsored by UKISS Technology

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Amidst a bold new future of digital leadership, cloud systems are the driving force powering digital transformation today, but they can also be an overwhelming proposition.

According to Alibaba Cloud’s ‘Cloud in Asia’ survey conducted in November 2020, while Singapore tops cloud adoption in ASEAN with nearly nine in 10 organisations in Singapore using cloud services, the issue of cost and security concerns remain.

However, through investing in and harnessing the right technology, startups can worry less about compliance and focus more on strategic growth plans. If you’re a small business owner that’s unsure of how to start, here are five tips to building cloud resiliency through cloud agreements and scale your business.

Prioritise a digital culture

Today’s leaders must live, breathe, and drive the right digital mindset, skillset and cultural changes to reimagine how the business is being operated in the new market reality. A digital culture will empower your talent to collaborate and grow in their roles and help nurture innovation and unlock business growth. 

Ensuring employees possess both the relevant skill sets and have an open mind to upskilling is the key to success. That’s why it’s essential to offer appropriate training and development as part of the roll-out.

It’s also beneficial to identify tech evangelists that can set a ‘digital culture example’ and help inspire other employees to embrace digital processes.

Also Read: Cloud kitchens: What are they, how do they work, and why are they so popular? 

Establish a connected ecosystem

A “system of agreement” refers to the functions associated with preparing, signing, acting on and managing agreements, so building connectivity between all these functions is critical.

Especially for startups, it’s crucial for business leaders to ensure that cloud agreements are integrated into existing CRM, ERP, HCM, office productivity and other applications that are already in use.

Through system integrations, agreement workflows can be embedded into employees’ applications. This will create a more holistic business model aimed at improving productivity and a better employee experience. 

We recommend that organisations take the time to assess their current business processes and identify the specific steps that can be optimised.

This way, leaders can use a targeted approach to weed out costly and timely inefficiencies and replace them with a more productive workflow that’s seamless, risk-free and compliant.     

Efficient data management

Legacy agreement processes are often manual and fragmented. As a result, data is stored in multiple systems (both analogue and digital), creating exposure to risk and infringement of data integrity. 

To unlock business growth through data, businesses must first understand the purpose of data collection and the know-how that data is being utilised within the organisation. This will weed out inefficiency in the customer service journey and provide a seamless experience for your employees and customers. 

Also Read: How cloud computing is helping startups navigate the new normal

The data should be captured and stored in a secured manner that doesn’t compromise the trust and privacy of the information.

With cloud-based agreements, data is not only easily stored and retrieved but typically also tracked through a complete audit trail of change history. More importantly, your customers can now fully trust your business model as they are reassured that you put customers first in a compliant manner. 

Capacity at scale

With the rise of e-signature accelerated by the pandemic, customers expect speed and convenience at their fingertips. Primed to deliver this experience, cloud agreements act as a hub to coordinate and connect with related systems and processes.

This helps create capacity, which frees up your team to focus on high-impact wins for the business rather than administration.

Your employees can be empowered to work efficiently on the go, on any device, at any time, at their convenience. This constant connectivity also helps to close business deals at a quicker pace. 

Improved reliability and security

Companies run on agreements, and continuous availability of agreement cloud software is necessary for mission-critical business applications globally. It’s not an option to be down for maintenance or unanticipated problems.

DocuSign, for example, delivers 99.99 per cent platform availability, regardless of the time of year, day of the week, time zone or country. 

Today’s business challenge is designing a hybrid workflow that keeps all the benefits of traditional office life without sacrificing the productive, employee-centric aspects of remote work.

Also Read: How cloud technology makes trading a hassle-free experience

As a business leader, you must constantly stay ahead of critical decision-making to keep the business moving forward with minimal disruption and maximum efficiency.

It’s time to tap into the Agreement Cloud and build the most robust flexible work systems to kick-start your transformation.

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The electric vehicle (EV) market is hot right now — more than 10 million electric vehicles are running globally and if current growth rates continue globally we can expect to reach the stated policy scenario target outlined in IEA’s flagship World Energy Outlook report of 145 million electric vehicles by 2030 across all segments. However, a concerted effort will be needed to hit the sustainable development scenario target of 270 million EV by 2030 — in order to align climate goals with the Paris Agreement of net-zero emissions by 2070. 

Clear evidence that electric mobility is set for rapid growth is seen from the fact that electric car registrations rose 41% during a pandemic year when car sales overall dropped. Increasing adoption of electric mobility in emerging APAC economies and improved EV and battery manufacturing capabilities in Southeast Asia represents significant opportunities for entrepreneurs who can deliver the products and services that make the market more attractive and efficient.

Electric motorbikes, three-wheelers, and delivery vehicles are becoming a common sight across Asia but we know in order to make a real leap in the path to net-zero carbon emissions, we need to see a lot more electric cars and trucks which impact a much larger carbon footprint. Moreover, the lack of charging infrastructure in countries such as India, Malaysia, and Indonesia continues to hamper the growth of the Asian market. For the EV sector to continue to scale faster in Asia, future growth is impacted by a number of key factors — government policies, investments by major automotive OEMs, lower battery prices, and better charging infrastructure.

Also read: How Grove HR is powering the next generation of Tech unicorns

These challenges, potential solutions, and innovations that will support electric mobility growth in Asia were discussed in episode two of Asian Development Bank’s Climatic series. The two-part episode included a talk show where host Linh Thai discussed solutions to remove potential roadblocks with industry experts, and a solution showcase where startups pitched their innovations to the panel of VC investors.

Linh analysed the current state of the industry with Sohail Hasnie, Principal Energy Specialist at the Asian Development Bank and a peer reviewer for the annual electric vehicles outlook of the International Energy Agency. Hasnie began by stating that the rising number of electric vehicles is already having an impact on mitigating the effects of climate change. From the launch of the first Nissan Leaf in 2010 it took five years to hit 1 million EV’s, but the next five years have seen exponential growth to 10 million he pointed out. 

An electric vehicle produces 9 Kgs of CO2 over a 100 km running distance as opposed to 18 ks of carbon dioxide emitted by a regular car, Hasnie explained. He added that since electric motors are 98% per cent efficient, they also deliver huge energy savings — a crucial factor for countries in Asia still largely dependent on fossil fuels. 

So while it is clear that electric vehicles can make a significant impact on mitigating climate change, the need of the hour is for entrepreneurs who can commercialise and apply new EV technologies to ensure the exponential growth projections of the market does not run into obstacles.

Asian Development Bank also has a venture arm called ADB Ventures which supports such initiatives. One recipient of the organisation’s investments is India-based company, Euler Motors, which is focused on the light electric commercial vehicles segment. Bridging gaps in the underserved EV market in one of the world’s most densely populated economies, ADB’s support could help the company develop its services and ultimately scale regionally.

Investing in double bottom-line impact

Linh Thai asked panellist Doug Parker, an automotive founder turned investor with VC firm Wavemaker Partners about some of the electric mobility startups they have invested in. Parker explained that lithium extraction is a really interesting area for innovation today because faster and environmentally friendly lithium extraction methods will deliver the kind of double bottom-line impact we need to tackle climate change, while still ensuring the EV market continues to flourish. 

Parker said his firm has invested in Summit Nanotech which developed an environmentally friendly, faster and more affordable way to extract lithium. “We’re going to need a lot more lithium as we scale up electric vehicles and this company can help us get it out of Argentinian, Chilean and Bolivian deserts where water is scarce,” said Parker. 

Another double bottom line impact company they have invested in is called Vflow which builds flow batteries that can be used with existing service stations and alleviate problems that electric vehicles might cause to existing electricity grids. Better battery technology is at the core of electric vehicle innovation but is highly problematic due to the environmental impact of current battery manufacturing methods.

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Parker elaborated further on the areas where he believes there are significant opportunities: “We are interested in opportunities around electric service stations — how you can get these service stations connected to the grid again. We’re really excited about commercial fleets — how you’re going to charge those fleets but also how you are going to route those fleets, maintain the batteries over time and how are you going to resell those cars.”

The amount of innovation going on in the EV space really sets a high bar for any company that wants to compete in this space. Parker said his focus was on trying to find companies that can have a “tenth of a gigaton impact — reduce 100 million tons of carbon annually from emissions as well as have a 100 million dollar run rate. Now that’s a pretty tall order but it also helps us really make sure we’re focused on the biggest opportunities. So we are definitely focused on not just dollars but large scale carbon reduction.”

Changing ambitions are leading to higher investment

Sophia Nadur runs the corporate venture capital arm BP Ventures at energy giant BP and investing in electric mobility might seem to be in conflict with their core business but Nadur says BP has a new vision to reimagine energy for the planet. Nadur said BP has “adopted an ambition to become a net-zero company and also help the world get to net zero. So we don’t see electrification as a threat.”

Startups are crucial to this ambition, thinks Nadur, because the energy transition is happening so quickly. Even though BP has deep technology expertise and capabilities, startups can help them find new solutions to old problems, integrate and take new technologies to market faster. Given BP’s resources, this is a potentially excellent synergy of deep pockets and nimble innovators who can together help tackle the energy transition head-on.

Therefore BP Ventures plays an important role for BP to achieve its vision and invest in technology companies that can help BP reinvent itself. It can also help them reduce their emissions and open new opportunities in adjacent emerging digital technology areas. “Because electric vehicles enable much more digital tech stack integration, it’s important for smaller companies to think about it,” added Nadur. BP Ventures has invested in a Chinese company called Publisher which has a tech stack that delivers charging to private cars and fleets, as well as offering battery management capabilities.

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ADB Ventures’ recent investment in Euler Motors crystalises the institution’s commitment to meeting net-zero emissions. Because commercial vehicles run extensively — about 30000 km a year — there is a huge opportunity to reduce India’s carbon footprint. Euler CEO Saurav Kumar said that they are focused on India for now since the country buys around 600,000 commercial vehicles a year — representing a 10 billion dollar market. He believes their vehicles will have strong appeal in regions like Southeast Asia and Europe, so he is confident that Euler can scale globally if they succeed in India.

Kumar thinks there has been a big shift in how the EV sector is perceived in India. He is upbeat about the future since government support is strong with forward-looking policies and with India a signatory to the Paris climate goals. With pollution reaching severe levels in India the government along with the entire ecosystem of OEM’s, charging networks and battery suppliers are together making a big push to develop the market in India, explained the Euler CEO. 

“Every month India is seeing new OEM vehicles getting deployed in the market — lithium was a major inhibitor but lithium cell prices have come down from around 800$-1000$ per kilowatt-hour to 200$ which is a huge cost reduction so the total cost of ownership has started making sense for people,” he added.

Shaping government policy in a critical decade for electric mobility

Talking of government policy, a perspective on what areas governments around the world need to work on to support the sector was given by Kartik Gopal, Senior Industry Specialist at World Bank’s International Finance Corporation. Gopal explained the challenges: “In the short to medium term, you do need some financial incentives to bridge the cost gap between electric vehicles and ICE vehicles, Additionally subsidies to support charging infrastructure development for passenger cars are needed as well.”

Supply chain issues include dependence on minerals like lithium, nickel, cobalt, and manganese for batteries, and rare earth minerals used in high powered electric motors. These minerals are not easily available across the world which could put some countries in a dominant position in controlling the supply of such minerals. “There is a possibility of an oligopoly emerging,” said Gopal, “so we need to make sure it does not lead to another set of challenges for accelerating the adoption of EVs. There has to be sufficient investment in the supply and also in making these resources available for any country that wants to develop its EV market.”

Overall he is optimistic that government policies will adapt quickly enough because he is seeing very keen interest in almost every country where IFC operates. “People are motivated to find solutions.” believes Gopal. This gives him hope that countries will be able to come together and find solutions to the pragmatic and political difficulties of meeting the world’s electric mobility goals. 

Electrification in the automotive industry is happening fast and is a major contributor to meeting Earth’s net-zero carbon goals. The entrepreneurs who can help reduce Asia’s carbon footprint will play a major role in making Asia more resilient to climate change. The second part of the episode was a showcase of electric mobility innovators in Asia. Three chosen startups Green Li-ion, Lithion Power and ETRAN showcased their products to the panel of electric mobility investors.

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

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