“Is this even real? Is everyone going to be talking about something else next year again?”

That was Jonathan Schiff’s response when a group of co-living firms approached him in late 2018 to seek investment and advisory opportunities.

Keen to find out more about the emerging vertical within the real estate industry, the industry veteran set out to travel across the world to experience it for himself. After speaking to several management teams, staying in co-living spaces and interacting with residents themselves, Schiff was won over.

“I was like wow! This does seem to be a secular shift in the way that people are looking at housing,” he shared in an interview with e27.

However, a problem arose. When sharing the idea of co-living with his acquaintances, a recurring theme emerged. “Isn’t that a bunch of 20-year-olds having keg parties on the rooftop every night?” he shared candidly of the encounter.

Thereafter, he realised he had to focus on a niche market to alter these perceptions and do well, especially in the rapidly expanding co-living market, where startups such as hmlet and Cove have emerged in Singapore recently.

Niche market

Seeking to dip his toes into what remains a nascent industry, Schiff founded gnômadic in January 2020. Based out of Singapore, the startup curates luxuriously furnished co-living homes with events to build a community for residents to unwind and connect. Prices start at S$2,500 (US$1,870) per month, with a strong focus on working professionals and expat community.

Also Read: How Rukita turned the pandemic into an opportunity to grow its co-living business

Schiff shares that while majority of gnômadic’s customers are in their mid-30s, it has a diverse range of clients residing in its four properties islandwide.

But the beginning of the company was not easy; within just months of starting, COVID-19 broke out and altered perceptions towards housing. There was a shift towards flexibility amidst the pandemic as uncertainty grew and locals started delaying big-ticket purchases, including property.

However, the movement restrictions imposed within the city-state did not result in an entirely negative outcome, he said.

“The pandemic was a great opportunity for us to learn more about our residents and how to serve them better,” he noted, as we settled in at gnômadic’s latest property Meadow, located conveniently off the bustling Orchard Road.

When quizzed on whether the increased rental demand would remain when the economy recovers, Schiff replied that demand would remain high within the professional community that gnômadic targets, as “highly qualified and compensated people” would continue coming into Singapore.

Community building

Throughout our hour-long chat, it was noticeable that building a community around co-living (through events) was important to Schiff.

Also Read: Why mixed-use is the future of real estate in a socially distanced world

Did the pandemic alter your plans? “Before the restrictions, we would have larger events such as rooftop parties with 20 to 30 people. During the lockdown, we were organising virtual events and that wasn’t a big challenge. The hard part was when physical events were reintroduced with restrictions on the size of the gatherings.”

“People wanted to get out of the house and physically interact with each other. However, there are restrictions still in place and residents are mindful of that,” he elaborated, adding that gnômadic is constantly innovating to come up with new solutions to bring residents together while adhering to the pandemic-induced restrictions.

Besides running gnômadic, Schiff is also Managing Director of a family office and a Director of a private equity (PE) fund. Having both founded and invested in startups across a variety of sectors, Schiff has a few words of advice for entrepreneurs.

“You have to focus on a particular niche. A lot of startups get into trouble because when you’re sitting down with a piece of paper, you can go any direction and could soon lose your direction,” he emphasised.

“Building a team is always important. At the moment, there’s an incredible pool of talent that’s out there in the hospitality sector looking for jobs right now. We are in the process of recruiting and the quality of people coming in is amazing,” he revealed.

Sharing his personal experience as he faced restrictions in purchasing property due to his non-citizen status, Schiff encouraged founders to be adaptable and resourceful to overcome any obstacles when starting up.

Also Read: Why startup founders should be open to pivoting anytime

Future plans

The co-living venture is currently looking to expand its operations into Bangkok and Ho Chi Minh City.

Schiff hopes gnômadic can help foreign professionals acclimatise into the local culture to ease their transition into a foreign land.

Revealing his thoughts on what the future entails for the co-living industry, Schiff remarked while it is still early days and co-living firms are in “unchartered territory”, he believes there would be an increased focus on community building in the years to come.

“The whole community aspect is very fascinating. And it is the thing that’s attracted a lot of people. People are asking ‘who am I going to live with?’ Therefore, we spend a lot of time curating our community,” he remarked.

“Before anybody moves in with us, we get to know their needs and desires so we can best serve those needs,” he said.

Schiff also shared that gnômadic, unlike conventional startups, has an asset-heavy model. Therefore, the business consists of a property management arm running alongside an operations one.

Though the firm has been self-funded till date, he shares it is seeking investments from real estate investment firms and private equity firms. However, he stressed funding remains a desire rather than a need.

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Image Credit: gnômadic

 

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In today’s world, there’s no question that digital platforms play an extremely influential role when it comes to inspiring creativity, enabling freedom of expression and building a strong community. While the internet provides us with many opportunities to freely exchange ideas and connect with others, the principle of freedom of expression is under intense scrutiny as platforms look to ensure they remain an inclusive and safe space for their users.

This industry faces an increasing responsibility to ensure the right voices and content is being spread and heard, and it’s not one that should fall on content platforms alone.

Leading digital platforms have begun creating third-party councils to develop forward-looking policies that not only address the challenges of today but also help plan ahead for the next set of issues the industry will face.

TikTok, for instance, has created an APAC Safety and Advisory Council which I sit on, alongside other leading legal, regulatory, and academic experts to provide advice on content moderation policies and trust and safety issues specific to the APAC region. The Council will provide subject matter expertise and advise on TikTok’s content moderation policies and practices to help shape regional and global guidelines.

Policies related to free speech and censorship

While today’s leading digital platforms all take a different approach to democratising content, allowing it to be developed, shared and consumed more easily, not all online content is appropriate or safe. For this reason, platforms must establish clear community guidelines and create forward-looking policies that will mitigate the spread of harmful content.

Most platforms agree that dangerous individuals and organisations should not be allowed to spread hateful ideologies or illegal activities, as well as violent and graphic content, content related to self-harm and dangerous acts, hate speech, harassment, sexually explicit, or misleading content. However, addressing these existing and emerging issues can be difficult as platforms are scrutinised for their moderation guidelines.

Also Read: Cybersecurity threats on the rise as companies shift to the WFH model

To provide more transparency into how platforms are keeping users safe through moderation practices, platforms such as TikTok have begun to develop Transparency Reports providing insight into how it responsibly responds to data requests and protects intellectual property. The Council’s mission moving forward is to help outline TikTok’s approach to policies to protect the safety of its community members across the APAC region, while maintaining full transparency to its users.

As a diverse group of legal, regulatory, and academic experts, we believe one of the best ways a platform can keep its users safe is by empowering the community with tools and education.

Policies related to online safety

The most important commitment the industry faces is to keep its community members safe. This is a challenging but critically important area for the industry to get right, and platforms should look to approach the protection and safety of their users through policies, product, people, and partners.

From a policy perspective, platforms should be steadfast in their commitment to immediately remove content, terminate accounts, and report harmful cases to law enforcement as appropriate. They should also build strong safety controls, and invest heavily in human and machine-based moderation tools, as well as work with third parties to identify and remove hateful content accordingly.

As external Council members, our primary focus is to identify and solve challenges related to children/underage kids, digital literacy, mental health and human rights. We are a diverse group of experts comprising of backgrounds in IT, digital safety and literacy, intellectual property and internet law, and advocates of child safety, women and other marginalised groups, who are committed to addressing these challenges.

Community effort to make digital platforms a safe space for all

If we exclusively put the onus on platforms to keep communities safe, we will fail. Policymakers, regulators, the platform and its users all have a stake in making digital platforms a safe space for all. Though we all come from different cultural and professional backgrounds and may provide differing opinions on how to keep the community safe, we will work together to spot gaps in content moderation policies and provide advice on the best path forward.

Also Read: VNG sues TikTok over alleged copyright infringement in Vietnam: Reuters

The road ahead isn’t going to be an easy one, per se, but it will be worthwhile as we collectively work together to tackle industry-wide issues. Our Council has long been committed to serving the online community in our own individual capacities.

Now, we’re looking forward to uniting in this endeavour to make the internet safer for users all across the APAC region, taking diverse cultural, religious, and other social nuances into account.

–

Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

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Soon after being announced as the winner of Singapore’s waste-tech startup competition WASTE 20/20, organised by StartupX in partnership with Enterprise Singapore and The Incubation Network, e27 decided to interview Magorium co-founder Chu Xian to find out more about its vision.

The startup recently received prize money of approximately US$19,000 and managed to outshine over 100 waste-tech startups that had applied for the competition from over 32 countries globally.

The issues of plastic waste have been prevalent throughout the world but have mostly been a major social issue in Southeast Asia, excluding Singapore. Without a viable recycling solution, plastic waste is indiscriminately burned releasing cancerous and pollutive emissions.

While many companies are striving to solve this issue, the lack of strict protocols on plastic production and consumption, coupled with lack of public awareness has led to an increased level of pollution.

Founded last year by Xian and Adriel Ng, Magorium aims to solve the converts plastic into polymers, which are then used to produce high-quality bitumen used for road construction.

Here’s an excerpt from the interview:

How did you come up with the idea of Magorium?

Having experience in the construction industry, the technology was initially an attempt to create more sustainable construction material.

Through years of R&D, we found ourselves not only a better performing alternative material but also an effective plastic waste recycling solution.

Also Read: How Maeko aims to reduce communal food waste through composting

What makes Magorium different from others who are already in the business?

Our technology can recycle a wider range of plastic types and incorporate a higher percentage of it into the roads. Hence, we believe that ours is a more effective recycling solution.

Can you share with us a story about the hard times that you faced when you first started your startup? Where did you get the drive to continue even though things were so hard?

When we first started, we approached different stakeholders essential to the success of our technology – the waste management companies, construction companies and the relevant authorities regarding commercialisation and adoption of our technology. There were substantial pushbacks from all the stakeholders as everyone was waiting for the first party to come onboard before following.

It was really frustrating trying to navigate the whole chicken and egg situation. We did not consider giving up, but it did feel quite helpless and we considered commercialising this technology outside Singapore instead. The drive to not give up stemmed from my team’s belief that our technology is one of the most viable and effective plastic waste solutions to date. If we held that belief and still gave up, I suppose you could say that we would truly feel to some degree responsible for the worsening plastic waste crisis.

What are the industry challenges you have observed that concerned you to jump into this space?

The largest challenge is the underlying problem: lack of market/ demand for recycled plastic. The common perception is attributing the plastic recycling problem to “people do not recycle properly or don’t want to recycle”. But the truth is that even if people were recycling properly, there is no technology to convert all these recycled plastic into a product which has a market. The properly recycled plastics would have nowhere to go.

Upon identifying the true problem, we realised that our technology could potentially be the solution to this problem as road infrastructure is a necessity worldwide. In converting it into a material to build roads, we are giving plastic waste a new lease of life as valuable feedstock with stable demand.

What is the roadmap for your company going forward?

We want to be able to further our R&D to increase the efficacy of our technology as a recycling solution and continue forming more partnerships with relevant stakeholders.

Also Read: Getting smarter with tech: How will smart cities look like 10 years from now? 

We are also planning on scaling into the Southeast Asia market where plastic waste is one of the largest problems.

How has COVID-19 affected your startup?

Our startup is reliant on the demand for road infrastructure materials. In Singapore, there were a few months where the majority of construction works stopped. This significantly slowed down our progress.

During the circuit breaker, an additional 1,334 tonnes of plastic waste was generated from takeaways or online shopping. These habits which developed during circuit breaker emphasises our reliance on plastic and the urgency to find a viable solution.

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Image Credit: Magorium

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If you don’t see the Spotify podcast player above, click on a link below to listen directly!

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Today’s Guest – Mony Gueorguiev

Our guest today is Mony Geuorguiev, a Bulgarian who grew up in the US, and the founder of Maidily, a software that helps cleaning companies manage their clients and schedules.

We met a few weeks ago when he responded to my request for entrepreneurs to answer the question “What stopped me from starting my first company?” If you haven’t seen the post yet, his response was a fear of failure, which I found to be a very common answer among those I received responses from. Eventually, he got tired of being in the “rat race”, and he decided to start his own e-commerce business. After building it into seven products across three brands, he sold the business. After that, he started a turnkey, fully automated, cleaning business!

While running the new business, he realised that cleaning business owners needed to use specific scheduling/CRM software to operate, and his current company Maidily was born. I normally do introduction calls with all my guests, and the typical call goes for 30 to 45 minutes, but Mony and I struggled to get off the phone after two hours of talking because we found we had so much in common. For example, we’re non-technical founders running technical companies in the B2B SaaS space and have completely remote teams, and he lives in Atlanta where my brother is, and he was trying to move to Singapore (where my company is) before the virus made it impossible. So today we honour his drive to find and exploit opportunities, and let’s give Mony a warm welcome!

Let’s give a warm welcome to Mony Gueorguiev

LinkedIn: Mony Gueorguiev
Website: Maidily

Also Read: How Cooklab seizes new opportunities during the pandemic to become Indonesia’s answer to Blue Apron

You’ll learn about

• Being an immigrant in the US
• Fitting into life in the US
• Being multi-lingual and how it’s beneficial for solving problems
• Discovering the American dream isn’t what they said it was
• Figuring out how to take advantage of a situation and turn it into a business
• Why e-commerce businesses are hard
• How to approach any new business

Resources

And remember, Entrepreneurship is a Marathon, not a Sprint, so take care of yourself every day, so that you can live and love, and have the energy and the passion to run your business, and to invest in your team, and to find a way to appreciate those moments of happiness.

—

This article was first published on We Live To Build.

Image Credit: Michal Czyz on Unsplash

The post Advice on exploiting business opportunities with Mony Gueorguiev appeared first on e27.

As we look back on decades of economic growth in Asia, we see a region that has emerged as a global powerhouse, with a rapidly rising share of global trade and manufacturing output. For this success story to continue, financial inclusion is a critical area that needs to be addressed.

The World Bank estimates that over a billion people in the region have no access to formal financial services – in other words, without formal employment, bank accounts, or the ability to participate in both offline and online commerce. In Asia’s developing economies, large segments of society are in danger of falling further behind without access to basic services like low-cost remittance and loans.

The good news is that technology has been a driving force behind significant changes in the financial services industry. One instance of such change is in how banks and fintech startups are now empowered to service these previously excluded groups of people, while maintaining industry-leading standards of security and regulatory compliance.

With large investments being made in the region, a figure KPMG estimates at US$8.1 billion in the first half of 2020 alone, there are more opportunities and possibilities than ever before to ensure financial inclusion. All this bodes well for the region: empowering wider swathes of the population to participate in greater levels of economic activity will bring about long-term benefits for economies.

Overcoming geographic limitations

One of the greatest factors causing financial exclusion is the distance between rural areas and bank branches, which often makes it impossible, or at least extremely time-consuming and inconvenient, for people living in these areas to access banking and financial services.

The advent of smartphones and digital financial apps have been a game-changer, making the need for physical proximity less relevant. Currently, 66 per cent of the population in Asia Pacific is subscribed to mobile services, and with this figure expected to increase to 70 per cent by 2025, we can expect to see more of the unbanked overcoming the rural divide.

Also read: Banking the unbanked: Have cryptocurrency project achieved the most claimed utility of the blockchain?

On the flip side, rural banks are also embarking on digital transformation initiatives to scale their presence. These efforts were accelerated this year by the outbreak of COVID-19, which drove higher demand for digital services. Some fintech help rural banks bridge the digital gap. In the Philippines, for instance, born-in-the-cloud fintech startup Pearlpay has empowered 450 rural banks in the country to reduce their data centre footprints through its cloud-based core banking solutions.

Opening up economics opportunities

An important element of financial inclusion is ensuring small businesses and citizens in rural areas have access to funding, which they can then use to improve their livelihoods, and their daily lives. Traditionally, this has been an issue because individuals lack credit history or collateral; the high costs of processing loans pose obstacles to the viability of offering such loans.

India’s CreditVidya is tackling this exact issue by using artificial intelligence and machine learning technologies to analyse payment data, financial behavioural data, and smartphone device data to score loan applicants’ creditworthiness. This is opening up loans to millions of Indian citizens that were previously financially excluded, with CreditVidya now processing 100,000 loan applications daily.

CreditVidya’s technology significantly reduces the cost of processing loans, making it financially viable to offer such loans. In Indonesia, Amartha Mikro Fintek is helping to connect entrepreneurs in rural areas with investors, allowing them to seek funding more easily. The company is also using analytics and open source business intelligence tools to analyse loan default data and keep non-performing loans below three percent, well under the global industry average.

Simplifying financial matters

Technology is also bringing about equity by enabling easier access by a broad cross-section of customers to financial opportunities that were previously regarded as overly complicated. This is opening doors, and levelling the playing field even for those who might be averse to financial mechanisms due to a lack of understanding.

For example, Singapore-based StashAway is a virtual wealth management platform that allows people of any level of net worth to invest in capital markets. It also personalises portfolios for individuals based on their existing assets and risk preferences. Using cloud technology, StashAway not only cut infrastructure costs for development by 90 per cent, but also built a robust platform that could quickly scale up to serve thousands of customers while also ensuring compliance with multiple country-specific financial regulations.

These are inspiring examples of how innovation and digital disruption are positively improving lives across developing and developed economies, while simultaneously driving economic growth. The fact that private and public sectors are working together, and paying more attention than ever before to drive such initiatives, lays a foundation for a brighter future, giving cause for optimism for the region’s future.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

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

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Smart technology promises greater peace of mind and autonomy for users. Not only will it provide greater convenience, it also facilitates better connectivity and control of their home and office environments and through automation allows people to spend more time and energy on the things that matter to them.

When I started Habitap in 2016, I built it on the premise of bringing technology seamlessly into our homes to empower our vision of a smart nation. We created a seamless user experience around three key pillars: Smart controls, smart community and as a lifestyle gateway, into an integrated mobile app.

We aim to make it easy for users using various brands of smart devices to control their devices on one convenient platform in a bid to introduce the use of smart home devices to the masses. We focused on pre-integrating them seamlessly into one single mobile application, with a consistent and therefore familiar user experience.

We recognised that we also live in communities and access common areas functions such as booking of meeting rooms, simple functions such as opening of mailboxes, or accessing e-commerce parcel stations and we linked them to the Habitap app.

I like to think that we are revolutionising the way people can interact with common spaces. We have transformed old school visitor management into the digital age. Today, visitors will be issued with a QR code so they could scan and enter condominiums. Homeowners could also receive a video call from the visitor on their mobile phones without the need to do so from the typical wall-mounted intercom screen in our home.

We also understood the growing trend of accessing lifestyle services from online platforms, and have made Habitap a convenient and seamless gateway to major platforms from transportation to food delivery and even home cleaning services.

Also Read: Fasal’s IoT device increases yield, reduces wastage by helping horticulture farmers make smart decisions on crops

In 2017, we pioneered this same smart living concept in office buildings and workplaces. And over the last three years, we saw a rapid surge in commercial developments adopting smart building platforms to provide convenient digital access for both tenants and visitors.

Habitap alone manages 15 commercial buildings. As you can see, smart technology for managing buildings is fast becoming the norm in Singapore. All of the above sought to bring connectivity and control to people, with the idea of offering a convenient way to manage their homes. Through this, we hope to help them improve their lives.

By 2020, the market has come to accept a new norm: a connected world from the home to office where most services could be accessed using an app. What is exciting is how we could now use this connectivity in a more predictive way.

Using A.I and data, your home would be able to learn your preferences and offer insights into creating greater convenience in your life.  For example, if you always used the water heater or the air conditioner at a specific time of the week, the A.I component could prompt you to turn it into a preset.

The pandemic has changed the way we all live and work

In the near term, the immediate challenges are how we perform contact tracing and distribute real-time news and alerts. Habitap has been pivotal in becoming a readily available and suitable platform. At short notice, we were able to send alerts to all office tenants and condominium residents in the form of push notifications and measure readership of those alerts.

Within four weeks of the circuit breaker Singapore, we integrated safe entry and temperature taking into building access control systems and present data reports to ensure safe measures were in place.

In the long term, the real estate industry recognises the inevitable changes to how we live and work. Contactless functionality is now a requirement in real estate designs. For example, electronic parcel stations create a buffer for deliveries of all office parcels.

Also Read: Smarter Cities will help, but not solve, global pollution crisis

In upcoming condominiums, food delivery stations and gym pods are being integrated into the design. The concept of using our mobile devices as digital access is now further developed into elevator call panels where users can call for elevators using a mobile app.

Moving forward from 2020, Habitap aims to be that app that connects people together through physical and virtual spaces. Secure and intelligent, Habitap manages facilities and offers services where every individual can enjoy the benefits of belonging to the community.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

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Peak into the private members club in any city and you will find a room full of lawyers and financiers drinking fine port. Little investment business is done, however. Investors want to place their money in fast-growing startups, not stodgy, conservative law firms. But that’s all changing. With the rise of legal tech startups, investors are hungry for deals in the high growth legaltech sector. 

The smart money pumped US$1.2 billion into legaltech startups in 2019. All of a sudden stodgy law firms are calling themselves legaltechs. But not all law firms with their newfangled tech solutions meet the definition of a legaltech.

Legaltechs leverage technology to deliver more efficient and lower-cost legal services to lawyers, businesses, and consumers. Their goal is to make legal services accessible to everyone.  

The legal and judiciary systems have well-earned their reputations as stodgy. They have traditionally been complex and expensive to use. Facing these barriers, many businesses and individuals have not had fair access to the legal system. Large enterprises pay through the wallet for legal services, while smaller businesses often have no legal recourse if a business partner fails to fulfill their half of the contract. 

If you cannot beat them, join them

The legaltech movement is quickly dis0intermediating traditional law firms. Businesses and individuals have been turning to alternative legal services (ALSPs) to reduce costs. These services perform document drafting, contract management, regulatory compliance, investigations support, and other legal services. Through technological efficiencies, they strip time and costs from legal services. 

Law firms are facing the stark reality that clients now have an alternative to their high billable hours. To compete they, too, are migrating to alternative legaltech services delivery models. As law firms become a major consumer of legaltech, investors are placing the largest slice of their money in legaltech solutions for law firms. 

Also Read: Indonesian legaltech startup Justika raises pre-Series A funding by top law firm

Private equity firms have made the bulk of their investments in contract management and document management startups — among the top three technology adoption priorities of law firms, following eSignatures. 

One-stop legal outsourcing shops

One-stop shops for legaltech solutions have attracted the most money. Clio, a cloud-based legal services portal for lawyers, raised a whopping US$250 million from investors. Over 150,000 lawyers use the software to automate and organise legal documents, handle billing, and manage client referrals. Legal enterprise software firm Onit took in the second-highest investment round of US$200 million last year. 

Remote law services 

As more people transition to remote work in response to COVID-19 confinements, sole lawyer practices are accelerating their adoption of legaltech solutions. The trend towards remote work is pushing lawyers to deliver their services in more cost-efficient ways. In this segment, investors are investing in legal contact management software (Liftify US$50,000), cloud contract management solutions, (Icertis US$115,000), and electronic signatures (Fadada US$55,000).  

DIY law

Individuals are the third largest consumers of legaltech. LegalZoom has emerged as the largest provider of ready-made legal templates for business services, trademarks, and wills and testaments. The legaltech has received US$811 million in funding, including a US$500 million funding round in 2018 led by Francisco Partners and GPI Capital. Investors are sprinkling money on other consumer legaltechs, including online notary Notarize and will creation website Farewill. 

The rise of the AI legal bots

Artificial intelligence (AI) and machine learning (ML) are bringing significant efficiency improvements to legaltech. Very smart algorithms will be a major growth driver for both established and startup legaltechs going forward. With an AI bot, a lawyer can review a contract in 20–90 per cent less time. Investors have backed over a dozen AI legaltechs including ContractPodAI, Evisort, Lumina, Verbilt and LinkSquares.

Corporate legal departments are using these AI legal bots to analyse and synthesise legal documents. The leader Luminance, incubated by mathematicians at the University of Cambridge and used by over 250 law firms, delivers an 80 per centreduction in contract review time and costs.

Also Read: When does your startup need a legal department?

These AI bots also do legal research, patent searches, due diligence, and amazingly conduct client interviews. Josef, a startup founded by young lawyers, has replaced lawyers with chatbots that can conduct client interviews and draft documents. 

Propelled by the high-efficiency improvements, legal community demand for AI legal tech solutions is expected to grow 39 per cent between 2018 and 2023. 

Smarter smart contracts

Bots are getting smarter but they are not as smart as smart contracts. The Alphabit Fund made what could be the most significant investment in legaltech this year. The specialist investment firm in digital ledger technology (DLT) and the blockchain led the investment round in the PAID Network, an advanced smart agreement enabling attorney-free business transactions, litigation, and settlement processes. 

The Paid Network has developed Smart Agreement templates that automatically provide the legal wrapping for contracts. Smart contracts remove trusted intermediaries like lawyers and banks from the transaction. They automatically execute transactions and actions according to the established terms of the contract. A smart contract is executed in near-real-time when the blockchain platform token is deposited, in this case, the Paid token.

With the Paid Network Smart Agreement, parties to an international trade contract can execute a legal clad contract at the same time they execute the payment transaction. Or two counter parties to an over-the-counter (OTC) swap agreement can use the smart contract to remove counter party risk. The Smart Agreement’s escrow account protects both parties.

Legaltech meets fintech

Financial institutions with high volume transactions can reap significant time and cost savings from automation. JP Morgan has been a big beneficiary of legaltech. The investment bank is using legaltech to manage counter party risk in credit agreements, and soon credit-default swaps and custody agreements. In the global OTC derivatives market, counter parties had USUS$2.4 trillion in credit risk exposure in 2019. 

JP Morgan Chase, a top-four bank dealer in the swaps market, was seeking a more efficient process for analyzing its 12,000 credit agreements a year. The solution? The investment bank built its own intelligent document management software called COIN (Contract Intelligence) to slash legal costs. The efficiency gains are nothing short of astounding. In seconds, COIN can process contract volume that previously took 360,000 man hours. 

Also Read: What tech startups need to know about the legal aspects of online marketing

A smart contract has the potential to do even more at a faster rate. The beauty of a smart contract is its simplicity. Any number of functions can be simultaneously performed in near-real-time. The PAID contract, for example, also incorporates the upfront negotiation and arbitration processes, should a dispute arise. A reputation scoring system helps reduce counterparty risk. 

The Paid Network is a parachain (blockchain platform with its own token) on Chainlink. As such, it can run all the above services in parallel with services of over 100 parachains. All of the aforementioned functions of legaltech solutions can be wrapped into one smart contract. 

Paid Network is the only blockchain legaltech startup to receive funding to date. That’s surprising given the additional business risks mitigated by digital ledger technology. DLT transactions are transparent, trackable, and irreversible. 

Following their investments this year, legaltech on the blockchain is poised to be the next hot legaltech investment sector. All major companies across all industry verticals are adopting blockchain business solutions. Ninety-one percent of businesses plan to improve business performance by adopting blockchain solutions, according to the Deloitte Global Blockchain survey. The legal industry, however, has been slower to catch on to the paradigm shift in business transaction management underway.  

Many companies are already conducting trade, commerce, and financial transactions with smart contracts. Like the mainframe, the legal industry will need to adopt more efficient technology-driven platforms. The legaltech model is well suited to run on digital ledger technology.

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Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

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

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Decacorn Capital, a Singapore-based cross-border tech VC firm, announced today it has invested in Qupital, a China-based fintech startup. Decacorn joined Qupital’s Series A+ funding round, alongside existing investors Alibaba Entrepreneurs Fund, MindWorks Ventures and Chinese fintech conglomerate CreditEase.

The funding news comes off the back of a US$15 million Series A round in 2019.

As shared exclusively with e27, Qupital plans to utilise the new funds to bankroll its expansion beyond Hong Kong, Shanghai and Shenzhen to other key e-commerce hubs in China, namely, Beijing, Guangzhou, Yiwu and Hangzhou.

Founded in 2016, Qupital is a B2B fintech platform that harnesses big data, blending fintech with e-commerce by using its proprietary credit assessment model to provide short term working capital to Chinese e-commerce merchants selling on Amazon, eBay and Lazada amongst others.

As per a 2019 TechCrunch report, Qupital had processed 8,000 trades, totalling HK$2 billion (US$258 million) in value.

Also Read: How fintech is making credit more accessible for Southeast Asian SMEs

“Besides the razor-sharp and well-demonstrated execution capability of the Co-founders Andy and Winston, it is Qupital’s unique big data analytics capability where we see the real moat,” said Debneel Mukherjee, Founder and Managing Partner at Decacorn Capital.

“We believe Qupital is at its inflexion point, ready to scale rapidly fuelling the working capital needs for the online exporters fulfilling the massive upsurge in global digital online shopping trend,” he added.

“As Qupital is looking to expand our reach in Asia, Decacorn’s strong ties to the local ecosystem coupled with cross-border experience across the US, Europe and Israel, provides us with the resources and connections that we value,” said Andy Chan and Winston Wong, Co-founders of Qupital.

Decacorn Capital’s most recent investments included GridIO, BioCatch and Sixgill.

The firm has invested across different verticals and geographies, from Israel to USA and Estonia besides its home turf in Singapore and in cybersecurity, Artificial Intelligence and big data analytics.

It is also known as an investor in Snap Inc and had exited through the startup’s IPO.

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A crisis also brings opportunities. Changes unfolding in the global economic landscape with COVID-19 have leaders re-evaluating growth strategies and business models, all conventional ways to work have been put through the grinder; we’re seeing the emergence of a new normal.

The financial sector has stumbled upon a hitch, as fund managers find it difficult to raise money for a first or final fund close. For those with dry powder, the challenge to wisely allocate funds, appoint a new team or go with an existing team is seen rising.

Investors across the globe share the belief that due diligence (DD) forms the most critical component of an investment process. Agnostic of the type of financial organisation– VC or PE fund managers, family offices or institutional ones, DD is a key process followed before investing in a fund or company.

The process of DD has multiple facets such as investment strategy, target markets, financial, legal, business, reference checks and more. Pre-pandemic, the process demanded on-premise and in-person engagements, which could go on for weeks, if not months. For example, an investment in a manufacturing company involved physical meetings at the production facility.

In sustainable agricultural technology investments it was standard DD to meet the different value chains and local producers, to review utilisation of the technology in real-time. These meetings were followed by interviews and more meetings with the staff and other investors, checking internal systems, processes and technologies.

Why? The findings and impressions gained during the DD stage can make or break a deal and can be the difference between investors making money or losing everything.

Also Read: Due diligence meets imagination: How SGInnovate plans to further support the deep tech ecosystem

Changing the course

Cut to the pandemic era, financial organisations now have to adapt to the new rules of due diligence. Futuristic investors and fund managers see an opportunity in revitalising investment due-diligence processes and infusing technology to weed out the inefficiencies. Communication tools such as Zoom, Microsoft Teams, Google Meet, and others are already par for the course; they were here before the pandemic and certainly will outlast the pandemic.

Platforms such as Dropbox and Google Drive find more user reliability instead of tracking documents on emails. These widely used tools help create easily accessed cloud content, collaborate remotely and share heavy files, enabling the due diligence team to gather information and insights fast, easy and effectively.

In addition, improvements in data management, records digitisation and videoconferencing technology, help one to carry out effective due diligence reviews virtually. This has worked well for VC funds who have seen increased interest from institutional investors, and who want to show that they can continue to invest capital in promising companies in a pandemic world.

A study by Omers Ventures of 150 VCs across the US, Canada, the UK and the rest of Europe shows that just four per cent of VCs are opposed to undertaking remote deals. Among the 96 per cent of VCs open to it, 42 per cent said they are willing to make changes to their processes to enable this. Interestingly, 40 per cent of the VCs surveyed said they had already done a fully remote deal, while 60 per cent are yet to do so.

With the practice of virtual DD, physical engagement can be kept to a minimum or eliminated entirely or undertaken only if absolutely required. 

How to go about normalising remote due diligence

There is no one shoe fits all practice to take this forward. VC funds address virtual DD in multiple ways as they focus on closing their pipeline of deals. In instances, relationships have been established with founders through meetings and conversations that have been going on for months, much before COVID-19 struck, and term sheets have already been signed. Closure of these deals has been relatively easy, as evidenced by the continued global flow of VC capital in Q2.

Also Read: Due diligence meets imagination: How SGInnovate plans to further support the deep tech ecosystem

With others, initial conversations have been fruitful, but final DD and signatures are pending. VCs are actively leveraging partners in the areas where these potential investees operate to drive some level of due diligence. Backchannels and talking to third parties were always an important driver for insights and this has further increased.

Further what simplifies the DD process is connecting with previous investors or funds who have already entered in the investment. Some VCs and other investment firms have, during the pandemic, done approximately 30 per cent of their due diligence remotely. Virtual tours have helped provide facility tours.

The quantum of discussions with founders has increased both at the individual level and in groups. Founders are also being encouraged more to connect across the network — with funds, entrepreneurs, and accelerators — in their local region. Remote DD has shown the critical role technology plays now when making an investment decision. References and testimonials apart, technology is the main driver of remote due diligence processes today. And from the looks of it, will continue to be so going forward.

Just Zoom meetings are insufficient to entirely conduct DD when mobility is hampered. Potential investees are working hard to help potential investors find ways to visit their factories, offices or warehouses and see first-hand what’s happening, how employees are engaged, how much stock they have and gather other information that will help the deal move forward.

Dependency on co-investors too has increased. Founders are under even more pressure to come with strong references. The increased emphasis on client checks is encouraging portfolio firms to try out the products or services of the companies under due diligence.

Be wary of betting on the wrong horse

DD is a multi-fold process and may not be always contained within set timelines. The current situation may lure investors to make mistakes. Lack of performance can be disguised under the pandemic, and going just for the supposedly “winner” sectors during COVID-19 may result in an expensive and simplistic approach, where you bet on the wrong horse.

Also Read: The hidden side of fundraising: how due diligence can make or break your deal

The fact that you’re conducting remote due diligence should not relax the depth of the analyses. If anything, there are now new scenarios to play with, new indicators to look at, to see if we’re in front of attractive investments or not. The good news? It all can be done remotely.  

Business continuity is the ultimate goal

In the current situation, where travel is significantly restricted, if not impossible, not institutionalising remote due diligence will limit business progress. Of course, having a large, well-dispersed team with deep industry relationships can be an invaluable advantage in the current environment. Nimbler investors who can harness the power of technology and couple that with a well-tentacled network may be at a significant advantage as they will draw on local capabilities to maintain due diligence processes and capture new opportunities.

Investors unable to draw on such resources will need to outsource parts of their process to trusted third-party specialists. The pandemic and the challenge that it imposes on due diligence should therefore not be an excuse to let the baton slip. It should be the catalyst that enhances scrutiny by utilising technology to further augment existing processes.

Undoubtedly, the process now takes longer; it involves far more scrutiny. A simple thing that spoke volumes during normal times, which VCs now miss, is picking up on nonverbal cues when interacting with people or teams in person. Zoom calls cannot compensate for this. A few investors will, nevertheless, prefer waiting it out till the pandemic is over.

That may just turn out to be a long wait. And there are too many challenges in the world waiting to be solved through companies using innovative technology. The investing world cannot grind to a halt.

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Singapore-registered FinAccel has promoted deputy CEO Umang Rustagi as CEO of its Indonesian digital lending platform Kredivo.

Current Group CTO Alie Tan will be taking over as CEO of KrediFazz, the group’s new P2P business unit.

These are part of a series of top management changes that FinAccel has announced recently.

Joining Rustagi in the C-suite of Kredivo will be Valery Crottaz as its COO and Paramananda Setyawan as Chief Data Officer.

Akshay Garg, current CEO of Kredivo, will be moving to a the role of Group CEO, who will be supervising Kredivo and KrediFazz.

Rustagi and Tan will continue to hold concurrent responsibilities as Deputy-CEO and CTO of FinAccel group, respectively.

The changes will be effective from the start of 2021.

Also Read: Why P2P lending can be the end of banking as we know it

FinAccel said in a statement that these changes reflect a streamlining of the group structure to better serve its vision of serving 10 million customers by 2025.

Under the new structure, Kredivo, which operates under the MFC license, and KrediFazz, which operates under the P2P license, will have different focus areas.

As part of this realignment, KrediFazz will target to expand its coverage of productive loans from 35 per cent to a target of 50 per cent over the next two years, focusing on serving the under-served and marginalized segments of society.

Also Read: How fintech can help reach the unbanked and underbanked in Southeast Asia

Garg, Rustagi, Tan, Crottaz and Setyawan said in a joint statement: “We are on a once-in-a-lifetime journey to expand access to financial services to under-banked and under-served segments of Indonesian society. With these changes, both Kredivo and KrediFazz are better placed to scale, while allowing the FinAccel group to push into new areas of innovation.”

FinAccel is company backed by Mirae Asset, Naver, Square Peg Capital, MDI Ventures, Jungle Ventures, as well as several other investors.

Last month, Kredivo — which provides instant credit financing to customers for purchases on e-commerce, offline and cash loans, processed based on real-time decisions — secured a credit line funding of US$100 million from US-based investment company Victory Park Capital (VPC).

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Image Credit: FinAccel

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