N-Squared Ecommerce Group, an e-commerce distributor and solutions provider in Thailand, has received an undisclosed amount in Series A funding from a clutch of investors, including KKP Capital, Siam Alpha Equity (SAE), Chanwanich Group, AHMP and ECG-Research.

The funds will be used to strengthen its core technology and services and expand its footprint across Southeast Asia.

“According to Statista, the e-commerce market in Southeast Asia is expected to grow by more than 402 per cent from 2019 to 2025. Following this growth opportunity, we are scaling our international businesses across Southeast Asia to countries including Malaysia, Singapore, the Philippines, Indonesia, and Vietnam,” said Nuttapon Boonpinon, Managing Partner at N-Squared Ecommerce.

Started in 2016, N-Squared provides e-commerce services including logistics and operation management, omnichannel management, customer service, web and tech, online marketing, data analytics, and consulting.

It owns several online direct-to-consumer brands and an e-commerce distributor for over 130 brands in six countries across Southeast Asia.

The startup’s clients include Tefal, L’Oreal, Huawei, and Hewlett-Packard.

Also Read: Desty raises seed funding to help individuals build an online presence easily

In 2019, the group generated a total of 1,192 million baht (US$39 million) in revenues, with a compounded annual growth rate of 125 per cent since inception, it said in the statement.

The startup expects to more than double its revenue for 2020.

According to data acquired by N-Squared, the average spending in Thailand has increased by 23 per cent after the onset of COVID-19. The data also showed that FMCG products, which consumers had tended to purchase offline, also gained online traction and strong growth, compared to other product categories.

“2020 has been another challenging year, but also full of opportunities for online businesses. We have seen a rapid change in consumers’ online shopping behaviours. This year, our house brands, HomeHuk and XtivePro, have been sold to over one million customers via online channels only,” Boonpinon added.

“The growth of the opportunity of direct-to-customer brands is huge in this region. Therefore, we plan to continuously invest in these brands and build them into the No.1 brand in the home & living category and sports goods in Southeast Asia. Also, we look forward to building more direct-to-consumer brands across more categories and markets, while we will expand our operation across Southeast Asia,” he shared.

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Image Credit: N-Squared

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In the sphere of global education, Asia has been widely recognised as the top student with its solid grades and outstanding performance in almost every international assessment and ranking. On the other hand, the fellow emerging region of Latin America has been demonstrating huge potential for improvement but continues to struggle playing catch up.

This dynamic has played out in global assessments such as the PISA 2018 worldwide ranking, where seven out of the top 10 highest average scorers came from East Asia and Pacific while all the Latin American countries fell below the OECD average score, and in rankings such as the QS World University Rankings, where 25 of the top 100 universities come from Asia and only one comes from Latin America.

Quality education in Asia and Latin America prove to be on vastly different levels, and this is a reflection of the differing levels of technology incorporation into the sector and the vibrance of the edutech scene.

As Asia is moving full steam ahead with technological innovations in the sector, the region could benefit from looking outward and lending a hand to those who are falling behind so that they may also improve and scale in the process.

Latin America, on the other hand, could stand to take some notes and capitalise on its potential for improvement by embracing Asia’s tried and tested solutions for emerging markets. This is especially relevant in light of COVID-19, which has forced more than 1.4 billion students worldwide to stay home. For students and education systems to stay relevant and competitive in these times, it is thus essential to capitalise on the benefits of technology.

Also Read: How edutech startup Snapask is filling the gap for personalised learning in a post-COVID-19 world

The education gap: Asia vs Latin America

In examining the educational gap between the two regions, the drivers of Latin America’s relative underperformance do not present themselves prominently at first glance. Education in the developing regions of Asia and Latin America share many similarities.

Both regions present similar statistics in terms of primary and secondary enrolment (a difference of barely two per cent), and tertiary enrolment in Latin America is even higher than that of Asia (51.8 per cent compared to 45.8 per cent).

Both regions also allocate significant amounts of resources to education – Latin America spends over five per cent of their GDP on education, compared to 4.15 per cent in East Asia and Pacific. However, the vast difference in the performance of Asian schools and students relative to Latin America suggest that there are deeper underlying problems related to the quality of education.

In terms of educational content, teaching methods, and the incorporation of technology into the education sector, Asia comes out on top. The edutech space in the region is flourishing, with startups such as Ruangguru, Unacademy, and Topica Education Group receiving close to a combined total of US$250 million in funding across their Series C-D rounds.

In Asia, edutech is the second-largest market in the industry, with a potential to reach a valuation of US$5 trillion, and all 12 of the top edutech unicorns in 2019 were from Asia. In contrast, Latin America continues to lack the digital infrastructure, skills, and financing for wide scale tech adoption in the industry, and 74 per cent of the region even had to resort to the low-tech solution of delivering education via radio and television during the government-imposed lockdowns of COVID-19.

Ultimately, the quality of education is reflected in the ability to embrace and incorporate technology into the content and delivery, and Latin America is displaying a huge potential for Asian edutech solutions to scale.

Also Read: In brief: Indian edutech startup Teachmint raises US$3.5M seed funding round

Latin America: The next frontier for global edutech

Despite the region’s lacklustre performance in global assessments and rankings, Latin America displays a huge potential for transformative improvement and is prime to be the next frontier for global edutech. The region’s e-learning market is projected to value at US$3 billion by 2023, making it the fourth largest edutech market in the world.

In addition, more than 12 million adults in Latin America are participating in online education. Large segments of the region’s population are also underserved and struggle to gain access to basic educational services. UNICEF reports around 14 million children and adolescents in Latin America that remain outside of the education system.

This presents a wealth of untapped opportunities in the region’s education market for innovative edutech companies.

According to Stefan Krautwald, Managing Director of Colombia-based venture capital studio Latin Leap, “One of the biggest problems holding back Latin American society is the weak education infrastructure, and the edutech scene is not robust enough to overcome this gap. However, this presents many opportunities for Asian edutech solutions to establish themselves in the market and scale.”

Asia: The star student

In terms of global performance in education, Asia is a shining star. Apart from the region’s performance in the PISA assessment and QS World University Rankings, the top five performing countries of the TIMSS International Mathematics Achievement come from Asia as well.

Literacy rates in East and Southeast Asia are also one of the highest in the world, standing at close to 100 per cent. In terms of the edutech scene, Asia is also leading the way with the money to back it up. China and India comprise 70 per cent of global edutech venture capital, housing nine out of 10 global edutech unicorns. With such a dynamic scene, Asia has much to share and benefit from spreading their knowledge and scaling their solutions to other emerging regions.

Sharing notes and spreading knowledge

As Asia continues to rise up the ranks of global education and continually try to outdo itself, the region could benefit from lending a helping hand to those who are struggling. By engaging in knowledge sharing and spreading their educational solutions and technological know-how to other markets, Asia could learn from the process of cultural and business exchange to further improve on their solutions while capitalising on untapped opportunities to scale their edutech businesses. Latin America, in particular, proves to be an extremely suitable partner.

Also Read: How edutech startups can accelerate active learning

Latin America and Asia may appear to be unlikely partners at first glance, being vastly different regions separated by geography, language, and culture. However, both emerging markets actually share more similarities than meets the eye.

Both regions have similar population sizes of close to 650 million, rapidly growing internet penetration rates that are close to 70 per cent, and shared economic realities and cultural practices characteristic of emerging markets such as relatively low per capita income and a top-down approach in business procedures.

According to Francisco Rios, Regional Group Director for Latin America and the Caribbean at Enterprise Singapore, “Latin America with its high levels of mobile digital connectivity and nascent digital market, is an attractive region for Asian tech companies and start-ups.  As the demand for improved access to quality education grows in the region, there are immense opportunities for Asian edtech companies to collaborate with in-market partners to co-develop innovative solutions to support remote learning. ”

Both regions have much to gain from deeper cooperation, particularly in the edutech space. Asia possesses the technological capabilities and knowledge that Latin America is ready to embrace, and Latin America presents itself as a huge untapped market with a young and knowledge-hungry population for Asian edtech solutions to take root in and grow. By sharing notes and spreading knowledge, both regions can mutually flourish and grow.

Soft-landing for edutech business expansion

When embarking on the path of expansion, businesses have to consider the host of risk factors and obstacles that come with entering distant and untapped markets. These include language barriers, cultural differences, unaccustomed local business practices, unpredictable regulatory and political environments, valuation challenges, and ever-changing tax regimes.

In understanding how to manage these risks, soft-landing proves itself as a viable business concept for Asian edutech scale-ups looking to enter Latin America. Soft-landing aims to support business expansion through a controlled launch in the new market with limited resources and connecting the company to a network of local stakeholders. The soft-landing process is best led by soft-landing facilitators, whose role is to help companies scale in far-flung and foreign markets.

Some of the benefits of soft-landing for edutech ventures include:

Cost reduction: When entering a new market, the cost of entry can be significant and many times it can exceed business budgets. According to the World Bank no Latin American economy ranks among the top 50 best places globally to do business, and this is in part due to high costs of entry that include paperwork, establishment fees, cultural barriers, and legal procedures among others.  Therefore, having reliable information and the support of a local partner can help avoid cost overrun.

Cultural adaptation: The cultural and business practices in each market determine the way of doing business. Informality is one aspect of conducting business in Latin America that needs to be overcome. Language, communication peculiarities and specific local knowledge within each country are keys for a successful landing into a new ecosystem.

Time to market: The time it takes for each company to position itself within a new market will depend on the level of preparation it has and the knowledge of the entry barriers into the new market. The soft-landing facilitator has local resources that accelerate the operational, commercial and legal establishment, providing access to strategic information, decision- maker contact networks, and talent.

Deployment and reputation: Having a well-reputed local facilitator vouching for the new entrant in the education sector is crucial when it comes to accessing institutions, local businesses and potential customers. This is why having local professional teams becomes critical for business development and facilitates integration from the beginning.

Peer to peer exchange: Facilitating the direct discussion between edtech companies looking to expand to Latin America and potential local business and government partners is a crucial part of the soft-landing facilitator’s role.

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According to the 2019 Indonesia Millenial Report, 65 per cent of millennials do not own a house. The reason? Property prices outpace the purchasing power of these first-time buyers.

In a country where over 60 per cent of the population are millennials, this was too big a problem to miss out for Sarah Soewatdy. Along with three other co-founders, she created quality and affordable co-living spaces to solve this pressing problem.

“Our first offer to the market was quality co-living, where tenants can live in a community with a perfect balance between private and shared space,” shares Soewatdy in an interview with e27.

Targetting millennials living in urban areas, the Sequoia Surge-backed startup seeks to offer them a convenient, communal and comfortable living space. The company also assists landlords in transforming their properties into higher-yielding assets while providing affordable co-living options for tenants.

It was no surprise the concept of co-living was well received. According to a report, Indonesians are more open to sharing economy services, with 87 per cent likely to use such services, compared to the global average of 66 per cent.

A certain Black Swan event this year has also generated tailwinds in the co-living industry.

Also Read: From co-working to co-living, these 7 brands in Southeast Asia have got you covered

Increased growth

Amidst the tightening of purse strings and flourishing work-from-home trend brought about by the pandemic, Rukita has thrived. Weakening purchasing power due to the sluggish state of the Indonesian economy has seen a shift in trends within the residential sector. Millennials have postponed their home-buying plans and are opting for renting a property instead. This has led to a boom in the co-living business.

The proptech startup reported good business performance amid the pandemic. Rukita claims it recorded a 20 per cent month-on-month occupancy growth rate in the third quarter of 2020. Additionally, the new tenant registration grew nearly 2.5 times in the same period.

Soewatdy remarks that the pandemic has brought a wave of uncertainties, making people more cost-conscious and meticulous in financial management.

“Hence, we are confident to be able to present a real solution and give economic as well as psychological assurance to landlords. We offer them the opportunities to transform their properties into higher-yielding assets, thus they can have peace of mind while enjoying passive income without hassle,” she adds.

Currently, Rukita operates more than 3,500 rooms in the Jakarta metropolitan area. “We are breaking the misconception of affordable living projects that often heavily focus on affordability and overlook other key factors,” Soewatdy says.

Adapting to the new normal

Rukita has been continually releasing new initiatives to adapt to the new normal brought about by the pandemic. It recently introduced Rukita Workpod, where employees can work and live together with supporting facilities to facilitate a more conducive and efficient working environment.

The startup has also introduced virtual property visits, where potential tenants can explore units safely without a direct visit. With this set of initiatives, Rukita aims to provide sustainable earnings and peace of mind for partners in uncertain times.

“We continue adapting and being agile so we can stay relevant to the changing needs through our set of new normal initiatives,” Soewatdy remarks, adding that new initiatives will be rolled out to further improve the well-being of tenants and landlords.

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

She remains coy on fundraising plans, but shares that the expansion of its business will remain aligned to Rukita’s mission to create quality co-living experiences for both tenants and landlords.

Looking into the future, Soewatdy believes that changing consumer behaviour brought about by millennials will result in co-living having a prominent role to play within the real estate industry.

“Millennials are seeking the finer pleasures of life and are looking for better-looking rooms with a complete suite of facilities and services for their convenience,” she closed.

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Image Credit: Rukita

 

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Singapore-headquartered PropertyGuru Group announced it has fully acquired MyProperty Data, one of Malaysia’s largest online property data companies.

As per a press release, the acquisition was completed through a share purchase agreement between the two firms.

With this deal, PropertyGuru aims to “strengthen its commitment” in Malaysia and provide property data and insights to various stakeholders — ranging from agents and financial institutions to home buyers and credit rating agencies.

Also Read: PropertyGuru’s CPO shares the secret sauce of building a highly productive remote team

Manav Kamboj, CTO of PropertyGuru, said: “Advancing on our mandate to serve Malaysians in their homeownership aspirations, we now focus on bringing transparency with data and are pleased to announce this acquisition as we move towards creating an integrated property ecosystem.”

“Our goal is to empower Malaysians with accurate and easy access to data for every step of their property journey so that consumers can buy or sell the property at the right market price and capitalise on potential gains in the future,” he added.

Kamboj further shared the group will be investing to expand MyProperty Data’s offerings and seek to expand its team in a wide variety of roles ranging from data scientists and engineers to product managers and marketing experts.

Also Read: Data is useless, it is what you do with it that drives the digital age

Joe Hock Thor, Managing Director, MyPropertyData, said: “This acquisition advances the goal we share with PropertyGuru — empowering Malaysians with accurate transaction data so that they neither overpay nor underpay when making decisions.”

“PropertyGuru is no stranger to us as we have collaborated on many occasions, such as in developing a Pricing Insight exclusive to PropertyGuru in 2018 and the Home Loan Pre Approval in 2019. It was natural for us to further collaborate and we are delighted to join the Group,” Joe elaborated.

MyProperty Data claims it provides property data analytics and insights leveraging over six million unique records across sales, rentals, auctions, new development and geospatial information along with proprietary datasets in demographics, location, liveability and more.

Its solutions are utilised by major banks and over 1,200 valuation professionals in Malaysia.

“Moving into 2021, the pandemic has accelerated the adoption of digital demand in every arena, including property. Our goal is to use data to enable homeownership in Malaysia, to help consumers make more informed buying, selling, renting decisions and we look forward to partnering with agents, developers, financial institutions and valuers in the industry to work towards achieving this goal,” added Kamboj.

Also Read: How proptech is set to empower the Southeast Asian property market

PropertyGuru is one of the oldest proptech players in Southeast Asia, with a deep pocket. In September, PropertyGuru Group announced a US$220 million in fresh investment round, led by leading global investment firms global private equity giants TPG and KKR.

In October 2019, the company had to defer its proposed IPO plans on the Australian Securities Exchange due to the unfavourable market conditions back then.

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Image Credit: PropertyGuru

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For startups around the world, finding funding and support is always important. With today’s business climate, it has become even more pertinent particularly in the Asia-Pacific (APAC) region where competition is cut-throat. Amidst the pandemic, the investment landscape has evolved and so has the investor sentiment in the region.

According to a report released by Cento Ventures, a Singapore-based venture capital firm, the overall exit proceeds in the Southeast Asian tech industry fell by around 50% in the first half of 2020. Funding in Vietnam dropped by 22% in the first half of 2020 as compared to the previous year, from $284 million in the same period last year to $222 million. In Hong Kong, the total value of startup deals hit $9.84 billion, a 39% year-on-year-drop compared to last year.

However, things are starting to look up. Based on the 2020 Google Temasek report, the regional tech investment landscape is set to flourish with an increase of 17% in the number of deals between the first half of 2019 and 2020. The deal value in the fintech sector surged to $835 million in the first half of 2020, from $475 million in the first half of 2019. Leading digital health apps were used four times more than before the pandemic while leading education apps were used three times more.

It is evident from the emerging trends that sectors embracing innovation and digitalisation are thriving in the new normal. As such, Hong Kong Science and Technology Parks Corporation (HKSTP) recently concluded their annual flagship event, the Elevator Pitch Competition (EPiC 2020), bringing together thousands of entrepreneurs, VCs, and other industry stakeholders from all around the world to put forward innovations in view of the market needs.

During the week of EPiC 2020 event, a conference was held specifically to share insights and trends in the investment and corporate innovation space. Co-organised by HKSTP and the Hong Kong Business Angel Network, the conference was aptly titled Investment X Corporate Innovation Conference and explored three crucial topics on today’s startup landscape:

• Accelerating corporate innovation in the midst of a pandemic
• Amplifying extraordinary possibilities in the Greater Bay Area
• Asia Innovation Investment Landscape – Ripe for Collaboration

Emerging trends and current climate: challenges and opportunities

The US-China trade war, followed by the general economic downturn due to the pandemic have overall reshaped the investment sentiment in the past two years. “Many investors, especially corporate investors, were also affected by the pandemic as their core businesses were impacted, and thus there was a decrease in the allocation of funds. With limited funds, investors are more prudent and investee companies became a priority,” said Raymond Wong, Head of Investment, HKSTP.

New areas are emerging, given the ever-changing corporate as well as consumer landscape. Such sectors include remote enterprise solutions like value chain optimisation tools, customer tracking solutions, digital medicine, education technology platforms, as well as online delivery services.

“The need for innovation is dire and the need to reinvent is inevitable,” shared Wong. With online meetings becoming the norm, reconnecting is easier than ever before. “With geographies and time zones blurred, startups can reconnect with regional and global investors in a faster and more convenient way to foster collaboration and look for investment opportunities,” he added.

Under the current business climate, collaboration is becoming the key to unlock innovation. On that note, Peter Mok, Head of Strategic Partnership, HKSTP shared, “Digitalisation is aggressively picking up in terms of corporate adoption. Second in line is automation, especially with healthcare products like lightweight robots and automated thermostats, the demand is high.” Based on his interactions with tier A startups in Hong Kong, regional and international businesses at EPiC 2020, Mok shared that one major shift is the increased focus on corporate innovation.

“Businesses are now taking a completely different approach to corporate innovation than the past. They are starting to create dedicated divisions for this, adopting innovative solutions to adjust their business models and adapt to the fast-changing business landscape. Corporate innovation is now being seen as a need for survival and there is a keen demand,” he shared.

“We are engaging corporates from eight different industry verticals, including banking and finance, construction, real estate, education, and healthcare among others under a three-stage programme: understanding corporates’ pain points, providing long-term solutions and working in cohorts across industry verticals instead of individual startups to foster collaboration and partnerships,” Mok shared.

On the investment side, Wong added that there is an ever-increasing demand for quality. With the high-risk factor in the current volatile market, investors want to play it safe. They are looking for mature and good-quality companies. “The number of deals has dropped but the amount invested is increasing”, he explained.

Offering support to tech startups in Asia

Going beyond the domestic market is always a crucial yet challenging issue for startups during their entrepreneurial journey. To further support tech startups in the region, HKSTP has been actively establishing strategic partnerships with other Asian markets such as Singapore, Vietnam, Thailand, Japan and South Korea, etc, carrying forward the strategy of “Asia Buy, Global Sell”.

“Through the collaboration with regional institutes, incubators and the vast investor network, we hope to help local startups go beyond Hong Kong’s market to search for more business opportunities and attract top-notch companies to establish a foothold in Hong Kong with our go-to-market programmes. Hong Kong is definitely an ideal launch pad for startups to lift their ideas to success,” Mok added.

As one of the largest incubators in Asia, HKSTP offers a wide range of value-added services to support the tech startup scene in Hong Kong and beyond, including tools and research labs for application and product development, early-stage investments, mentoring and business consulting, and connecting Park companies with local industry and trade associations. The incubation programmes are full-blown starting from idea stage to startup and scaling stages, coupled with an Elite programme dedicated to high-potential companies.

With a robust network made up of a thousand investors, HKSTP connects the right startup to the right investors at the right time. Wong shared that they have been working closely with investors to understand investment strategies and participate in the decision-making process. Leveraging the Corporation’s resources to attract private sector funding in nurturing early-stage technology startups, HKSTP Ventures has grown its fund size to around US$ 80M asset-under-management (AUM) and hit 1:13 times leverage of private capital successfully. From 2017 to 2020, investment raised in the Science Park has topped US$ 3.8 billion.

He also shared that there is a shift in the risk appetite of investors in general and startups need to be better prepared to get a shot at fundraising. “Startups need to focus on their core competency even more than before. They need to identify their most valuable offering: is it the technology or the solution, and then upsell it.” Startups also need to learn to pivot fast to adapt to changing consumer demands and market trends.

“A more synergistic and collaborative ecosystem is going to be the new normal. Startups should join hands with other startups or even their competitors to explore new collaboration opportunities at this point to create greater synergy. It could further enhance their cash flow and spark new ideas under the current challenges,” he added.

Hong Kong is emerging as a tech hub and has the potential to help local, regional, as well as global businesses thrive in the region. In line with this, HKSTP is serving as a super-connector that bridges gaps between industries and across borders. After all, collaborations and scaling are key to survival under the new normal.

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

We can share your story at e27, too. Engage the Southeast Asian tech ecosystem by bringing your story to the world. Visit us at e27.co/advertise to get started.

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Kyt, an Indian edutech startup, has secured US$2.5 million in funding, led by Surge (by Sequoia India).

Singapore-based Titan Capital as well as angel investors such as Allen Penn, former Global Head of Operations at Uber Eats, and Amrish Rau, Co-founder and CEO of Pine Labs, also joined the round.

The funds will be channelled to expanding Kyt’s platform globally, with a particular focus on its launch in Singapore.

The edutech startup is part of the fourth cohort of Surge, a bi-annual rapid scale-up programme run for startups across Southeast Asia and India.

Founded in June 2020 by the husband-wife duo of Bhavik Rathod and Tripti Ahuja, Kyt leverages technology to provide virtual live lessons to children from five to 15 years old worldwide.

The startup offers two learning pathways on its platform: Kyt Academy and Kyt Workshops. Academy courses span up to 12 weeks and are designed for children who are passionate about specific areas of knowledge outside of traditional curriculums — such as yoga, language, reading, and dance — and want to expand their skills.

Workshops are one-time classes, ideal for children who would like to explore different interests and try multiple classes, including cooking, magic classes, animation, rap and poetry.

Also Read: Paving the way for Asian edutech to soft-land in Latin America

Kyt claims its classes provide opportunities for students to connect to instructors and educators they may not otherwise be able to access. Some of these include Indian chess grandmaster Vidit Gujrathi, Philippine hip-hop legend Ruel Varindani, and celebrity yoga instructor Sabrina Merchant.

The startup claims that more than 1,000 students have taken a course or attended workshops with them, and the platform has more than 20 teachers, with plans to increase this to 500 over the next 12 months.

“Tripti and I started Kyt to build something for our daughter. After speaking to several parents, we realised that there is a much larger need to provide high-quality courses that focus on the holistic and all-round development of the child, beyond just academics,” said CEO Rathod.

The startup claims its curriculum infuses animation and gamification to better engage and motivate students. Its courses require minimal commitment — less than five hours per week for the majority.

Furthermore, there are regular assessments to monitor the progress of each student, with progress reports shared regularly with parents.

Given the limitations to learning during the ongoing pandemic, with schools closing and families being stuck at home, Kyt courses allow students to benefit from real-time interaction, providing the feedback and attention they may otherwise be missing.

“The future of education is a hybrid of online and offline learning, and the market size for primary and secondary extracurricular learning is estimated to be US$10 billion in India alone and around US$200 billion globally,” Rathod added.

“While most learning has previously happened in physical spaces, there will be rapid adoption of online learning even beyond COVID-19, as these well-structured curriculums will build strong global communities, encouraging children to remain engaged over time,” he shared.

Also Read: How edutech startups can accelerate active learning

In the coming months, Kyt expects several thousand new students to enrol in its platform, while also onboarding more teachers for online learning. The platform will also be adding more courses, including chess and various musical instruments.

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Image Credit: Kyt

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As the price of bitcoin surges to highs that we have not seen since January 2018, attention has once again shifted to the prospect of mainstream adoption. But twelve years on from Bitcoin’s launch, cryptocurrency still has a perception problem. Mainstream media is quick to paint it as an ultra-high-risk investment instrument at best and a haven for dark web criminal transactions at worst.

The average person, if not already scarred by the 2017-18 Initial Coin Offering (ICO) mania, still considers cryptocurrency the domain of the tech savvy, while those who have experience with it lack use cases beyond investment and trading.

Usability is often cited as one of the key barriers to adoption, but despite best efforts, the cryptocurrency space still feels like the Wild West. Token prices skyrocket and collapse within minutes, scams proliferate, and exchanges are hacked. Mainstream adoption is nothing but a pipe dream at this point.

Sure, 55 million Bitcoin wallets exist, but the number of active users, aside from those who are trading, is still relatively small. And few merchants accept cryptocurrency as a payment method. According to coinmap.org, the number sits at just north of 18,000.

When it comes down to it, the average person just does not trust cryptocurrency enough to integrate it into their lifestyle. And this is by no means an unfair risk assessment. On the contrary, people trust fiat currencies because their value is backed by the issuing authority. Five dollars is five dollars because the government says so.

With cryptocurrency, there is no such authority. Value is determined by the community. Bitcoin, for example, has value because people with a stake in it say it has value. This is fine for some, but a majority of people would much prefer to place their trust in their government-issued currency. It’s accepted everywhere, comes with deposit insurance, and has other consumer protections.

Also Read: A lowdown on why DeFi is good for the growth of cryptocurrency

The thing about cryptocurrency, though, is that it has the potential to be an evolved form of money. It has features that existing forms of money do not have. Access to global liquidity, transparent and detailed tracking, and asset tokenisation are to name but a few.

To reach mainstream adoption, these features have to be accepted, trusted, and available. Using Singapore as an example, mainstream adoption is when Singaporeans are able to use cryptocurrency and cryptocurrency-based services with the same confidence and utility that they currently do with fiat currency.

This is why cryptocurrency regulation is so important and, I would argue, key to mainstream adoption. It would help mitigate criminal activity, ensure the same consumer protections as fiat currency, and spur government-supported innovation.

All of which add up to increased trust and the introduction of a rich variety of cryptocurrency-based services that people can integrate into their lives.

Combatting criminal activity

It is no secret that cryptocurrency is being used for illegal activity. But the truth is that any currency, fiat or crypto, can be used for illegal activity. Cash is still very much king in that regard. For large-scale money laundering, cryptocurrency is not particularly expedient, despite its pseudonymous nature, for two reasons:

• a complete history of transactions and wallet balances are stored and viewable on public ledgers
• exchanges are needed for conversion to fiat. The exchanges are particularly important because they can implement KYC and AML processes that weed out criminal actors looking to convert their cryptocurrencies to fiat and vice versa.

Cryptocurrencies, aside from the few that are specifically designed to hide transaction data, actually boost AML/CTF efforts because they offer transaction tracing by design. This allows firms such as Chainalysis, Elliptic, and Merkle Science to conduct forensics on any transactions and wallets identified as suspect.

I asked Ian Lee, VP Business Development at Merkle Science about the advantages of cryptocurrency in the context of AML/CTF. He told me, “The great thing about cryptocurrencies is that we can track the movement of value within a single ledger or across multiple ledgers. This is impossible with cash and very difficult with bank transfers, particularly due to bank secrecy laws and silo-ed transaction data. Combined with strict KYC processes on centralised exchanges, blockchain transaction monitoring and forensics is a strong deterrent for money launderers.”

Also Read: Why it makes sense to do business in cryptocurrency

At the same time, exchanges are a logical focal point for regulatory scrutiny. Singapore, Malaysia, and Indonesia have implemented important regulations that hold exchanges to a much higher standard, meaning a safer experience for users.

There is also the “travel rule” announced by the Financial Action Task Force (FATF) that strongly encourages exchanges to pass sender and beneficiary information when making fund transfers. These regulations are a good starting point as a deterrent for criminal actors. Stronger regulation, such as the requirement to connect cryptocurrency transaction history with customer exchange accounts, will go even further. 

Consumer protections

All markets have scams. The cryptocurrency market is no exception. The difference is that regulated markets have consumer protections built-in. Deposit insurance exists so that you are protected in case your bank gets robbed; stacks upon stacks of documents are needed to stage an Initial Public Offering (IPO) in order to weed out scams. These same protections do not yet exist in the cryptocurrency space.

Anyone can launch a token and then disappear with the proceeds; if the exchange or DeFi protocol where you keep your funds gets hacked, you may not get your money back. These are real problems that prevent people from placing their trust in cryptocurrency.

Regulation adds a layer of protection because it increases scrutiny on exchanges, protocols, and other services that utilise cryptocurrency. To conduct a token sale, for example, the issuing company could be subject to similar standards as companies looking to stage an IPO. Deposit insurance could be built into decentralised finance protocols to mitigate smart-contract risk. Or stablecoins could be required to pass a stringent vetting process in order to be accepted as legal tender.

Innovation

Cryptocurrency is still a nascent technology. As such, the rate of innovation is high. New products and services are being launched every day. Some bring legitimate value to the space, while others are questionable at best. An argument can be made that the rate of innovation is a result of an uncertain regulatory environment.

If there are no regulations, the argument goes, there is no limit to innovation. And while this may be good for business, the consumer is left to swallow all of the risks.

I would argue that clear, consistent, and fair regulation actually results in better innovation. Regulated markets attract capital and require accountability; unregulated markets attract profiteers. A 2018 study by Statis Group suggested that more than 80 per cent of ICOs conducted in 2017 were in fact scams.

Also Read: Inside the changing landscape of Asian cryptocurrency exchanges

What regulations do is create trust across the entire ecosystem. Investors bring capital, businesses allocate resources, and startups work free of stigma. Singapore is a shining example. In April 2020, there were at least 397 cryptocurrency startups in the country. Entrepreneurs have chosen Singapore because of its forward-thinking approach to regulation. Far from being restricted by regulation, startups know what they are getting and thrive as a result.

Where do we go from here?

Regulation is a difficult balance to strike. It has to be both fair to business and protect consumers. Some countries have chosen to ban cryptocurrency outright. I would not consider this to be regulation. Fair regulation happens at the confluence of cryptocurrency’s value to the future of money and the willingness of consumers to trust it. If countries continue to treat cryptocurrency as a black box, consumers and businesses will lose out.

For cryptocurrency companies, mainstream adoption is not coming simply as a result of better usability or skyrocketing bitcoin prices. Acceptance by large fintechs such as PayPal help, but will only take us so far. Adoption will happen because governments have put in place the frameworks that allow us to trust cryptocurrency the way we do fiat.

The best and most trusted cryptocurrencies and other cryptocurrency-based services will then rise to the top, allowing consumers to choose those that fit their needs best while feeling safe in the knowledge that protections exist.

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This article is published via a special e27 partnership with StackTrek – a company specialising in using algorithms and data to build and scale programming teams for tech companies. Each week, StackTrek Founder & CEO Billy Yuen talks with top executives about startups, culture, and tech hiring.

This week, Billy Yuen chats with Alex Kong, founder and CEO of TNG FinTech Group, Inc – a Hong-Kong based company that provides next-generation financial services to 1.2 billion unbanked individuals throughout Asia.

Kong incorporated the company in 2012 but launched its services in November 2015. At that time they were less than 30 people, and today they have close to 400 employees across 14 countries. 

Yuen: So your role in the company has changed from day one to now. How has it changed?

Kong: I look at managing my company; it’s like we’re going through different phases of the corporate life cycle, just like human beings. When we first started to launch our service, we are like a baby, so we are at the stage of a baby. So, the way we manage a baby, a 20-people company, to 50 people, to 100, 200, 300, 400, are very different. Just like human beings, we go through a different corporate life cycle.

My role changes so fast because we grow so fast. We don’t even bother to print our position or title on the business card because the role keeps changing. It’s an ongoing challenge. It’s also an ongoing change management because the way we manage the business and the people are very different compare to day one.

From the freedom of working anytime, come to the office anytime, come to work at 11 AM, go to lunch anytime to now in which we become very systematic. You better come on time, and go to lunch on time. A lot more professional and a lot more systematic. There are different phases of growth but to me, I’m excited about the unique DNA that we have created because of the rapid growth of the company, so we built a culture of obsoleting ourselves.

Every week, our people, our different departments will discuss, sit down and discuss what happened, what we did last week, and what are the small changes we can do this week. And we work on their improvement week after week, and then the business keeps growing. 

You’ve mentioned company culture. Can you share with us what your company culture is like?

Kong: It’s about survival. We have very little cash, and with that little cash, how do we survive? And we have to do anything to pay the rent, pay the salary. We didn’t talk about culture at all, we just work, work, work, day and night, and through that, we kind of built a culture of survival.

Also Read: CloudSwyft, the startup that aims to change the way companies do human capital development

Now, the company is profitable. We have a lot more resources that we can dedicate for benefits and rewards that help us cultivate a certain culture. For example, recently we turned an entire office floor into a dedicated coworking-like space that promotes collaboration. It has an in-house cafe that serves coffees, sandwiches, soups, healthy drinks, etc.

We now provide a lot more fringe benefits and stop asking people to come on time. We don’t enforce the on-time policy. We don’t believe in that. But if they come on time, we reward them for something more. There’s a lot more freedom.

So it’s a very rewarding culture?

Yes. We want to make the culture rewarding because we believe people, by nature, want to work hard. We want to build a happy house – a happy environment that people look forward to come to, and collaborate with each other, and together create a solution and platform that serves as many as billions of the unbanked population around the world.

Our mission is to bank the unbanked. Helping the unfortunate people who couldn’t open a bank account to gain access to banking or financial services. We need people to believe in our mission. We need people to understand that we are doing something great together. And while doing it, we are enjoying every moment of it.

How do you ensure that as the company grows, they still feel like you are still a part of the team? Since they don’t see your face every day.

We are in a very virtual environment. I have 123,000 unread emails, and thousands of unread messages. People still send or copy me in messages, but I don’t really read every single one of them. Anything emergency, they will call me. And every time they come to me, it’s for a decision.

So my job is, every moment in the office, one after another is making important decisions. And I delegate down to my second-liner and third-liner, to entrust them to make the relevant decisions and create a policy, and create a system with check and balance. So you have to entrust the people to carry out the job. They cannot depend on everything on me anymore, only come to me for important decisions.

Can you share any tips with leaders who want to build a successful team?

There are a lot of things that you need to build a successful team, but one thing that has always stuck in my mind is people that are part of the solution.

Also Read: Book Excerpt: What Google, Facebook did to grow from zero to 1,000

I tell myself everyday: if I’m not part of the solution, then I’m part of the problem. When you first hear it, it sounds very harsh. I ask myself that question every day, “Am I part of the solution?” If not, then I’ve become part of the problem. I share that to my people as well. When they come to me with a problem, I want them to think about solutions. You don’t come to me with just a problem.

You have to come to me with proposed solutions. If you only come to me with your problem, then you yourself become part of the problem. Then what am I hiring you for? It’s harsh, but it’s a necessary evil. When we build teams, we need to make sure that we are building with people that can be part of the solution.

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While recent forecasts have shown pockets of optimism, they continue to paint a bleak outlook for the global economy and the state of international trade in the months ahead. The International Monetary Fund’s global economic outlook update in October was more positive than its June forecast, but still predicted a contraction of 4.4 per cent for the global economy in 2020, while the WTO’s October forecast expects world trade will fall by 9.2 per cent in 2020. This is an improvement on the 12.9 per cent drop it predicted in April, but still not good news.

One positive for trade in ASEAN is that amidst the global uncertainty, the Association of Southeast Asian Nations (ASEAN) and its major trading partner countries have reiterated their commitment to the Regional Comprehensive Economic Partnership (RCEP).

Once enacted, the trade deal will cover close to one-third of the world population and global GDP, injecting strong impetus to the continued development of global trade, regional integration as well as economic development across the region.

The continued support for global trade will be important for ASEAN governments in protecting the region’s important Small and Medium Enterprises (SMEs) sector. SMEs are the backbone of the ASEAN economies, making up around 97-99 per cent of the enterprise population and accounting for more than 60 per cent of employment.

Despite their contributions and importance to the region’s economy, SMEs continue to face significant barriers that prevent them from being adequately represented in international trade.

One of the foremost challenges that prevent SMEs from participating in international trade is the lack of access to finance. According to the Asian Development Bank (ADB), the current global trade finance gap is estimated to be at US$1.5 trillion, with half of this figure attributed to SMEs in developing countries in Asia and Africa.

Also Read: Investree receives US$15M from Accial Capital to provide loans to Indonesian SMEs

The World Economic Forum (WEF) has estimated this funding gap could well reach US$2.5 trillion by 2025, although this estimate predated the onset of the COVID-19 pandemic which has since weighed further on global trade.

How can we help ASEAN’s SMEs overcome rising barriers?

From Open Banking and platforms to the Internet of Things (IoT) and data analytics, technology is coming together to help create opportunities for greater access to international trade and break down barriers to funding for SMEs.

Take the example of Nguyen Van Son and his coffee farm, Son Pacamara, in Da Lat, Vietnam. Son Pacamara uses natural, organic processes that are sustainable for the environment, but growing coffee this way is difficult and expensive. Obtaining the funds needed to sustain the business was a problem for Nguyen and he approached his local Vietbank.

Leveraging technology, Vietbank was able to look beyond past financial performance when assessing Nguyen’s suitability for finance, instead considering all aspects of his business, including previous crop yields. It then combined this information with predictive analytics and data such as weather patterns and currency fluctuations, to better model the business’s potential and viability, meaning Nguyen was successful in securing finance he needed for his business.

In addition, Nguyen also received critical advice and support in optimising other aspects of his business. Using a cutting edge fintech trade solution, Vietbank also has access to a huge network of potential global customers for its clients like Nguyen, which helps to identify any risks of doing business with them.

Today, Son Pacamara is selling coffee to customers across the world, including in Korea, the UK and the USA, delivering products to wider distribution chains. Both Nguyen and his buyers have full visibility of the end-to-end supply chain to track the location of the goods, as well as physical factors such as the temperature and humidity of the cargo, so everything is delivered to the highest possible standard.

The collaboration between Nguyen and Vietbank clearly shows it is possible for SMEs to build a successful, entrepreneurial and international business through smart technology and informed decision making.

Also Read: How startups can aid Southeast Asia’s Open Banking landscape

As well as technology being used by financial institutions, it is also important to help SMEs digitise their operations. Earlier this year, Finastra partnered with Mastercard and the Asian Development Bank (ADB) to help build a new digital pathway to credit for wholesalers.

Through the application of technology, the programme aims to help SMEs digitise trade, making it easier for them to participate in global supply chains. The programme will start in Indonesia with 500 retailers and aims to build to 5,000 retailers by the end of Q1 2021.

Post-COVID-19, the WTO has warned that the MSME trade finance gap is likely to increase as financial market confidence will take some time to recover from the negative effects of the pandemic. Governments in the region have introduced national stimulus packages which provide liquidity support to address cash flow issues, but SMEs continue to face an existential risk as they have less resilience and flexibility in dealing with the shocks brought on by the crisis.

While governments and businesses in Southeast Asia remain eager to support and participate in multi-lateral trade, it is imperative to accelerate the application and adoption of new technologies to help local enterprises improve access to trade finance, and build successful, sustainable businesses amid the new environment.

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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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Pulsifi, a Singapore and Malaysia-based HR tech startup, announced it has raised US$1.8 million in an angel round. Investors such as Kairous Capital; Aaron Chen, Founder of KVC group of companies; and Rajesh Lingappa, Co-founder & Former CTO of RedMart, joined the round.

As per a press release, this investment brings Pulsifi’s total funding to US$4 million. The fresh funds will be utilised to boost expansion to new markets in Europe and accelerate product development.

“Aside from Europe being a large market for HR tech, many of our customers are globally headquartered in Europe. Therefore, it is a natural market for us to expand into, in order to grow the global relationships with our customers,” said Jay Huang, Co-founder & CEO of Pulsifi.

“With COVID-19, we had to adapt our plans for 2020. We are fortunate to still hit the goals we set out to achieve. During the pandemic, we expanded to serve customers in the healthcare, high-growth manufacturing and telco sectors,” he remarked.

“As employers became more selective in hiring, we took the opportunity to enhance our platform to better support our customers with their existing employees as well,” he further added.

“As a strong believer in bringing out the potential of people, I was struck by how the Pulsifi team is also so passionate about that vision. Pulsifi benefits any company that values its people, and I am keen to support its growth among my businesses and around the world,” Chen opined.

“Pulsifi is a unique B2B company that built a compelling product that is relevant globally, not only in its home markets,” added Joseph Lee, Partner at Kairous Capital.

“Talent acquisition and management at scale is very hard, and I experienced this first hand. Pulsifi is solving this problem in a very unique way, and the team has built a strong technology platform to do so at scale,” remarked Lingappa.

Also Read: What will the next wave of VC investment in HR tech look like?

With operational bases in Singapore and across the causeway, Pulsifi has customers across six Southeast Asian countries. Notable clients include Nestle, Singtel and Heineken.

Its platform unifies multiple hard skills and soft traits data on each candidate or employee, and accurately predict each person’s work styles, role fit, culture fit, and other outcomes. The company remarked its methodology is backed by over 50 years of organisational psychology research.

Pulsifi claims its platform has over 90 per cent accuracy when predicting the outcomes of people at work, helping their clients improve quality and efficiency in talent acquisition and management.

Building on its recent win at the HR Tech PitchFest 2020, Pulsifi is expanding its market coverage through a network of partners, from Southeast Asia to Europe.

Having graduated from the inaugural SAP.iO Foundry in Singapore last year, the HR tech startup has also strategically partnered with SAP SuccessFactors, a global leading human capital management software platform.

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Image Credit: Pulsifi

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