William Bao Bean, who holds over 20 years of experience in investing and is currently the general partner of SOSV, has said that COVID-19 will be the driving factor behind both a recession and a tremendous change in customers’ habits.
As the pandemic strikes the economy, there has been a general discussion of a potential recession hitting nations.
In Southeast Asia, Singapore was the first country confirmed to be in a recession last quarter, according to a Bloombergreport. Meanwhile, Indonesia’s finance minister Sri Mulyani Indrawati has predicted a four to five per cent decrease in the country’s GDP in the third quarter, leading it to a potential recession.
“There are two things to take note of. First, that people need to understand we’re heading into an economic downturn. The second thing is that this type of shock is quite special because it’s driving an equally massive change in habits,” Bean says in an interview with e27.
“Stay at home is driving the adoption of digital [platforms] extremely quickly. So on the one side, it’s an economic apocalypse, but on the other side, people are focussed on the change of habits,” he continues.
While balancing these two directions can be tough, there is plenty of good news on the ground.
Good businesses are still trading at a premium price. The fact that many investors continue to fund startups such as Ula, Tiin Tiin, and TurtleTree indicating that some companies are not cracking under uncertainty.
“You want to position on companies that are prepared to, or at least, going to be in a position to do well during this very uncertain time,” Bean stresses.
He gives the example of VR technology which was on no one’s radar before COVID-19. But now VR headsets are selling out because people are bored and can’t go outside.
Bean’s 2020 industry predictions
Winners of the future will be very different from the winners of the past which, according to Bean, will mostly be driven by newly formed habits.
E-sports is expected to be “fricking huge,” he says.
“With an audience larger than the NBA, tennis and American football, it’s over half a billion people who watch these sports. Plus, you know, some people [prefer to] watching it, instead of playing it. Right now, a lot of sports are not airing and who is the beneficiary of [having] no sports on TV?” the investor points out.
Gaming has become one of the most common past times of entertainment and experts predict that the trend is here to stay.
Twitch, a leading live streaming platform for gamers, noted a viewership increase of 56 per cent this quarter compared to Q1 2020 while growing 60 per cent year over year. Facebook Gaming also saw a boost from the lockdown growing 75 per cent throughout Q1 until now.
Aside from gaming, Bean also expects online education and online media to have a longevity period of growth.
This is mostly driven by the needs of parents and students who were forced to study from home during the circuit breaker measures implemented in Singapore, and similar approaches taken in other countries.
As with the case of e-sports, online media are also experiencing a surge in popularity as customers see their offline entertainment sources becoming limited.
Investing in the previously unreached
As predicted by many, the health tech sector is also experiencing growing popularity amidst the global health crisis, particularly for products or services that enable users to interact more safely and ease the burden of the healthcare system. One example of such platforms is telemedicine or telehealth, which enables distance consultation between doctors and patients.
According to this CNBCreport, in the US, social distancing measures at doctor’s offices and hospitals could push telehealth interactions to one billion by the end of 2020. The case in Southeast Asia can be quite similar as telemedicine platforms claim rapid growth during the crisis.
Naturally, Bean’s biotech accelerator also expects to see growth in the health tech sector. Started in 2014, the US$3.2 billion-worth accelerator sees a “heavy focus” from investors on COVID-19-related health investments.
“We’re focused on investing, not only in the people who already have access to technology but also in the billions of users in emerging markets who are moving from offline to online,” Bean explains how they aim to do it.
For them, this is the major trend that they want to focus on, particularly in markets such as South Asia, Southeast Asia, Middle East, Eastern Europe, South America, Latin America, and Africa.
Singapore-based StashAway, a digital wealth manager for both retail and accredited investors, has closed a US$16 million in Series C funding round, led by Australian VC firm Square Peg.
Burda Principal Investments (the growth capital arm of German media and tech company Hubert Burda Media) and existing investor Eight Roads Ventures also participated.
This takes StashAway’s total funding raised to date to US$36.4 million. This includes a US$12 million Series B round in July 2019, led by Eight Roads.
“This new round of financing further strengthens StashAway’s balance sheet position, bringing our paid-up capital to MYR 153.8 million (US$36.2 million). This latest round will enable us to accelerate product development to both broaden and deepen our wealth management offering for our clients in Singapore and Malaysia, as well as support new market entry,” said Michele Ferrario, Co-founder and CEO of StashAway.
StashAway was founded in 2016 and operates in Malaysia, besides Singapore. The company offers investment and cash management portfolios for both retail and accredited investors. It delivers automated, personalised portfolio management for each client’s individual portfolios.
The firm offers global growth-oriented investment portfolios targeting different levels of risk — yield-focused Income Portfolio, and straightforward cash management solution StashAway Simple.
StashAway claims its portfolios have generated annualised returns ranging from 11.1 per cent for its highest risk portfolio and 4.3 per cent for its lowest risk portfolio since its launched in July 2017.
Currently, StashAway employs 85 people across five countries.
According to Raj Dugar, Managing Partner (India & Southeast Asia) at Eight Roads, “The strong customer value proposition and StashAway’s stellar execution has been demonstrated by its rapid growth. Its AUM has grown over 4.3X in the last year alone in an extremely volatile market.”
She Loves Tech’s Annual Global Startup Competition, which is said to be the world’s startup competition for women and technology, is returning for the sixth time this year with fully online competition and conference.
Despite the pandemic, the organiser stated that the competition will expand yet again due to overwhelming response. It will be held virtually for startups in over 30 countries across North and South America, Africa, Europe, Asia and Australia.
It counted institutions such as ATAST, Circle, Girls in Tech Macau, Gobi Partners, Hatch, Kerala Startup Mission, Longyan, NCSF, QBO, Yazamiyot, Raintree, Tanggram, Techcode, Turtle Venture, Unlimited, and Women In Tech HK as organising partners and Asian Development Bank Ventures as Official Impact Partner.
“One of the things we’re most excited about is that going fully online gives us a great opportunity to reach a wider audience and help even more entrepreneurs than we ever could have,” She Loves Tech co-founders Leanne Robers, Rhea See, and Virginia Tan said in a press statement.
The competition is searching for startups that filled the following criteria:
1. Early stage startups
The startups should be seeking for angel, seed, or Series A funding round of under US$5 million with at least a minimum viable product (MVP).
2. Gender lens
The startups should fulfil one of the following gender lens: Having a female founder, a majority of female users/consumers, and a tech that impacts women’s life positively.
For Singapore-based startups, the registration deadline will close on August 7 while the competition will be held on August 26. For details on other countries’ deadlines and competition dates, please refer to this site.
The competition gives the world’s most promising women-led or women-impact startups mentorship and guidance to grow and scale their business and showcases them to a global audience of top investors and influencers from the tech community.
Previous ambassadors, mentors, judges and speakers include Tim Draper (Founder, Draper University), Ankiti Bose (CEO, Zilingo), Arielle Zuckerberg (Partner, Coatue Management), Jane Sun (CEO, CTrip), and Lesly Goh (Former CTO, World Bank).
From the previous years, alumni startups of the programme have gone on to raise over US$100 million in aggregate funding from some of the world’s top investors, including Sequoia Capital, Vertex Ventures, Wavemaker, Microsoft and Amazon.
The She Loves Tech conference itself has gathered more than 3,000 delegates (with 67 per cent of them being women) from at least 30 countries within the last five years. It consisted of keynote speeches, pitches, panels, and breakout session.
The news of Indonesian firm Sorabel’s (erstwhile Sale Stock) plans to shut down by the end of this month sent shockwaves across Southeast Asia’s startup ecosystem — more so because the VCs-backed fashion e-commerce startup was believed to be going strong after its rebranding sometime last year.
Sorabel, which has so far secured about US$27 million in four rounds from the likes of Gobi Partners, Golden Equator, Open Space Ventures, and InnoVen Capital, was on the verge of raising a new massive funding round when it decided to pull the curtain down.
COVID-19 hit the business but it was not the only reason behind the decision.
e27 talked to Jeffrey Yuwono, Co-founder of the 6-year-old company, to know what made them to take the extreme step.
Excerpts from the interview:
Q: Sorabel was being led by an experienced team, was going strong until the end of 2019, had a good amount of venture capital, and was close to raising a new round of funding. What went wrong all of a sudden?
Indeed, Sorabel was going strong, and the strategy was to make sure our Series C raise is followed and leveraged strong, post-rebranding growth.
From the rebrand in February 2019, our revenue grew 2.5x by December but it took until the end of Q3 2019 to build that momentum.
In Q4, the revenue was growing between 10 per cent and 20 per cent monthly, and the company was generating positive margins after marketing costs, clearly demonstrating the brand’s strength.
However, this also meant that the window for closing the next round of financing would be March/April 2020 — the period, it turned out, when COVID-19 would hit the hardest.
From a capital perspective, despite the uncertainty, the company did procure several offers, including a term-sheet pulled at the last minute as uncertainty reached new levels in late March.
It is important to keep in mind that these are investors from outside of Indonesia, who were unable to travel to the country to simply verify that the physical operations existed — that is a lot of risk to ask any investor to accept in any circumstances, let alone the economic uncertainty of March and April of 2020 (or even now).
This meant that as COVID-19 hit, the company’s cash reserves were already depleted.
Then from a sales perspective, Sorabel’s positioning could only have been worse if it were an offline retailer.
We sell fashion, a luxury item all about representing oneself to the outer world when people weren’t even allowed to go outside.
We target the mass middle and middle-low income market, and these were the people losing their jobs and worrying if their next pay-check would be their last.
In other words, the last thing the company’s core market wanted to do was buy fashion.
Thus, COVID-19 struck during the most vulnerable point in our funding strategy and devastated our core customer base.
Q: Do you think the management failed to anticipate the impact of the pandemic? Shouldn’t you have taken steps such as pivoting and cost cutting to salvage the business?
The facts say quite the opposite, as the company was already implementing cost reduction measures even before the onset of COVID-19. By March, we had already cut core opex by 20 per cent and marketing costs by 80 per cent, in part as a pre-arranged strategy to reach profitability by Q1 of 2021, and in-part as a defensive move in anticipation of worsening economic conditions related to the pandemic.
Once COVID-19 hit, in addition to further cuts that slashed opex in half, the company moved aggressively to find new sources of revenues:
We began selling masks (so popular that our first batch sold out in seven hours), but unfortunately margins on masks were simply too small and the supply of materials too limited;
We tried to sell medical PPE kits and even had a buyer overseas ready to purchase. However, it was prevented by law from exporting and could not find ready buyers domestically.
Q: But as per some news reports, Sorabel became breakeven in 2018 and was on its way to become profitable?
Sorabel Co-founders Lingga Madu and Jeffrey Yuwono (R)
Sorabel was never break-even, nor was it even on its way to break-even before the brand change.
In fact, the unit economics were the core rationale for the brand change: only by improving the brand and its image could the company command enough margin on its goods to be profitable (indeed, the achievement of positive margins in Q4 2019 is proof that the brand change strategy was working, albeit too late).
Simply put, COVID-19 crashed squarely through the company’s fundraising window, choking off the flow of funds when it was most vulnerable.
Arguably, Sorabel could have pursued a more defensive strategy (lower operating leverage in the form of trading fixed for variable costs) but it was too late to do that in 2020, and frankly the evidence shows that demand from April-June 2020 wouldn’t sustain such a strategy anyway.
Q: Despite being an e-commerce firm, why did Sorabel fail to take advantage of the pandemic (like most of its peers)? Many fashion e-commerce firms are still going strong in the region…
Frankly, I strongly disagree with the premise of this question: fashion e-commerce firms and most other “non-essential” e-commerce firms have found it tough going during COVID-19.
COVID-19 was a boon to innovative startups focused on bringing essentials to e-commerce such as Sayurbox and Tanihub with groceries or Halodoc with healthcare, or even Carsome with financing through second-hand vehicle sales.
Unfortunately, fashion is not an essential, particularly when everybody is in lockdown. In fashion, the impact ranged generally between a 50 per cent and 70 per cent drop in revenue (particularly devastating as it occurred during the Ramadan sales season), with only those companies more focused on the upper end of the market spared.
Also at issue was the ability pivot. As discussed earlier, the company tried to pivot to masks and PPE, but it takes cash pivot. Some fashion e-commerce companies had strong cash reserves heading into COVID-19, but Sorabel did not.
Q: What do you think a typical fashion e-commerce startup should do at the time of an unprecedented crisis like this to salvage the business and save jobs?
COVID-19 is a global pandemic and a force majeure: by definition it is difficult to predict, and its effects difficult too. Even larger companies with deep cash reserves had to lay off 40-60 per cent of their headcount, but in this is probably the real commercial lesson.
Companies, especially startups, need to blend their fundraising/cash reserve strategy with both market risks and business model risks. The greater a company’s burn from fixed cash expenses, the more cash the company needs to have in reserve to survive a severe economic downturn, and thus the longer cash runway the company needs to build and protect.
In order to grow into a successful angel investor (‘angel’) one needs sufficient opportunities to review.
It’s hard to catch a fish if the pond is empty and from experience, we know that it takes around 100 deal reviews before one good investment can be made. At the same time, angels should focus on constructing a portfolio of (multiple) investments.
This article is meant to help angels build a routine in order to make sure they get to see the great opportunities out there. These guidelines for deal origination (or deal sourcing) can be used by both novice and experienced angels.
Sourcing channels
There’s typically a range of different channels available within each geography (country or city). Investors seeking to get global exposure can also find suitable channels.
Some channels require more investing expertise than others. Most channels revolve around network, network, network. The one exception to this is the ‘Syndicates’; they allow angels to follow a relatively passive investing strategy as Syndicates are generally positioned closer to investing in a VC fund as LP.
Here’s a (not exclusive) list of options that an angel has at his or her disposal:
Angel groups can be broken down into local and international networks. What they have in common is that both are typically professionally organised and managed (some better than others).
Local groups
Almost every major city in the world has a few local groups. They are great for novice angels as these networks have the resources to get you started and help you to invest close to home.
Local groups typically provide:
Education on angel investing
A community of like-minded (novice and expert) investors
International groups
International groups typically require you to have more experience as an investor and most of the times they don’t have the resources to ‘get you started’.
Most networks charge an annual membership fee. Almost all angel groups recommend you to have an active involvement in order for you to generate success. You are still the one making the investment decisions.
Do your research before signing up as a member as not every group will give you great value for money.
You can also build your own group of angels. We see this typically happens where angels have a common background or interest. It’s recommended though to make sure at least several ‘members’ have experience with angel investing so there’s some sort of quality control within the group.
Also, you will need some rules on who will source deals and evaluate them. If the group is ‘too’ informal, chances are you might have a good time, but not get to invest in any (good) deals.
Keep in mind: angel investing is a risky game and you want to make sure to understand the basics before you get started.
Some research suggests investments made in ventures found outside of an investor’s trusted business network (e.g. identified through a friend and family network) may well be less successful and could have a higher possibility of failure (Wiltbank, 2005).
Angel investing is a risky game and you want to make sure to understand the basics before you get started.
Network of venture capitalists
The more experienced angels could choose to work closely together with venture capitalists (VCs). VCs prefer to work with angels as they are a source of potential deals for them.
VCs get to see a lot of deals that are either too early or simply do not fit their investment thesis. They might like the founders and introduce you to them. Or sometimes there’s a little room in the funding round left for angels to co-invest and having a good relationship with the VC can lead to an invitation to participate.
Having close relationships with VCs that have a track record will help you to open quality another channel but it is not very suitable for novice angels as you’ll need to carefully curate the VC that you want to work with.
The network of professional service providers
It’s wise to build a (trusted) network of bankers, consultants, accountants, and lawyers. Through these relations, you can get deals and you will have the benefit that a professional already had a look at the company and somewhat was able to vet the quality.
The benefits are smaller compared to building a network of VC (with track record), but the relations with professional service providers are ‘easier’ to build.
LinkedIn
You can indicate on your Linkedin profile that you are active as an angel investor. This will lead to founders reaching out to you with their pitch decks. The quality of deals might not always be too good (or at least nobody might have vetted them at all yet), so be careful!
I also recommend you to indicate any previous investments you’ve made as an angel on your profile, this will ensure that you (as an investor) look (more) credible. Keep in mind: good founders will always look for ‘smart’ finance and due diligence should work both ways.
Personally I always maintain our portfolio on my profile so any potential stakeholder can understand us better. We don’t shy away from listing both the winners and write-offs. In addition to LinkedIn, we use Crunchbase to promote our organisation and we typically tell our portfolio companies to do the same.
Using Linkedin is suitable for both novice and experienced angels.
Venture builders and accelerators work with the startup founders before the venture is launched and they are typically very suitable for founders that are still in the ‘idea stage’, a stage that’s typically too early for angels to invest in.
It is recommended for angels to network with these venture builders and accelerators. Most of them organise ‘demo days’ where founders get to pitch their venture to a group of investors.
If you know what you are looking for you can reach out to companies to see if they are (or soon will be) raising capital. Perhaps because you read about them in the media or a relation told you about them.
Important:
Ability to explain how you can add value to the company (you’ll need to pitch first)
Clear on the geography that you are sourcing in
Clear on the industries that you are looking at
Tip: instead of reaching out directly to the founders, it would be even better to ask for an introduction through an existing investor.
Above strategy can be very effective for experienced angels that have sufficient time (or resources) at hand and know exactly what they are looking for.
We have several companies in our portfolio that we found through such outbound strategies. I see these companies typically perform better (vs. the ones that are struggling to raise money) as I’m of the opinion that an investor should have to fight to get on the cap table of a company. After all, quality founders might not need your help.
‘Offline’ and Online’ events
Be out there. Attend events. Sign up as a speaker. Network with people and share what you are looking for, indicate that you are looking to invest, and explain what value you can add to a company.
Syndicates
Syndicates allow you to follow a ‘lead’ investor who already invested in a deal. The lead is typically an experienced investor and he basically shares the deal with his network to co-invest. In return, the lead typically receives a carry when there’s a profitable exit. Sometimes a small management fee is charged by the lead to the Syndicate investors to cover for the legal costs.
The advantage of Syndicates is that they allow you to invest ‘smaller’ tickets while they take care of the deal sourcing, due diligence, and legal matters. And hence they are a great way to explore angel investing without taking an enormous risk.
Syndicates are one of the few strategies in angel investing that allow you to be more or less passive and rely on the ‘syndicate lead’ to handle the investment. The advantage of Syndicates is that they allow you to invest ‘smaller’ tickets while taking care of the deal sourcing, due diligence and legal matters.
The downside is that there are limited syndicates available in Southeast Asia as the majority are active in the United States. Also, I still recommend you to do your own research and not blindly follow the syndicate lead.
An angel has multiple channels that he/she can use and we recommend applying a combination of strategies to explore what works best for you. Everything depends on how much time and resources you have available.
The above guide is not exclusive and is solely meant to give several options that have worked well for us.
Angel investing is hard work and generating good results requires your time, passionate learning, and energy.
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.
Grab in talks with banks for US$500M loan; It will be a revolving loan for 3 or 5-year tenor for 5-6 per cent interest rate. Deal Street Asia
Dropee raises US$1.3M seed-extension round; Investors include Y Combinator, Ondine Capital, Vynn Capital.
Indonesia’s Bank Central Asia launches 3rd SYNRGY Accelerator with 11 startups; Its focus areas are insurtech, data analytics, proptech, Enterprise 2.0, AR/VR, mortgage, blockchain. e27
Antler announces 15 new investees; The list also includes 2 startups from the startup generator’s COVID-19 Initiative. e27
How travel startups can survive when investors withdraw; The term of virtual travel expectedly becomes popular, and inspires several startups capturing this model to survive. e27
MDEC launches 6-month programme to empower tech startups; The ‘Founders Grindstone’ consists of 3 blocks of intensive workshops conducted by global partners from VC firms, ECF operators, media. OpenGov
How to craft your startup’s financial projections. A good starting point in looking at your projections would be the revenue forecasts. e27
Cyber resilience key as SMEs step up digitalisation efforts; To manage cyber attack threat, SMEs can conduct simulated spear phishing campaigns to test employees on a regular basis. sgsme.sg
Crystal-ball gazing: How startup models will evolve in the new, multi-dimensional connected world; The eventual goal for organisations to thrive would be to create a platform of co-creation, co-sharing and co-distribution among collaborating parties. e27
Lazada helps Asia’s malls go online after virus upends retail; The Alibaba-backed e-commerce major launched its virtual mall ‘Lazmall’ in 2018 and the number of brands working with it has grown ninefold to 18K-plus. InsideRetail
Immersive chat startups have a very different vision for the future of voice; As audio-centric platforms garner investor interest, VR founders of old are trying to push 3D audio as the next evolution, presenting the tech in a way that looks entirely different from today’s voice chat platforms. TechCrunch
4 steps for digital success in the COVID-19 era; Overnight shifts to virtual workplaces have reinforced the need for digital transformation of the HR function. hrmasia
Digital economy now contributes one fifth to Malaysia’s GDP; The country’s digital economy is worth US$63B (18% of GDP); It is expected to reach 20% by end-2020. OpenGov
DTI Philippines launches e-forum for MSME resilience amid COVID-19; As per a report, the 3 most-funded categories were all downstream — in-store retail & restaurant tech, with US$115M (across 23 deals); online restaurants and mealkits (US$86M, 13 deals); and e-grocery (US$51M, 9 deals). AgFunderNews
These 5 Asian startups are innovating sustainability solutions, from repurposing waste to clean meat; The 5 startups from Singapore Food Bowl’s latest cohort hail from Philippines, Singapore, Thailand. GreenQueen
Al-Huffaz, Ameenfarm and Yuwal top DARe’s Accelerate programme in Brunei; Over 100 startups have completed ‘Accelerate’ since the programme started in 2016. Biz Brunei
SiHub, Expara launch startup incubation programme in Myanmar capital; The programme aims to incubate at least 20 startups with products suited to the fast-growing market. Vietnam News
Filipino startup trains underskilled women in AI for free; The startup Connected Women trains them to be data annotators, which are considered to be essential in any programme that uses AI. Inquirer.Net
Thai bank SCB to launch own food delivery service to through its venture capital arm; The new company aims to bring 50K restaurants to its Robinhood app by the end of the year. Nikkei Asia Review
Is China the new global e-commerce leader?; Its growth is largely locally driven as a result of the explosive growth of affluent and internet savvy consumers. e27
Prabhjeet Singh is Uber’s new India and South Asia president; He succeeds Pradeep Parameswaran, who was promoted to be the regional GM (APAC); TechCrunch
When COVID-19 struck in early 2020, universities and schools around the world found themselves suddenly shifting to digital education, a scenario many had never conceived of before. Teachers and professors rapidly switched to Zoom with mixed results.
In this period of rapid technological adoption, the existing educational technology industry, or edutech, led the way in providing mass digital education services in Singapore.
EduSpaze, Singapore’s first edutech accelerator, quickly compiled a bank of useful edutech tools and resources for the pandemic, signalling the key role edutech was going to play during the crisis.
Tapping on the crisis to grow online users
For parents stuck at home, the period of Home-Based Learning (HBL) from April 8 to May 4 was a stressful period, as they had to explore ways to keep their children engaged without compromising their learning.
This was the time for edutech firms that had laid the key groundwork for innovative and engaging digital pedagogy to shine.
Consider the case of Tenopy, a platform for live online education that was launched in 2017. The platform uses a unique in-house algorithm, data analytics, and interactive content to make personalised education content accessible for over 2,000 Primary School students all over Singapore.
Tenopy moved quickly to promote its products and raise awareness of its innovative pedagogy for the online space. Due to Tenopy’s active efforts to reach out to students and parents, the platform saw a 100 per cent increase in active students since March. Even as HBL drew to a close, the company saw a 95 per cent retention rate moving from Term 1 to Term 2, as a result of its engaging and affordable platform.
In the words of Tenopy founder and CEO Soh Chong Kian, on their experience during the pandemic: “The pandemic has made digitalisation a new norm and drastically accelerated the adoption of e-learning, that comes with natural merits such as efficiency, easier accessibility (to high-quality teachers), interactivity and affordability.”
VERE360 is another edutech firm that had its long-simmering efforts pay off. VERE360 aims to democratise experiential learning for schools across Southeast Asia, using virtual reality.
Before COVID-19, its efforts were primarily geared towards integrating VR content within everyday classroom settings. During the HBL period, it responded quickly and began working with teachers and schools to continue engaging students in learning through its VR content library.
VERE360’s immersive education style hence allowed teachers to close the gaps presented by not being in the same space.
Both VERE360 and Tenopy proactively marketed their unique digital pedagogy during a time of technological adoption, allowing them to offer sought-after services. Their long-standing efforts to develop pedagogy that fully engages students over the digital space paid off, giving them a leg up over traditional tuition businesses during the pandemic.
The crisis forced educators across the industry to ask difficult questions about retaining student development when education shifts online, and adroit edutech startups were able to provide the answers needed.
Understanding the severity of the situation, Tenopy did its part to fulfil its mission of making high-quality education accessible to all.
In June 2020, Tenopy inked a Memorandum of Understanding (MOU) with AMKFSC Community Services Ltd. (AMKFSC) to provide free tutoring services to children from underprivileged backgrounds across a range of Primary 3 to Secondary 2 students. Not only does Tenopy provide regular live online classrooms to these children, but it also provides free recorded lessons and homework materials to online tutors from AMKFSC so that they can conduct professional tutoring for affected students.
Another edutech firm, Yumcha Studios, responded to the crisis by using its platform to educate children about the coronavirus through an accessible and humorous quiz. The firm used its in-house characters and stories from its bilingual book-and-app series Little Dim Sum Warriors to develop this quiz released in 8 different languages, such as Bengali, Indonesian, Chinese, and even Singlish.
During HBL, the firm also made all their Dim Sum Chums bilingual mobile app free to download on iOS and Android devices worldwide, engaging many more students in developing their language skills. Yumcha remained cognisant of the differing access challenges faced by low-income students in Singapore and ensured its outreach efforts remained accessible to these students.
Yumcha Studios and Tenopy worked hard to improve their product accessibility during a challenging period for the country. By actively thinking of those in need, they reached consumers who most needed their products and forged important connections for the future.
Edutech companies quantifiably demonstrated the value of their work in reaching the most vulnerable quickly and hassle-free. They shone a light on the potential of edutech to revolutionise key problems in the education sector, both in Singapore and beyond.
Looking ahead
The edutech industry in Singapore was well-positioned to actively respond to the challenges posed by COVID-19 to traditional education models. COVID-19 may have set the stage for a digital revolution, but it was the hard work of the edutech industry during the crisis to respond to community needs and attract online users that accelerated their growth.
As we move into the post-pandemic world, it is likely that this digital revolution is here to stay, and that the edutech industry will keep booming in a newly digitised world.
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.
The COVID-19 pandemic put enormous strain on public health systems and governments had to speed up their response and quickly get credible information to concerned citizens.
The scale of Facebook’s platforms means that we are able to help facilitate access to the latest and most reliable information, with people using digital channels like Messenger to stay connected and get information from trusted health authorities that are on the front lines fighting this global pandemic.
Facebook’s mission to help people connect and be closer together when everything moved to virtual was even more important to us.
To do this, we recognised the role our vibrant developer community had in forming the foundation of a collaborative effort to connect people to the right information. We launched a global programme to connect government health organisations and UN health agencies with developers that can help them use Messenger to address various needs, such as sharing official answers from health agencies to the most commonly asked questions on COVID-19; providing the latest information about the outbreak including number of cases, and addressing misinformation among others.
Startups such as Reach52, which participated in Season 1 of Facebook Accelerator Singapore and focuses on providing affordable healthcare to underserved communities, moved quickly to build a COVID Information and Symptom Checker on the Messenger platform to help curb misinformation.
In the first week alone, their solution reached over 6,500 people from rural communities across the Philippines and Cambodia. Now available in more than 15 languages, and also available in India, Reach 52 has plans to scale-up their COVID-19 solutions, including the use of FB messenger to reach over one million people in the next six months, as well as train 1,500 frontline health workers across four countries.
In the Philippines, Aiah.ai responded to the call to support the citizens of the Philippines by building a chatbot in approximately two weeks for the Department of Health (Philippines) in partnership with AI4GOV, a non-profit organisation that researches and develops AI-based solutions to improve public service delivery.
The chatbot known as K.I.R.A KontraCovid, helps to combat misinformation by disseminating official information about COVID-19 and other important facts.
Meanwhile, New Zealand’s ARK team launched a free Messenger chatbot, Āmio. Āmio uses publicly available information from the New Zealand Ministry of Health and other official COVID-19 sources to help people determine if they need to be tested, find the nearest testing lab, receive the latest recommendations, and get updates on cases.
Our community loves to build and when we combine technical skills to a social mission we can have a positive social impact. Here are some of our learnings through the process.
Using constraints to your advantage
The circumstances brought about by the COVID-19 pandemic added another layer of complexity for startups that needed to work faster than ever to bring timely and accurate information to people including underserved communities.
Driven by an urge to do good, Aiah.ai was able to iterate quickly with partners and compress the time of its sprint process by leveraging existing platforms, its expertise in building chatbots, and focusing on local needs. However, building so quickly also meant having to overcome challenges and improving along the way.
A key takeaway for the team was using the constraints of the chatbot to their advantage. The limited conversation space meant keeping responses concise and ensuring they provide the necessary call to action. It was also important that they set expectations for every interaction so people know what they can expect from the bot, and when they can expect a response from a human for more complex queries.
Synthesising the use of offline-first apps and online platforms
Messenger allowed these startups to scale accessibility and provide trusted health information quickly to large numbers of people and relieve pressure on official helplines. The reach52 team used their Messenger-powered mobile application and platform to integrate with their existing primary healthcare solution for rural communities.
Synthesising the use of offline-first apps and their virtual platform, they are able to deliver screening, telehealth, health worker training, medicines, diagnostics, and insurance into communities where traditional services can’t reach.
Also, since not everyone has devices that support the download of apps, the startups were still able to deliver streamlined bot-based experiences on mobile web and Facebook Messenger Lite.
With these success stories, it is extremely heartening to see how developers have built on their strengths and channeled their ingenuity towards giving back to their local communities.
Our developer partners have also provided their services free of charge to government health organisations and UN health agencies during this crisis.
We’re proud of the commitment of the developer community to answer the challenges brought about by the pandemic.
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Without question, COVID-19 is a black swan event that has shaken the business landscape across the globe. It has caused billions of dollars to leak away as startups desperately try to get through the day while maintaining their service and products for customers.
Thus, many startups have to make their own sacrifices by shutting down parts of operations and laying off staff members. These actions might sound logical at first, however, once they are executed, it will expose companies to high risks of losing existing customers for failing to deliver the promised results.
So the bottom line is finding the appropriate strategy to let tech startups save costs while still maintaining peak performance. In other words, cutting down on more expensive redundant headcounts and having a more economically viable offshore team to help support your operations.
According to a recent study, the average annual savings of offshore software project costs vs onshoring is about US$56,000 per project. This is a significant reduction, and very valuable for startups.
But why Vietnam? Does it have any cost advantages compared to other popular offshore destinations? And how will offshoring to Vietnam help you save more money than onshoring in Singapore?
The answer lies within the tech labour force that enables Vietnam to surpass others when it comes to saving costs.
Did you know that Vietnam is one of the 30 countries that have zero cases of COVID-19 death? They are also among the first nations in ASEAN to reopen, allowing businesses to resume. Simply put, Vietnam has done well to fight back the outbreak compared to its peers and other developed nations.
This means the country is already starting to recover ahead of others, especially for offshoring which already gets people back to work. In the landscape where everyone has to cut down their operation due to the distancing practices while still trying to meet the customer’s demand, having the capability to keep going without being disrupted is valuable.
Additionally, the country’s GDP growth record is brimming with an average six per cent rate, which is fastest compared to other famous offshoring destinations in ASEAN such as Indonesia, Thailand, Malaysia, and more. As a result, the Vietnamese market also holds much more potential in the near future.
On the other hand, Vietnam is also well known for its breeding ground of technical talent where young engineers, software developers, and entrepreneurs arise. Eddie Thai, general partner at 500 Startups Vietnam, expected Vietnam to be ranked in the top three countries with the highest number of engineers by 2024. As a result, Vietnam provides lots of leeway for offshore tech startups to find and hire the right talent.
From the standpoint of recruitment, having a wide talent pool will save time (and therefore costs) of scaling operations. Recruitment efforts allow businesses to access more candidates and have a higher chance of getting suitable talents for the roles they are hiring for, in a shorter period of time, hence, decreasing the overall time/cost significantly. With better recruitment efficiency, tech startups can better focus on other core business activities.
Affordable and reliable workforce
Shortage of skilled talent is one of the common reasons for sky-high onshore labour costs. In fact, firms often offshore to Southeast Asian countries to take advantage of their human resources. Still, compared to other competing players, Vietnam is standing in the spotlight due to its lower salaries but a dependable workforce.
The Vietnamese government understands how important foreign investments are to its economic growth more than anyone. Thus, the country has put a lot of work into keeping its currency competitive to allow a fast-growing economy led by exchange rate-sensitive exports.
The “fortunate” side effect is that Vietnamese labour costs are approximately 10 per cent to 50 per cent lower than its neighbours such as Indonesia and Singapore, approximately five per cent cheaper than the Philippines when it comes to fresh developer:
Role
Labour Cost per Country (US$/Year)
Vietnam
Indonesia
Philippines
Singapore
Developer
7,200 – 12,400
17,581 -24,658
8,300 – 12,426
38,000 – 84,500
Senior Developer
12,400 – 24,000
24,658 -30,970
12,426 – 14,620
50,500 – 84,500
Figure 2: Labour cost comparison chart (Sources 1,2, 3, 4)
As shown in the table above, the low labour costs in Vietnam indicate that it is the better offshoring destination for tech companies and startups to save costs. Even when comparing with its neighbouring countries, Vietnam still presents a noticeable difference in the cost range.
Moreover, Singapore has always been one of Vietnam’s largest foreign investors, with US$49 billion worth of projects in 2018. There has always been a positive relationship between the two countries, where investors are encouraged to venture into various sectors such as startups, software development, Industry 4.0, manufacturing, and offshoring.
Therefore, building an offshore IT team and accessing the labor market in Vietnam is much easier for Singapore companies and startups.
By observing a 30 per cent yearly increase of IT growth in Vietnam at a relatively lower turnover rate and higher stability compared to Thailand or Malaysia, offshoring software development to Vietnam seems like a given.
Time is now
Now, rather than asking yourself, “Why do firms outsource or offshore?” try questioning this: “Why do firms outsource or offshore to Vietnam?”
While our list of reasons for offshoring software development to Vietnam will help businesses understand the opportunity present by the market, it is crucial for you to take action immediately before things get more chaotic from COVID-19.
However, instead of venturing into it blindly, it is recommended to consult a trusted offshoring service provider for detailed legal information and market insight.
After all, modern problems require modern solutions!
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The ongoing US-China trade war has been talked about for more than two years and the glooming uncertainty that it brings towards the world economy is worrying. The relationship between the two nations was getting better at the start of the year when they signed a Phase 1 Trade Deal.
However, with the recent Luckin Coffee accounting scandal followed by the US Senate passing a bill to delist Chinese companies from its exchange and the US blaming China for the coronavirus outbreak, this tension could possibly re-escalate and worsen the relationship again.
But because of the current pandemic crisis that is happening across the globe, both countries have put their ongoing tension aside to focus on saving their own respective countries from this unprecedented crisis.
Singapore is well known to be an open economy and highly dependent on international trade. In 2019, Total Merchandise Trade stood at S$1,022 billion (US$738 million), which is a 3.19 per cent decline from SG$1,055 billion (US$762 million) in the previous year. Geographically, Singapore is strategically located as it is at the crossroads of major air and sea routes within the Asia Pacific region and the Indian subcontinent.
Singapore also has the highest trade to GDP ratio in the world, averaging about 400 per cent from 2008 to 2011 and 326 per cent in 2018. Being at the centre of international trade, the US-China trade war will no doubt have a negative impact on Singapore.
Singapore is more exposed to the Chinese market with about 25 per cent of exports bound for mainland China (13 per cent) and Hong Kong (12 per cent), whereas the US only accounts for 7.64 per cent. Majority of the export items compromised of electronics and types of machinery.
As for Singapore’s re-exports, approximately 20 per cent of re-exports (which is SG$274 billion or 52 per cent of total exports) goes to China (13.6 per cent) and US (6.1 per cent). According to the Ministry of Trade and Industry, the US-China bilateral trade made up 1.1 per cent of Singapore’s GDP in 2018. Hence, if there was a fallout between the US and China, these are the numbers that would be heavily impacted.
US tariffs that are directly applicable to Singapore affect a relatively small set of products which include solar panels, modules, washing machines, steel, and aluminium. Singapore’s exports of these products to the US accounts for only about 0.1 per cent of total exports. While many of the tariffs do not directly affect Singapore, they would still have a spillover effect due to Singapore’s role in China’s supply chain.
With that being said, goods and merchandise trade will definitely be impacted by the trade war. However, a silver lining could result from the US-China trade war and that is from the ongoing Hong Kong-China nationalisation dispute. Should Beijing impose the new National Security Law on Hong Kong, the US may remove its special treatment towards Hong Kong.
The removal of this special treatment could lead to the US to treat Hong Kong the same way as it treats China, such as higher tariffs and export controls over sensitive technology. Apart from that, the Chinese government will also be able to track and seize rich Chinese money in Hong Kong as more than half of Hong Kong’s estimated private wealth of over US$1 trillion comes from the mainland.
Ultimately, this would impact Hong Kong’s status as one of Asia’s leading business and financial hub, therefore, forcing businesses, financial services and private wealth to relocate to Singapore, which is clearly the next best alternative in Asia.
Last year alone during the early phase of the protest in Hong Kong, Goldman Sachs reported US$4 billion outflows to Singapore because of concerns over the protest and while global FDI stagnated in 2019, Singapore’s inward FDI jumped 42 per cent to US$110 billion.
Singapore will emerge as a winner in Asia thanks to the US-China trade war but the question is: Will this gain on the financial service sector be able to offset the decline in merchandise trade in the long run?
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