In spite of the challenges brought on by the ongoing pandemic, more startups are gaining traction and getting attention from VCs and investors, especially in Southeast Asia (SEA).
However, having a good idea is just the first step.
With the surge in market saturation, startups are facing incredibly stiff competition. Having a strong financial foundation has never been more important in gaining an edge during fundraising, and it will go a long way to inspire greater confidence from potential investors.
Past examples such as Theranos, WeWork, and even industry giants such as Wirecard showed that size and funding is not the ‘be all end all’.
True long-term success is made up of a multitude of factors, and we need to pay attention to the smaller details in order to avoid the mistakes made by our predecessors.
Having said that, below are five common ones and how you can avoid them.
Mistake 1: Recognising revenue and expenses on a cash basis
Cash basis refers to an accounting method that recognizes revenues and expenses at the time cash is received or paid out. This contrasts accrual accounting, which recognises revenue when a service is performed or goods sold; and records expenses when the obligation to pay is incurred regardless of when cash is received or paid.
Cash accounting can misrepresent a startup’s actual health and growth. For example, the startup might record growth in sales due to customers’ payment of invoices rather than the actual act of performing a service.
Accrual Accounting should be adopted in practice over Cash accounting as it represents a more accurate picture of the startup’s business performance and financial health.
A consistent accounting policy means that once an accounting method is adopted for use (e.g. recognition of inventory), the business does not change the method from period to period. The purpose of having a consistent accounting policy is to ensure that transactions or events are recorded in the same way or manner over time.
This allows easier and more accurate comparison of performance over time. An example of this is when a startup recognises inventory using the ‘First-In-First-Out’ method starting out but ends up switching to the ‘Last-In-First-Out’ method during the latter years of expansion.
The Chart of Accounts classifies and organises all assets, liabilities, equity, revenues, and expenses accounts that help to form the foundation of a startup’s operations and financials.
While it might seem minute, a properly structured chart of accounts is pivotal for an accurate and detailed presentation of the startup’s financials used for analysis, budgeting and cost management.
Mistake 4: Labelling capital expenditure as operating expense
Capital expenditure refers to the purchase of long-term assets such as office equipment, furniture, vehicles and more.
Oftentimes, inexperienced startups can recognise capital expenditure as operating expense, which will skew their income statement as these purchases are only made once every few years, making it more challenging to accurately assess a startup’s true performance.
Mistake 5: Inconsistent bank reconciliation
Bank reconciliation refers to the process of matching the startup’s cash balance to that of the bank statement. This helps to explain any discrepancies or differences between the balance on the bank statement and the startup’s cash account.
The monthly bank reconciliation is important as it helps to prevent fraud and identifies any accounting errors (such as incorrect or duplicate accounting entries) and outstanding cash balances.
While not the most exciting thing to pay attention to, these fundamentals are crucial to the long-term financial success of any startup. Thankfully, these issues can be easily addressed if identified early, be it through hiring an experienced financial team, or by partnering with a reliable service provider.
The article is co-authored by Charles Phan, Project Lead and Darrell Su, Senior Analyst, Capital Advisory at Paloe
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Ajaib, a mobile-first stock and mutual fund investment platform in Indonesia, has secured US$153 million in a Series B funding round, reports Bloomberg.
This round brings Ajaib’s valuation to over US$1 billion to make it the region’s latest unicorn.
DST Global led the new round, with participation from existing shareholders, including Alpha JWC Ventures, Ribbit Capital, Horizons Ventures, Insignia Ventures, and SoftBank Ventures Asia.
DST and Ribbit Capital are also investors in Robinhood, a prominent stock trading app in the US.
Jakarta-based Ajaib will use the capital to expand its team, improve its app and provide credit facilities for margin trading for some investors.
Ajaib, which follows the blueprint set out by Robinhood, also plans to implement financial education initiatives to attract more aspiring investors.
Earlier this year, Ajaib raised US$25 million in Series A funding co-led by Alpha JWC and Horizons Ventures. It later added US$65 million more to its mega Series A round led by Silicon Valley-based Ribbit Capital, another backer of Robinhood.
Co-founded in 2019 by Stanford MBA classmates Anderson Sumarli and Yada Piyajomkwan, Ajaib leverages Indonesia’s high smartphone penetration rate by operating as a mobile-first stock trading platform. The app requires no minimum sum to open a brokerage account.
The company claims to have attracted over one million stock investors in Indonesia, a country with a total of around 2.69 million retail equity investors.
According to a survey conducted by the Financial Services Authority in 2020, Indonesia’s financial literacy in the capital market remains low at 4.9 per cent.
However, Indonesia’s retail savings and investments market has constantly picked up pace in recent years. The value of the market tripled from US$108 billion in 2008 to US$326 billion in 2018, according to Researchandmarkets’s report. This number is expected to cross the US$400 billion mark in 2022.
Riding on the tailwind of the pandemic-induced investment euphoria among young, smartphone-savvy people, Indonesia has witnessed a trove of personal finance apps for all, with PINA being the latest startup to launch one this November.
The latest report from Facebook & Bain Company has proven that the “new normal” resulted in new purchasing habits, which boosted digital consumption. The e-commerce sales in Southeast Asia are estimated to nearly double to US$254 billion at the end of 2026.
While it is expected that digital spending will continue to expand amidst the pandemic, how much will SEA’s e-commerce companies grow as we’re entering the year-end sales period?
An e-commerce aggregator, iPrice Group, analysed the most visited e-commerce platforms in Southeast Asia to predict where the market is heading and what exciting developments we can expect from the year-end shopping frenzy.
Here are 3 predictions on the success of Southeast Asia’s e-commerce industry for the rest of the year
The pandemic-induced digital shift is enhancing online consumption even more than last year. Data shows that the overall web visits of online shopping platforms across Southeast Asian countries remained positive in the 1H 2021.
With more than an average of four million web visits from January to June in 2021, the number has increased by 31 per cent compared to the same period in 2020.
The Philippines experienced the most surge by 73 per cent, followed by Indonesia (41), Malaysia (34), Singapore (10), Thailand (9), and Vietnam (7).
The top two Singapore-based companies, Shopee and Lazada, experienced an increase of web visits by 56 per cent and 10 per cent in 1H 2021 compared to the same period last year.
The surge was probably driven by its ongoing marketing initiatives to supply value-driven shoppers during the new norm with flash sales, Ramadhan sales, 6.6 sales, and others.
In 2020, iPrice Group saw that the overall web visits grew at 26 per cent from 1H to 2H 2020 across all six countries. As such, the company forecasts that the total average web visits will grow even more for the remainder of 2021.
Therefore, online marketplaces will potentially receive an additional average of 690,000 visitors or more across the region, given that there are many upcoming year-end sales.
Influencers will continue to drive success to online sales
From footballers to Korean artists as brand ambassadors, and recent partnerships with Jackie Chan and Hyun Bin, Shopee, and Lazada sparked consumer hype as we entered year-end shopping sales.
iPrice Group tracked the social sentiments of the latest 9.9 campaigns. Using this data, the study uncovers which drive is the most successful.
Jackie Chan’s endorsement has the highest engagement per article. The campaign collaboration with Chan for 9.9 sales has over 59 articles published online, while there were 53 articles written about Hyun Bin’s endorsement.
However, the number of articles doesn’t draw a full conclusion. Hence, the study also investigates consumers’ reactions towards these partnerships. Who seems to be the more loved brand ambassador?
Observing the 3.8k social reactions that were recorded, Hyun Bin has the highest number of “love” reactions (79), along with 19 per cent “haha” reactions and two per cent “wow” reactions from its partnership with the giant e-commerce company, Lazada.
Similar success was seen with the kung fu legend’s collaboration. Jackie Chan’s endorsement was received with 62 per cent “love” reactions, 21 per cent “haha” reactions, and 17 per cent “wow” reactions. It looks like the social sentiments towards these two ambassadors have been positively received by people, according to the data.
It’s clear to see that influencers play an important role in driving excitement for the upcoming sales period. Thus, key e-commerce companies have enough incentive to involve influencers in their campaigns. But does this mean that they will increase the amount of consumer spending during year-end sales?
A steady increase of consumer spending year-over-year
Given the uncertain COVID-19 infection rates, consumers will stay at home and consequently forego holiday travels and family get-togethers.
More time spent at home means more opportunities for online shopping. iPrice foresees that Southeast Asian consumers would probably spend an average of US$40 on e-commerce by the end of the year.
The prediction is made by examining the average consumer spending across online marketplaces in the 1H 2020 and 1H 2019. iPrice found an increase of 26 per cent in average consumer spending in 2020 when consumers spent about US$32.
Most purchases will be directed towards the categories of sports and outdoor, home improvements, and electronics.
Lastly, even if consumer spending won’t increase as predicted, online retailers can still expect far more online web visits to their platforms this year.
The web visits data was collected from SimilarWeb as of August 2021, which accumulated the total average visits (desktop & mobile web only) obtained by e-commerce companies across six different Southeast Asia. Data on social sentiment was taken using Buzzsumo by inserting keywords such as “Jackie Chan” OR “Jackie Chan Shopee”, “Hyun Bin” OR “Hyun Bin Lazada” on September 2, 2021.
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Kaspar Hidayat, Co-Founder and Partner, Forge Ventures and Tiang Lim Foo, Co-Founder and Partner, Forge Ventures
Singapore-based seed-stage VC firm Forge Ventures has announced the closing of its oversubscribed debut fund at US$21.88 million targetting Southeast Asia.
A sector-agnostic fund, it intends to back founders developing the next generation of category-defining firms at the seed stage. It is also paying close attention to fintech startups in the region.
Over the next three years, Forge Ventures plans to invest in 15 companies, primarily in Singapore and Indonesia, with an average cheque size of US$750,000.
It has already invested in three companies. They are:
Vouch, a digital concierge SaaS platform for the hospitality industry in Singapore.
Marathon, a Vietnamese K-12 after-school tutoring business.
Forge Ventures has also built a Limited Partner base designed to assist founders. Its prominent LPs are Airbnb, Carousell, Fabelio, Facebook, Funding Societies, GajiGesa, Grab, Kopi Kenangan, Qoala, and Stripe.
Forge Ventures was established in 2021 by Tiang Lim Foo and Kaspar Hidayat in partnership with Alto Partners, an Asia-focused multi-family office.
Foo was earlier a venture partner at Next Billion Ventures, while Hidayat was an investor at 500 Startups (now 500 Global).
According to Foo, Southeast Asia’s startup ecosystem is at an inflexion point, with a growing number of startups eyeing exits or joining the unicorn club. An influx of available capital urges founders to look for more from their seed investors.
“We are operators, so we know what it takes to go from zero to one. This is why we can build conviction early and be the first institutional capital to back a startup. The founders that we partner with count on us to get our hands dirty in every aspect of company building from ideation to go-to-market (GTM),” Foo added.
“While we do provide capital to startups, we see ourselves first and foremost as partners and advisers to the founders we work with. Unlike other investors, we allocate the majority of our time to working with founders so that we can make a difference,” co-founder and partner Hidayat said.
According to Refinitiv data, buoyed by the pandemic-induced digital transformation across the world, global VC funds have invested record-breaking US$268.7 billion so far in 2021, exceeding their total investments of US$251.2 billion a year earlier. In Southeast Asia, VC investments also amount to a record US$6 billion in Q1 2021, according to DealStreetAsia.
However, VC fundraising performance in the first half of 2021 has witnessed a slowdown, with the total proceeds slumping 21 per cent compared to the first semester of last year.
Participants of the Startup Studio Batch 3 programme
The Indonesian Ministry of Communications and Information (Kemenkominfo) on Monday announced the 15 local startups that have been shortlisted into the third batch of its Startup Studio Indonesia incubation program which is set to run from September to December this year.
The startups will participate in a Founder’s Camp and 1-on-1 Coaching sessions related to product-market-fit for four months. The series of Startup Studio Indonesia programmes will culminate with Milestone Day at the end of this year, where startups have the opportunity to present their business models and achievements in front of industry stakeholders.
The shortlisted startups are:
1. AturKuliner
A B2B app to help Indonesian F&B businesses manage food costs. Based in Bandung, the startup aims to empower F&B Micro Small Medium Enterprises (MSMEs) to take full control of their food cost with an integrated industry-specific supply chain management solution.
2. AyoBlajar
An online learning app for K12 students in Indonesia. AyoBlajar is an edutech startup focusing on providing a more interactive learning method through live class format for K12 students across Indonesia.
3. Bicarakan.id
A marketplace for mental healthcare consultants in Indonesia. Based in Jakarta, Bicarakan.id is a place for Indonesians to discuss and find solutions to their problems with trusted counsellors.
4. Bolu
An online course and services platform to help Indonesians sell online. The Jakarta-based startup aims to help people sell online through courses that it makes and the services it offers.
A full-stack immersive social commerce platform for lifestyle and F&B in Indonesia. Based in Jakarta, Eateroo is a full-stack immersive social commerce platform for lifestyle and F&B. With the Eateroo app, communities discover brands through user-generated content. The company aims to revolutionise social selling for Indonesia by digitising the word-of-mouth experience.
6. Finku
Finku is a personal finance app focused in helping Indonesians manage their finances better by seamlessly getting a view of all their money in one place. Based in West Jakarta, the company works with other fintech platforms such as KoinWorks and Flip.
7. FishLog
A B2B fisheries cold chain network in Indonesia. From its base in Bogor, West Java, the startup aims to build the biggest nationwide B2B fisheries cold chain network.
8. Gajiku (Sampradaa)
A fintech app to give early-wage access to employees. According to the company, blue-collar workers in Indonesia typically live paycheck-to-paycheck without a “rainy day fund” for ad hoc expenses. Gajiku offers on-demand, early wage access to these enterprise employees. It work with employers to let them provide their workers access to money they have already earned without requiring them to wait for their regular payroll check or direct deposit.
9. Imajin
A marketplace for manufacturers in Indonesia. According to the company, it aims to help users to find the right manufacturers for their needs.
10. Keyta
A West Jakarta-based startup that builds conversational commerce tools with the goal to empower social commerce sellers. It helps sellers increase the productivity and efficiency of their business operations through an all-in-one keyboard application.
11. Powerbrain
Powerbrain is an energy management company that utilizes IoT and automation technology to optimize energy consumption in a building. Based in East Jakarta, it enables businesses to save energy costs with risk-free solutions. It also stresses that their solutions help save energy through a legal means. It counts leading brands such as Alfamart, Indomaret, and Campina as its clients.
12. KreatifHub
KreatifHub is a one-stop creative platform that connects consumers and businesses with freelancers in the Indonesian creative industry by facilitating transactions of creative services through its marketplace.
Based in West Jakarta, the startup said that there are currently more than 12,000 talents from the creative industry all over Indonesia that uses KreatifHub.
13. Sgara
A Bekasi-based one-stop platform for shrimp farming. The startup builds data-driven farm advisory and marketplace solutions for shrimp farmers.
14. Soul Parking
The Jakarta-based solution provides an innovative parking management solution for businesses.
15. Zi.Care Hospital Information System with structured Electronic Medical Record (EMR) Sistem informasi rumah sakit digital Digitizing Indonesian Healthcare
Launched in 2020, Startup Studio Indonesia selected 15 startups out of 5,723 registrants.
Startup Studio Indonesia targets to generate 150 digital startups by 2024 who have the capabilities to scale up their business in terms of the number of users, total revenue, employment rate, and funding from Venture Capital.
By far, 35 early-stage startups in Indonesia have attended the programme in two batches.
For this batch, Startup Studio Indonesia invited notable names in the startup ecosystem such as Moses Lo (Xendit Co-founder), Christopher Madiam (Sociolla Co-founder), Fajar A. Budiprasetyo (HappyFresh Co-founder), Suwandi Soh (Mekari Co-founder), and Hiro Kiga (Wallex Co-founder).
Remote workforces are now a reality for thousands of startups around the globe. Startups are now much more likely to hire international teams to leverage a wider pool of talents and optimise resources.
As a startup founder, the people you hire depend on your business needs and available funding. However, managing a remote team is easier said than done and, while there are a lot of advantages, there are also a lot of challenges especially when managing a team with diverse backgrounds.
In the recent webinar “Scaling your startup across borders: How to effectively manage your remote team”, organised by e27 in partnership with Deel, we talked about challenges and best practices of managing remote international teams. Deel is a payroll and compliance software that helps startups recruit talent and work with remote employees across the globe.
The panel featured Ilya Kravtsov, Founder and CEO of PouchNATION, a SaaS-based platform with NFC wearable technology and a one-stop guest management solution operating in 7 countries in Asia; Jonathan Hall, Senior Director of Business Development at Rapyd, a global payments solution provider; and Abhinav Krishna, Head of Expansion APAC at Deel.
The webinar was moderated by Meltem Kuran, Head of Growth at Deel. Kuran kicked off the discussion by remarking that as Deel experiences rapid growth to their current strength of over 275 people spread across 46 countries, they continue to operate without an HR team, and onboard employees using their software platform.
Why build remote teams?
The panellists kicked off the discussion by outlining the various factors that push companies to build remotely, knowing the challenges and risks associated with building remote teams.
Krishna started by pointing out that COVID-19 has accelerated the existing trend towards remote teams. He explained the four main barriers to going remote which are encapsulated as “HTTP”: Hiring (the right people), tracking (productivity and metrics), trust (culture and team building), and payroll (wages, benefits, and incentives).
These four areas represent the biggest challenges to hiring remotely, says Krishna. COVID-19 has been the catalyst to innovation in the remote hiring world so startups can start trusting in remote teams. New technologies are solving many of these challenges so startups can create a remote working culture, build trust, and confidently make the leap into the unknown, and hire remote teams across borders.
The challenges are around visibility and alignment — making sure that people are focused on the objectives set for the team. Knowledge sharing is critical in fast-growing startups, he said. From a growth perspective, market penetration and reach are important so it becomes critical to have people on the ground. Product localisation and local knowledge as well as the flexibility to hire a single person in a key new market are important drivers to international hiring. Lastly, access to talent around the world as globalisation spreads is another reason why startups are looking to hire internationally.
Kravtsov added that the key to hiring international teams is transforming your organisation from being an input-driven to an output-driven company. Working regular hours is not as important in reality, he feels and thinks it is better to focus instead on output-driven goals. PouchNATION made a conscious decision not to measure hours worked: “We are focused on making it output driven and making people aware of that.”
How to ensure remote team members stay engaged
Continuing from the issue of tracking remote workers, Kuran took the discussion deeper to ask how companies make sure that work gets done and keep their teams engaged. When it comes to hiring remote employees and tracking their work, in Hall’s experience, more senior candidates tend to fit the profile of a remote worker much better. “They have the resilience and potentially perseverance to overcome the barriers that come with distance. I certainly have a preference towards experience when it comes to remote working,” shared Hall.
Ways to measure success in remote working revolves around methodologies and tools. At Rapyd, the methodology is centred on short frequent contact, making an active effort to ensure communication is not transactional. Having conversations that are not related to work is important. “Focus on highlighting achievement and milestones and saying thank you is important because it gives visibility into work and makes sure people know they are appreciated,” explained Hall. From a tools perspective, anything that enhances collaboration, sharing, and visibility is a win.
Kravtsov added that keeping people engaged remotely is a challenge because of the difficulty in ensuring that engagement is natural and not forced. “Engagement over coffee is naturally created in an office environment. Creating that engagement over a Zoom call is a little bit forced and I am a big advocate of creating a culture of engagement and I think creating that engagement should be about doing it spontaneously.”
He said that at PouchNation they try to create that by having a huddle session every morning with the management team. “Cameras are a must — seeing everyone every morning creates engagement, We try to push these daily routines and make it less forced and more casual. It’s about not just contacting people when you need it so you don’t feel detached from your colleagues.”
Krishna feels the challenge is actually about two things: engagement and productivity.
When hiring a remote worker it’s very important to have clarity on personal and professional milestones. This could be as simple as knowing what family goals each team member has as well as their professional goals. While Deel does utilise tools to track productivity metrics and build efficient processes, “tracking comes from trust”, said Krishna. “If you cannot have trust, those tools are not going to be of any use.” Transparency in metrics helps teams at Deel to create a straightforward way to have every employee engaged and productive, he explained.
Transparency is built from a data perspective with transparency around performance metrics shared with everyone, and also from a people perspective by sharing direct and honest communication. It is very easy to misunderstand things when working remotely so direct communication is key, he pointed out.
Kravtsov added that in his company, even a simple activity like writing sales targets on a whiteboard is replicated remotely to build more engagement.
How to build culture in a remote setting
Kuran moved the discussion to building team culture, saying: “we discuss a lot around communication but culture is a separate thing.” Building on these points, the discussion was taken deeper into the issue of building an organisational culture in remote teams.
Kravtsov described his experience of building culture in teams that do not have physical interaction: “Before COVID, our operation teams were working on live events and that created a real culture because they were practically living together on weekends etc. during the events. We were doing 20-30 events a month and then it went down to 0.”
He thinks the challenge of how to build that culture digitally can be tackled by having proper feedback loops, having an engaged multicultural team to make sure that there is always alignment even if people come from different countries/cultures, and building trust. This is so that even if colleagues give their frank opinion, the person will take it constructively. He added that this can be done only if you go beyond transactional interaction and engage in non-work related activities or interests.
PouchNation has used chat meetings to gather 5-6 team members to chat with one rule: don’t talk about work. They also hold an online dance challenge among team members who each have to make their TikTok dance videos. “That breaks barriers between teams and these things help build a great culture,” says Kravtsov.
Krishna feels that culture building is not something that can be passed on by a CEO or HR team. “At Deel we don’t have an HR team so how do we manage? Firstly, it is about the CEO defining a very clear and simple vision: A vision that is so simply defined for everyone that we automatically understand the culture to be built in our teams. Second, we define the role, responsibility, and metric well for each person.”
Hall added that culture is an active effort and that building camaraderie doesn’t always mean spending money. “No one wants to get on a team call on a Friday night, so it’s about finding an engaging event that breaks down barriers.”
Kuran concluded the discussion by saying that stating what the culture is and making it personal is very important: “Just knowing what are the things you want to be part of your culture and stating them makes a big difference.”
The panellist then moved to discuss their favourite tools which facilitate a great remote work culture, apart from collaborative work products used in most companies such as Slack and Zoom. Krishna said that they of course use Deel for payroll activities and that his personal favourite tool is Notion, which has helped him a lot and played a crucial role to help him as he manages working with team members across time zones.
Kravtsov added that their startup holds a fun tournament which they call the “Pouch Olympics” by gathering together on Zoom for games to play around words etc. Another way they build remote team culture is by organising Whatsapp groups across the company “where we encourage to share stuff that is not work-related.”
Hall said the tools that have worked best for Rapyd to encourage remote team behaviour is the concept of shadowing. Taking a peer from a different team so they can understand your challenges and suggest new ways of thinking. For example, getting product people on sales calls or tech team members on sales calls. This also helps with building empathy, Hall feels.
Do certain cultures adapt to remote working better than others?
Hall feels that culture and personality are different things and personality plays a bigger role in determining the ability to work remotely. He said that people in some cultures may be shyer and some are more direct and don’t take offence if someone gets direct or steps over the line. “Personality is a clear driver,” says Hall.
Krishna thinks that company personality is an equally important factor. For example, remote workers working for a client who is not local are considered freelancers, and in some countries, that term has a bad perception. Freelance workers are not considered as important and often do not get paid on time. It is up to companies who hire remotely to say: “We will trust our people and build a great culture and we will go for people who will be responsible.”
So it also matters to look at the hiring company to see if they are creating the right environment to treat remote workers equally.
How to incentivise remote workers
On the topic of employee benefits and incentives, the panellists shared their viewpoints on how to motivate remote workers.
Financially, the incentives don’t change too much since ideally, the output should not change
Kravtsov says that beyond that frequent small gestures help in motivation. “If you can’t be in office and you have kids, craft incentives around flexibility around a personal situation. It’s about understanding the situation. Healthcare incentives are particularly important now during covid and recognising these things makes remote workers feel valued.
Krishna added that in today’s age companies are hiring internationally to find the best talent and not to save costs. He added that in some cultures people place more important benefits like insurance and time flexibility to be able to do side projects and follow their personal interests.
Kravtsov thinks this is important to allow people to pursue secondary education such as getting another degree while working. They allow employees to have side projects outside the company and satisfy their needs and they find that these people are still committed to the company and still stay with you.
Kuran agreed that remote employees want flexibility and control over their own lives and giving that increases loyalty.
Why diversity works
To conclude the webinar, Krishna emphasised that it is important to remember that today startups are hiring internationally “for better teams, more diversity and faster growth.”
“If you believe in these things go ahead and start creating your remote team. Labour laws and payment laws are boundaries that companies like Deel are breaking with their technology. So people just need to take the leap.”
Kravtsov added: “Diversity works — it can be done. There is nothing to fear about hiring international teams. We are living in a globalised world and there is so much to learn, so go for it!”
To watch the webinar, click here. Deel also has a special promotion for members of the e27 community. For more information, visit Deel’s official page.
This article is produced by the e27 team, sponsored by Deel
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Luwjistik Co-Founders Syed Ali Ridha Madihid (left), Wong Yingming
Singapore-based e-logistics startup Luwjistik raised a US$1.1 million (IDR15.8 billion) seed funding round led by East Ventures with the participation of Arise, a fund that is the result of a collaboration between MDI Ventures-Finch, and Global Founders Capital. The company plans to use the funding to grow its local and regional teams in Singapore, Indonesia, and Malaysia; develop its platform; and expand its reach.
Luwjistik is a relatively young company, having been founded in July by logistics and e-commerce veterans Syed Ali Ridha Madihid and Wong Yingming. Their vision is to develop a logistics infrastructure with an instantaneous regional reach through a network of global partners, enabling clients to benefit from a standardised workflow of ease and transparency.
According to Luwjistik Co-Founder & CEO Syed Ali Ridha Madihid, the solution is built to respond to the rise of e-commerce popularity as triggered by the pandemic, which has forced logistical companies to expand their operations. “Many people are unable to travel to build their network and connections on the ground. Many are also still relying on the old ways of doing things, and are unable to transform themselves digitally to keep up with the demands,” he said on Thursday.
Through the Luwjistik platform, clients only have to integrate a single API to connect themselves to selected partners and go through the transaction process all the way to the end. A network of almost 30 partners in Singapore, Malaysia, Indonesia, the Philippines, and Thailand is now connected through the Luwjistik platform. Some of the companies included Ninja Van, J&T Express, and JNE Express. DHL eCommerce and YCH Group Pte Ltd are examples of clients that have used the platform.
Madihid said that there are key main values that the company offers. First, in terms of ease, clients will be able to access a network of potential partners in Southeast Asia that offer deliveries of imported goods in domestic or regional markets. They can pick the service provider that suits their needs.
Second, with its standardisation, clients can navigate cross-border documentation, workflow, and fee transparency matters more easily. Lastly, with its single API, the platform enables easy and fast data management, direct booking, contract signing, document signing, and payment processing in just one platform.
According to Madihid, what the company is trying to achieve here is to combine the technology and knowledge that the co-founders have built after working in the sector to connect the different points of the supply chain. In the end, they aim to help clients navigate the challenges of cross-border shipping, especially in a developing region –where it can be fragmented.
“In the end, as there is an urgency to accelerate the digitalisation of the logistics sector to meet the demands of the market, Luwjistik provides a fast, efficient, and safe tech solution to help companies grow,” he said.
Another one for the logistics sector
Prior to announcing this funding round for Luwjistik, East Ventures had also announced an investment into another e-logistics startup –McEasy. This segment has been experiencing an increase in popularity during the pandemic due to its crucial role in supporting the growth of the e-commerce industry.
From early 2019 to July 2021, the DailySocial research team noted that there are around 16 funding announcements involving a tech-based logistics company, totalling the investment to US$586 million. Of all these companies, there are at least four startups that have more than US$100 million in valuation: SiCepat, Waresix, Shipper, and GudangAda.
As any HR professional will realise, the pandemic has triggered a number of organisational trends.
One particular note has been the democratisation of the crisis management function. Simply put, COVID-19 demonstrated that crisis management is no longer the remit of just a select number of senior employees or subject matter experts.
Instead, it is now a task dealt with horizontally across an organisation, an agnostic practice to serve for the good of all.
Global crises impact organisations globally, so employees at all levels have had to roll up their sleeves in this respect. Necessity has meant they need to have a part in crisis management.
Nowhere is this more apparent than in HR teams. As HR professionals are now becoming more influential regarding the shape and execution of their company’s crisis management strategy and plans.
Findings from International SOS’ APAC Trends Watch survey highlight this, as 79 per cent of relevant experts predict that HR professionals will now have an essential role on crisis management teams, particularly as we work towards an endemic COVID-19 in Singapore.
As business leaders and the authorities map out strategies to return to travel, facilitate a larger proportion of employees in the office, and return to business as usual, crisis response scenarios need to ensure a level of agility and adaptability to survive and thrive. This requires establishing framework conditions conducive to the proper conduct of the practice.
As HR is regularly responsible for the skills and development of individuals within a company, it can play a vital role in the acquisition and/or integration of these key elements into crisis management planning in the near future.
HR should always have been an integral part of crisis management. Very often the lack of HR integration is due to either a poor structure by the design of the crisis team or to a silo approach that compartmentalises crisis management to a single entity.
No matter what the scenario, crises are intrinsically linked to people, thus to HR.
HR teams are gaining more responsibility for many different functions out of necessity. In contrast to many previous crises, the COVID-19 pandemic has been a significant cause of disruption for a long period of time – it is a marathon, not a sprint.
It is this dynamic that’s causing more personnel, including HR professionals, to become involved with crisis management, as the impacts on employees are different to a “normal” business crisis.
Notably, the impact on mental health has been significant. Given mental health policies often fall into the domain of the HR function, it is understandable that HR professionals are now becoming more involved in crisis management and response, particularly as we move into the recovery phase of the crisis.
But there has now been an increased level of positive integration of HR in supporting the staffing of crisis management teams in situations of exhaustion or burnout.
HR, for example, played a decisive role in identifying replacements or in providing organisational support for staff engagement; valuable support to business leaders.
How can HR teams respond to this new dynamic?
With HR professionals now becoming more involved in crisis management, the need for agile responses before, during and after a crisis and then proactive planning for the recovery phase is more important than ever.
In preparation for a crisis, HR teams should try, through regular simulation, scenario planning and benchmarking, to identify where they have gaps in knowledge and capabilities, and then proactively find partners who can provide specialist support in these areas.
Looking at COVID-19 specifically, the need for medical knowledge is clear, and many HR professionals have been looking for insight from experts and doctors into how to manage the situation and their duty of care responsibilities.
“Plans are nothing, planning is everything.” President Eisenhower was right, and that is why it is key for crisis management teams to be able to train in immersive, dynamic scenarios to test their responses, processes and teamwork.
Regular simulation and crisis planning sessions organised by HR, and to which HR will proactively participate (through their representative or as observers), can therefore be a game-changer when making decisions in the pressure cooker environment of a crisis.
Recovery phase
With regards to the recovery phase of crisis management, HR professionals should work closely with their crisis management colleagues and/or key stakeholders that were involved to provide effective employee communications.
Openness and transparency in this area are vital. Crisis management plans and strategies must be shared at different levels in order to foster a collective dynamic and proactive (re)actions.
Furthermore, clarity is key, as confusion is likely to cause further stress for employees. Specifically, regarding COVID-19, employees are likely to be anxious about various issues. Fear over catching the virus, uncertainty about any planned return to the office as well as feeling under strain from the blurring of work and home lives due to work from home experiences.
In this situation, the response of HR professionals in managing crisis recovery can be key. Not only can actions be taken to improve staff morale affected by the pandemic, but also processes can be improved to account for the changing working environment.
It’s almost inevitable that the working environment that organisations and employees face post-pandemic is going to be different to the one that preceded it.
However, while the challenges that the HR function faces might now differ, it’s clear that the crisis management lessons that should have been learnt during the pandemic (through an After Action Review or a global Gap analysis) need to be remembered.
By embracing the responsibilities of supporting and being a key part of the crisis management team, HR professionals remain at the heart of the battle and can ensure that their organisation’s recovery is an effective one, improving both business outcomes and the productivity and morale of their workforce.
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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic
Go Zayaan, an online travel agency (OTA) startup in Bangladesh, has raised US$2.6 million in a seed round led by Wavemaker Partners.
The round saw participation from other SEA-focused VCs, including 1982 Ventures and Iterative, and angels such as Airbnb China CEO Kum Hong Siew, former Airbnb APAC managing director JJ Chai, and five former Priceline executives.
Liechtenstein-based private investment company Century Oak Capital also joined.
Focusing primarily on the Bangladesh market, Go Zayaan plans to use the fresh capital to improve user experience, attracting new talents, and expand its customer base and travel service network.
Founded in 2017 by digital marketing-savvy entrepreneur Ridwan Hafiz, Go Zayaan works with local airlines, inter-city bus firms, hotels and tour operators to bring more travel services online.
The startup aims to bridge the gap between offline and online travel services by creating a holistic travel booking infrastructure, including financing, transport modes and lodging options, and integrations with the country’s mobile financial services industry.
While OTAs only take up about 4-6 per cent of the total travel market in Bangladesh, travel suppliers are catching on fast with digital technology adoption in recent years.
During the pandemic, as tourism face headwinds, Go Zayaan decided to focus on domestic tourism and boasts of achieving a 5X growth rate in the past 12 months.
The startup also claims to have clocked over 500,000 monthly active users and 40 per cent returning customers to date.
Vietnam’s fintech has emerged as a rising star in the ASEAN region lately. Why should you choose the fintech market, and how to start a fintech business here? Let’s explore.
Within the context of a robust digital transformation wave covering every aspect of the economy, fintech is definitely on the top list of potential and high-return investments. CSIRO (2019) has considered Vietnam one of the rising stars in the global fintech industry.
The fintech ecosystem in the country grew from 44 startups in 2017 to over 130 companies in 2021, as cited by the Vietnam Fintech Report 2020, a remarkable growth rate of 173 per cent within three years. The revenue of the industry was estimated to be US$7.8 billion in 2020 (Vietnam Briefing), fueled by the rising adoption of digital transactions, a growing e-commerce sector, and the support of the government in promoting fintech as part of the bigger national plan on pursuing a digital economy by 2030 (Fintech News).
Most investors in Vietnamese fintech startups are foreign investors, including financial institutions and venture capital funds. For example, Momo’s latest series D funding round was co-led by Warburg Pincus and Goodwater Capital at over US$100 million.
In recent years, fintech has grown to a multi-disciplinary industry that includes e-wallet payment services, financial literacy, fundraising and crowdfunding, peer-to-peer lending, wealth management services, mobile money, and even the trending sub-sector of cryptocurrencies.
Among the 130+ fintech startups, the top five most active sectors are digital payments solutions (31 per cent), P2P lending (17 per cent), blockchain (13 per cent), and wealth management and POS services tying at 7.5 per cent.
In terms of payment methods providers such as digital wallets, Vietnam ranked high in terms of usage density owing to a young demographic, the rising smartphone users, and the upward development of e-commerce sites, according to EY’s ASEAN Fintech Census 2018.
Along with the increasing trend of digital payments, the total transaction value of this sector is expected to reach nearly 30 million dollars in 2025. Listed in the top fintech companies in Vietnam are Momo, Nextpay, Zalopay, VayMuon, and Kilimo Finance, among others, specialised in various fields.
Consistent with Fintech Singapore’s report on the Vietnam fintech market, B2C sub-sectors dominated in terms of quantity and investment amount, B2B sub-sectors such as SMEs financing, digital banking, and data/credit/scoring management only amounted to an insignificant number.
This helps predict the likely fintech trends shortly, with new startups perhaps filling in the gap.
However, the past years have also witnessed positive expansions of the digital banking system, signifying cooperation between fintech businesses and traditional commercial banks.
As noted by the Digital Banking in Vietnam by Austrade (2020), the banking sector in Vietnam is driven by trends of digital transformation as the Vietnamese government is initiating a solid push towards a digital economy.
Innovations in mobile banking, QR code payment, and cooperation with other e-wallet enterprises have been applied by many banks such as MBBank, BIDV, and Techcombank, which have become even more critical in the context of COVID-19.
The most recent prominent case is the partnership between Shinhan Financial Group and Grab to develop new payment applications.
Opportunities for FDI investors in the Vietnam fintech industry
As one of the fastest-growing industries, fintech has been an attractive destination for many investors. According to CB Insights, one out of every five dollars invested in venture capital so far is in fintech.
Looking at Vietnam’s foreign investment market, between 2019 and 2020, the Vietnamese fintech market attracted US$435 million in funding, which was the second-highest in the ASEAN region. The increase in e-payment and online commerce due to the COVID-19 pandemic has brought confidence to investors in the fintech industry in Vietnam.
Undoubtedly, this sector has been the topmost attractive investment sector since the beginning of 2021 to now.
Fintech regulations in Vietnam
Vietnamese laws currently provide neither a definition of fintech nor a single comprehensive regulatory framework for fintech activities, which is a bottleneck for the ecosystem. Current regulations are mainly concerned with fintech activities in the payment industry.
Fintech products in Intermediary Payment Service Provider (IPS) are governed by Decree 101 on non-cash payments and Circular 39 on IPS. IPS includes financial switching services, electronic clearing services, payment gateway services, supporting services for money collection and payment, supporting services for electronic money transfer, and e-wallet services.
Following this Decree, IPS providers must be locally established enterprises that have obtained a license to provide IPS (“IPS License”) from the SBV. Therefore, foreign investors can invest in fintech in Vietnam through a legal entity. Currently, the government is drafting a new decree that will replace Decree 101 on non-cash payments.
One of the new policies mentioned in the Draft Decree amending and replacing Decree 101 is the proposed regulation of IPS agent activities assigned by banks to fintech businesses. If this Decree is passed, the market will be fiercely competitive in service quality and fees.
Regarding the future development of fintech, the government has issued many programs and projects. Among them is the legal framework for virtual assets such as cryptocurrencies. This sector bears a massive potential to the future payment services and the finance industry as a whole and a regulatory sandbox for the fintech sector.
As the government had newly issued a draft decree on regulatory sandbox for the banking sector in 2020, it will provide fintech businesses with a rigorous legal environment to test their services and products.
Key legal issues when setting up a fintech business
When thinking about establishing a fintech business, here are some fundamental legal issues that you should pay attention to:
Entity formation and registration
Licensing and sublicensing, as some fintech activities require a special license, for example, the IPS license – Intermediary Payment Services or a Non-Bank Credit Institution – NBCI.
Registration of appropriate business line
Special ownership arrangements: stock options, preferred shares, team member stock options, etc.
Technology contract
Intellectual property protection and cybersecurity issues
Market access and operational conditions for foreign investors
As stated above, regarding the regulations focused on electronic payment gateway services, here are some market access and operational conditions for foreign investors to keep in mind. The most popular form of investment for foreign investors in Vietnam fintech is to license authorities to perform intermediary payment services under their approved business lines.
The 6499 VSIC code, interpreted as “Other financial service activities not elsewhere classified (except for insurance and social insurance”, has been the most common for companies providing Payment Intermediary Service at the time being. Additionally, non-bank institutions can only be allowed to undertake the payment intermediary service after attaining a Provision of Payment Intermediary Services (“License “) from the State Bank of Vietnam (SBV).
The prime condition for attaining this License is a minimum charter capital of at least 50 billion VND. In addition, the company must satisfy the following criteria: a comprehensive business scheme, a legal representative and technical infrastructure, and IT systems appropriate to the requirements of intermediary payment services.
As of October 2020, there are 41 licensed service providers in Vietnam approved by the SBV, including Napas, Viettel Pay, and FPT.
However, peer-to-peer lending is a case when it is not included as “Banking Services and Other Financial Services” under WTO commitments between Vietnam and other members. P2P Lending companies, in fact, unlike companies in the financial services business, provide a digital technology platform instead of giving money/loans.
An Official Letter No. 5228/NHNN/CSTT dated 8 July 2019 of the SBV stated: “In Vietnam, some companies have registered their business lines as financial advisory, financial brokerage, and self-introduction as P2P Lending companies providing services to connect investors and borrowers; however, the current Vietnamese law is yet to have regulations on P2P Lending activities”.
Hence, at present, there is no specific business line for P2P Lending Companies to register under the Vietnamese laws, and foreign investors have to apply for investment approval from the relevant Ministries and follow the process to obtain the investment license to start a P2P lending business in Vietnam.
Entry strategy for foreign investors in Vietnam’s fintech market
The potential of the Vietnam fintech industry is undeniable and foreign investors could choose from a wide array of market entry modes. Here are some of the most notable cases with success entering the Vietnam market.
In August 2021, Vietnam’s fintech ecosystem welcomed an Indonesia-based fintech startup – Kredivo, through a joint venture deal. The startup offers “buy now, pay later” solutions and has partnered with Phoenix Holdings, a diversified portfolio of financial services, to establish Kerdivo Vietnam JSC.
“The launch of Kredivo in Vietnam, our first market outside Indonesia, is another key achievement and milestone for the business this year,” said its COO Valery Crottaz. This is because the country has low penetration of credit cards and a rapidly growing middle class, together with the booming e-commerce market, he added.
In terms of merger and acquisition (M&A) deals, activities are becoming more robust as a massive number of large deals were made in the last few years, according to Vietnam Fintech Report 2020. For example:
In September 2018, Grab acquired a Moca – a Vietnamese mobile payment startup
In December 2019, Ant Financial acquired a substantial stake in e-wallet eMonkey, and in November 2019, Lazada Vietnam integrated eMonkey into its platform.
September 2020, Indonesia’s Gojek has acquired a controlling interest in WePay.
In conclusion, there are inevitable opportunities for the fintech ecosystem in Vietnam and other fundraising organisations and investors in the world. The growth of this sector is also well-aligned with government direction towards a digitalised economy and society shortly.
Although the fintech sector in Vietnam remains a significant challenge related to a holistic regulatory framework, a well-trained human resource, and the rapid development of advanced technologies, the Vietnam fintech market is expected to take huge leaps in the future.
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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic.
