<article>Asia can leapfrog the West in financial technology (fintech) areas such as mobile payments and China is leading the pack with its connected ecosystems, says <a href="http://dealstreetasia.com/tag/Arbor-Ventures" target="_blank" rel="noopener">Arbor Ventures</a> managing partner <a href="https://www.linkedin.com/in/whopeman" target="_blank" rel="noopener">Wei Hopeman</a>.</article>

Asia can leapfrog the West in financial technology (fintech) areas such as mobile payments and China is leading the pack with its connected ecosystems, says <a href="http://dealstreetasia.com/tag/Arbor-Ventures" target="_blank" rel="noopener">Arbor Ventures</a> managing partner <a href="https://www.linkedin.com/in/whopeman" target="_blank" rel="noopener">Wei Hopeman</a>.
Arbor Ventures is the largest fintech focused venture capital (VC) firm in Asia. Its portfolio includes fintech companies from China and Southeast Asia as well as cyber security firms from Israel. Founded by Hopeman and Melissa Guzy, it is also one of the few women-led VCs in the region.
Hopeman, who was named to the Top 38 Fintech Influencers in Asia, sees the rapid expansion of Chinese corporate giants in the rest of Asia as a double-edged sword for the region&#8217;s investment landscape.
&#8220;It brings capital and excitement to the markets and encourages entrepreneurship. At the same time, it means there is a lot more money in the market, leading to overfunding and valuation inflation,&#8221; she said in an interview with DEALSTREETASIA. 
Edited excerpts: 
Hong Kong, Singapore, Australia, Japan, South Korea and Malaysia have launched a range of special programmes to attract and foster fintech ventures, from incubators and grants, to temporary license waiver schemes &#8211; each country appears to be adopting different strategies? In such a situation, is it possible to produce fintech startups that can be regional players?
Creating an environment which fosters innovation is key in a diverse region such as Asia, where each market has distinct characteristics. Many people tend to view Asia as one monolithic area. But in fact, it is comprised of many individual markets with different culture, language, consumer habits, different stages of economic and technological development. Any company aiming to become a regional player must get it right in one market first before attempting to launch in multiple markets.
As companies scale, it’s critical to leverage local market knowledge by recruiting the right local teams who understand the market dynamics, regulatory landscape and consumer habits, as each market is dynamic and specific. The key opportunity, as well as challenge, is to leverage the local knowledge with the regional opportunity.
Has Asia stolen a march over the Europe and US, rather the rest of the world, when it comes to fintech? Unlike copycats of companies from the valley, we are seeing innovative fintech companies come up with solutions specific to the needs of Asians &#8211; and this is happening all across the continent.
Asia is leading the way in certain sectors such as mobile payments, which has been achieved through building the ecosystem across several verticals, connecting the dots from a consumer perspective, leveraging scale and strengths.
Chinese companies have been the best at harnessing the power of connected ecosystems. And we are starting to similar trends in SEA with the likes of Grab and Go-Jek. If you look towards the West on the other hand, deep tech may be more advanced, an example being cyber security coming out of Israel. The core opportunity as we see it at Arbor is to bridge these opportunities by opening up the Asian market to these deep technologies, and as such further drive Asian fintech innovation to the next level.
As the fastest growing region in the world and a significant driver of global economic growth over the past decade, will Asia assume the digital leadership position in the 21st century?
It depends on which verticals you look at. Asia leads in different verticals, notably in the consumer segment, driven by significant mobile penetration, in conjunction with a limited financial legacy in the region. With mobile penetration significantly higher than banking penetration, it has enabled Asia to leapfrog with mobile payments, mobile commerce and much more personalised services delivered on-demand. In the Western world, when it comes to digital payments, there is a clear generation gap where millennials are more open, but will take time to change perception and penetrate all customer segments.
As a fund focusing on investments in Asia, how has your experience been as compared to the West? What is the difference in strategy that you have to adopt while making investments in this region, as compared to the US?
We are a global fund that looks for the best technology across the globe. In Asia, consumer facing companies tend to scale faster given the fast-growing underlying markets. B2B is starting to take hold but has lagged behind the US and Israel. Our investment strategy is to bridge the best team and the most sophisticated technology with the largest, fastest growing market in the world.
<a href="https://pevc2017.dealstreetasia.com/#register"><img loading="lazy" decoding="async" class="alignnone size-full wp-image-76412" src="https://media.dealstreetasia.com/uploads/2017/06/banner-click-to-register-1.png?resize=640,134" alt="" srcset="https://media.dealstreetasia.com/uploads/2017/06/banner-click-to-register-1.png?w=2480 2480w, https://media.dealstreetasia.com/uploads/2017/06/banner-click-to-register-1.png?resize=300,63 300w, https://media.dealstreetasia.com/uploads/2017/06/banner-click-to-register-1.png?resize=768,161 768w, https://media.dealstreetasia.com/uploads/2017/06/banner-click-to-register-1.png?resize=1024,215 1024w" sizes="(max-width: 2480px) 100vw, 2480px" data-recalc-dims="1" /></a>
Arbor Ventures is on the road to raise a second $220 million fund, bigger than the first fund that closed at $125 million in 2014. Would you say the increase is due to a bullish stance about the region or liquidity in the market? When can we expect the first close and the final close, and in addition to IFC, who are your LPs?
Due to SEC regulations, we are not allowed to comment on fundraising. We continue to believe there are significant opportunities within fintech with a clear global appetite that justifies the deal flow.
Arbor was the first dedicated fintech VC in Asia and we continue to be the largest. We have acquired significant domain expertise and have the deepest strategic network globally.
Without going into specific names, our LPs are global with strategic importance in finance and insurance, creating a network across key verticals and ecosystems. This allows Arbor to generate impact with mutually beneficial partnerships, from LPs to startups.
A lot of Asian VCs have not joined the hunt for Israeli startups? What got you interested?
There has been a shift in the last year with more Asian VCs seeing what we have seen for a while. We go where the best tech is and Israel is fascinating in a number of fintech areas with a clear global growth opportunity.
Where we bring a different aspect is the value added investing through providing a global perspective, opening up the Asian markets to them through being an investor that understands the environment and growth opportunity, together with our unparalleled strategic network.
How will Chinese companies, especially the big four &#8211; Baidu, Alibaba, Tencent and JD.com, expanding into rest of Asia change the fintech landscape and even the VC landscape in these regions?
It’s a double-edged sword as it brings capital and excitement to the markets and encourages entrepreneurship. At the same time, it means there is a lot more money in the market, leading to over funding and valuation inflation. For entrepreneurs, this means they have to balance financial VCs vs. strategic investors and evaluate how it might impact their exit opportunities down the road.
What in Chinese fintech excites you the most?
Currently we are spending significant time in regtech, insurtech and cross-border opportunities.
How can investors find an optimal exit route, given the limited IPOs in the region (with perhaps the exception of HK)?
If you build a great company you will have options. Early stage is about building impactful companies with a long-term view.
As a VC, does it pay to be specialised?
In our experience, yes. Money is a commodity today. Attracting smart entrepreneurs and being a successful VC means we need to be partners with our portfolio companies by bringing domain expertise, leveraging our network to help the companies grow, recruiting the right talent and understanding their core market. It also enables us to make quick decisions when we see a great opportunity that fits the market, industry and network needs.
Has the absence of later-stage capital compelled VCs like you to turn cautious in deploying fresh capital? By when will the recovery be complete? Do you agree with the consensus that it’s going to get a lot worse before it gets better?
It’s about understanding what KPIs and metrics are needed to attract the next level of investment, and the revenue and consumer base which is needed to generate these results, independent of what level you go in at. The companies need a viable business proposition with the correct levers to get the attention for later stage funding.
Core to Arbor’s business is that we can and do leverage our extensive global strategic networks and relationships within the finance and investment community to bring our companies the right opportunities to get there.
In the private equity, venture capital and startup ecosystem as well as the broader corporate world, women are under-represented and the gender gap is significant. What is the current landscape for women in the industry? How does diversity help to deliver better performance? How should firms nurture career progression to a senior level and how can you attract and retain top talent?
This is a very hot topic that has been discussed for some time. It’s evident across both the start up community and VC world. Crunchbase’s <a href="https://techcrunch.com/2016/04/19/the-first-comprehensive-study-on-women-in-venture-capital/">Women in Venture report</a> last year showed that only 7 per cent of VC partners in the top 100 firms are women.
When it comes to founders, the core traits of the person are key to the company’s success, whether that is a man or a woman. However, there are a lot of reports out there showing that diversity, for example at board level, produces better results. It takes time to change the status quo but it is crucial that we create the right environment and opportunities so we are not asking these same questions in 20 years.There are now more initiatives which aim to support women and drive the change forward.
At Arbor, we are very proud to be one of the first, and unfortunately still few, female founded and led VCs. It demonstrates and hopefully inspires other women to see the possibility for women to succeed and create a more level playing field.
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<a href="https://www.dealstreetasia.com/stories/chinese-internet-majors-compete-to-dominate-asean-tech-ecosystem-78535/">Chinese Internet majors compete to dominate ASEAN tech ecosystem</a>
<a href="https://www.dealstreetasia.com/stories/airbnb-to-quadruple-its-china-tech-team-to-target-millennials-80349/">Airbnb to quadruple its China tech team to target rich millennials</a>
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Asia can leapfrog the West in areas such as mobile payments, says fintech-focused venture capital firm Arbor Ventures' managing partner Wei Hopeman.

China firms' expansion a double-edged sword for Asia's VC scene: Wei Hopeman

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