Deals in jeopardy amid virus precautions, but opportunities abound

Empty hallways and booths greeted the odd visitor at the Singapore Airshow 2020 in the wake of the COVID-19 outbreak.

The white tents, metal detectors and red queue stanchions stood ready for the crowds that were expected to come through for the widely-anticipated Singapore Airshow this week. Yet, this year, there were far more people manning the security checkpoints than there were attendees.

The biennial event has typically attracted hundreds of industry players, and tens of thousands of trade visitors, from around the world each time. Billions of dollars worth of deals – from aircraft orders to services agreements – are inked at the event. But the outbreak of Covid-19, which causes severe pneumonia and has killed more than 1,300 people, put paid to all expectations of this year’s event.

Singapore is seemingly hardest-hit by the virus outside of China, Hong Kong and Macau, with 67 confirmed infections as of Feb 14. But across Southeast Asia, meetings, conferences, and trade shows have been cancelled or postponed, as authorities discourage large scale gatherings in a bid to contain the virus spread. Indeed, what was a mundane meeting of gas meter executives at the Grand Hyatt hotel in Singapore resulted in the coronavirus being spread to five countries.

The human cost is severe and climbing. The virus outbreak is also putting billions of dollars worth of business in jeopardy.

“It does affect investment activity in an already fragile economic climate,” venture capital firm TNB Aura’s co-founder and managing partner Vicknesh R Pillay told DealStreetAsia.

“Definitely, I think deal-making has been hugely impacted,” echoed Raditya Pramana, partner at Jakarta-based Venturra Capital. Raditya noted that “several prominent startup events” have been cancelled owing to the heightened alert status in Singapore, and added that the venture capital firm has banned work trips for the month of February.

The events, Venturra’s Raditya said, do not just impact dealmaking. “This also affected our portfolio companies’ operations.”

Concurs automotive marketplace Carro’s co-founder and CEO Aaron Tan. “As a platform company, we are only as strong as our partners are. With the virus, we predict a demand crunch for automotive across the region and thereby we fully expect a reduction in sales across the group,” he said.

The moratorium on face time between entrepreneurs and investors is likely to take a toll on startups in the early stages of their lifecycles who require as many meetings as possible as well as more established companies.

“Sizeable startups at growth stage out of Southeast Asia or India need Chinese investors who can write large cheques,” noted Ncore Ventures CEO Ryan Park. “Most of the investors prefer to visit the startups and have face-to-face meetings with the CEOs or founders before making final investment decisions – they are not able to do so.”

To be sure, several other meetings have simply moved online. And for one investor at least, the outbreak has had little impact on deal-sourcing and assessment. “The advantage for us is that we’re an online platform for investment assessment,” said Anuj Jain, co-founder and CEO of venture building platform Startup-O.

Jain asserted that the firm’s process is able to discern resilience, and therefore it is not slowing down its investment decisions either.

He said Startup-O is already in the “final stages” of three deals: A human resources technology startup, a software-as-a-service business focused on workflow automation, and a Malaysian Internet of Things startup focused on infratech for smart homes. “In a way, it’s a great time for deserving entrepreneurs to prove that they’re weatherproof.”

Indeed, the events have thrown up opportunities for some businesses and their investors.

“During the past couple of weeks, we witnessed outsized traffic and demand online,” said Dave Ng, Head of Southeast Asia at Eight Roads Ventures. “Many e-commerce platforms are tested to the limits as they tried to cope with inventory fulfillment and deliveries.”

He pointed to some of the venture-backed companies such as Ninja Van, Grab and Gojek, that could deploy technology to adjust their services in response to a surge in demand.

“Within AI and advanced biotech, one of our portfolios, Insilico Medicine, is at the forefront of using AI and Machine Learning to speed up the process of finding an effective treatment for Covid-19,” he said.

For others, the turn of events could provide an impetus for a review of strategy or processes.

“Our fundraising strategy needs to change,” noted Victor Chua, president of the Malaysian VC and PE Association. He cited seeking out new types of investors, including local LPs, who would not be affected by limits on travel, for instance.

Ultimately, the market is still open for the right deals, said DBS Group CEO Piyush Gupta at an earnings briefing that was held via teleconference.

“This is probably a good time to take things to market, particularly if you wanted to do fixed income and debt capital markets deals,” he said. “Pricing is very attractive and therefore I think a lot of clients might be seduced by the attractive pricing and actually get deals done.”

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.