Myanmar-based early-stage investment firm Emerging Markets Entrepreneurs (EME) is planning to raise a further $20 million by the fourth quarter of 2021 to support its portfolio and invest in new startups, according to a top executive of the firm.
“This raising of $20 million will enable the company to continue to support its existing portfolio as it grows while also continuing to invest in startups that target mass markets and bring tangible value to Myanmar consumers and businesses,” EME investment manager Matthew Viner told us.
The firm currently invests out of an initial corpus of $3 million and cuts cheques between $50,000 and $250,000, with scope to make follow-on rounds. EME Myanmar typically picks up to 15 per cent stake in its portfolio companies.
Established in October 2018 by Myanmar-focused investment firm UMJ Ikeya Investment Ltd, EME focuses on putting equity in early- to growth-stage startups across Myanmar in tech and non-tech industries including education, agriculture, healthcare, logistics and e-commerce.
Investors who have participated in setting up EME include Emerging Markets Group Holdings (EMGH), United Managers Japan, the Dutch Good Growth Fund (through Triple Jump) and Singapore-based angel investor Dr Yit Fan Wong.
To date, EME Myanmar has made eight investments including baby products e-commerce and delivery provider Kyarlay, e-commerce startup Ezay, animation company Joosk Studio, car trading startup CarsDB, HR company Mote Poh, call centre service provider Lan Thit Masterpiece and local company producing high-quality solar-
Edited excerpts of an interview:
Could you update us on EME’s investments? How much of the fund has been deployed?
EME is actually a company, not a fund. That said, we’ve invested or earmarked about half our initial capital. We’ve made eight investments since launching in October 2018 and already two have received follow-on rounds from outside investors, where we’ve also participated. Although we’ve made quite a few deals, we don’t just write cheques. Because we do a lot of post-investment support, we spend time getting to know founders before we invest, to make sure we’re a match.
Do you have a plan to raise a new fund this year?
Yes. We are currently courting several high net worth investors with experience and networks to help our portfolio companies expand further. In the near future, we’ll be doubling down on our success and raising a further $20 million.
What is your view on the exit horizon?
We launched about 18 months ago, so it’ll be a while until we make any exits. We see that Myanmar companies have a golden opportunity to scale without the threat of significant international entry, as companies focus on other markets. We have Grab and Foodpanda, but that’s about it for large startups. We’re patient but purposeful investors and expect exits to be geared around our portfolio companies really taking the local market over the coming years.
EME makes investments ranging from $50k-250k but the most recent investment in Kyarlay was $750K. Is EME increasing its ticket size?
We’re maintaining our ticket size for the time being. It’s a sweet spot in Myanmar and we’ve built great capacity in this area, with a team that is excelling at post-investment support. The Kyarlay deal represents our ability to bring in co-investors that we know and trust, which helps us consider a wide range of deals and participate in exciting companies like Kyarlay and CarsDB where we also co-invested in a larger ticket size than our maximum.
Kyarlay is EME’s largest investment to date. How did that come about?
Kyarlay represents a few things for EME, not least of all our commitment to founders during turbulent times. It represents our interest in consumer markets and our focus on identifying growth markets and finding the leaders in them. Kyarlay, Ezay, Natural Farm Fresh [EME’s three latest investments] all focus on tapping into large markets with essential products. Kyarlay also signals that we’re very interested in companies with online and offline strategies that appreciate the scalability of digital while understanding the reality of Myanmar still being a market where offline is just as important.
How do you see venture capital investment opportunities shaping in Myanmar?
We love the VC space in Myanmar because it enables us to find and fund new and innovative startups that can quickly develop to meet a changing or emerging trend. More mature companies might have larger buffers than startups, but these buffers also bring legacy costs that make it tougher to pivot. In tough conditions, such as now, the VC model still holds true, as nimble startups can take advantage of positive unit economics where larger, more burdened companies may not.
How do you see the impact of the COVID-19 pandemic on the region?
Of course, we’re prioritizing our portfolio companies and have met with them recently to help them prepare for the times ahead. But, beyond that, we’re looking forward to leveraging synergies between our portfolio of market leaders to launch new business opportunities. And, in bad times, it’s easier to spot truly great founders, so we continue to seek investments that can help Myanmar through challenging times to come.
EME is currently focused on Myanmar. Do you plan to expand to other countries in the region?
We like this market and we know it very well, which helps us identify and access the most exciting deals. Myanmar also has such great potential that we think there’s a long way we can go in this market before even considering another. Over the past 18 months, we have proven to our investors and the market that Myanmar has great founders who are able to develop and execute market-leading startups.