Singapore: MoneySmart.sg closes $10.1m Series B led by Kakaku.com

Vinod Nair, CEO and Founder of MoneySmart.sg, and Genta Sugihara, Senior Executive Officer, Corporate Development Division of Kakaku.com Inc.

Singapore-based online personal finance portal, MoneySmart.sg Wednesday said it had raised S$14 million ($10.1 million) in a Series B funding led by Kakaku.com Inc.

Kakaku.com Inc. is an online service provider with a diverse service portfolio in multiple verticals, including shopping, food, travel, lifestyle and real estate and is listed on the Tokyo Stock Exchange.

Its services include Kakaku.com, Japan’s largest shopping support site that provides information on a wide variety of products and services; Tabelog, a user review and ranking site for restaurants, as well as Kinarino, an online lifestyle media and TimeDesign, a dynamic packaging provider.

MoneySmart.sg is the first company that Kakaku.com Inc. has invested in outside of Japan, marking the beginning of their business expansion.

Genta Sugihara, Senior Executive Officer, Corporate Development Division of Kakaku.com Inc., said, “We believe that this strategic partnership with MoneySmart.sg is an investment into a rapidly growing market with many opportunities for synergies between our two companies.”

“It’s an important first step in accelerating Kakaku.com Inc.’s global business and we look forward to exploring similar opportunities with other businesses whose offerings complement our portfolio,” he added.

Incepted in 2009 with the aim of simplifying personal finance, it has emerged as a major personal finance portal in the city-state. Since closing a Series A round in 2015 led by the SPH Media Fund, it has experienced significant growth.

Starting as an online home loan package aggregator, it currently curates and aggregates 17 different personal finance products, including credit cards, insurance, loans and bank accounts on its digital marketplace, and reports its traffic growing 40 per cent since 2015; it reports receiving an average of 1 million monthly sessions, and is visited by an average of 700,000 unique people per month.

November 2014 saw MoneySmart expand into Indonesia with the full acquisition of its Indonesian counterpart, now branded as DuitPintar.com,  which took up a minority shareholding stake in MoneySmart.sg. According to DuitPintar’s traffic data, it sees about 1.6 million monthly sessions.

The Series B will finance the plans of MoneySmart.sg to launch into new markets in the Asia Pacific while also deepening and expanding its footprint in Singapore and Indonesia. In addition, it will be expanding its team of developers, content writers, as well as business development and marketing specialists.

In an official statement, Vinod Nair, Founder and chief executive of MoneySmart.sg, said, “The synergy between both companies is a natural fit and stems from our shared values of putting the customer first. Having an investor like Kakaku who has gone through and overcome the many challenges in the comparison space, is extremely valuable and serves as a timely validation that we’re on the right track and will be a guiding light for our future endeavours.”

In an exclusive interview with DEALSTREETASIA, Nair discussed the growth journey of his venture, the Series B funding round and the contours of media in the city-state.

Edited excerpts: 

How as MoneySmart.sg evolved to the point of this Series B round? 

I started Smartloans.sg in 2009 just comparing mortgages and home loans and it was a nice, small little business for a measure of time until the Singapore government came up with property cooling measures which destroyed half our business. It was a very challenging period. We saw that what we’d started with mortgages was working and we wanted to replicate that with other financial products. But the challenge was that the banks were not ready.

We had the credit card and insurance comparison websites but we weren’t able to monetize that traffic and we were just a one trick pony, essentially only monetising from home loans. The big break was 2013 when the government introduced the do not call (DNC) policies and instantly, 40%-50% of bank sales which came from telesales were cut overnight and they had to decide whether to allocate their budget towards more above the line marketing or digital.

And the payoff is obvious with digital as you can really track your conversion rates and monitor your ROI. We were placed at the right place at the right time to ride that wave, in a nutshell, that’s the early years. In November 2014, we entered Indonesia through acquiring DuitPintar, in November 2015 we secured our Series A led by SPH Media Fund, so since our Series A round, we’ve consistently doubled revenue year on year (YOY) for the last three years. For instance, DuitPintar sees about 1.6 million sessions and 1.3 million unique users.

You started as a financial comparison website but people are more aware of your content and it seems your media/content product acts as an amplifier for your business. Can you highlight this element? 

The first four years were bootstrapped and we pumped back all revenue into growing the company. Back in 2011, we had to figure out what our growth strategy was and we didn’t have the cash for meaningful above the line marketing.

Google AdWords was already there but its a pay to play option. You put in 20 cents and maybe get 25 cents out but it’s a market that’s more competitive as prices would go up and margins get eroded, so we needed to figure out a way to organically attract customers and get them to return to our site.

The problem with comparison websites is that people don’t need to come back to your site frequently. If I help you find a mortgage, you might come back to my site four years later, and that’s not good engagement in any sense. We’re not able to keep that happy customer returning and to engage users more frequently, we figured content was the way to go.

Who doesn’t like money right? We didn’t talk about just personal finance and with so many finance publications being dry and boring. In a nutshell, we’re the “Buzzfeed of Finance” where we are entertaining and positive but also try to be educational and informative.

And that was the winning combination of our content strategy back then but it was also a huge risk. And rather than putting the cost a writer into Google Adwords we decided to invest in content so there was no Facebook feed or Google News back then so we really relied on organic search to get traffic and influencers on Twitter to tweet about our articles.

It was not until 18 months later that we saw content taking off but the main reason was that it was filling a gap in a space nobody was filling with the sensitivity required to address the man on the street, which we were.

People have talked about a Series B gap. You’ve just closed one. What’s your take on that?  

As there are not many investors in the region who can write such cheques so we went through this dilemma where we were talking to multiple investors trying to find someone who could invest at terms that were fair to us.

We secured multiple term sheets which were all vastly different so we had some investors who wanted a big chunk and didn’t accord us with the recognition of the progress we made from Series A to Series B.

So naturally speaking, if you draw a straight line and secured a Series A at a fair valuation and double revenue at double revenue, you have investors who’ll say it’s 1.5X who try and lowball and do so knowing that not many investors can write such cheques in the first place

So, our approach was to bring the company to break-even or profitability before we raised the next round, which puts the control back in the founder or entrepreneur to never take a bad deal on the table

I did that from the first day. We bootstrapped the company, raised the seed round then started burning money, brought it back to break event and raised our Series A. We did that for our Series B as well. And with that control, we can do deals on our terms – which are fair and equitable – rather than taking any deals on the table.

What’s your take on the venture ecosystem in Singapore and ASEAN? Where’s it now and where is it going? 

You’ve had a lot of maturation. Five years ago there was a Series A crunch where you had a lot of seed but not enough Series A investors. Now you have a Series B crunch where you have companies that can raise a Series A but cannot close the gap. To me, the solution is to make sure you have a business model by Series A so that by the time you get to Series B so that you can to be self-sustaining. That way, you don’t need to rely on the next round of funding to sustain your growth.

And if you can secure funding to accelerate your growth, then great! But people shouldn’t have to rely on external funding to grow their company. It’s a matter of time before the markets mature with an influx of Chinese and Japanese investors as they start participating in Southeast Asian deals and we’ll see investors in the region start to catch up.

You’ve raised a Series B. What’s the exit route for MoneySmart? Is a public listing on bourses like the ASX, SGX, TSE Mothers or Hong Kong a possibility?  

It’s very hard to engineer a trade sale or acquisition from my perspective. You can only control growth in terms of revenue and profits, so in that regard, it’s prudent towards working towards an IPO, but I wouldn’t rule out an acquisition should a good opportunity present itself. So listing is the way to go. I have no strong view but I think the ASX, SGX and Hong Kong Stock Exchange are viable options.

It all depends on liquidity and the sentiment of investors in the market. Everything is fueled by liquidity right? So if you have a sufficient pool of retail investors who understand tech and want to invest, then that’s where there’s liquidity if investors can realise their gains. The SGX has been good in evolving their approach with the Catalist board and there was a recent move to encourage more tech listings.

We’re a few years away, so we’ll see how that plays out and make a choice when the time is right.

Also Read:

Singapore’s MoneySmart raises $1.96m in Series A led by SPH Media Fund

We plan more acquisitions in tech, digital, cyber space: EY’s Richard Watso

Japan: Deals worth $18b go sour amid record M&A boom

Challenging to raise funds in Asia, says adtech startup Unlockd COO Aliza Knox

MoneySmart acquires Indonesia’s KreditAja