Opportunities abound in ASEAN’s ‘VIP’ markets:George Mathew

Futurebooks team, with George Mathew at the centre

A Singapore-based Asian startup accountant and a member of Singapore Institute of Directors, George Mathew is the co-founder of Futurebooks, alongside Anthony Coundouris, a former creative director and serial entrepreneur.

Since its launch in 2010, Mathew has been actively working with VC-funded technology startup ventures and acting as a director on the boards of various ventures, advising and providing feedback on taxation and corporate governance.

Dealing with essential elements of a venture’s business operating system and financial problems that few entrepreneurs have the skills to negotiate, Futurebooks serves a vital – if under appreciated role – in the critical functions and underlying success of startup ventures.

The Futurebooks story

Futurebooks was originally started by Coundouris in 2010, while Mathew was still operating Servolve, a competing firm. With the realisation that both were trying to reach the same niche market of technology and consulting startups in the same way – through cloud accounting and cloud corporate secretarial tools – the two entrepreneurs decided to merge Servolve into Futurebooks.

Based on a personal and professional chemistry and a core of common values, especially in regards to their perspectives on organisational culture (i.e. people operations) and work-life harmony, Coundouris and Mathew grew the company together through the 2013-2014 period.

Along the way, Futurebooks acquired current managing partner Namita Sethi in 2013, a former EY auditor who had previously handled fraud investigations. Sethi eventually took charge of sales and client relations.

Commenting on her rapid ascent to the role of managing partner, Sethi said, “I slowly transitioned to the sales side, as well as connecting one-on-one with clients and people. At that point, I realised and raised the matter with Anthony and George that I wanted to provide services at a professional level equivalent to the big four, positioning ourselves in this particular market and providing clients with these niche services.”

From there, Mathew and Coundouris stepped back from their roles in a phased manner, as Sethi assumed a leadership role in the team. Explaining the current state of affairs, Mathew says, “As of mid-2015, I have stepped back and become a director, alongside Anthony, in terms of guiding marketing and brand evolution. All operational mattes are under the purview of Namita.”

Also Read: MAS commits $225m to fintech growth in Singapore

Excerpts from the interaction:

When it comes to governance and compliance requirements, what are the challenges that startup founders, investors and employees with stock options should be aware of?

Typically, with a startup, the main governance issue I encounter is the composition of the board of directors. Here, I see startups going into two extremes. Some have only a single founder on the board of directors, while others is that sometimes people don’t differentiate between the board of directors and board of advisors.

Advisors don’t need to be on the board. In fact, you can create a board of advisors separately. You generally want people on the board who are playing the long-term game and are invested in the venture alongside yourself. The moment you have a board that’s overstaffed, your investors will come along asking you to clean up your governance structure and trim the fat.

What are the major difficulties, in terms of bookkeeping and accounting, that a startup should be aware of and prepare for?

One venture I dealt with involved two smart founders, one of whom was an Ivy League computer science graduate. They started a fashion e-commerce firm and  got a lot of things right, in terms of their supply chain, marketing and traction, as well as channel and distribution strategy. They raised a seed round and bridge round.

At this point, they came to us and asked for an accounting cleanup, as they had not maintained their accounting rounds well, beyond some spreadsheets. And then here’s what happened: in the  short that they got their accounting cleanup done, we alerted them to an inventory glut and missing inventory.

They had to shut down in a few months subsequently, purely because of cashflow issues that were too late to correct and a Series A they could not raise on time, though they tried real hard. This is an actual event that occurred in Singapore, something I felt very sad about personally.

What it shows is that real time accounting and financial forecasting is crucial, especially for a company which maintains inventory, requires capital-intensive investments and needs a rapid succession of funding rounds to happen.

With reference to this Tech in Asia piece on corporate secretaries, what has changed with regards to the contours of the corporate secretary role since 2012? 

The biggest things that have changed, from our perspective, is that the company secretary role has shifted from being reactive to becoming proactive. Rather than handle administrative issues and governance, we help them structure and sort out the vesting period. We play a strategic and advisory role now.

We help them have their basic agreements in place, such as a shareholders agreement. What we’ve realised is that there is a gap in what the law firms provide and is essential at certain stages versus what a traditional company secretary doe.s. There’s a level of proactivity a corporate secretary has to show.

For instance, we show five different examples of an M&AA agreement  to our clients. Many times, people comes to us expecting a law firm when they don’t need one.  A corporate secretary role is a lot more business-focused. What are the scenarios you expect and plan for, and what are the outcomes that can occur? That’s what a corporate secretary has to account for.

What challenges to corporate secretaries encounter when dealing with startup ventures, and what should they be aware of when managing the affairs of startup ventures?

One of the realisations we’ve had is that not every startup is our client. Not even a startup venture ready to pay us our fees is a client. It’s not about the size of the business but the intent of the founders. Are they ready to do it the right way? If they are, then a firm like us makes sense.

One truism we’ve come to re-realise is that you can get a lot of things right when you’re a founder and struggling but by the time you’ve hit traction and money, it’s harder to fix things. We prefer clients to want to do things right from the get-go.It comes down to the personality of the client.

If they consider their company as a precious Ferrari, do they want qualified technicians and insurance covering it? As corporate secretaries and accountants, that’s what we do.

From your perspective, what have been the major changes in the startup ecosystem over the past few years?

The first front is I really do think the government has done a great job in kickstarting a lot of things – but this was a ‘spray and pray’ approach initially, which has since become more targeted and intelligent. There is so much financial capital being infused into the system, from both the private and public sector, and we are seeing it in terms of the funds being set up and growing bigger.

You are also starting to hear founders having billion dollar expectations, with credible founders seeking to grow their startups rapidly. In the last week I read two pitch decks from startup founders in Singapore and Thailand, both envisioning exiting their startup venture for north of a billion in five years.

Both of these pitch decks have raised money. One raised a high-6 figure sum, while the other a raised mid-7 figure sum (~4-5 million). Ambitious? Yes, and that’s a great start to anything right. Ridiculous? Absolutely not. These founders are executing on their ambitions.

Where do you see the startup ecosystem, in Singapore and Southeast Asia, moving in the 2015-2020 period? 

A friend of mine called a few of the Southeast Asian markets the ‘VIP markets’. They have more than 600 million people when taken together, and there is so much traction happening in the countries surrounding Singapore. I was sitting in a meeting room with two Vietnamese founders last month, who were negotiating over the term sheets with their Singapore investor.

They were so grounded and well articulated in their expectation. Vietnam was where their real business was in. Singapore was just a jurisdiction and the investor here was an enabler. The calibre of startup founders seems to be steadily growing, in Singapore and the wider region. There are more successful local examples to learn from and people to model after.

Khailee Ng, is a great example of this, as the managing partner of 500 Startups who handles the 500 Durians fund here in the region. He’s an entrepreneur who moved to the VC side and is very pro-entrepreneur, actively partnering with the entrepreneurs he’s funding, sharing at events. That’s the start of something good, when the community is coming together.

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What would be your most practical advice for entrepreneurs building their companies or for individuals seeking to become corporate secretaries? How similar and different are the two roles?

There are those who say I’m building a startup and there are those who say I now have my own business. If you have your own business, then people are often unclear on questions regarding scalability, brand building or differentiation beyond the superficial.

A startup is a company that’s clearly built to scale, competing on differentiation, and usually powered by venture capital. And I see the same in people individually trying to become a company secretary. From the paradigm of a corporate secretary seeking to come out on their own, you would seek to compete on building relationships or cost. Competing on cost is a downwards spiral. Or do you choose to differentiate sharply by being a company secretary for fintech startups or in a specific niche. Now that’s a sharp differentiation.

Then comes the question of scalability – how do you take the corporate secretary firm to the next level? Can you keep up with your clients who go through hockey stick growth? Say SoftBank comes in and invests in them. Or say they are expanding to 14 different countries around the Asia Pacific? Can you grow with them or will you lose them?

For Futurebooks, bringing a seasoned professional like our current managing partner, Namita Sethi, onboard is a step 1 completed successfully. Step 2 is putting in place a board of directors with depth of experience, in terms of geography and value chain mapping. Two medium term milestones for us are adopting a whole client model and expanding geographically.

When founders part ways in a venture, what are the steps needed to protect the professional interests and stakes of each founder?

The way to think about it is accounting for it at multiple stages of the venture’s development. The first stage comes when you’re working on a concept. Who owns an idea that you’re commonly working on? Do you have non-competes? Is confidentiality built in? Founders have faced these questions for many years.

I would definitely not recommend an online template. It’s fool’s gold and unenforceable. Can a corporate secretary do that though? Yes, we can formulate the contracts and agreements for you. Now, what happens when a founder decides to walk away after a year,? Does a founder get to hold onto their stake in the venture? I see so many experienced entrepreneurs go through this. Have a vesting period with a cliff in place, where certain conditions kick in.

A standard condition is a four year vesting period, with a one year cliff. You will also want to cover termination clauses, such as removing a troublesome founder, where the founders can gather and kick that founder out.

What’s your opinion on the restrictions on companies hiring foreign talent in Singapore? Should a startup visa scheme be implemented or other alterations be made?

There’s a beautiful Startup Visa comparison chart at this site called Migreat. The thing is that Singapore has the EntrePass, which is pretty reasonable.  I think the framework is already there. Can the Entrepass be tweaked a little? Sure, especially for things like the first year and material issues like a founder being unable to bring their family in.

Is Singapore’s visa regime decent? Overall, I would resoundingly say yes. I understand that some founders have chosen to base their business venture in the Philippines or Thailand. The fact is that they’re Singapore ventures but physically based in these nations.

I think its fair that the Ministry of Manpower (MOM) stance is that until a business shows traction, they should control the visa’s, which are a limited commodity. The MNC’s contribute much more than the startups, so they should have priority.

Futurebooks handles immigration for co-founders and C-level executives, and one of things that has been encouraging and positive has been that MOM these days acts very pointedly, asking intelligent questions about what the business does and taking the effort to genuinely appoint people that will look at the business plans and make a decision. I think its a positive development

Where would you like to see the corporate secretarial profession progress towards in Singapore?  Is more regulation needed in dealing with startup ventures or less? 

ACRA is definitely moving towards a regime which I interpret as being more liberal and less procedural. For instance, there’s no need for companies with a corporate shareholder to conduct an audit. Even a startup venture which had just raised a seed round had to go through a lot of costs and paperwork to audit prior to this change.

ACRA has decisively acted on this and lessened the regulations, removing this burden. ACRA’s  records of members and directors registers are what is now legally valid, a huge shift from before, when ACRA records were simply a repository of information. It’s a shift that takes on the legal onus.

In many ways, that takes away a lot from traditional company secretaries who maintain the registers of members. We’re being forced hard to justify what we are charging for and why we are here, as company secretaries. The better ones among us are responding by helping ventures structure startup incorporation and having a transparent fee structure.

The question you as a founder may want to ask is: “As I’m going through a stage of my company’s life-cycle, like acquisition, are you as a corporate secretary sophisticated enough to respond to the needs of the entrepreneur?”

For instance, electronic signatures really matter to a lot of startups, givne that they raise funds from 20 different people and these electronic signature are critical, given the geographical separation involved. The Electronic Transactions Act makes a big difference in this area for startups.

Namita Sethi: It’s about being being intelligent when asking questions and structuring the company, so that there is a sufficient pool of shares for investors. It’s critical for corporate secretaries to align their vision professionally with what their clients need and constantly evolve with their clients.

Rather than just going by what the books says and being procedural, you need to facilitate what the clients need as they grow. Good corporate secretaries are sufficiently adaptable to aid in forming solutions to the problems their clients face, while still ensuring compliance with regulations.

What are the biggest differences in functioning as a corporate secretary between a startup venture and an SME?

In practical terms, a corporate secretary’s role is very limited with an SME, maybe only handling the dividends on occasion. It’s a reactive, unexciting role which is very black-and-white and hasn’t been a Futurebooks focus. We focus on the startup scene and corporate subsidiaries which look and operate like startup ventures in Singapore.

They often have the more exciting and exotic requirements like doing an acquisition and needing to transfer shares for acquisition, or situations where you need to grant founding team members (i.e. founding employees) their ordinary shares but want super-voting (i.e. management) shares in order to maintain control. That’s where we excel

Sethi: For instance, if I want to make my company more enticing via stock option, but want to inhibit employees from influencing management decisions with those stocks. It comes down to how you structure the initial agreements.

At what point does a startup venture cease being a micro-enterprise and transition into being a functioning SME? At this transition point, as it scales upwards what are the important things to take note of in terms of compliance and regulations?

It comes down to how we define a startup venture –  as a business with sharp differentiation and tremendous scalability that typically accepts external investors. Most of the companies that we have dealt with for a long time are still startup ventures. And they are happy to be classified as such.

Servolve started out as a small business, undifferentiated and personality-driven. Future books, on the other hand, was a startup from the get to – differentiated, product-focused and brand-driven. I can’t emphasise how liberating it feels to work with the startup gestalt. It is scalable and rewarding. And for this I am so thankful to Anthony for his original vision for Futurebooks.

Sethi: Intelligent entrepreneurs always want to be classified as a startup, as they aim to constantly evolve. Personally, I always want to have a vision and aim to work towards. Futurebooks is a startup and still has so much to achieve.

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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.