SCB 10X, the digital technology investment arm of Thailand’s Siam Commercial Bank (SCB), sees the COVID-19 pandemic as an opportunity to find attractively-priced, high-potential startups that fit into its investment strategy.
The corporate venture capital (CVC) firm is looking to ramp up investments in sectors that are poised to benefit from the new normal. This includes five themes: digital payments, remote work, digital lifestyle, healthtech, and AI and robotics.
“We feel we should invest in these five key areas of disruption and potentially disrupt ourselves,” said Mukaya (Tai) Panich, chief venture and investment officer of SCB 10X. “We believe it [the pandemic] is an excellent opportunity to invest in high-potential startups when others hesitate to deploy capital,” she added.
Despite the pandemic, the firm is still actively investing, and did not delay or cancel any investment plans, added Panich. In June, SCB 10X, along with SPARX Group, led an $80 million Series C round in Thailand-based fintech company SYNQA.
“We think we should take advantage of downturns when startup valuations are lower…[and] focus on those firms that are impacted by the downturn, but where the overall long-term stories haven’t changed,” said Panich.
SCB 10X, which started three years ago under the name Digital Venture VC, calls itself the first Venture Builder in Thailand. It has built a multi-pronged strategy based on three pillars — Investing, Building, and Partnering — for which it has created dedicated in-house teams.
The Investing team, SCB 10X VC, scouts for global startups that require early-stage funding (series A to C). The firm has set aside a corpus of $150 million, from its $670 million fund, for this. It aims to generate at least 15 per cent internal rate of return (IRR) for its parent bank over a 10-year period from this pillar.
The Building team, SCB 10X Venture Building, will nurture startups in-house, and aims to create Thailand’s next unicorn. Once the startup grows it will be spun off, and SCB 10X will invest $1-2 million for a 60-80 per cent stake. It will also invest $10 million in follow-up fundings in the startup.
For Partnering, the SCB 10X Strategic Investment and Partnership (SI & SP) team will invest in later-stage startups with the aim of forming JVs or partnerships.
Currently, SCB 10X has controlling stakes in three Thailand-based tech firms: Digital Ventures, an early-stage blockchain for supply chain financing; Abacus, an AI and datatech venture; and Monix, a newborn fintech company jointly established by Chinese unicorn Wecash and SCB.
Besides startups, SCB 10X also invests in VC firms. In the first quarter this year, it invested in two VC firms — Qiming Venture and China Creation Venture.
Southeast Asia focus
Although the investment scope is global, Southeast Asia will be the focus of SCB 10X in the years to come. The region has remarkable potential for growth, due to its favourable consumer behaviour changes, growing internet connectivity, and business transformation, Panich said.
Within the region, Thailand remains a focus area. “SCB 10X VC continues to invest in early-stage startups globally (in Southeast Asia, China, US, Europe, Israel), but we now also have a specific Thai fund, from which we plan to invest in early-stage Thai startups to help foster Thai ecosystem,” said Panich.
Although fintech has always been the area of focus, SCB 10X recently invested in an undisclosed AI-powered, full-stack, digital insurance startup based in Thailand.
“We think, going forward, blockchain and digital asset areas will be interesting,” Panich said, adding that the firm also recently invested in a logistics startup serving social commerce and e-commerce, given that COVID-19 drove consumer’s acceleration to digital lifestyle and technology adoption.
Thailand’s banks have been constantly revamping their banking applications by strengthening various online services. These services have revolutionised the fintech ecosystem and the nation’s economy, and Thailand tops the global ranking for internet banking services.
“We have an investment strategy in mind, on how to prepare the bank for the future when traditional finance will be even more disrupted—some types of technology, knowledge, or potential partner/acquisition targets. We have to invest abroad to find those,” Panich said.