tryb Group has secured an investment of $30 million from Makara Innovation Fund to accelerate the development of its financial infrastructure platform for ASEAN. The firm said it will use the proceeds to finance the acquisition, development and expansion of growth-stage financial technology (fintech) companies.
Acquisition targets will be selected based on their “enhanced capacity as data-driven technologies” and their role in enabling the origination, syndication and distribution across ASEAN’s dis-aggregated economies.
The $717-million Makara Innovation Fund is a collaboration between the Intellectual Property Office of Singapore (IPOS) and private equity firm Makara Capital. The fund invests in IP-driven small- to mid-sized companies with globally competitive technologies. Its last investment was a $51.7 million investment in Singapore-based telecoms operator MyRepublic.
The launch of the fund, which has a corpus size of S$1 billion, was announced in April 2017, in a move that saw Makara Capital partner with the Intellectual Property Office of Singapore (IPOS) enterprise engagement arm, IP Value Lab. It maintains an investment size of S$30 to S$150 million per portfolio company.
In an official statement, Markus Gnirck, co-founder and CEO of tryb, said, “Their [Makara’s] extensive investment experience, combined with our deep networks in ASEAN markets, enhances our position to acquire, partner and operate global technology companies, with the aim of enabling the digitisation of ASEAN credit markets.”
Its investment thesis sees the fund target “small-to-mid cap companies that demonstrate proven and defensible intellectual property, compelling fundamentals and a strong Pan-Asian growth trajectory” which can leverage Singapore as a base for growth and expansion into international markets
Its investment in tryb Group aligns with itryb’s focus on financial infrastructure, as well as Makara Capital’s own preference for late-stage investments. At the Asia PE-VC Summit 2017, Ali Ijaz Ahmad, Makara Capital’s CEO, had told this portal: “We are bringing private equity to the edge of the venture capital space. So, our sweet spot is going to be in the late stage B, C, D, and growth stages.”
“Our research with our partners shows that there is a lot of capital at, say, pre-Series A and at the late growth stage. But there’s a lot of dearth of capital between the C and D stages, and this is where it gets interesting for our fund’s strategy in two areas – globally competitive IP, so we are agnostic as to where we are buying technology, and of course IP,” he’d added.
tryb and Makara will also collaborate to develop and implement technology projects in strategic collaboration with local entrepreneurs and business partners across Southeast Asia, with the aim of integrating them into and extending tryb’s financial infrastructure network. The investment comes at a time when investors are expressing a preference for companies that are light on physical assets,
Kelvin Tan, Director of Investments at Makara Innovation Fund, said, “As a technology-driven company that leverages its defensible IP portfolio as a strategic asset, tryb signifies a unique investment value proposition. Underpinned by its strong leadership team, the company is poised to lead the transformation towards the digitisation of ASEAN’s credit markets, with the aim of sustaining its competitive edge through its management of its defensible and proprietary technology and know-how.”
With less than 60 per cent of small to medium enterprises (SMEs) able to access bank loans and an estimated 50 per cent of SMEs in the region unserved or underserved by financial institutions, there is a strong market opportunity to cater to the growing demand for more accessible capital.
Additionally, the lack of access to cloud-based banking technology infrastructure by smaller banks and microfinance institutions represents a green-field opportunity for digital distribution channels; this can drive enhanced efficiencies, reduce the cost of capital and effectively connect global capital with end consumers across Asian growth markets.