Myanmar-focused UMJ Ikeya Investment Ltd, which has been engaged in venture capital play in the frontier market, is scouting for the next batch of scalable startups and is also looking to make follow-on investments in its existing portfolio, a top executive from the investment firm said.
UMJ Ikeya, which has offices in Myanmar and Japan, has invested in companies like Century Finance Co Ltd and GL-AMMK, which is into consumer finance. It also made some early stage investments in Oway Group, Bagan Innovation Technology (BiT) to name a few.
In an interaction with DEALSTREETASIA, UMJ Ikeya Investment director Hitoshi Ikeya said, “we are capitalising on the biggest opportunity that Myanmar presents, the mass market. We are hoping to find startups that are trying to solve problems or provide services to the mass market.”
While UMJ Ikeya follows a sector-agnostic approach, it is looking at verticals such as agriculture, education and healthcare with interest. “We want to make sure that we can leverage on the mobile economy,” he said.
Apart from fresh investments, UMJ Ikeya is also bullish on backing its existing bets. “We believe in the idea of reinvesting,” said Ikeya.
In line with that strategy, the firm is looking for a play in GL-AMMK Co Ltd’s growth plans. GL-AMMK Co Ltd is a joint venture between Group Lease Holdings, Aung Moe Kyaw, Macondray Holdings Pte Ltd of Singapore and UMJ Ikeya Investment.
The company owns exclusive rights to finance Honda bikes in Myanmar. Apart from bike financing, the company also provides SME loans to mom-and-pop shops, at a ticket size of between $10,000 and $30,000. So far, it has a disbursement rate of 50 such shops a month.
Going forward, UMJ Ikeya is looking at participating in GL-AMMK’s plans of deploying at least $250 million in the consumer finance space.
UMJ Ikeya’s early bets
UMJ Ikeya Investment and its affiliates have holdings in six companies in Myanmar and one of their earliest investments was BiT back in 2015.
It made two follow-on investments in BiT whose flagship products include Wun Zinn e-book and two keyboards for Android.
“BiT is servicing the mass market where I feel is the biggest value” said Ikeya. Based on the committed investment for 2018, the cumulative investment of UMJ Ikeya in BiT would be over $5 million.
BiT has over 8 million active users for its ‘Bagan’ keyboard while the e-book app has over 1 million users. The company is now in talks with a few international game companies to enter into the mobile gaming business.
In 2013, it invested an undisclosed sum in Oway Group but exited the startup in 2015 when it received a good offer.
The investment firm also bet on Joosk Studio, a digital animation company, which produces cartoons and short stories reflecting the life of Myanmar university students.
Ikeya has also invested in a Myanmar-based call centre company, which is a joint venture with Masterpiece Group of Japan. Masterpiece has call centre operations in China, Japan, Thailand, Philippines, Singapore, Hong Kong, Columbia and Myanmar.
Bullish on mass market play
Ikeya, who has 10 years of experience working in Morgan Stanley and Goldman Sachs abroad, says, “I’ve always wanted to come back to Myanmar…that’s where the big opportunity is in the early stage startup space, which needs money and mentoring for the necessary ecosystem to thrive.”
On the Myanmar growth opportunity, Ikeya says, “I am very bearish about the overall Myanmar economy. I think my investors are more optimistic than me. But I do still see a big healthy growth and demand in the mass market.”
UMJ Ikeya’s investors come from Switzerland, Singapore and Japan.