VC broad themes: online, mobility, speed & rising middle class

The online platform, mobility, speed and tackling the rising middle class in Southeast Asia continues to be among the broad current trends that venture capitalists (VCs) are keen on, a panel of VCs noted recently.

In a panel session titled ‘In Search of the Next Big Global Innovation’ at the Southeast Asia VC and PE Conference 2015, Teak Capital managing director and founder Chok Kwee Bee noted that online opportunities and mobility are the key trends at the moment.

“VCs have to look three years ahead. if everyone has invested in it, then it is too late. But we don’t have a crystal ball so it also takes a bit of gut feel as well,” she said.

While online and mobility are the broad investment themes at the moment, she advised that VCs need to be alert to other trends that are happening on the ground as these could either supplement the broad themes or could change it.

“I don’t think it is old school (to follow trends), how else can you know what is going to come like a tidal wave? VCs need to know a lot about what is happening around us, whether relevant or not to their investments because everyday life is going to impact how your invest,” she said.

Although 500 Startups partner Khailee Ng appreciates trends and the impact it has on investments and consumers, he also harbours a contrarian view on it.

His approach, he said at the panel session, was to be “trends or market agnostic, and returns religious”.

He noted that 500 Startups have traditionally made a lot of money from very untrendy things, noting the Unsexy Conference where the firm puts up “a bunch of companies that nobody has heard of but makes a lot of money, put them on stage and people go: wow!”

The examples of these ‘untrendy’ startups are usually those in the B2B, enterprise solutions segment.

“There are a lot of trendy startups that can make money, as well but I just want to put it out there that on the path of chasing trends, let’s also look at untrendy businesses that can make money,” he said.

Ng added: “Broadly speaking, the generally sexy business is (focused on) the rising middle class in Southeast Asia where people are getting income bumps or moving to the city and want to enjoy a fuller life without the costs.”

One of the conveniences that the middle class urban dwellers would pay for is online grocery shopping and delivery. He shared that 500 Startups is invested in HappyFresh, an Indonesian-based hyperlocal grocery shopping app.

In a TechInAsia report in March, it was stated that the e-commerce company is supported by a seven-figure undisclosed round of pre-series A funding from a group of VC firms, international angel investors, and institutional backers.

To add to servicing a rising middle class, Chok noted that speed is a necessary advantage.

“People are getting more impatient, so you need to be able to deliver a service to your customers at a speed they expect,” she said.

Khailee noted other factors to complement speed that gives a startup business the leg-up: cost, convenience and efficiency.

“If you can deliver quickly, then you can win them (customers),” he said, noting a fast and viral execution would differentiate a business from its rivals.

Other segments in the market that were highlighted in the panel session were also the halal industry.

“I think there is a lot of opportunities in the halal industry as well, not just in Malaysian per se but globally,” Khailee said. To that, he noted that 500 Startups have invested in LagiSatu.com, a Malaysian-based halal travel portal and HijUp, a Muslim female wear e-commerce site based out of Indonesia.

HijUp was reported to have received seed funding of an undisclosed amount from a pool of global investors that includes 500 Startups, Fenox Venture Capital, and Skystar Capital.

Global capital

As for getting the funds, the VC space is attracting more big funders than before.

For one, global PE players like KKR and TPG are also putting their money into technology and earlier stage funding.

In May, KKR led a rare $15 million Series A round in fundraising platform Artivest. The investment firm pulled from its $98.6 billion in assets under management to lead the investment.

To date, KKR has backed companies including Magic Leap,FanDuel, Ping Identity, Arago, ClickTale, Next Issue Media, and The Hut Group.

Earlier this month, TPG Capital led a $129 million investment into Singapore-based online real estate portal PropertyGuru Group. The other investors in the round were technology-focused venture capital firm Square Peg Capital and media company Emtek Group.

“I notice more and more investors are getting into (venture capital and technology investments). I think there’s a new world in VC and PE ahead and I love that there are more and more PEs doing VC as well,” Ng said.

With this as a backdrop, Khailee noted the importance for startups to prime themselves for global capital.

“Many companies come and talk to us to see what (500 Startups) are investing in,” he noted, this was partly to see where the companies fit among investors’ appetite.

He added that the hunger for good deals work both ways, with investors looking for great potential and startups also looking for investors who can value their companies higher.

“(Globally) there are investors who are willing and ready to pump in the money,” he highlights, noting that the two important things startups need to learn is how to structure their shareholding when an investor comes in, and to train themselves to think globally.

The Southeast Asia VC and PE Conference 2015 was organised by the Malaysian Private Equity & Venture Capital Association (MVCA).

Also read:

Online property portal PropertyGuru bags $130 million investment

Temasek’s Pavilion Capital joins KKR-led consortium to buy controlling stake in Ticket Monster

Series A to B space in Malaysia being filled up gradually: MVCA

TPG, Northstar sell 17.5% in Indonesia’s BTPN for $462m

Grocery shopping app HappyFresh launches in KL, eyes Jakarta

 

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.