UL Ventures, the venture investment and acceleration arm of US-based safety science corporation UL, is looking at making its Asia debut and is scouring the market for investible opportunities.
It has invested in 11 startups in the US so far, spanning sectors such as food safety, AI, manufacturing and smart cities. For its Asia investments too, UL Ventures will look at segments such as digital manufacturing,autonomous systems, smart cities, digital health and cyber security.
Some of its global portfolio includes cybersecurity firm RiskSense, healthcare technology startup Massive Bio, food safety tech firm Safe Traces, drone tech startup SkySpecs, to name a few.
In an interview with DEALSTREETASIA, Simin Zhou, Vice President and Managing Director of UL Ventures, elaborates on the venture firm’s focus areas, deal flows and collaboration with local players to tap opportunities in the region.
How are you viewing the quality of deal flows in the region?
There is so much talent out there, and it has been very positive to interact with local entrepreneurs. We are starting to see more deep tech startups in the region.
What investments and sectors are you looking at in the region?
We are currently focused on five key segments – digital manufacturing, autonomous systems, smart cities, digital health and cyber security. These are the same areas we look at across the US, Asia and Europe.
Our mission is to ensure safety, security and sustainability, which forms the underlying intersection in everything we do. We want to improve those areas, and that’s why we’re so interested in technology startups which work in areas like virtual simulation, AI validation, traceability.
One example is SafeTraces, which has very unique ways of ensuring agriculture and food safety and sanitation.
It’s getting very competitive for foreign VCs to do deals in China. How do you plan to do deals in China?
We will work with local teams to make it happen. We bring a unique set of depth around industries and technologies, and we bring our global understanding and reach. I think we have our competitive advantages, and also acknowledge it’s a very tough market.
When do you hope to see your first set of deals happening in Asia?
We’ve been actively looking at companies to understand what’s available and how to tackle this market. We are looking for the right deals.
There are very few VCs that do deep tech in this region. How are you viewing the response to deep tech among the VC community here?
There is a growing ecosystem of early-stage investors for deep tech. We expect to see more opportunities.
Do you think there is capital available in this part of the world for deep tech companies? Most of these companies may require more capital than others.
We see more CVCs getting established, and we believe that will help provide long-term capital to deep tech startups.
Do blockchain companies interest you at the moment?
Blockchain is an important fundamental technology. We did an in-depth study on blockchain last year, and have a number of initiatives working with the technology to understand both commercial viability and technology readiness. We are also actively talking to blockchain start-ups. I would say it is still early days, I foresee opportunities to get the underlying technology more robust over the next two to three years.
In terms of scalable applications, many companies are experimenting at this point. We will likely make a few related investments in the area, and anticipate broader adoption three years from now when the underlying technology is more mature.
SGInnovate and Entrepreneur First (EF) have been trying to engage more deep tech companies recently. Have you been speaking with them?
Yes, we are working with SG Innovate and Entrepreneur First (EF). They are creating a pipeline of new entrepreneurs and startups, which is great. As they create more companies, we will be able to participate in that growth and funding.
When you say these companies are too small for you to look at, how small are you talking about exactly?
We start our funding with $500k and go up to $5 million. Typically we invest $500k to $2 million during Series A and B, and reserve for follow-on rounds.
We are not seeing many start-ups built to support Smart Cities. Why aren’t they taking off yet?
Smart Cities is a concept with many aspects such as, mobility, digital infrastructure, smart energy. It is more than one specific thing. It is important we focus on developing more efficient and sustainable cities because the populations in cities will double over the next decades. We must leverage technology and develop new approaches, whether its mobility, infrastructure, or energy.
We have done a couple investments in digital infrastructure and one in mobility, and we will do more. Due to the diversity of cities, one practical challenge for smart cities startups is finding cost effective and rapid ways to scale. As we talk more about smart cities and drive adoption, we will see a faster path to success.
So the Smart City infrastructure is still fragmented. When do you think they will start integrating?
Our digital infrastructural investments, for example, OpenDataSoft is targeting to solve the fragmentation and integration challenges by providing a data and API platform. They actively make it easy and cost effective to integrate the varying data sources, do analytics and provide APIs.
What’s the opportunity for Singapore to take the lead and scale the idea of a Smart City?
Singapore is beyond the Asia leader for smart cities. It is the global leader. When I attend global smart city conferences, everyone talks about how great a job Singapore is doing. There are clearly a lot of right methods and value we can all learn from Singapore.
Which are the smart city spaces where you can develop value very quickly?
Start-ups need to build a business case where the value extraction is quick. This is absolutely critical to winning in the smart city space. If the payback is long or unclear, then it is difficult to drive adoption. Mobility, digital infrastructure and energy are areas where we see a clear value. What if we are able to eliminate 50% of city parking via autonomous vehicles? What if cities could develop new income streams via providing APIs (e.g. road closures)? What if each building is designed to be energy independent?
When you say mobility, which aspects are you referring to?
Connectivity is critical to enable the next generation of mobility. Security is another area. As more devices are connected and self-learning, it is critical we design the infrastructure to be more secure. Many companies are working to solve these new challenges, and it is a major opportunity for our company and startups.
One of the big challenges is commercialising research work. Do you think this is a challenge in Singapore, considering that it has some great universities where cutting edge work R&D is being done?
We work with Singapore institutes, and these institutes are bridging that gap between research and commercialisation. Often what comes out of research is still conceptual, and these institutes provide a platform for researchers and companies to work together on applications. As the institutes become more mature, we can spin out startups from them. I think Singapore is actively taking that step, and it will take some time for it to work on a systematic level.