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investment

Why global tech stocks are not overvalued

There is certainly a lot of volatility in the technology space right now, but some of the recent investor nervousness is being driven by interest-rate concerns. Original Link

Tencent profit blows past all expectations

Tencent Holdings posted earnings that surpassed all analyst estimates as one-time gains and advertising demand limited the impact of a government clampdown on its lucrative games business. Original Link

MTN said to be close to $800-million Nigeria settlement

MTN Group is close to agreeing an $800-million settlement with Nigerian authorities over a claim it illegally transferred $8.1-billion funds out of the country, according to a person familiar with the situation. Original Link

Romeo Kumalo to launch tech investment firm, sources say

Former Vodacom Group executive Romeo Kumalo has started a tech-focused South African investment firm and aims to raise as much as R2.9-billion in an initial public offering next year, sources say. Original Link

Why Disruption Still Matters and 5 Ways to Deal With It (Part I)

Disruption. This word has fallen from the headlines because it’s "so 2017." But not all industries have been disrupted yet. And those that have will likely be disrupted again. Are you ready to respond? Can you keep up with a more nimble company that comes in to steal your market share?

Last week, I watched a talk by a woman who predicts where certain technologies will go and invests accordingly. According to her, analysts are too focused on today. She predicts that blockchain, 3D printing, and eventually robotics, will combine within the next few years to completely disrupt the supply chains of most companies. To me, this means that companies that thought they were relatively immune to overnight disruption could soon be ripe for it.

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China Business Cast 80: Kyle Ellicott of ReadWrite Labs, China-US cross-border investment

EPISODE CONTENT:

  • Kyle shares a little bit about his background
  • Discussion on what ReadWrite Labs does, specifically in Asia and China these days
  • Kyle shares what he’s seen and felt during the 2018 Startup Launchpad
  • Kyle shares a bit about the speech he gave during the 2018 Startup Launchpad
  • Kyle’s first impression of Shenzhen compared to Hong Kong
  • Question for Kyle: How is doing businesses internationally, and what have you learned in doing businesses in Asia?
  • Kyle shares the impact of his perspective of doing businesses and building companies
  • Question: What does cross-border investment mean within the current economic context of China and the U.S. to you? What are the potentials in it and challenges?
  • Kyle is helping many expat-founded startups in Shenzhen and Hong Kong. He now shares what most of them need with and how he goes about helping them
  • Kyle shares tips on building networks in China
  • How people can reach Kyle and his business

Episode Mentions:

Intro

Interview

Download and Subscribe

A big THANK YOU to our amazing crew who made this happen: Jessa, Boban, Honey, Verena, and Grace.

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The Australian VC who funded PropertyGuru and Chope isn’t interested in your valuation

Paul Bassat, co-founder and managing partner of Square Peg Capital

Paul Bassat, co-founder and managing partner of Square Peg Capital. Photo credit: Square Peg Capital

Square Peg Capital raised a US$180 million fund for startups earlier this year. The Australia-headquartered VC has investments in its home country as well as in Southeast Asia, Israel, and the US. Its portfolio includes an early small stake in Uber, Australian graphic design firm Canva, and Singapore’s PropertyGuru, Chope, and Wego.

Paul Bassat, Square Peg’s managing partner and co-founder, is an entrepreneur himself, having co-founded jobs site Seek in 1997. And before he invests, the last thing he wants to hear from founders is their company’s valuation.

In Bassat’s mind, an entrepreneur who’s too eager to push a number on investors risks putting them off, as they might find the proposed valuation too high. Then, if the entrepreneur haggles, investors might think this sounds too desperate or betrays lack of confidence in the initial proposal.

“Raising money is as much about psychology as anything else,” Bassat tells Tech in Asia. Also, if investors value your company at a certain amount and you come to them with a lower price in mind, it’s your loss. “I just don’t think you’re doing yourself any favors,” he notes.

More importantly, that’s not what you should be focusing on as a founder, he adds. “We want to meet folks who are just passionate about running the business. So there’s a little bit of a turn-off when they come along with valuation comparatives and talk more like investment bankers.”

Growth potential

Square Peg invests in technology businesses that can target markets with high potential and address real problems in them. In Southeast Asia, the VC has invested in property portal PropertyGuru and travel search engine Wego. Most recently, it funded restaurant finder Chope and services marketplace Kaodim.

The VC’s 27-strong portfolio also includes payments provider Stripe, US-Israeli big data weather predictor ClimaCell, and freelance services marketplace Fiverr. It’s had one exit so far, with Texas-based logistics software builder Shipping Easy selling to competitor Stamps.com for US$55 million last year.

“[These companies] have platform or marketplace dominance to them,” Bassat says. “They are very, very scalable businesses. We love scalable businesses. And that’s not just financial scale, it’s organizational scale.”

You have a list of things that you want to do. On most days, you can’t get to any of them.

This means that as the business grows larger, it doesn’t get proportionately harder to manage. “Contrast that with ecommerce-type businesses, where the level of complexity just keeps growing and growing as the company gets bigger and bigger,” he explains. “The number of agents [on PropertyGuru] has probably doubled since the time we’ve been involved in the business. It’s not two times more complex to deal with double the number of agents.”

A common refrain of investors outside Southeast Asia who hesitate to invest in the region is the lack of local knowledge and presence on the ground. Square Peg counts on the expertise of its portfolio companies instead of trying to learn everything itself. Working with local investors who go into deals with it is also part of Square Peg’s strategy.

“We feel we understand those markets well enough to make investment decisions. But in terms of actually executing and running a business day to day, we’re relying on incredible local knowledge and expertise,” Bassat says. “And what we bring perhaps in this case is strong domain expertise in terms of understanding how to scale marketplace businesses.”

To accomplish this, Bassat tries to keep his hands off the wheel when working with a portfolio company. “The way I think about our role is to push and challenge if we do have questions. But ultimately, it’s really to back management,” he says. “And it’s very, very easy as a former CEO sitting on the board to think, ‘Oh, why can’t they do this?’ or, ‘This is easier. Why can’t they do more things?’”

Since Bassat was a CEO himself between 1997 and 2011, he has an idea of the challenges in store. “You wake up in the morning and arrive at work. You have a list – maybe a mental or a written-down one – of things that you want to do. On most days, you can’t get to any of them. On a good day, you get to one or two of them, out of the six or seven. And you never finish any of them.”

Plus, the problems that usually reach the CEO are the tough ones. Otherwise, Bassat thinks they would have been solved somewhere along the way.

Paul Bassat, managing partner, Square Peg Capital

Bassat during a team meeting at Square Peg. Photo credit: Square Peg Capital / Stuart McEvoy

Cheering from the sidelines

PropertyGuru and Chope appear satisfied with this approach, especially as it helps them build strong management teams. “For example, [when] we brought on a new COO – our most recent hire – the board played a big role in vetting the individual,” Hari Krishnan, CEO of PropertyGuru, tells Tech in Asia.

Krishnan thinks that having an open mind is necessary to be part of PropertyGuru’s board. “We’re not a finished product,” he says. “We continue to grow and learn and develop. So the board really helps set that context and then continues to challenge [them] as they come on board the business.”

“There was a candidate for a senior management position we were assessing,” says Chope CEO Arrif Ziaudeen. “First thing [that Square Peg] did which was helpful was use its own networks to get honest opinions on the candidate that I couldn’t.”

You end up with an outcome that most people around the table are comfortable with because the data tells a story.

More importantly, the investor let Ziaudeen know they trusted his instincts on the candidate. “That’s an important distinction, I think, between helping the entrepreneur think through a particular issue [and] helping [them] think through how to make tough decisions and grow.”

“Like any other groups of people, we have disagreements,” Krishnan adds. “But you can have that constructive disagreement and debate and keep it in a good place if you build relationships. When I read about backseat driving in articles, I often feel there’s been an underinvestment in the relationship. So I don’t take that for granted. There’s a lot of time spent just understanding where my expectations are at, where are people at – not just the board, but even with my executive team.”

Disagreements and debates are what informs Square Peg’s relationship with its portfolio companies as well as its strategy. Bassat says the VC does not have a controlling stake in any of its portfolio companies. Instead, it usually takes one seat in their board.

For Bassat, advice from a board member doesn’t have to be gold all the time. “I can think of plenty of examples where we’ve had debates with management teams, and we’ve ended up being wrong,” he muses.

“And there are probably more examples [when] we’ve been wrong than [when] we’ve been right. But most of the time, it’s not so much that someone has got this view and someone else has got that view. You sit, you chat, you debate things, you have a data-driven conversation. And you end up with an outcome, with the view that most people sitting around the table are really comfortable with because the data tells a story,” he adds.

Opportunity abounds

Square Peg usually goes for a 10 to 20 percent stake in the companies it backs. “Maybe 95 percent of the investments we do fit within that model. We think it’s a great opportunity to have that perspective of looking at things more broadly,” Bassat says.

Though he didn’t share specific figures about Square Peg’s investments and returns, he says the VC tries to make a compelling case to its investors on why it can deliver them higher returns than other types of investment.

“We say to our investors that if you invest in Square Peg and we end up giving you back the same returns that you get from the stock market plus a small premium, then really, you shouldn’t be giving us money. Because you’re better off having the liquidity and the benefit of investing in liquid assets if the returns are broadly similar,” he explains.

Square Peg is riding an early-stage wave for growing businesses and markets, Bassat hopes. He offers PropertyGuru as an example, where a large addressable market was ready for property listings and agent services to move online, together with most of that industry’s money.

“That’s exactly the sort of thesis that we like. And that hopefully is going to lead to our investors getting really, really good returns. But they have to be patient because we want to be involved in companies like PropertyGuru for a long time,” Bassat says.

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Digix gets $1.3m seed funding to turn gold into cryptocurrency

Copyright: <a href='https://www.123rf.com/profile_dariohayashi'>dariohayashi / 123RF Stock Photo</a>

Photo credit: dariohayashi / 123RF

Singapore-based Digix has secured US$1.25 million in seed funding, it announced today.

The round was led by Japanese VC firm Global Brain, with Shanghai’s Fenbushi Capital – one of Asia-Pacific’s most prominent backers of blockchain-related startups – also participating.

See: Japanese VC firm Global Brain to start investing in ICOs

The funding will help the startup continue building its DigixDAO platform for trading gold-backed digital tokens on the Ethereum blockchain.

By tokenizing gold bullion, Digix is aiming to create a cryptocurrency that can provide more stability for investors. Unlike the majority of cryptocurrencies currently being traded, each Digix token will represent a real, physical asset – in its case, a piece of gold stored in a secure vault somewhere in Singapore.

This reflects the concept of the gold standard, under which most of the world’s currencies were directly linked to the value of gold. Most countries abandoned the gold standard in favor of the fiat system – where the value of money is not based on the value of a commodity – during the 20th century.

By using the distributed ledger, Digix is able to securely record and track ownership of its gold-backed tokens.

Twice the tokens

Digix has created two digital tokens so far.

Digix Gold (DGX) is the result of its tokenization of gold reserves, with each unit of DGX representing 1 gram of gold.

DigixDAO (DGD) was distributed as part of the startup’s initial coin offering (ICO) in March last year. The DGD token is not backed by gold and, like most tokens that can be thought of as cryptocurrencies, its value can go up and down depending on market forces and exchange rates.

In addition to giving its holders the ability to claim rewards on DGX transactions, DGD also grants them a say in the way the Digix ecosystem is run.

As a result of the token sale, the platform became a decentralized autonomous organization (DAO) – an economic entity governed according to smart contracts on the blockchain, theoretically removing the need for a traditional corporate structure.

Buyers that hold DGD over a certain amount will be able to submit proposals to the DAO as to the direction the platform should take in order to encourage adoption of DGX. All DGD holders will be able to vote on such proposals.

In its ICO, Digix managed to raise 465,134 Ether – worth close to US$5.5 million at the time. This will be spent in accordance with decisions made by DAO members.

Much has been made of the apparent conflict between ICOs and traditional VC funding. Earlier this year, money raised by ICOs surpassed that of VC seed funding in internet-related startups.

See: Easy money? Top token players weigh in on the ICO vs venture capital debate

The consensus among panellists at Tech in Asia Tokyo earlier this year was that both fundraising formats could and should be seen as complementary.

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Cyber security startup raises $10m to help protect industrial internet systems

ScadaFence founders

ScadaFence founders Ofer Shaked (L) and Yoni Shohet. Photo credit: ScadaFence.

As connected devices find their way into large-scale industrial applications – what’s often called IIoT, or Industrial Internet of Things – the need to safeguard those networks becomes more imperative. If you’re, say, a large automotive company running a bunch of manufacturing plants, you really don’t want your connected systems hijacked by hackers or compromised by employee errors.

Tel Aviv-based ScadaFence is a cyber security startup that tackles this specific challenge – shielding industrial networks from cyber attacks and threats. The company just announced its series A round, raising US$10 million.

Investors include JVP, NexStar Partners, 31Ventures Global Innovation Fund, Global Brain’s GB-VI Growth Fund, iAngels, and DS Strategic Partners.

The funds will be used to grow the company’s research and development center in Tel Aviv and boost its global business teams to address “growing demand” from its clients in the US, Europe, and Asia.

Co-founder and CEO Yoni Shohet tells Tech in Asia the startup has “dozens” of customers across these territories, although he doesn’t provide details. While ScadaFence serves several industrial sectors, Shohet says the most demand comes from the chemicals, food and beverage, automotive, and energy sectors.

Building the fence

The startup’s name comes from SCADA, an acronym that stands for Supervisory Control And Data Acquisition. SCADA computer systems are used to control and monitor plants and factory equipment in industries like energy, telecommunications, transportation, and more.

Shohet and his co-founder Ofer Shaked were both part of the Israeli army’s intelligence division, which has birthed many a founder in the country – especially in the cyber security field.

No longer operating in disconnected silos, companies now have to deal with the extra challenges connectivity brings.

The duo saw an opportunity in the industrial internet space, as companies started taking advantage of connected technologies. “Once industrial devices started connecting to systems that allowed them to communicate in networks not based within the industrial environment, we saw a lot of transformation in this space,” Shohet says.

No longer operating in disconnected silos, companies now have to deal with the extra challenges this brings. “[They] need to change their security perspective and think about how they can improve their security while staying connected to the outside world – it’s a very big change for them,” he adds.

That’s where ScadaFence comes in – the startup builds products that help companies monitor their networks for signs of intrusion or compromise, and detect threats in real time. It also makes security assessment tools to help a company determine how its networks are being used, what its current security level is, and what the potential risks are.

Shohet says the startup can scale its products to address clients ranging from one-factory businesses to companies running hundreds of plants worldwide.

ScadaFence doesn’t worry much about competition at the moment, as there is currently no dominant player in the field, according to Shohet. He points to his company’s ability to support big manufacturing networks like large-scale automotive factories as its edge in the market.

“We identified this gap early on because of our focus on these business cases,” he says.

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SoftBank’s $10b investment in Uber could end the war with Grab in Southeast Asia

Grab and Uber CEOs Anthony Tan and Dara Khosrowshahi

Grab CEO Anthony Tan (L) and Uber CEO Dara Khosrowshahi. Image credit: Grab, Uber, Tech in Asia.

As Uber’s board gives the green light to what could be a US$10 billion investment deal with SoftBank, all eyes in our region turn to the ride-hailer’s local competitors, most notably Ola in India and Grab in Southeast Asia.

Assuming the deal goes through, Uber and Grab will once again find themselves sharing a major investor – Chinese ride-hailing giant Didi Chuxing is already an investor in both, and SoftBank (which has also invested in Didi) will be one more.

What does this mean in the long run for Uber’s fortunes in Southeast Asia? Not everyone agrees on that. Grab and Uber are neck and neck in the countries they share, including Singapore, with Grab pulling ahead of its US rival in several of them. Riding on both cars, SoftBank wins regardless in this scenario, but there’s another possibility everyone is thinking about – Grab and Uber putting aside their differences and merging under the SoftBank roof.

All in the family

Monk’s Hill managing partner Peng T. Ong believes the planned investment could bring the two companies closer together. “It is a possible friendly way to work towards consolidation,” he notes.

It is possible that SotfBank would bring the two operations together in the future.

Elizabeth Lim, editor at M&A research firm Mergermarket, shares the same view. “SoftBank will probably continue to invest in both startups in the region, and it is possible that they would bring the two operations together in the future,” she says.

Lawrence Cheok, senior research manager for market intelligence firm IDC, feels that the consolidation of SoftBank’s ride-hailing assets would be a “win” for the fund – yet there are other ways for everyone to win too.

“What would create a win-win-win scenario for all firms involved is to avoid price competition and collaborate on technology sharing to create a global ecosystem,” he explains. He uses the Uber-Didi deal as an example of how this could work. The deal basically resolved the unhealthy price war between them and left Uber with at least a foot in the Chinese market through its stake in Didi.

“Instead of straight-out mergers, a similar approach may be taken by [SoftBank] to encourage collaborations between firms under its portfolio. Doing so seems in line with their investment strategy to build up a global ecosystem of technology disruptors,” Cheok says.

Malaysia-born, Singapore-based Grab claims to have over 1 million drivers and recently announced a milestone of 1 billion rides across Southeast Asia. Having raised over US$4 billion in disclosed funding, its pockets are not as deep as Uber’s but it has cemented its presence in the region as a force to be reckoned with.

In Singapore, Uber celebrated its four-year anniversary earlier this year, announcing it hit 1 million active riders in the city-state with “tens of thousands” of drivers. It crossed the 5-billion-ride mark worldwide in June.

Cheok cautions a possible consolidation might not end up being such good news for consumers – the price wars might end, but that could result in increased costs for users that could sometimes be inscrutable, like the dynamic surge pricing system. “Under a monopolistic market structure, there needs to be more transparency how these changing prices are generated or calculated,” he notes.

Softbank’s top 10 deals this year. Graphic by Tech in Asia.

Spring cleaning

With or without an alliance, the potential SoftBank investment could help Uber put its house in order. “Such an investor will bring some discipline to [Uber],” says Kee Lock Chua, CEO of Singapore-based venture capital firm Vertex, an early investor in Grab.

The incoming investment could help Uber put its house in order.

Under former CEO Travis Kalanick, the embattled company was connected to controversies ranging from sexual harassment and sexism to questionable competitive tactics – like the Hell program to gather data on US rival Lyft’s drivers and a project called Surfcam to scrape data from competitors like Grab.

If SoftBank does end up coming on board as an investor, it will likely have little patience for such shenanigans, Chua thinks.

Mergermarket’s Lim also thinks SoftBank will have a big influence on Uber’s board.

“Uber has attempted to move past its recent woes by resolving certain issues within its board, which paved the way for this investment to take place,” she says. “With plans for an IPO in 2019, SoftBank’s stake buy and two new board seats signal a move forward finally for the ride-sharing company.”

The US company’s board of directors decided to go ahead with the deal by resolving the much-discussed feud between Kalanick and investor Benchmark Capital. Benchmark agreed to suspend the lawsuit it kicked off against Kalanick a few months ago so that the deal with SoftBank could proceed. If SoftBank does invest, Benchmark said it would drop the lawsuit, which aimed to reduce Kalanick’s influence over the board.

See: Uber was catching up with rivals in Southeast Asia. Now the gap could be widening

Head to head

In the meantime, Chua feels Uber’s competition with Grab is a good thing so long as it’s healthy, and new people coming on the company’s board should help with that.

Competition, after all, can help diversify and improve both companies’ services.

Grab has quite the headstart there, with several verticals under its umbrella. From taxis and private-hire cars to bikes, shuttles, and coaches, the company has offered enough different mobility services to make itself as ubiquitous as possible.

Uber does carpooling and motorbikes as well (although its offering in this regard lags behind Grab and Indonesia’s Go-Jek) but it’s mostly laser-focused on its core product – the private-hire car. UberEats is quite the tasty addition to its verticals but one that faces its own competition from other providers like Foodpanda and Deliveroo. Grab has its own food delivery offering but only in some markets like Indonesia and Thailand.

Grab wants to expand into other applications beyond just ride-hailing.

The kicker may be the way Grab wants to expand into other applications beyond just ride-hailing. The company wants to use its e-wallet function to enable more online-to-offline services.

Earlier this year it acquired Indonesian fintech startup Kudo to expand its payment network. During Grab’s five-year celebrations, CEO Anthony Tan said the company wants to “win payments in Southeast Asia,” saying that the app’s user base can be the groundwork for more services.

Grab already made it possible for users to make peer-to-peer micropayments using the wallet, while more recently it announced its payment system can be used at restaurants and hawker stalls through a WeChat-like QR code.

Go-Jek-uber-grab-indonesia-map-update

Not going anywhere

Grab’s strong position in Southeast Asia could portend a repeat of what happened in China where Uber sold its local business to Didi, or Russia where it pulled out while retaining a stake in a joint venture with home-grown player Yandex.

However, during The New York Times DealBook conference a few days ago, new Uber CEO Dara Khosrowshahi dispelled rumors of Uber ceding the Southeast Asian market to competitors.

That said, Khosrowshahi doesn’t expect profitability from Southeast Asia anytime soon. “The economics of that market are not what we want them to be – I think it’s over-capitalized at this point,” he pointed out.

See: What SoftBank’s $10b investment in Uber means for its battle with Ola in India

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Ecommerce enabler aCommerce raises $65m to reach more markets in Southeast Asia

aCommerce co-founder and group CEO Paul Srivorakul

Co-founder and group CEO Paul Srivorakul. Photo credit: aCommerce.

Southeast Asian ecommerce services provider aCommerce announced the closing of its series B today, a deal worth US$65 million.

The round is led by Emerald Media, an investment vehicle set up by international investors KKR along with several existing backers: Australia fund Blue Sky, Telkom Indonesia venture arm MDI Ventures, and Swiss market expansion services provider DKSH. The Zurich-headquartered firm previously poured an undisclosed amount of funding in the startup for a 20 percent stake.

The funding will be used to improve aCommerce’s online software that allows merchants to sell and distribute goods through a number of ecommerce platforms, establish more partnerships in the startup’s current markets, and seek out clients in new markets like Malaysia and Vietnam.

At the moment, Bangkok-based aCommerce operates in Thailand, Singapore, Indonesia, and the Philippines. It’s working with international brands like Samsung, Unilever, Nestlé, L’Oreal, Philips, and Mars to help them distribute their products online in the region.

“At the beginning of the region’s adoption of online, it was enough to simply have a website. Fast-forward a few years later and brands are realizing in order to stay ahead of the retail game, they need to be omnipresent and data hungry to fully control all pricing and consumer touch points,” co-founder and group CEO Paul Srivorakul says in a statement.

The company had announced its plans to raise a series B two years ago, aiming for US$30 million. In the meantime, it clinched the DKSH deal and raised some bridge funding from MDI.

Including this funding, aCommerce will have raised a disclosed total of US$95 million.

Editing by Eileen C. Ang

(And yes, we’re serious about ethics and transparency. More information here.)

About Michael

A Greek in Asia, Michael covers startups in Singapore and beyond. Drop him a line at michael@techinasia.com or say hi to him on Twitter: @michaeltegos

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Brief: Amazon invests more in its Indian marketplace, twice as much as Flipkart so far

Photo credit: Pixabay.

The news (extracted from Economic Times):

  • Amazon has invested US$444 million in Amazon Seller Services – its ecommerce marketplace in India. With this fresh capital injection, the total investment in Amazon Seller Services stands at US$2.6 billion.
  • “As India’s largest and fastest growing ecommerce player, and with a long-term commitment to make ecommerce a habit for Indian customers, we continue to invest in the necessary technology and infrastructure to grow the entire ecosystem,” Amazon India spokesperson said in a statement shared with Tech in Asia.
  • Jeff Bezos committed US$5 billion to Amazon India last year.

Why it matters:

  • Amazon has been building up rapidly in India with localized strategies, investing heavily in infrastructure, logistics, and customer experience. The latest investment will give it more teeth in its battle with Indian rival Flipkart.
  • Flipkart has invested US$1.3 billion in its marketplace so far, half of what Amazon has invested.
  • But Flipkart has had two mega funding rounds earlier this year from investors including SoftBank, Tencent, and Microsoft. It has over US$4 billion in its balance sheet, yet to be deployed.

See: No robots, please, we’re Indian – the lowdown on Amazon’s localization strategy

Editing by Sumit Chakraberty and Judith Balea

(And yes, we’re serious about ethics and transparency. More information here.)

About Malavika

Idea-chaser, listener, inua. Malavika’s passion for storytelling has found perfect resonance with the protean world of startups. She’s TIA’s India Head. Find her @vmalu or malavika@techinasia.com

Original Link

These Palantir and Grab alumni chose Singapore for their cyber security startup

Tiger atop tree bark

Photo credit: Frida Bredesen / Unsplash.

There’s nothing like a good burglary to get you wise about cameras and alarm systems in your house. The same applies to cyber security – the past two years have seen a bunch of well-publicized online attacks that have made a lot of people a lot more interested in the concept.

But while large organizations mostly have the resources to get themselves the electronic equivalent of sturdy steel bars and ferocious guard dogs, smaller companies usually can’t afford such measures or don’t have the people required to set them up.

Horangi hopes to be the cyber security provider for ‘the little guy.’

That’s where Singapore-based Horangi comes in. The young startup makes cyber security tools aimed at small- and medium-sized enterprises (SMEs) that want to secure their online presence but can’t afford to install expensive software on the premises.

The startup just announced it’s raised series A funding to the tune of US$3.1 million. The round is led by Singapore-based venture capital firm Monk’s Hill and joined by Right Click Capital, 500 Startups, Hub Ventures Fund, 6Degrees Ventures, and private investors. It had previously raised a smaller, undisclosed amount.

“We target the SME space because we feel it’s underserved,” Paul Hadjy, co-founder and CEO of Horangi, tells Tech in Asia. The startup offers a software-as-a-service suite of products but also connects its clients to teams of cyber security experts they couldn’t afford otherwise.

Horangi, which means “tiger” in Korean, was founded in 2016 and launched its software platform in early 2017.

All-seeing eyes

Hadjy set up the company together with co-founder and CTO Lee Sult. But the two go back further, having been part of storied big data analytics company Palantir. They took on government and commercial projects involving information security at the US firm. The work brought them to South Korea, where they got involved in an initiative by the Korean Information Technology and Research Institute.

The Best of the Best initiative’s purpose was to source the country’s top computer science minds out of 1,000 student applicants. Sult and Hadjy were helping out breaking down all the applications coming in. A software solution they developed proved to be useful for students, which led to the duo deciding to start a company of their own.

By that time, Hadjy was working for Grab in Singapore on the ride-hailer’s information security team. The prospect of his own startup proved irresistible, though. “I really liked working [at Grab] but I had this opportunity and had to make a choice,” he says.

See: MAS appoints first-ever chief cyber security officer

Detect and protect

Horangi’s products revolve around three core tenets of cyber security; protection, detection, and response. “Every cyber security tool you can find either overlaps with some of those sectors or focuses on one of them,” Hadjy explains.

The startup’s products currently include:

  • Scanner; which uses a library of more than 50,000 known threats to scan APIs and web apps, report on server and networked device vulnerabilities, and check software code for security gaps. “[It] just needs to be pointed to your hostname or IP address, and it will run a network and application scan, sending queries to assess the configuration and state of security on that device,” Hadjy explains.
  • Hunter; which runs on target devices and collects forensic data from the startup’s tools like running processes, system logs, network connections, and more, to determine advanced threats. The data is then reviewed by Horangi’s team of experts.
  • Storyfier; which creates comprehensive and easy-to-understand reports on vulnerabilities and comparisons to security systems of other organizations.

This holistic approach helps Horangi acquire customers, offering them first a way to understand what the risks are for their particular business and then producing insights and tools for them.

This is also its edge against the competition, Hadjy thinks. “A lot of cyber security companies in Singapore focus on one specific sector, on solving one problem,” he says. That may suit specific requirements of large companies and organizations, but perhaps not the market Horangi is going after.

This approach has allowed Horangi to get in front of problems fast. Hadjy recalls a client that was iterating quickly on its application, with each new feature or update giving birth to new vulnerabilities. Horangi determined that the client tackled security only in the last stages of its development process.

With a combination of security awareness training and what’s called secure software development process (SSDLC), the company in question saved “weeks” of troubleshooting and patching by adding just two days to its initial development time. “This was an extreme case, but normally a successful implementation of SSDLC pays dividends of developer time by the second or third development cycle,” he explains.

Horangi also gave the company some security-related objectives to include in its overall performance metrics. “I’m not sure if those were implemented,” Hadjy adds.

Some related companies in Singapore include Scantist, Cloak, and i-Sprint, as well as larger companies like Trend Micro and Acronis.

Horangi team

The Horangi team at KITRI. Photo credit: Horangi.

Filling the gaps

Horangi currently has over 50 clients – some of those are firms above the billion-dollar mark but most are SMEs. Hadjy doesn’t disclose who the clients are because of the sensitive nature of the business, but they span various sectors from tech to government to finance. Around 40 percent of those clients are in Singapore.

He also demurs on figures about the company’s revenues but says they’ve been able to keep the business growing since launch.

Horangi has seven offices around the world, including Singapore, Seoul, Manila, Jakarta, and Washington DC.

See: This Temasek-backed startup builder tackles cyber security with army experience

In the coming year, the startup wants to add new features to its platform like multi-user support and machine learning – once it has a competent amount of data to do it effectively. Hadjy is confident that with the company gaining more clients, it will be able to collect larger amounts of meta-data for this purpose. “This meta-data enables us to both understand our clients environments and to better understand the cyber security threats faced by our clients,” he explains.

Ultimately, Horangi hopes to be the cyber security provider for “the little guy,” Hadjy says. “I kind of look at our model as similar to Hubspot,” he says, citing the marketing software’s all-in-one approach.

It also hopes to help grow the community in Singapore and the region and do its part in developing tech talent – something that fits right in with Singapore’s drive to improve its cyber security capabilities. It’s working with parties like the Cyber Security Agency and the National University of Singapore for this purpose.

“There’s a lot of people trying to tackle the cyber security problem in Asia but I think this is a talent issue,” Hadjy says. “That’s one of the reasons why we started the company here, because we want to help with that.”

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Robo-investor AlgoMerchant begins trading after $2m-plus funding

Copyright: <a href='https://www.123rf.com/profile_oneinchpunch'>oneinchpunch / 123RF Stock Photo</a>

Photo credit: oneinchpunch / 123RF.

Everyman securities trading platform AlgoMerchant has officially launched today after raising more than US$2 million in funding from East Ventures and a “network of prominent individuals in the fund management and broking industry.”

The Singapore-based startup offers a range of robo-traders that allow investors of all shades – from part-time retail investors to professionals and high-net-worth individuals – to automate securities trading through their personal trading accounts.

The robo-traders use data analytics and machine learning tech to automate trading, while also avoiding delays and human error. The basic service is free, while a range of premium packages can be paid for.

AlgoMerchant said it collaborates with freelance quantitative traders  – in other words, those that specialize in automated trading – and data scientists from around the world to discover profitable investment algorithms. More than 1,000 traders tested out the service during its nine-month beta phase.

Forty percent returns

The startup claims that its bots can give everyday retail investors “an edge similar to resource-rich top quantitative hedge funds,” securing projected annual returns of over 40 percent.

It also offers a form of social network and holds occasional seminars, giving investment novices the chance to exchange ideas and advice.

That said, AlgoMerchant also markets itself to professional investors. According to the startup, renowned Singaporean investor Robin Ho has committed an undisclosed amount of money for trading through the platform. It has also begun to offer customized solutions for institutional investors, such as funds that want to automate more of their trading activity.

Algomerchant was founded in 2014 by former bankers Justin Tjoa and Aditya Santoso. The startup went through NTUitive – the incubator program affiliated with Nanyang Technological University – before securing around US$910,000 in seed funding from East Ventures in January 2016.

It faces competition from a number of apps aimed at making securities trading more accessible to the general public. Hong Kong startup 8 Securities launched its TradeFlix platform last month, while US player Robinhood hit unicorn status after its most recent round of funding with a US$1.3 billion valuation.

About Jack

Sweltering in Singapore. Email: jack@techinasia.com Twitter: @jacknwellis

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Singapore marketplace raises angel funding to help working parents find local services

Social Weaver co-founder and CEO Sumedha Khoche

Social Weaver co-founder and CEO Sumedha Khoche. Photo credit: Social Weaver.

When you’re a working parent, time is a resource as precious as it is scarce. Singapore startup Social Weaver is trying to scrounge some more of it for its users, and it just raised some pre-seed funding for its efforts.

The startup has secured an undisclosed amount from angel investors in banking and tech like CEO of Rewardz Sudhanshu Tewari and entrepreneur and investor Deepak Gurnani.

Social Weaver is an online marketplace that connects parents to services related to childcare, from child doctors to birthday party planners. The startup claims to have over 4,000 service providers on its website, who benefit from the access to Social Weaver’s user base. The startup works with its clients on a subscription basis, providing them tools to help with customer management and marketing.

The team will use the funding for product development, including building a mobile app and improving website features. It will also raise more awareness for the site.

The startup was founded by Sumedha Khoche and Kaivalya Gundu, a marketing and a tech professional respectively. Both working mothers, they faced a lot of the problems of having to find child-related services first-hand. So they decided to create a “TripAdvisor” for parents – a “Kid Advisor,” if you will.

It’s not the first business Khoche and Gundu started together – the long-time friends had a lending library for kids when they were little girls. Khoche went through roles in Procter & Gamble and Pepsico, while Gundu cut her teeth as business analyst for Wells Fargo and Bank of America before taking on a product role in Indian startup CallHealth.

There are several online marketplaces and communities aimed at parents in Singapore, including The Asian Parent, Flying Cape, and Kiasu Parents. Social Weaver claims its edge is building a large database of local information and resources. Khoche, who’s the CEO, says that parents usually want services that are local in their neighborhood and that’s what the startup aims to create for its user base.

The startup claims to have over 19,000 page views and 950 active users since its launch last week.

Editing by Jack Ellis

(And yes, we’re serious about ethics and transparency. More information here.)

About Michael

A Greek in Asia, Michael covers startups in Singapore and beyond. Drop him a line at michael@techinasia.com or say hi to him on Twitter: @michaeltegos

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SparkLabs gets in on blockchain frenzy with $100m VC and cryptocurrency fund

SparkChain managing partner Joyce Kim. Photo credit: Joyce Kim.

Global venture capital and accelerator network SparkLabs Global Ventures announced its latest initiative today: SparkChain Capital, a US$100 million fund aimed at tapping the craze for all things cryptocurrency-related.

The new fund has a dual purpose. The majority of the capital will be used to make equity investments in promising startups in the blockchain space. The remainder will be used to buy cryptocurrency, including digital tokens issued by companies as part of their initial coin offerings (ICOs).

It is also planning to run its own ICO later in the year.

SparkChain is headed up by Joyce Kim, a co-founder and former director at Stellar – the San Francisco-based non-profit that just teamed up with IBM and a number of major banks to launch a global blockchain platform for rapid cross-border transactions.

blockchain-amercia

Photo credit: Namecoin.

Kim tells Tech in Asia that the fund will primarily target participation in series A rounds, with each investment in the range of US$1 million to US$3 million. The aim is to invest in around 15 to 20 companies in total, with some funds earmarked for follow-on investments in those same startups.

According to a press release, SparkChain will additionally have “a small targeted holding of actual cryptocurrencies,” which it “will not actively trade.”

“We are presently capping our investments into cryptocurrency and ICO holdings at 10 percent of initial fund capital,” says Kim. “We will be able to invest in ICOs as well, but as expected, potential ICO investments will go through a very rigorous vetting process.” Investment decisions relating to cryptocurrency and digital tokens will be made by evaluating numerous factors and keeping a close eye on the overall state of the market, she adds.  

The ICO market is very exciting, but we think it is still too young and volatile to be dedicating a larger portion of assets.

As to why SparkChain will not engage in trading these cryptocurrency holdings,  Kim explains that this is not a focus for the fund at present. “There are many crypto hedge fund options for investors out there, and this isn’t our team’s strength,” she says. “We’re experienced in helping companies grow and make an impact in the world.”

The rationale behind the 90/10 split is that Kim believes the fund will benefit from this hybrid investment strategy. “We are dedicating the bulk of the fund to making equity investments in companies and entrepreneurs, because we believe will find the best and brightest teams committed to building companies that will be successful in the long term and help avoid many of the flash in the pan projects,” she says. “The ICO market is very exciting, but we think it is still too young and volatile to be dedicating a larger portion of assets to it.”

SparkChain is slating its own token sale for some point later this year. “The ICO will allow a wider audience that is crypto-interested to invest in a fund that is managed by seasoned venture investors with deep knowledge of the blockchain space.”

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With fresh investment, crowdfunding site DanaDidik wants to improve access to student loans

Image credit: public-domain-image.com

Indonesian student loan crowdfunding platform DanaDidik has raised an undisclosed amount of seed funding from impact investment fund Garden Impact.

The startup will use the funds to scale and enhance its technology and service.

DanaDidik is a crowdfunding platform for Indonesian students. They pay back the loan to their supporters in installments once they’ve graduated and found a job. The disbursement happens through the platform. Only students who already have a university spot and will graduate within two years are eligible to apply. The maximum loan size they can get is US$770. DanaDidik takes a cut from successful campaigns.

“Garden Impact’s business is in line with our vision. We need patient capital,” the startup’s co-founder Dipo Satria told Tech in Asia today.

Singapore-based Garden Impact supports small businesses that create jobs and provide services and products for the poor and marginalized. While expecting returns, impact funds can have longer lifecycles than a typical VC firm.

Since launching last year, DanaDidik received 7,000 applications from students, but only a few were able to reach their funding goal.

When DanaDidik joined the Plug and Play accelerator program earlier this year, it learned a lot in terms of “adjusting the strategy,” Satria says.

While before, they targeted a general audience to find individuals willing to chip into the loan – the way crowdsourcing generally works – DanaDidik now wants to work with enterprises and family offices to improve the campaign success rate. The idea is to link campaigns with corporate social responsibility programs.

“According to USAID study, about 19.4 million Indonesian youth do not attend higher education due to limited financial support,” Satria points out. There is also limited government support, which leaves many aspiring students stranded.

With the new funding, DanaDidik has another shot at increasing the number of underprivileged students who obtain a university degree.

Editing by Judith Balea and Eva Xiao

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About Nadine

Startups, smartphones, sci-fi.

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Foodie startup Chope feasts on $13m funding

chope acquires ticktok

Chope co-founder and CEO Arrif Ziaudeen. Photo credit: Chope.

Singapore-based restaurant discovery and booking startup Chope announced today it’s raised a fresh round of funding worth US$13 million.

The round is led by Asia-Pacific investment firm Square Peg Capital and joined by C31 Ventures and Moelis Australia. Existing investors NSI Ventures, Susquehanna International Group, DSG Consumer Partners, and SPH Ventures also came in for a top-up.

The entire amount is raised, Chope co-founder and CEO Arrif Ziaudeen tells Tech in Asia.

Why don’t diners have real-time info about restaurants the same way they do about their taxi?

“Square Peg specialize in investing in marketplaces and really did their homework on Chope,” Ziaudeen says of Chope’s new investors. “I joke that they may know our business better than us!”

Square Peg are also Uber investors and they participated in PropertyGuru’s US$129 million round in June 2015.

C31 Ventures, the venture capital arm of mall owner and manager CapitaLand, got in the deal thanks to an existing relationship between Chope and its parent company. This included things like restaurants in CapitaLand malls using Chope’s management systems and digital marketing efforts. It also involved a chatbot concierge service called Sparkle, which allows users to book Grab rides, reserve tables at restaurants, and browse retail products.

Ziaudeen says the continued partnership gives Chope access to more business in China, where CapitaLand operates several malls.

Chope will use the funding to hire more staff and improve its products and customer support. It will also focus on new services. “There’s dozens of problems to solve,” says Ziaudeen. Restaurant discovery, no-show bookings, dynamic prices based on workload, and payments are some examples he offers.

“Why don’t diners have real-time info about restaurants the same way they do about their taxi?” he muses. “It’s time for us to expand our business scope beyond purely reservations to the full dining experience. Of course we’ll also be doubling down on our core business, because there’s still so much growth in that market too.” Ziaudeen doesn’t offer more details in this regard.

Chope team photo

The Chope team. Photo credit: Chope.

The food market

Chope operates in eight cities in Singapore, Hong Kong, China, Thailand, and Indonesia. Out of its more than 2,500 restaurants, the company says that over 60 percent are outside its home city, with the fastest growth coming from Shanghai, Hong Kong, and Indonesia.

Last year, it expanded to Indonesia by acquiring local startup MakanLuar. At the time, it had around 1,300 restaurant clients. Although it will keep considering other acquisition opportunities as they come, Ziaudeen says that’s “not a core part of our strategy.”

The startup operates in a busy market with both local and international competitors. HungryGoWhere is a Singaporean staple that also operates in Malaysia. It recently partnered with food delivery company FoodPanda to expand its business into the takeout space. Germany-headquartered startup Quandoo has a presence in 12 countries, including Singapore and Hong Kong in Asia.

Other competitors include Burpple, Eatigo, and Offpeak, although the last two focus more on filling empty tables at restaurants during less busy times of the day.

According to SimilarWeb and AppAnnie, Chope enjoys better traction than most of its major competitors in Singapore, even though this data doesn’t always paint a full picture. Ziaudeen does not reveal any figures regarding users and revenue, saying only that Chope is “the transactional app of choice for over a million diners.”

Chope previously raised US$8 million in 2015.

Converted from Singapore dollars. US$1 = S$1.35.

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Wavemaker raises $66m in oversubscribed Southeast Asia tech fund

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Singapore skyline. Photo credit: fazon / 123RF.

US-Singaporean venture capital firm Wavemaker Partners has closed a US$66 million fund for Southeast Asia – its second focused on the region.

The new vehicle – which exceeded its initial US$50 million target – has been backed by Singapore sovereign fund Temasek Holdings, the World Bank’s International Finance Corporation, and veteran investor Tim Draper, among others. AddVentures, the corporate venture arm of Thai conglomerate Siam Cement Group, also announced an investment in Wavemaker this week.

Wavemaker has already made follow-on investments through the new fund. Those went into financial services platform Coins, which raised a US$10 million series A round earlier this year; online payments specialist Red Dot Payment, which closed US$5 million in series B funding last month; and fashion marketplace Zilingo, which recently got US$17 million for its series B. The firm said that three more series B rounds are expected to close before the end of the year.

Previous Wavemaker exits include mobile advertising startup Art of Click, which Philippines mobile tech company Xurpas purchased for US$45 million last year, and chat app Pie, which was acquired by Google.

Wavemaker is the third VC firm to have completed a significant fundraising in Singapore this week, as investors see fit to bet big money on Southeast Asia. Temasek affiliate Vertex Ventures closed its third Southeast Asia-focused fund at US$210 million with backing from Temasek, Thailand’s Kasikornbank, and Taiwan’s Cathay Life Insurance.

This was followed by Vickers Venture Partners’ announcement that it had closed a US$230 million fund which will be split between Southeast Asia, China, and India, as well as “deep tech” investments in North America and Europe.

Editing by Judith Balea

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About Jack

Sweltering in Singapore. Email: jack@techinasia.com Twitter: @jacknwellis

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Singapore co-working space JustCo hits $200m valuation after closing series B

JustCo co-working space, Singapore. Photo credit: DIA Brands.

JustCo, a Singapore-based provider of shared workspaces, has just closed a series B funding round in which publicly traded Thai property developer Sansiri was the sole participant. The investment amount was not disclosed, but the Singaporean company said it now values itself at US$200 million post-money.

JustCo currently operates four shared offices with a total floor space of 180,000 square feet in central Singapore. The series B funds will be used to open its first venues outside of the city-state, with spaces planned for Bangkok, Ho Chi Minh City, Jakarta, Kuala Lumpur, and Manila.

The plan is to have a total of 30 shared workspaces totaling 1 million square feet in operation across Asia-Pacific by next year.

The firm currently offers a range of membership options at its Singapore locations. At the lower end, a US$72 per month basic package comprises a hotdesk, business address, and attendance to events and networking sessions organized by JustCo. For US$591 a month, you get an entire dedicated studio space and 24/7 access of all of the company’s locations.

Significant investment money has poured into the shared workspace industry in recent months, and competition between players in Asia-Pacific has become increasingly fierce.

With a current valuation of US$1.5 billion, China’s UrWork has been busy expanding beyond its home soil, opening its first foreign location in Singapore back in July and strategically investing in Indonesia’s Rework last month.

This has brought UrWork into a direct rivalry with US-based WeWork, which received US$500 million in funding from SoftBank and Hony Capital in July to expand its Asian presence, and recently acquired Singapore-based competitor Spacemob. WeWork has since launched lawsuits against UrWork in the UK and the US, accusing the Chinese company of infringing its trademark rights.

While use of co-working spaces is typically associated with startups, research from Colliers International suggests that corporates are also increasingly making use of such venues – indicating the opportunity that exists for operators like UrWork and WeWork.

Converted from Singapore dollar. Rate: US$1 = SG$1.35.

Editing by Michael Tegos

(And yes, we’re serious about ethics and transparency. More information here.)

About Jack

Sweltering in Singapore. Email: jack@techinasia.com Twitter: @jacknwellis

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Thai property portal Hipflat gets investment from Japanese price comparison firm

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Bangkok, Thailand. Photo credit: kobiephotography / 123RF.

Thai real estate marketplace Hipflat has secured a strategic investment from Aucfan, an online auction price analytics and comparison platform from Japan. The funding amount was not disclosed.

The Thai company said it will use the funds to introduce new products aimed at enhancing transparency in emerging property markets.

Hipflat’s portal aggregates real estate listings from multiple sources. The startup said that it currently hosts 260,000 properties, and receives more than 30,000 inquiries from prospective buyers and renters each month. While real estate agents can list properties on Hipflat for free, the startup charges them to receive enquiries from would-be buyers and renters.

Southeast Asia’s online property portal space is a crowded one, with PropertyGuru, 99.co, and iProperty just a few of the bigger names angling for market share. Hipflat says that its main point of differentiation is a proprietary data mining solution – driven by natural language processing and machine learning technologies – which enables it to extract and process real estate pricing data from hundreds of unstructured sources.

This could prove of critical value in emerging markets where official records of property transactions may often be incomplete, missing, or otherwise unavailable to the public. It would appear that this is what piqued Aucfan’s interest.

The potential synergy arises because the technologies both companies apply for collecting, cleaning, analyzing and presenting pricing data are similar, Hipflat founder and CEO Denis Nemtsev tells Tech in Asia. “One of the things I am particularly interested is Aucfan’s experience in packaging the data and offering it as a paid product,” he says. “We’re planning to introduce advanced data analysis as a paid subscription in the future. I see a lot of interest to this kind of solution, which is especially valuable in such a fragmented and opaque market like Thailand.”

Nemtsev says that Hipflat has raised a total of roughly US$1.3 million since launching in 2013, including US$335,000 in angel investment in September that year. Aucfan is not the startup’s first Japanese backer; VC firms OPT SEA and REAPRA – which has stakes in several startup property portals – have previously invested. Other prominent Hipflat investors include 500 Durians and Xplorer Capital.

About Jack

Sweltering in Singapore. Email: jack@techinasia.com Twitter: @jacknwellis

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Q&A: Veteran VC Ron Cao on why he thinks China’s market is ‘just getting started’

Ron Cao, founder and managing director of Sky9 Capital. Previously at Lightspeed Venture Partners. Photo credit: Sky9 Capital.

There are few investors in China as experienced as Ron Cao. Founder and managing director of Sky9 Capital, Cao has headed three venture capital firms over nearly two decades of investing in tech companies in the US and China.

Specifically, Cao seems to have a knack for picking up on trends at the right time. The Wuxi native has led a number of investments in leading technology companies in China – from Tujia, dubbed the Airbnb of China, to food delivery and daily deals unicorn Dianping (now Meituan-Dianping). He’s vetted peer-to-peer lending companies, cloud service startups, and even an ecommerce platform for moms to sell to other moms.

I feel like China is just getting started.

Now, over a year into founding his VC firm Sky9 Capital, Cao is as bullish on China as ever.

“I feel like China is just getting started,” he says. Urbanization, high-end consumerism, increasing savviness around financial products – all of it is happening in real time, he emphasizes.

Like many tech elites in China, Cao has extensive overseas experience. He earned a Bachelor’s and Master’s degree in electrical engineering and computer science at MIT before working at Goldman Sachs and Intel. His investment experience would pull him back towards China, however, with cross-border investors like Lightspeed Venture Partners – he was the founding partner for the firm’s China arm in 2006 – straddling tech ecosystems in both Silicon Valley and China.

At Sky9 Capital, Cao is focusing exclusively on early-stage Chinese startups. When I asked him why he started Sky9, he said he felt the opportunity in China was so great, “I just had to start my own firm.”

We caught up with Cao in Shanghai to learn more about trends in China’s investment landscape, how early-stage investors evaluate startups, and other lessons he’s learned over 18 years of investing. Below is an edited transcript of our conversation.

As someone who has investment experience in both the US and China, have you noticed any differences between early-stage VCs in the two countries?

I don’t think so. I think the top funds around the world have the same formulation. It’s to be extremely people-focused and talent-focused. How you judge talent might be different, but overall early-stage investing is really about investing in talent.

As an investor, how do you get to know founders when you’re vetting them?

After you have been doing this for awhile, you can have a pretty good feel for a founder’s strengths and weaknesses – and with a high degree after two or three meetings.

Generally, we look for two things. One is their capability – the ability to create, manage, lead, and have a vision and strategy.

Two is sort of an all-encompassing phrase: authenticity. It’s about seeing through a person, seeing what’s really inside, and really trying to understand what’s driving them. The core question is: are they true to what they are doing?

He truly believes that he was born to make cloud as accessible as water.

Take Richard Huang, the CEO of [enterprise cloud services startup] QingCloud. For him, it’s a sense of mission. He truly believes in his deepest of hearts that he was born to make cloud as accessible as water.

When you see that moment – and those things come in flashes – you have to take it as truth and a lot of times that can sway your decision, especially early decisions with little data.

I think that’s something you get good at after years of just seeing thousands of people. Authenticity. Either they love being entrepreneurs or they love doing what they’re doing.

What about foreign entrepreneurs interested in entering China? What advice would you give them?

It’s similar to a Chinese entrepreneur going to the US to start a company. I don’t know if there’s any advice one can give to help them succeed. It’s very tough. For a Chinese person that’s never lived or studied in the US – or entered their society in some way – the chances of the startup succeeding are almost zero. The opposite is true too.

If you do have a competitive advantage, it’s most likely some sort of technology. You own a kind of technology and you want to enter China to find a team and turn this technology into a business model or business. I think that’s possible.

Why do you think locals have such an advantage?

A lot of teams in China rely on their business model, their operations, and execution to succeed. As a foreigner, you probably do not understand these things as well as local entrepreneurs do.

Whoever wants to come needs to know what their competitive advantage is. And information is no longer a competitive advantage, because data is so accessible now. Whatever [models or businesses are] successful overseas, Chinese people can do it here.

China’s tech industry has different boom-and-bust cycles, where new businesses develop in a gray area until the government cracks down with new rules. As an investor, how do you help your portfolio companies navigate that?

In our industry, there are a lot of cases that don’t have clear policies, especially for innovative companies at the early-stage. These are typically disruptive verticals where startups come up with new business models or a new way to make things more efficient. In these situations, the policies often will follow the business.

Information is no longer a competitive advantage.

In the case of Tujia, for instance, there were a lot of details that weren’t clear from the policy perspective at the beginning. Can individuals rent to individuals? Does one need to show ID? Who pays taxes? If there are issues with the rental, who is responsible?

All these details were unclear. So Tujia has to cooperate with different regional governments wherever it goes to create certain rules and best practices. We also want to resolve these issues – it’s just that no one had done it before.

See: Why the Airbnb of China is Tujia and not Airbnb

For [consumer lending platform] PPDai and many of our portfolio companies, they are constantly in touch with and working with various government entities, partly to be transparent in what we are doing and partly to help governments to think about how to work with these new technology companies.

For startups in China, government relations is important. At Sky9, our team works hard to introduce our founders to the right people, and help them develop relationships so that they are building their businesses in a sustainable and responsible way. The relationships and learnings are something we’ve accumulated over time.

You mentioned that a lot of Chinese investors are going into Southeast Asia now. What do you see as a future trend of China’s investment landscape?

I think another trend will be about the US market – Chinese funds investing in the US.

Why? Because the US market and the Chinese market are the two biggest markets, and there are a lot of similarities in terms of business models and consumer behavior.

In many situations, China VCs and entrepreneurs are also perhaps more sophisticated than their US counterparts as the China market has moved ahead in some consumer business models.

In the future, China will come up with more of these trends first. And then the US will follow.

We see more and more ideas being generated in China first and taken to the US market second. Live streaming is a perfect example. China’s live streaming industry is the largest in the world. In the future, China will come up with more and more of these trends first. And then the US will follow, especially on the consumer side.

There will be a reverse flow of cross-border investment. Chinese people, Chinese money, Chinese ideas – Chinese outbound. We’re not talking about tourism. We’re talking about China outbound of money and talent and innovation.

What are some lessons that you’ve learned in your career as an investor?

Starting a company and making it successful is the hardest thing there is to do. If that’s the hardest thing to do, why not do something big?

One thing we learned over the years is that it is just as hard to do something small as it is to do something big. There are no sure bets – no low risk, stable return bets. They’re all high risk. So go for the high return ventures. Believe it or not, if you go for the high return ventures, your risk is actually lower.

Why do you say that?

Because the biggest ideas always come from the strongest people. There’s a positive natural selection for talent. The CEOs are usually the big, crazy visionaries.

Big ideas can also attract more capital and also higher quality leaders. So there’s a good chance that with a big idea, you can get into this positive cycle of talent, capital, and talent, which ultimately results in a much higher chance for success and higher impact outcome.

How do you differentiate the big ideas from the crazy ones?

Sometimes it’s hard. That’s where the risk is.

I also think a lot of the risk that we measure is psychological. But in reality, a lot of things are not that risky. If no one is doing a deal and you’re doing it, you feel risky. Doesn’t mean it’s any riskier.

That’s the other thing we learned over the years, which is to have a different perspective on risk. The difficult thing about investing is that you almost always have to be a contrarian to be able to invest in something big. The hard part is to be a contrarian and also be right.

Sometimes investors confuse perceived risk and actual risk. To be able to understand and assess that difference is one of the key skillsets early-stage investors have to learn over time.

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Uncover these latest tech trends at Tech in Asia Tokyo 2017

Tech in Asia Tokyo 2017 hosts one of the greatest meeting of the minds in the startup scene—wisdom is passed, ideas are heard, shoulders are rubbed. The two-day conference welcomes anyone interested in the startup scene – yes, even if you’re not a startup guy.

Hundreds of businessmen from established corporations attend Tech in Asia’s conferences to survey the latest in the tech and business scene, so you don’t have to feel like a fish out of water. If you’re only looking to learn about the latest market trends and insights, check out the roadmap below on how you can maximize your TIA Tokyo experience on September 27 & 28.

Note: Some of the sessions mentioned below will be conducted in Japanese (language denoted in brackets beside each session title). Translation devices will be provided.

Day 1

Blockchain, Banking, and the Fintech Boom (JP)

Time: 13:30 – 14:00, Main Stage

Why: Cryptocurrency is the talk of the town now – the all-digital currency has been a driving force of fintech ever since the first Bitcoin was mined. At this talk, Yuzo Kano, the CEO of Japan’s largest Bitcoin marketplace bitFlyer, discusses how and why he traded a career at Goldman Sachs for a fledgling cryptocurrency. Joined by financial analyst and consultant Tatsuto Fujii from MUFG, they’ll take an in-depth look on how businesses can apply open digital innovation to their financial future. Interviewing the duo is Mio Takaoka, Partner, Arbor Ventures; Advisor, Monex Group, Inc. She is named one of the top 100 fintech leaders in Asia and also a World Economic Forum Young Global Leader.

VC in Japan – Is This the Golden Age? (JP)

Time: 14:00 – 14:30, Main Stage

Why: VC investment is at historical highs and healthy exits are creating positive outlooks for Japan’s startup ecosystem. Within the past two years, venture capital increased by at least 21 percent for startups, with 80 percent of the deals coming from top companies. Venture capital is rapidly becoming an inviting endeavor for investors especially in the Japanese economy. Renowned investing firms Globis Capital, 500 Startups Japan, YJ Capital, and Rakuten will answer fundamental investing questions: is now the best time to invest in Japanese startups? How can we apply Japan’s success in venture capitalism to other countries around the world?

VC in Southeast Asia – Why the World is Watching (EN)

Time: 14:30 – 15:00, Main Stage

Why: Silicon Valley might have birthed the world’s tech giants, but Southeast Asia is right on their heels with multitudes of smaller startups taking over the digital world – with ASEAN startups Grab, GoJek, Tokopedia, and Sea as proof. Throughout their development, they have not just revolutionized the region’s digital economy, but also inspired thousands of entrepreneurs and billions of VC funding. At this session, venture capitalists Fresco Capital, STV Fund, and Entrepreneur First weigh in on how the rapid growth of the startup ecosystem will influence the world’s economy and its future.

Day 2

The Artificial Intelligence Arms Race (EN)

Time: 10:30 – 11:00, Main Stage

Why: AI has been a moving force in both the startup and business scenes. Uber, for example, recently established Uber AI Labs, an initiative to develop the latest in machine learning. AI-centric investing firms (like Zeroth.ai and Fenox Venture Capital) have also started supporting the startup ecosystem with the rising technology. Join them as they ponder on the future of AI and how it affects your business and the larger startup ecosystem.

Starting and Scaling Globally in the Internet-driven New Economy (EN)

Time: 13:30 – 14:00, Main Stage

Why: Japan has been a technology powerhouse for decades, but few brands have captured the world stage. A shift is imminent though, with online retail and mobile transforming each industry, presenting more opportunities for businesses take the next step globally and online. Natalie Shiori Fleming, co-founder of the Fintech Association of Japan, interviews a panel of the powerful Internet-driven brands – Stripe, Shopify, and Tokyo Otaku Mode – to discuss opportunities and challenges in this new economy.

Interested to find out more?

Next week on September 27 & 28, you can learn from industry experts, make connections, and stay updated on the tech scene. Whether you’re just dipping your foot into the water or a veteran member of the startup ecosystem, Tech in Asia Tokyo 2017 has something for you. Check out the agenda here!

Get your tickets to Japan’s real tech conference before you miss out on it and have to wait for another year.

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This Malaysian startup helps small businesses get paid on time

If you’re running a small enterprise – say you’re in the business of supplying large restaurants and hotels with fresh fish – it’s easy to get into a situation where you’re short on cash, even though you have paying clients.

That’s because clients sometimes pay late, but you must meet deadlines, like paying office rent and salaries. Or you need more cash than normal to make an investment. The traditional, but ultimately costly, way would be to take a loan to fill the gap.

Ang Xing Xian’s father is a fish supplier in Malaysia, and observing this business made Ang understand common cash flow problems. He also learned that there are ways to improve access to cash with technology while he was studying in the UK.

Ang ended up worked at an invoice financing company there. That’s a type of platform where small and medium-sized enterprises (SMEs) can sell their yet-to-be-paid invoices to investors or financial institutions who want to purchase future cash flows.

Back in Malaysia, Ang went on to “boast about this concept,” according to Dion Tan and Edwin Tan. Ang was impressed by how effective it was.

The two Tans soon became Ang’s co-founders in a startup called CapitalBay. They wanted to find out how to apply this idea in their home country.

Worsening gap

As former management consultants, their first instinct was to dig up data to understand the business opportunities.

“Over the last three years, we conducted an analysis to compare the revenue and trade payables of the relevant top corporations listed on Bursa Malaysia,” Ang says. That’s Kuala Lumpur’s stock exchange.

They found that the situation was actually worsening for SMEs. Suppliers were having to wait longer and longer before getting paid. And it was the largest of the Malaysian companies who were extending their payment terms more than the other companies.

“This is not unique to Malaysia,” Ang explains. “Many countries have seen similar issues and their governments stepped in to implement supply chain finance as a solution.”

Supply chain finance is similar to invoice financing, but takes it one step further.

A typical transaction cycle could go like this: A supplier requests for early payment on their invoice through the platform. Then, a funder approves and pays the amount to the supplier. The buyer then pays their invoices to the funder at the end of the payment terms.

But the platform not only allows SMEs to request fast payment, it also incentivizes companies that owe money to suppliers to pay early, at times when they are cash-rich. That’s made possible by the third party financial institutions and banks who sit in the middle. It’s no longer a case of one supplier waiting for the bills to be paid by one particular client. Instead, there’s a marketplace that can fluidly match the need for cash with an oversupply of it across its different members.

Government supply chain financing schemes have been implemented in the UK, the US, the Netherlands, and India, Ang points out. But in Malaysia the concept is still nascent.

Early adopters

Ang admits it wasn’t easy to get the first customers to try out CapitalBay, but eventually, they were successful. “Some forward-thinking large corporations spotted this as the opportunity to gain a competitive edge,” he says.

Now, a handful of the top Bursa Malaysia-listed companies and their suppliers have completed several transaction cycles through the platform.

CapitalBay is open to working with all banks and financial institutions and found that it works best for smaller banks that don’t offer similar products. Development banks are another good partner, Ang says.

For each successful financing transaction, CapitalBay charges a small fee based on the supplier’s invoice amount. Currently, it does not charge any fees to buyers or funders for using its platform.

The startup today locked in its first round of venture capital, a US$477,000 seed round led by KK Fund. This will be used to accelerate product development and customer acquisition, Ang says. So far, CapitalBay is run by a 10-person team, with a few supporting members in administrative roles.

Ang believes CapitalBay is the only bank-independent supply chain financing provider in Malaysia for now. Indirectly, it competes with banks who offer traditional financing solutions, he says. But all banks could use the platform to avoid the costs of developing their own supply chain financing products.

Converted from Malaysian ringgit. Rate: US$1 = RM 4.19.

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E-bike startup Gogoro raises $300m to expand its smart energy network

Gogoro scooter battery swap

Battery swapping at a Gogoro GoStation. Photo credit: Gogoro.

Taiwanese company Gogoro is known for its “smart scooter,” an electric bike that stands out from the competition with its stylish look and geeky heart.

But the firm, founded in 2011 by HTC veterans Horace Luke and Matt Taylor, is thinking bigger than that. The team’s vision involves energy solutions that could end up powering a lot more than just their scooter. It hinted at this from the start: When the company launched, its product was only described as “a device around energy management.”

Gogoro created a network of charging stations called GoStations to support the bike’s energy needs. There, you can swap your vehicle’s spent batteries with fresh ones. The accompanying app shows you the closest battery station and allows you to book fresh batteries in advance. The service, which includes support and road assistance, is offered through a subscription fee.

At the moment, it has over 400 such stations in Taiwan, with more than 34,000 vehicles sold in the country. But in the future, the charging station model could be used to power other types of vehicles and even serve other energy-related purposes.

“Vehicle makers see how many stations we have and how we can swap batteries anywhere,” Luke, Gogoro’s CEO, tells Tech in Asia. “Other potential industries include logistics and warehousing, or industrial applications.”

Fully charged

Gogoro announced today it’s raised US$300 million for its series C round. Investors include London-headquartered Generation Investment Management, which is chaired by former US vice president Al Gore and invests long-term in sustainability, clean energy, and mobility projects.

Gogoro wants to boost its station network so it can better predict demand spikes.

Also joining in are Singaporean state fund Temasek, Japan’s Sumitomo Corporation, and French electric utility company Engie. Existing investors also participated, including founding investor Dr. Samuel Yin, Panasonic, and more.

Gogoro gains from its new investors’ local and regional connections which include strategic benefits for expansion. While it’s not making any announcements in terms of new markets, it’s definitely looking at several regions with interest, including scooter-happy Southeast Asia.

The funding will also go into technology development and hiring. Gogoro wants to boost its station network so it can better predict demand spikes and know when it needs to get more batteries charged. This way, it doesn’t waste energy charging batteries that aren’t going to be used.

“It’s not as simple as putting a battery [in the station] and charging it,” Luke says. The company plans to work on machine learning and big data applications to let the network make such decisions on its own.

Gogoro co-founder and CEO, Horace Luke

Gogoro co-founder and CEO, Horace Luke. Photo credit: Gogoro.

Betting on electricity

Trying to expand in more markets, Gogoro has remained flexible. While it’s managed to get good traction and coverage with its GoStations in Taiwan, it’s not easy to replicate that model elsewhere.

A partnership with Bosch that kicked off last year allowed it to bring its scooters to Berlin and, more recently, to Paris, but based on a bike-sharing model. Using an app called Coup, people can pick up the scooter closest to them and ride it to their destination.

In the future, Gogoro’s charging station model could serve other energy-related purposes.

The company doesn’t use docking or charging stations in this scenario. Instead, it sends its team out to change the batteries of scooters that are running low, while at the same time hiding those scooters from the app.

In late 2015, Gogoro decided to bring its scooters and network of charging stations to Amsterdam. Immediately after the announcement, however, it was approached by Bosch with the bike-sharing proposal, so the Amsterdam plans were delayed.

Gogoro has 1,600 bikes in Berlin and Paris at the moment. Luke says the sharing model could be the way into other territories like Southeast Asia, but the company is still exploring options.

Coming from HTC, where he served as chief innovation officer, Luke saw first-hand one of the challenges of building hardware products – customer stickiness. Once someone buys your phone, for example, that’s it from that customer for maybe a couple of years or more.

See: Gogoro is a geeky electric scooter with the soul of a motorbike

The way Gogoro works in Taiwan – selling the bike with a subscription for the batteries on top – ensures an ecosystem of customers who come back again and again. With a scooter’s average age in the seven-to-10-year range, the subscription revenue gives the company a lot of room for growth and evolution. Luke declines to talk about Gogoro’s revenue in more detail.

He also believes the timing is right, with several countries including India and China pledging to reduce fossil-based fuel consumption. The opportunity is not lost on competitors either, with manufacturers like BMW and Vespa building their own electric bikes – although without getting into swappable battery tech like Gogoro.

Other companies working on batteries for vehicles, except Tesla of course, include Austrian startup Kreisel Electric.

The new investment brings Gogoro’s total funding to over US$480 million. The company had previously raised US$130 million from investors including Panasonic, which works with Gogoro on the scooter’s batteries, and the National Development Fund of Taiwan.

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