ask a VC: Insignia Ventures



We’re speaking to Singapore’s leading VC funds to find out about their thoughts on the current state of the Southeast Asian startup and venture ecosystem, and what they currently are looking for in companies.

This week we’re speaking to Yinglan Tan from Insignia Ventures.

how is the Southeast Asian startup and VC ecosystem looking in 2019?

The local conditions are ripe for the next wave of unicorns. Economic growth is growing the middle class, enabling governments to spend more on infrastructure developments and innovation projects, and incentivizing more founders and funds to set up shop in the region.

Regional unicorns are securing rounds from the likes of Softbank, Tencent, and Alibaba. This is spurring acquisition sprees, corporates experimenting with venture capital arms, and the superapp race.

Insignia explains how the innovation landscape has been shaped by the region’s first wave of unicorns in its recent feature, The World Is Flat, But Southeast Asia is a Bowl.

the number of VCs seems to grow each year. do you see more large US funds setting up shop in Singapore?

It’s a snowball effect. Regional successes have set the tone for other foreign VC players in more mature markets to pay more serious attention to startups here. Warburg Pincus’s recent announcement on the $4.25B fund for China and Southeast Asia is one example.

Although Singapore’s track record will continue to play a key role in channelling funds into the region, other countries like Vietnam are becoming attractive for funds to set up shop.

what has been the impact on the ecosystem of the tech unicorns?

Tech unicorns in the region like Grab are leveraging their size to acquire and fund startups with products that they can add to their line-up of value offerings. This has created an innovation ‘gravity well’, with opportunistic startups emerging and positioning themselves for a Grab or GoKek exit.

people talk about Indonesia due to its market size, but what other countries in Southeast Asia are producing amazing startups?

Vietnam has established itself as a destination for tech investment and as a source of engineering and technical talent.

Malaysia’s government has also been very active in enabling entrepreneurs to set up in the country with plenty of active startups and deals, although these deals are smaller compared to other countries.

Successful founders in these countries are building in markets or verticals that are core to the local economy. Logivan, for example, tackled the highly fragmented logistics industry in Vietnam.

what kind of startups have been catching your eye in the last 12 months?

We’ve noticed that successful startups in the region have been leveraging ‘RICE’:

  • Reinventions of successful models outside the region, adapted to local nuances
  • Integration of services across value chain for more end-to-end solutions
  • Cross-border activity, as more enterprises are looking for regional partners for specific functions like logistics
  • Elegance as an approach to product-market fit in offline and traditional markets

Startups who excel in one or more of these areas are able to set up a competitive ‘moat’ against foreign players. For example, Janio is capitalizing on this by setting up offices in [countries] to cater to cross-border needs of international clients.

(Read more about RICE on Insignia’s blog)

any predictions for the Southeast Asia ecosystem for the next 2 years

  • Funding at the frontier: Specialised investment will open up for emerging verticals in the region like healthtech, entertainment, logistics, and smart cities
  • Away from the centre: 2nd to 4th tier cities will become the focus of more startups as the regional unicorns and bigger players take up online segments and more developed localities
  • Data sources and use cases: New sources and use cases for data will emerge as platforms engage more consumers, enabling verticals like RPA (robotics process automation), healthtech, and insurtech to tackle industry inefficiencies.

favourite Southeast Asian startup to watch? (portfolio company not allowed :-P)

mClinica has been around since 2012 and they’ve steadily grown across the region, from the Philippines to Thailand, Malaysia, Vietnam, and Cambodia. Their on-the-ground, hands-on approach to the pharmacy markets in the region has turned out to be effective, even as they engaged government institutions.

(Sidenote: Kindrik Partners advised mClinica on their seed and series A financing rounds. Read our case study.)

tips for founders pitching to you?

Unstoppable founders know their three whys.

  • Why are you doing what you are doing? This tackles both your motivation and vision, which should be ingrained in an unstoppable founder.
  • Why does your solution work? This shows your understanding of product-market fit, and how you will approach growth after the funding round.
  • Why are you not yet where you want to be? Necessary to get from 0 to 1 is knowing what it will take to get from 0 to 1 — specifically, what hurdles are there to overcome. It’s easy for a founder to trip up because of ignorance, but an unstoppable founder knows the rocks that lie on the road ahead.

Are you looking to raise funds for your startup in Southeast Asia? Our team of lawyers are market experts in tech and VC. We’ve gained this experience the only way that works – by doing deals (hundreds of them!) and by immersing ourselves in the tech ecosystem.

If you need help with your term sheet or have questions about raising your round, book a time to speak to one of our lawyers.

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