singapore venture series – monk’s hill ventures
In a series of blogs we’re speaking to Singapore’s leading VC funds to find out about their thoughts on the state of the Southeast Asian startup and venture ecosystem and what they currently are looking for in companies.
First in the blog series is Kuo-Yi Lim from Monk’s Hill Ventures. Welcome to Kuo-Yi!
how is the Southeast Asian tech startup and VC ecosystem looking in 2017?
As active as before in terms of deal flow, with several companies continuing to scale and grow across the region. Quality of deal flow is getting deeper and more active across the board in Southeast Asia – though in some countries more than others.
the funding boom appears to have slowed. What’s your view?
Certainly feels that way, based on the media reporting. Not surprising given that most funds were raised 2-3 years ago so activities may slow down until new funds are raised. A lot of VCs are probably currently focused on helping their portfolio companies grow and raise their next rounds. For many new and first-time investors, they are likely also still adjusting and getting more careful with their investment pace.
are you looking for global tech disruptors, or rather potential winners in Southeast Asia?
We always look to invest in companies that can potentially be big and get to significant valuations. This could be global players or regional players, as long as the conviction is high that they can get there. Ultimately it is a function of whether the problem is big enough and if the company’s approach is sufficiently differentiated.
what are the strengths / weakness of the startups in the region?
Strength: Generally having a reasonably large population to address across several key cities and markets. For consumer-focused plays, it is one of the fastest growing populations-in-aggregate in the world. The strengths of the successful startups have been their ability to transcend borders and regulatory regimes quickly and effectively.
Weakness: Relatively shallow in terms of quality executives, IT and other talent necessary to scale startups fast. This will need to continue to grow.
have we moved on to new technology – A.I., machine learning, IoT, AR/VR and automation now? What kind of companies are catching your eye?
2016 saw a big spike in the “fintech” category, especially in P2P lending, credit scoring, and payments. There was a general shift away from investing in pure e-commerce or on-demand, as investors start to realise the economics are hard to scale.
In the past year we have seen more A.I., machine learning and automation companies, often trying to find business use cases from crunching big data sets. We recently invested into two – Finaxar which provides working capital to SMEs based on a proprietary A.I. credit model, and Saleswhale which is a SaaS tool that automates sales operations.
I wouldn’t say any specific new technologies catch our eye. I think the type of businesses that succeed in Southeast Asia are mostly driven by business model innovation and nuanced application of leading edge technology – tailored for local audiences (in some cases, 6 very different countries).
how does the VC industry in Singapore differ from other significant startup ecosystems? Is there competition amongst funds?
It is still a relatively nascent industry with many first-time managers – though most of the funds have known each other for a while. Also, there aren’t that many institutional early stage funds so while there is competition, co-operation and co-investing happens quite regularly as well.
what’s missing (or weak) in terms of infrastructure in the tech startup ecosystem?
As mentioned above, it is hard to fill the executive level below founders. There is a lack of people who have scaled startups from 10 to 100 people and beyond, especially across multiple countries.
top tip for founders pitching to you?
Get to know us early and before you would like to pitch to us for investment. Reach out to our investment members (we’ve got people based in Singapore, Jakarta, Ho Chi Minh City, Bangkok and Hong Kong), and tell us about what you’re working on so we can follow your plans and progress. And even help you along the way.
prediction for the Southeast Asia ecosystem for the next 5 years. Singapore to become a leading global tech hub?
Yes, it is somewhat there already. There are multiple global tech hubs depending on region and Singapore takes its place as the leading tech hub for Southeast Asia. It is the entry point for anyone thinking about technology in this part of the world.
Singapore already has a few homegrown tech companies of significant size, e.g. Garena (now SEA), Grab, Lazada etc., and most of the world’s biggest tech companies have their APAC headquarters in Singapore (Google, Facebook etc.).