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everything you need to do your next capital raise
We know that raising capital for your technology company is a tough gig. But even once you have investors that you like on the hook, there is still a lot of hard work to come before the money hits your bank account.
Explore our venture capital resources to understand the mechanics of raising a funding round in southeast Asia.
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Whether you're strategically acquiring targets and technology, or considering selling your company, we've got resources to get you up to speed
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Singapore based property startup 99.co likes a challenge. Dominated by well funded regional players, there would be easier sectors to disrupt than online property. However 99.co is fighting hard with a unique proposition. The company has raised two rounds of funding since incorporation and is backed by high-profile investors including Sequoia Capital and Facebook co-founder, Eduardo Saverin.
Founder and CEO, Darius Cheung, talked to us about the company’s progress, its most recent capital raising transaction in 2015, and how they have found working with Kindrik Partners.
the 99.co story
Darius is one of Singapore’s celebrated young tech entrepreneurs having sold mobile security startup tenCube to McAfee in 2010. This was a decent sized exit for a Singapore tech startup at the time. With the current hot funding environment and massive interest in mobile disruptive technologies in Southeast Asia, Darius is now looking to build a company for an even larger exit.
Not surprisingly, given the city state’s rapid growth, Singaporeans have always had a real interest in property. So 99.co is playing in a compelling space. Singapore has over 30,000 property agents many of which use online real estate platforms such as 99.co. The company recently set up an Indonesian website and plan to get going in Malaysia and Thailand further down the line.
99.co differentiates itself from larger competitors by promising a more intuitive search experience, where the rankings for listings are influenced by the quality of the published content. The site, for example, could favour listings with more photos or with value add information such as commute times or local amenities. This contrasts with the traditional model where the level of fees paid typically pushes classifieds higher. Darius believes that users will increasingly seek this kind of consumer friendly experience.
99.co charges agents a basic subscription fee to list their properties. The company has, however, recently launched a new product called 99PRO – a subscription model where agents can unlock additional features like interactive map searches and new data.
challenges
Darius agrees that the competition is tough to crack in Singapore and the region, given the dominant players. Content is king – the number of listings is fundamental to the success of the business. Bridging the gap, and chasing the platforms that have the majority market share, requires innovative offerings. Plus it’s a crowded market. Aside from other startups trying to challenge those established players, print media still retains a surprisingly sizeable chunk of the market.
The nature of 99.co’s subscription model means the company will need to add alternative revenue streams over time.
Finally, talent acquisition in Singapore and building the 99.co team has been difficult given the number of other startups also hiring sought-after developers.
working with kindrik partners
Lee Bagshaw was introduced to Darius by one of 99.co’s investors. Lee has helped the company through each of its financing transactions. Most recently in 2015, Lee, supported by Chris Wilson, advised on the company’s series B transaction led by Sequoia and Saverin.
Darius’ previous view on lawyers had been that they were expensive and it was not always easy to see their value. He describes working with Lee as a breath of fresh air. Whether by email, on the phone, by WhatsApp or even in the passenger seat of Darius’ car, Lee’s advice was always simple to understand, but with real value add.
Darius was impressed with Kindrik Partners’s knowledge of VC financing deals in Southeast Asia. He says Lee and the team were also very fast, generally turning documents around in under 24 hours. Darius believes that, by working for a tech focussed firm, the Kindrik Partners lawyers have a greater connection with startup founders, combined with unique experience. Throughout the negotiations, Darius found that even if the company could not secure the best outcome on all points, Lee and Chris ensured that he understood clearly the implications, so he could quickly move on.
summing up
99.co are operating in an exciting space in Southeast Asia. Real estate tech companies globally have grown rapidly, achieving some astonishing valuations.
Sequoia’s and Saverin’s backing shows that notable investors are looking carefully at this space in Southeast Asia, particularly for platforms that are distinguishable from the others.
Kindrik Partners will be closely watching 99.co continue its growth to become a significant online property player in Southeast Asia.
Explore 99.co.
[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]
Sprout Solutions is a Philippines based SaaS payroll, HR and recruitment company. Sprout’s products are tailored to meet the requirements of each jurisdiction in which their enterprise clients operate.
We recently spoke to co-founder and CEO Patrick Gentry about working with Kindrik Partners on Sprout’s series seed funding round.
the sprout solutions story
Sprout was founded by the husband and wife team of Patrick and Alexandria Gentry. In 2016 Acceleprise (a US based SaaS accelerator) asked Sprout to be the first Philippines based company to join its program. Patrick says:
We were interviewed by other accelerators, but chose Acceleprise because it specialised in assisting companies that were looking to scale their sales to enterprise customers.
The connections that Patrick and Alexandria made at Acceleprise helped them to raise an angel round from overseas investors. Those funds were used to expand the company’s software engineering and sales teams. The company grew rapidly, and by the middle of 2017 it had over 75 employees and 150 enterprise clients in the Philippines.
After proving the business model locally, the company wanted to expand into other emerging markets in Southeast Asia. Patrick and Alexandria began looking for institutional investors to fund the tailoring of the company’s products for each new market, and to grow the international sales and services teams.
the deal
Patrick was well connected in the startup ecosystem after several years of bootstrapping both Sprout and a previous company. A fellow entrepreneur provided Patrick with a warm introduction to several VCs with a focus on B2B SaaS products. Sprout soon began negotiating a series seed investment round led by VCs Kickstart Ventures (Philippines), Wavemaker Partners (Singapore), and BEENEXT (Singapore).
A condition of the round was that Sprout needed to redomicile in Singapore. This type of restructure (or flip) is quite common, since many Southeast Asia VCs will only invest in a Singapore incorporated entity. There are a number of reasons for this, including taxation, minimal restrictions on foreign ownership, the ability to easily repatriate investment returns from Singapore, and legal certainty (including IP protection).
For Sprout, a new Singapore head company was incorporated and the existing company became a Philippines operating subsidiary. The terms of the restructure were incorporated into the long form investment documents and the flip was completed at the same time as the rest of the investment round. Patrick recalled that:
Some aspects of the restructure were unique. Kindrik Partners were great in this scenario as they did a deep dive to understand the specific requirements and complete the process by working closely with local counsel.
The company closed its US$1.6m series seed round in late 2017. Patrick told us that:
Completing the round was a huge deal. I knew we could accelerate this business with capital, and felt like the timing was perfect. It’s exciting to gain the freedom to stretch a bit and continue our rapid expansion in new areas of the business and market.
working with us
Kickstart recommended Kindrik Partners to Patrick as they had worked with us on the other side of previous deals.
Patrick says:
Kindrik Partners were invaluable in moving the deal forward as efficiently as possible by keeping the negotiations centred on the critical commercial points, and by providing insight as to what was common market practice in these areas. I can’t emphasize enough how important it is to have a strong partner that not only knows the process inside and out, but will also go to war for you and represent you as if they are negotiating for their own company.
Kindrik Partners even assisted with the calculation of the cap table, as the deal involved some bespoke debt conversion calculations relating to a previous round.
As entrepreneurs we pour our heart and soul (and blood and sweat) into our companies, and to have someone fighting for us as if it were their own – that’s just awesome!
Sprout is rapidly becoming a regional SaaS star, and we would like to thank Patrick for taking time out of his frantic schedule to speak with us.
[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]
Auckland based startup 90 Seconds is the world’s leading cloud video production platform, allowing brands to purchase, plan, shoot, edit and review video anywhere in the world, online and on mobile.
Tim Norton, Founder and CEO, and Richard Chew, CFO, recently talked to us about 90 Second’s Series A capital raise and how they have found working with Kindrik Partners.
the 90 seconds story
Tim has been building tech companies for the last 14 years from SaaS to video platforms. It was after founding a media company that profiled the startup community through print and video, that Tim realised how hard it was to create videos. He says that the process was varied, it was difficult to shoot between countries and despite the fact that online video content was growing in popularity, professional videos were not easy to make.
This led to Tim’s idea to connect people around the world in order to create professional videos. 90 Seconds was launched in 2010, with Tim and one other developer creating online video production tools, off the back of seed and angel investment.
The concept and tools grew, and Tim managed to solve his previous issues through the creation of a cloud-based platform, which lets users handle almost every part of the video production process in one place. Brands can purchase, plan, shoot, edit and review video from the platform anywhere in the world, online and on mobile.
It was always part of Tim’s vision to build a truly global company, so two years in Tim began to establish a presence in Japan, Singapore, Australia, on top of NZ and the UK. The company became profitable in 2014 and Richard also joined as CFO. In 2015, Tim decided to hire a Head of Talent and they grew from 20 to 78 people in under a year. They then secured NZD$11m through their Series A capital raise led by Sequoia in 2016.
90 Seconds have now worked with more than 1000 brands including Google, Barclays, PayPal, Visa and Sony to produce over 10,000 high quality, fast, easy and affordable videos, in 70 countries.
The company has a global team working across Singapore, London, Tokyo, Manila, Sydney and Auckland, and they hope to open new offices in San Francisco, New York, Hong Kong and Berlin going forward.
Tim thinks that 90 Seconds has just scratched the surface of the global opportunity for cloud-based video production. They will continue to focus on their global growth and make video production even faster, as fast as Uber, publishing professional videos within anywhere between 24 hours to two to 3 weeks, no matter in the world the video creators are. They also plan to continue to develop the mobile version of their software so clients can manage every part of the production process on their tablets or smartphones.
challenges
Tim and Richard both agree that talent acquisition and management is the key to ensuring the success of 90 Seconds, as well as scaling growth at the right time. Tim says that we always need to hire as the business continues to grow, finding the right people to do the job within budget, is definitely an art.
There is definitely competition in the industry which comes in two types. The first being companies who have been around for the same time or longer than 90 whose established business practice. The second is startups, who have the speed and agility to move quickly and innovate. However, Tim says 90 Seconds has a unique position given their stage of growth. They not only understand the industry and are experienced enough to compete with established business but they are also nimble enough to compete with new ones, having the capacity to completely revamp their current product.
working with kindrik partners
Tim and Richard have both worked with lawyers throughout their careers and had varied experiences, prior to their first capital raise, 90 Seconds brought lawyers in get the job done and keep legal costs at a minimum.
They were recommended Kindrik Partners by Sequoia, the key investor leading the capital raising process, who have invested in a number of the world’s leading tech companies including Apple, Google, YouTube and Airbnb. Lee Bagshaw’s was the lead partner for the deal given his background in fund raising for global startups and extensive experience negotiating deals with Sequoia.
The 90 Seconds team worked closely with Lee and Chris Wilson on the intricate transaction which involved a re-domicile, re-structure and Series A all rolled into one, as well as a broad range of investors, from publicly listed companies, venture capital firms and private investors such as SKY TV New Zealand, Airtree Ventures, Beenext and Oleg Tscheltzoff founder of Fotolia.
Tim describes the process as being much longer than he expected, taking 6 months. He says it was like a giant Jenga of risk, investors and issues to manage and at times he was keen to concede on points to move the deal on. However, he says Lee kept them focused on the key issues and eventually they nailed it, and got a deal far better than I expected with Tim feeling more powerful as a founder and entrepreneur through Lee’s advice. Richard also notes that Lee’s knowledge and experience with Sequoia was completely invaluable.
Tim and Richard both agree that this process showed how important it is to partner with lawyers who have hands on experience in dealing with the legal and commercial complexity of capital raising for a global company. Tim notes that when you work with a range of investors on a global deal, you need a legal partner to get the deal done and Kindrik Partners provided the best advice which got them a big outcome.
summing up
90 Seconds are an inspiring example of a company with humble NZ beginnings, demonstrating a fast-growing and rapidly scaling business model, as well as attracting major technology investment players.
Sequoia’s backing shows that big US VCs now view New Zealand startups as global opportunities. Kindrik Partners will be closely watching 90 Seconds continue its rapid growth to become a significant global player.
Explore 90 Seconds.
[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]
