[PREMONEY 2014] Ardent Capital >> Adrian Vanzyl, "The Global VC: Southeast Asia"

adrian@ardentcap.com; Twitter: adrianvanzyl
Overview of Tech and Venture
Ecosystem in SE Asia
Dr Adrian Vanzyl
Ardent Capital
adrian@ardentcap.com
@adrianvanzyl

Who is Ardent? An “Operator VC”
• A successful operating company, focused on capturing a large share of the
ecommerce value chain in Southeast Asia
• We do so by operating (majority ownership) or investing (minority ownership)
• Companies are deeply synergistic, and all cooperate with each other for
mutual benefit
• Existing bets in B2B (aCommerce), B2C (WhatsNew), Sourcing & E-Retail
• A portfolio of seven companies, 350+ new jobs created
• A track record of significant current success, including aCommerce. ROI in excess
of 40%
• Headquartered in Bangkok, investments across all of SEA

Active Investor, bringing money into the region
Ardent itself has investment from
Recruit, GMO and Siemer and has
co-invested with these companies

aCommerce.asia – An example web 1.0 investment
Phone Orders
Storage Picking
Packing
Online Orders Order Processing
Order Documentation
Order Checking
Quality Control

About Me
• Dr Adrian Vanzyl
• Based in Bangkok, previously in San Francisco & Australia
• Ardent Capital, Bangkok - CEO and Co-Founder
– Operator VC. Investments include aCommerce.asia, WhatsNew.asia,
PicoCandy
• Blumberg Capital, San Francisco - multiple roles over 12 years (CTO & CEO
of two portfolio companies, LP, Advisor)
– Current fund $150M. Investments include Hootsuite, DoubleVerify,
Nutanix
• SLI-Systems, San Francisco - Co-Founder, Board Member
– NZX listed. Current Q2 market cap $112M
• LinkExchange, San Francisco - VP Business Development
– Sold to Microsoft for $260M
• LookSmart, San Francisco – CTO
– IPO NASDAQ. Peak market cap of $3.5B
• Sausage Software, Melbourne AU - CTO and Board Member
– First internet IPO in AU. Peak market cap $1.5B
MD degree
MB BS Hons I
Monash University,
Australia

• Thailand/Indonesia/Malaysia?
– Maybe
– Some angel money; limited experience
– Almost impossible to raise > $2M
• Singapore
– Maybe
– Lots of money, dozens of funds
– Highly competitive
– Many strings attached – must incorporate in SG, have key execs in SG
• Japan
– Maybe
– Lots of money, dozens of funds
– Language and cultural barriers
– Highly complex due diligence
• So what is the solution?
– We need more venture funds in the region, outside of Singapore!
How hard is it to raise venture capital in SEA?
Where does a Thai/Indonesian/Malaysian entrepreneur go for money?

Total Addressable Market. Why S.E. Asia?
Sustainable GDP per capita growth (Avg. 5-6%)
Rising disposable income
Growing mobile broadband penetration
Accelerating smartphone penetration
Increasing Credit Card penetration
Improving logistics and infrastructure
Social is everything – Facebook, LINE
Over $17B of branded and direct to consumer ecommerce
coming into SEA in next 3 years

SEA Basic Data
Unit ID SG PH VN TH MY China US
Population M 248 5.2 95 88 67.5 28.9 1350 315
# Online M 75 3.9 33 31 32 18 513 246
% Online % 30% 74% 34% 35% 46% 63% 38% 79%
# Social Media Users # 66 3.6 38 24 27 17 NA 167.8
# E-commerce Shoppers # 5.6 1.8 5.8 13.2 14.5 10.5 164 184
E-commerce Shoppers % 7.5% 46% 18% 42% 45% 58% 32% 75%
Retail Sales USD B 134 31 34 108 139 51 2,380 4,700
B2C E-commerce Market USD B 0.9 1.1 1 0.5 1.1 0.7 190 343
E-commerce % of Retail % 0.7% 3.5% 3.1% 0.5% 0.6% 1.4% 8% 9%
Spend Per Spender USD 252 917 172 42 365 68 726 1,864
Source: UBS Research, Nielsen, Comscore, PWC HK, ATKearny, researchandmarkets.com, Dailysocial, smu.edu.sg, E-commerce.org.sg

Southeast Asia Online Landscape
162 million
Active Social
Network Users
Source: Global Digital Statistics 2014
SOUTHEAST
ASIA
ONLINE
SNAPSHOT
155 million
Internet Users
630 million
Total Population
689 million
Active Mobile
Subscriptions
109%
Mobile
Penetration
26%
Social Network
Penetration
25%
Internet
Penetration
45:55
Urban: Rural
93%
Mobile
Penetration
26%
Social Network
Penetration
35%
Internet
Penetration
52:48
Urban: Rural
GLOBAL
ONLINE
SNAPSHOT

Internet Penetration is Exploding
24M
31M
18M
4M
55M
34M
194M
New internet
users
360M
Internet users
Source: We are Social, Accenture
2010 2020
62%
Est. internet
penetration
25%
2010 internet
penetration

Epicenter Outside US
Structural shift towards internet trend in Asia Pacific (>40%)
US is no longer the epicenter of internet usage
66%
13%
34%
87%
0%
20%
40%
60%
80%
100%
1996 2012
Internet Usage
US Outside US
Source: UBS, comScore Media Metrix

19%
17%
16%
17%
38%
37%
0% 10% 20% 30% 40%
NORTH AMERICA
SOUTH AMERICA
EUROPE
OCEANIA
AFRICA
ASIA
Mobile Usage, In Terms of Page Views, as % of Web Usage
(2014)
Asia is amongst the top mobile device users in the world
Source: Mary Meeker, Code Conference. StatCounter, 5/14.
Global
Average
Mobile Device Users

SEA Mobile Penetration
All major SEA countries are above the global average in mobile penetration
Source: Bain&Company
Higher
Mobile
Penetration
Singapore 144%
Vietnam 133%
Malaysia 122%
Thailand 110%
SEA Average
Philippines 92%
Indonesia 90%
Global Average
China 63%
Country | Penetration

Smartphone Penetration in SEA (2013)
Source: TigerMine Research
Credit card usage by country
Indonesia
Malaysia
Philippines
Singapore
Thailand
15%
23%
49%
80%
87%
0% 20% 40% 60% 80% 100%
Smartphone
Feature Phone

Comparative Study: Thailand vs China
Thailand requires 1.5 vs 3 years to reach the same online penetration level as
China’s post 3G
0
0.1
0.2
0.3
0.4
0.5
0.6
2003 2005 2007 2009 2011 2013 2015 2017
Internet Penetration
Internet penetration in China
Internet penetration in Thailand
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2008 2009 2010 2011 2012 2013 2014
Smartphone penetration
Smartphone penetration in China
Smartphone penetration in Thailand
Source: CNNIC, UBS estimates

Mobile Advertising Opportunities
$0
$20
$40
$60
$80
$100
North America Western Europe Asia-Pacific Worldwide
Mobile Ad Spending per Mobile Internet User
2012
2016
High discrepancy between Mobile Ad Spending per User and Actual mobile usage in
Asia-Pacific, specifically in SEA
Source: eMarketer, WeAreSocial
101% 129% 109% 93% Mobile
North America Western Europe Southeast Asia Worldwide Penetration

Online Advertising
SEA online shoppers are very responsive upon seeing online ads
Source: Google Southeast Asia Online Shopper Study
68%
79%
70%
73%
85%
79%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
THAILAND
INDONESIA
PHILIPPINES
Used info from ads when researching product Took direct action from ads

0
2
4
6
8
10
12
14
16
18
20
22
24
26
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
US$Billions
Year
Furniture & Floor
Coverings
Sports & Leisure
Equipment
Home & Garden
Products
Books, News &
Stationery
Apparel, Accesories &
Luxury Goods
Music, Video &
Entertainment Software
Food & Grocery
Electrical & Electronics
7.1
23.5
13.5
3.5
2.5
Thailand, Philippines, & Indonesia Online Retail is Growing Fast!
Online Retail Sales Forecast 2005 – 2015 – Source ICD Research
Ecommerce is Exploding
18.7

Online Shopping Categories
Apparel has highest purchase frequency but lowest average spend when compared
with Mobile Phones and Consumer Electronics
46%
51%
35%
21%
14%
16%17%
19%
14%
0%
10%
20%
30%
40%
50%
60%
Thailand Indonesia Philippines
% bought last month
Apparel Consumer Electronics Mobile Phones
0
100
200
300
400
500
600
Thailand Indonesia Philippines
Average Purchase Price (USD)
Apparel Consumer Electronics Mobile Phones
Source: Google Southeast Asia Online Shopper Study

ASEAN Economic Community (AEC)
The ASEAN Economic Community (AEC) represents a tremendous opportunity to do
business in Southeast Asia.
Free flow of
goods
Free flow of
services
Free flow of
investment
Free flow of
capital
What it
means…
Free flow of
skilled labor
What it
comprised of…
More attractive to foreign direct
investment
Easier to obtain/move capital across
the region.
Easier to recruit talent from countries in
Southeast Asia
Cheaper and easier to sell goods across
borders
Easier to provide services and establish
companies in the region
In 2015, Southeast Asia will transform into an integrated market, making it easier for
businesses in Southeast Asia to expand
Source: ASEAN

Leading Ecommerce Players in SE Asia
By Country
B2C
Marketplaces
B2C
Multi-brand
Retailers
B2C
Private Sales &
Daily deals
C2C
Marketplaces
& Classifieds
Singapore
Thailand
Indonesia
Philippines

Biggest player in SEA - Who is Rocket Internet?
Rocket Internet has built over 100 companies in 50+ Countries
Started in 2007; headquartered in Berlin
75+ active independent portfolio companies
Employing over 27,000 people
Raised over $1B in 2012
30+ exits
$2.5B+ in revenue
7 companies currently in SE Asia
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Indonesia
Indonesia
Malaysia
Singapore
Vietnam
Indonesia
Malaysia
Singapore
Thailand
Vietnam
Indonesia
Malaysia
Philippines
Singapore
Malaysia
Philippines

Started in Dec 2011
Adaptation of Zappos.com
1,300+ employed across the region
Annualized Gross Run Rate: €115mm
Well over $126M in funding
Spent over $23M in marketing in
2012
Rocket’s SEA bets
Started in Feb 2012
Adaptation of amazon.com and
alibaba.com
900+ employed across the region
Annualized Gross Run Rate: €92M
Well over $185M in funding
INVESTORS:

VC Firms: SEA Outside of SG
PHILIPPINES
Launch Garage: Seed ($30K)
Ideaspace: Seed ($25K-$100K)
Kickstart Ventures: Seed ($100K)
Nest: Seed ($50K)
Hatchd Digital: Seed ($100K)
Narra Ventures: Seed/Growth ($500K - $1M)
IPVI: Later Stage ($1M)
ICCP: Later Stage PE firm ($1M and up)
INDONESIA
IDEOSOURCE: Seed ($500K)
Mountain Ventures: Seed ( $250K)
Rebright: Seed ($200K)
East Ventures: Seed ($50K)
Grupara: Seed (Up to $50K)
VIETNAM
Silicon Valley Project: Seed ($10K-$20K)
PVNI: Seed (Up to $250K)
DFJ Vina Capital: A ($1M-$2M)
IDG Ventures: Seed, A, B (Up to $2M)
CyberAgent: Seed, A (Up to $1M)
THAILAND
True Incube: Seed ($15K)
DTAC Accelerate: Seed ($15K-$50K)
Ardent Capital: Seed ($100K-$200K)
AIS Invent: Seed/ Series A (Up to $2M)
MALAYSIA
500 Durians: Seed ($50K-$100K)
1337 Accelerator: Seed ($15K)
The Star Accelerator: Seed (Up to $300K)
Asia Venture Group: Seed (Up to $500K)
Catcha Group: A, B, C, D (All Range)

• Singapore’s two sovereign wealth funds (“SWF”s) have more money under
management than the entire US venture capital industry ($315B vs 200B).
• SG’s National Research Foundation (“NRF”) provides dedicated Early Stage
Venture Fund (ESVF) to support early stage ecosystems (Series A)
• First Round (2008) – Seeded S$50M total funds to five VC firms. VC companies
must co-invest on a dollar-to-dollar basis. (Totaling S$100M fund size)
• There is a buy-out option offered to other LPs/GP
• These companies have collectively invested over S$38M in 24 start-ups from
various technology sectors to-date.
• Second Round (2013) – S$50M to five VC companies on the same dollar-to-dollar
co-invest basis
• NRF will take profit up to 5% ROR (simple interest) and share rest with LPs/GP
Singapore, INC

• Generous support from the Singaporean government leads to large number of
Singapore-based funds, but start-ups need to be based in Singapore to qualify
for funding and often need to have key executives in Singapore
• Early Stage ($250K-$500K)
• Growth Stage ($1M up)
VC Firms: Singapore

VC Firms: Singapore
• There are also bigger funds that are heavily tied to Singapore
• There are also many Japanese investors – both funds and corporates investing in
SE Asia, some with offices in Singapore
Corporate
venture capital
fund of SingTel;
investments must
be strategically
beneficial
Venture arm of
Temasek, an
investment
company owned by
the Government of
Singapore

Acquisitions and Exits
1 1 2
4 5 4
7
1
5
3
1
2
3
1
1
1
2
2
2
1
3
1
0
5
10
15
20
2005 2006 2007 2008 2009 2010 2011 2012 2013
NumberofExits
Vietnam
Thailand
Philippines
Malaysia
Indonesia
Singapore
2% 8%
13%
13%
19%
45%
Exits since 2005
Vietnam
Thailand
Philippines
Malaysia
Indonesia
Singapore
Singapore and Indonesia make
up 64% of the total tech
exits since 2005
Source: SGE
Since 2005, there have been 53 tech acquisitions in Southeast Asia

Running a fund in SEA - Challenges
• Number 1 issue – Talent
– For your fund – key ‘on the ground’ staff
– Company execs in portfolio
• Dealflow – how to see best deals
• Legal – fund structure, investee structure
• Tax – where are you liable? USA issues
• Exits – who will buy? How do you get your money out?
• Lack of transparency – legal/tax/operations
• Lack of accurate data – no one knows the exact
numbers for anything!

Do & Don’t
• Don’t just open a satellite office and fly in fly out.
• Cultural nuances
– Six completely different cultures, not just one place
• Local ownership restrictions
– BOI in Thailand, Nominee in Indonesia, Licenses in Vietnam
• Location of Holding Company
– Either in Singapore or Hong Kong
– Importance for legal, fund raising, exits
• Local partners
– Tap into local expertise, dealflow, sanity checks
• DO – come into the region, invest, educate, support

THANK YOU
Thailand Office
946 Dusit Thani Building, 4th fl.,
Rama IV Rd. Bangrak,
Bangkok, Thailand 10500
Indonesia Office
AXA Tower 45th Floor, Jl. Prof. Dr. Satrio
Kuningan Kav. 18, Kuningan City, Jakarta
12940
Thailand Distribution Center
951/1 Soi Preeyanon, Sathupradit Road,
Bangpongpang, Yannawa
Bangkok 10120, Thailand
Adrian Vanzyl
CEO
Ardent
adrian@ardentcap.com
@adrianvanzyl
Singapore Office
Oxley Bizhub, 61 Ubi Road 1, #2-13
Oxley Bizhub, Singapore 408727

[PREMONEY 2014] Ardent Capital >> Adrian Vanzyl, "The Global VC: Southeast Asia"

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