Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
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Professor Douglas Abrams gave a presentation at Sasin on the latest trends and opportunities in venture capital investing in Southeast Asia.
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Sasin Master Class - "Venture Capital in Southeast Asia: At A Turning Point?"
- 1. October 2016 Sasin Masterclass - Venture Capital in SEA At the turning point? Douglas Abrams
- 2. 2 6XXXX Douglas Abrams About the facilitator • Wharton MBA • JP Morgan – Vice President IB Technology, GM Internet Marketing • Parallax Capital Mgmt – Co-founder and MD Private Equity • Extream Ventures – Co-founder and MD S$20 million seed fund • Expara – Founder and MD IDM Ventures Incubator, advisory, training • NUS – Adjunct Associate Professor, Business School, Entrepreneurship, Sasin – Visiting Professor, Venture Capital
- 3. 3 6XXXX Douglas Abrams Expara timeline 2000-2015 3Overview of Expara 2000 20152000 2002 2004 2006 2008 2010 2012 2014 NUS Expara EIDMV I Extream EIDMV II EV III Parallax BANSEA KIMBA Sasin Expara Thailand Expara Malaysia Expara Vietnam Expara Japan
- 4. 4 6XXXX Douglas Abrams Sasin Masterclass - Venture Capital in SEA • Venture Capital why and how? • SEA VC at the inflection point • Trends in SEA VC • Trends in Thailand VC
- 5. 5 6XXXX Douglas Abrams VC mindset • Risk and return are highly correlated • You cannot increase return without taking more risk Return Risk Potential outcomes
- 6. 6 6XXXX Douglas Abrams Why invest in venture capital? As of 31-Dec 2014 The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,569 U.S. venture capital funds (1,002 early stage, 175 late & expansion stage, 386 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2014. 1Pooled end-to-end return, net of fees, expenses, and carried interest. Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's, Thomson Reuters Datastream, and Wilshire Associates, Inc. *Capital change only Case Shiller Real Estate Index 4.1 Expara IDM Ventures (2) 47.05
- 7. 7 6XXXX Douglas Abrams Impact of VC on a diversified portfolio Private Equity and Strategic Asset Allocation. 2007 Ibbotson Associates
- 8. 8 6XXXX Douglas Abrams Companies founded with venture capital www.nvca.org
- 9. 9 6XXXX Douglas Abrams GVMs for all first-round investments 10 years after investment. Data from Sand Hill Road Econometrics. Companies received first financing before 1 January 1999. First non-seed round investment. Returns are gross - before fees and carry
- 10. 10 6XXXX Douglas Abrams VC process - stages and sources of funds Founder’s Capital Seed/ Angel Series A, B, C Mezzanine Pre-Exit Exit VC hurdle rates 60-100% 40-60% 20% OM F,F&F Incubators corporations government Customers, suppliers, strategic partners VCs, Banks for VC loans R&D Establishment GTM/Rollout Accelerated Expansion Maturity Enablement growth
- 11. 11 6XXXX Douglas Abrams How do VCs make money? • Trade sale – sell to another company • IPO – sell to the public through listing on an exchange
- 12. 12 6XXXX Douglas Abrams Trade sale or IPO? www.nvca.org
- 13. 13 6XXXX Douglas Abrams Sasin Masterclass - Venture Capital in SEA • Venture Capital why and how? • SEA VC at the inflection point • Trends in SEA VC • Trends in Thailand VC
- 14. 14 6XXXX Douglas Abrams SEA exit markets at an inflection point Exit activity in SEA, especially in Singapore, has exploded • Increased investment in startups since 2007 is beginning to yield results • Value of exits increased from 51 MM in 2010 to 1.2 B in 2014
- 15. 15 6XXXX Douglas Abrams Some recent SEA exits Company Country Acquiror Price Year ZopIM Singapore Zendesk US$29.8MM 2014 Non-Stop Games Singapore King US$ 100MM 2014 ERIIN Singapore Shopdeca Undisclosed 2014 Indiescapes Singapore BeMyGuest Undisclosed 2014 Webfluenz Singapore Mu Sigma Undisclosed 2014 Fimela Network Indonesia KapanLagi Group Undisclosed 2014 PriceArea Indonesia Yello Mobile Undisclosed 2014 DapurMasak Indonesia Cookpad US$0.6M 2014 Maxitech Indonesia Corous360 US$3.35 million 2014 JobStreet Malaysia Seek US$671.15 million 2014 Anino Games Philippines Pocket PlayLab Undisclosed 2014 Sulit.com.ph Philippines OLX undisclosed 2014 MOL Malaysia IPO US$169MM 2014 sgCarMart Singapore SPH S$60 MM 2013 DS3 Singapore Gemalto S$50 MM est. 2013 Asian Food Channel Singapore Scripps Networks Undisclosed 2013 I Love Discounts Malaysia Dealmates undisclosed 2013 Reebonz Singapore MediaCorp and Existing investors S$250MM 2013 Yfind Singapore Ruckus Wireless Undisclosed 2013 Techsailor Singapore TO THE NEW Undisclosed 2013 travelmob Singapore HomeAway Undisclosed 2013 Catcha Digital Media Singapore Opt Inc Undisclosed 2013 GridBlaze Singapore Undisclosed Silicon Valley Startup Undisclosed 2013 Viki Singapore Rakuten US$200MM 2013 SGE Singapore Tech In Asia Undisclosed 2013 AyoPay Indonesia MOL AccessPortal Undisclosed 2013 Eevent Indonesia EnvisionPoint Undisclosed 2013 EK Media Singapore SingPost US$1.2 million 2013 Tongue in Chic Malaysia PopDigital Undisclosed 2013 Ocision Malaysia Star Publication 13.5MM RMB 2013 PaymentLink Singapore Wirecard US$41.2MM 2013 Dealguru Singapore iBuy S$34.28 MM 2013 Dealmates Malaysia iBuy S$10 MM 2013 Fisheye Analytics Singapore Kantar Media US$0.622 2013 Says Malaysia Catcha Media Berhad 24MM RMB 2013
- 16. 16 6XXXX Douglas Abrams SEA seed stage dealflow pipeline is full S$90MM invested in Singapore seed stage in 2013 alone Deals Amt (USD MM) Population GDP (USD B) Total SG 264 71.8 5.312 274 Total US 908 361.4 314 15000 SG / US 29% 20% 1.7% 1.8% [1] Crunchbase Jan 2014, Wall Street Journal Feb 2014
- 17. 17 6XXXX Douglas Abrams Participants in enterprise ecosystems Enterprise ecosystem RIs IHLs Entre Govt Accel Incub Angels VCs Mentors Industry Capital markets
- 18. 18 6XXXX Douglas Abrams SEA enterprise ecosystems at the inflection point Singapore Thailand Vietnam
- 19. 19 6XXXX Douglas Abrams Sasin Masterclass - Venture Capital in SEA • Venture Capital why and how? • SEA VC at the inflection point • Trends in SEA VC • Trends in Thailand VC
- 20. 20 6XXXX Douglas Abrams US VCs enter SEA • Sequoia Capital (Southeast Asia) with $960M for India & Southeast Asia • 500 Startups – 500 Durians for Southeast Asia (US$26M) • 500 TukTuks for Thailand (US$12M) • 500 Vietnam for Vietnam (US$10M)
- 21. 21 6XXXX Douglas Abrams Rise of Series A and B VC funds • Golden Gate Ventures • Jungle Ventures • Rakuten Ventures • Monk’s Hill Ventures • Venturra Capital • B Capital Group
- 22. 22 6XXXX Douglas Abrams SEA unicorns • Garena (Singapore) – US$140MM at $4B • Grab (Singapore) – US$ 750MM at $1.43B • Lazada (Singapore) - US$1B – controlling stake to Alibaba • Razer (US/Singapore) – US$75MM at $1B • Go-Jek (Indonesia) – US $550 MM at $1.3B
- 23. 23 6XXXX Douglas Abrams Sasin Masterclass - Venture Capital in SEA • Venture Capital why and how? • SEA VC at the inflection point • Trends in SEA VC • Trends in Thailand VC
- 24. 24 6XXXX Douglas Abrams Thailand public sector support • Thai government announced major initiatives to fuel the growth of the enterprise ecosystem in Thailand • US$570 MM venture fund for start-ups and venture capital funds • Regulatory reform for VC funds, including the waiting of dividend and income tax on VC funds • Industry sectors include: next-generation cars, smart-electronics; affluent, medical and wellness tourism, agriculture and biotechnology, food, industrial robotics, logistics and aviation, biofuels and bio-chemicals, digital, and medical services
- 25. 25 6XXXX Douglas Abrams Accelerators in Thailand • DTAC Accelerate • i4-X • True Incube • AIS the Startup
- 26. 26 6XXXX Douglas Abrams Growth of VC funds in Thailand • Ardent Capital • 500 Startups • Inspire Ventures • Galaxy Ventures • Invent • Expara Ventures • DMP • Red Dot • Golden Gate • East Ventures • CyberAgent
- 27. 27 6XXXX Douglas Abrams Thai banks enter the VC space • SCB – Digital Ventures • SME Bank – VC fund • Kbank – Corporate VC fund • Bangkok Bank – Corporate VC fund
- 28. 28 6XXXX Douglas Abrams Crowdfunding VC – equity crowdfunding in SEA • May 2015 - Equity crowdfunding launched in Thailand • Restrictions: total amount raised up to US$600K; each investment limited to US$1,500 • June 2015 - Malaysia SEC approved six equity crowdfunding sites • Singapore – equity crowdfunding regulatory review underway
- 29. 29 6XXXX Douglas Abrams Is VC in SEA overly government driven? • The US federal government alone invests as much in small businesses as total VC investment through SBA/SBIR • Federal contracts to small businesses dwarf total VC investment • Start-ups are also funded at state and local levels • Both US and Singapore invest about 1% of GDP into programs supporting start-ups and small businesses
- 30. 30 6XXXX Douglas Abrams Why is VC in SEA at an inflection point now? Historical challenges • Exits • Enterprise ecosystem • Innovation • Legal and corporate governance • Cultural attitudes Mitigation • Early stage valuations allow profitable local exits; regional focus allows larger exits • Regional bridge and expertise in building local network • Focus on innovative segments – new and traditional • Changing environment • Channeling entrepreneurial energy to scalability
- 31. 31 6XXXX Douglas Abrams Contact us • Douglas Abrams • Expara – dka@expara.com – www.expara.com • Block 71 Ayer Rajah Crescent • #02-10/11 S139951 • 65-9780-5381
- 32. 32 6XXXX Douglas Abrams Key elements of a venture deal • Board of directors • Protective provisions • Drag-along agreement • Conversion Control • Price-per-share • Valuation • Amount of financing • Liquidation preference • Vesting • Options pool • Anti-dilution • Pay-to-play Economics