CAPITAL.MY

Deals | Funding | Pre-IPO | SME | Startup | Advisory | 投資, 融資, 集資, 上市

Startups to IPO: Funding Roadmap

Startups to IPO: Funding Roadmap

Capital raising has always been a challenging task for entrepreneurs, more so when it comes from venture and angel funds, who unlike banks do not judge your business funding on the physical and liquid asset one owns. As the start-up ecosystem fosters and more ventures emerge, the mortality rate of companies that could not sustain has also risen.

While getting the initial investor is the toughest part, a lot of big ticket fund raises in the past two years have seen dwindling revenue figures, questioning whether all of that money could have been put to better use. To avoid thinking that it’s necessary to get acquainted with the different stages of fund raising and why each stage is important.

Typically rounds are depicted by alphabets, where they correspond with the development stage of the companies that are raising capital like Series A, B, C and so on. Although there is no fixed standard on what amount depicts which round, the natural streak is to get higher investment as you move ahead in the stages.

The main differences between these rounds are the maturity levels of the businesses, the type of investors involved, the purpose of raising capital and how it is ultimately allocated.

Let’s find out what each round depicts, why it’s important, which are some of the funds operating in these spaces in India, and some start-ups who are in this phase.

Pre-Seed/Early

This stage is mainly the conceptual one, where most of the money comes from friends, family and personal or business loans. This stage also includes the various accelerators that have cropped up in the past few years, although some of the bigger accelerators fall in the Seed Stage category as they offer higher disbursements and greater support.

Most government incubated hosted startups fall under this category, along with ventures who start with no institutional capital.

Seed/Pre-Series Stage

At this stage money is given to a company to give it the momentum it needs to produce its initial product. Seed money gives the company just enough runway to move from this early conceptual phase toward a product. This is also the most challenging stage for a startup as the highest mortality rates for startups lie in this stage.

Axilor, Prime Ventures and Seed Fund are among some notable seed stage funds.

Series A

By this point the company has a prototype, and with the exception of science and defence tech ventures, most companies are in full operational stage. They mostly seek funding from a VC firm, or even a consortium of VC firms. The amount will be larger than the seed round and will be offered in exchange for a portion of the company, therefore the most challenging one in fund raising.

The stage is used to figure out the best business model for their company and to work out the nuts and bolts of moving your product into the actual marketplace. Sequoia, Accel Partners, Kalaari, and Nexus Venture Partners are amongst some of the well-known VC firms in this stage.

Series B

Series B refers to when a startup has a product and is operational but need enough capital to bring the product to a broader market. The money is also needed for growing a team, bulking up on business development, sales, advertising, tech, support, and more.

This ticket size could range anywhere between 10 to $50mn, depending on what stage the company is at. Norwest Venture Partners, Sequoia, Matrix Partners, are some of the funds operating in this sector.

Series C

This is all about fast growth. In series C funding, companies might move the work they’ve been doing in series B toward international markets or focus on diversifying their product for multiple different platforms. In fact, many look for acquisition and merger options at this stage itself.

The cycle of successful exists for VCs generally starts by this stage. Most companies post their series C findings have gone for a merger or sale option. Funds like Sequoia, Bain, Barring, SoftBank and more fund these rounds.

Series D

By Series D a startup should be as established as an SME and should ideally be prepping for either a merger or an IPO. Generally, if a company has good financials it does not need a Series D. This could signal that the company may have strong fundamentals but hasn’t hit growth expectations set from series C and the fund is being raised to keep the company afloat.

Traditionally, a company raising a C or D round was considered to be in trouble because most startups were acquired or went public before then. But the trend is changing as smaller rounds of funding are being raised now over a longer period as it’s become easier to raise smaller amounts.

Series E and So on

Most companies go public or get acquired by series C or D. In case a company still seeks a 5th round of funding which is Series E, it means the company isn’t ready for an IPO or it’s not found a buyer yet, in case it’s looking to sell.

Surprisingly a bunch of startups have not only raised Series E, but gone on to raise funds till as far as Series H. Technically this may be considered a disastrous, but due to the unfamiliar territory of startups going for an IPO, the trend is not being viewed that negatively as expected.

Bridge Funding

This is a pre-IPO stage, where finances are raised for the growth of expanding companies prior to an IPO. Ideally at this point, the company has several hundred employees and probably operating in more than one country.

To attract investors for this round, the company must demonstrate a track record in the industry with an established reputation and product, a history of profitability and a viable expansion plan for the business.

IPO (Initial Public Offering)

An IPO, or initial public offering, is when your company sells stock to the public for the first time. This can be debt or equity offered on a public stock exchange. In the US, it means filing with the SEC.

Holding an IPO can introduce you to thousands of new shareholders, but you must follow strict rules and regulations and give quarterly financial reports. Plus, it can be pretty expensive and you have no control over who invests in your company.

Recently, it seems that companies have been staying private longer, like Uber and Snapchat.

Talking at the maiden NSE Tech Conclave, its MD and CEO, Vikram Limaye in this regard said, “We want startups to seriously look at public fund raising. I know the decision to list is not an easy one. It brings a lot of scrutiny especially from the public eye and the investors. But the advantages are also high.”

www.entrepreneur.com

Conclusion

If you are thinking about raising money from investors to help grow your company, first decide how much do you need at this stage. Keep in mind that each round gives you a chance to change your term sheet, meaning that the terms set in your early investments don’t need to be the same later on. Starting with a small funding round now can give you a chance to prove yourself in the market in one specific way and help you get better terms for your next raise.

Also, if too many funding rounds have happened (say, a company announces that they are hosting a Series E funding round) it can appear like the company isn’t being run properly, but as mentioned before, it seems that more companies are staying private longer. Each funding round that you announce communicates a message to other people about where your company is, so you should always make these decisions strategically and wisely.

Singapore Early-Stage Venture Funding

Singapore Early-Stage Venture Funding

If you are planning company incorporation in Singapore or have an existing business on the verge of exploding into a phenomenal growth, Singapore government offers several attractive grants and funding schemes that help grow a business through its various early stages.

In addition to the government support, there are many angel investing networks, venture capital firms, private equity firms, startup incubators and accelerator programs that assist entrepreneurs in raising capital.

Government Schemes

Government agencies in Singapore provide the following cash grants and equity financing schemes to local startups in the country; startups are eligible for these grants and schemes on the basis of qualifying criteria set by the government.

Startup SG

The Standards, Productivity and Innovation Board Spring (SPRING) has consolidated its previous startup assistance schemes under one program which is now called Startup SG. The goal of Startup SG is to provide Singapore-based startups with access to funding sources and mentorship programs and thereby help turn innovative business ideas into thriving companies. Under Startup SG, qualifying startups can access cash grants, equity financing, and business loans. The following provides an overview of the funding programs offered by Startup SG:

Startup SG Equity

Startup SG Equity is an investment fund managed by SPRING Seeds Capital and SGInnovate. Under the Startup SG Equity scheme, the Singapore government will co-invest with 11 private investment partners in startups that require significant capital expenditure and may take longer to be commercially viable.

For startups that are improving existing technologies, the Singapore government will provide 70% of the funding in an initial investment round of S$250K. Thereafter, the Singapore government will invest S$1 for every S$1 invested by private investors up to a cap of S$2 million.

For startups classified as “deep tech”, the Singapore government will provide 70% of the funding in the initial round investment of S$500K.

Thereafter, the Singapore government will invest S$1 for every S$1 invested by private investors up to an investment cap of S$4 million.

The Singapore government describes deep tech companies as developing products based on scientific or technological breakthroughs that are unique, differentiated and hard to reproduce. Typically, the technology a deep tech startup is developing is the result of years of research and lab testing and, requires a longer period to reach market viability.

To qualify for Startup SG, startups must meet the following requirements:

  • Be a Singapore-based company
  • The core operations of the company must take place in Singapore
  • Be incorporated as a private limited company for fewer than 5 years.
  • Have paid-up capital of at least S$50,000.
  • Be able to prove substantial innovative and intellectual property
  • Have high-growth potential with clear ability to scale in the international market.
  • Have identified an independent third-party investor.
  • The business must not be involved in gambling, tobacco-related products, or any other activities which are in violation of law, or against public interest.
  • The company cannot be a subsidiary or joint-venture.

Startup SG Tech

This grant provides project funding for local Singapore companies to develop breakthrough technology that can disrupt current markets or create new markets. With Startup SG Tech, companies will receive funding for both Proof-of-Concept (POC) and Proof-of-Viability (POV) projects. POC projects, which are designed to test the technical and scientific viability of a new technology, can receive funding of up to S$250,000. POV projects designed to test the commercial viability of a lab-proven technology can receive up to S$500,000 in funding.

To qualify for Startup SG Tech, companies must meet the following requirements:

  • The company must be a registered Singapore company less than 5 years old
  • The company must operate in Singapore
  • The company must have at least 30% local shareholding
  • Annual revenue must be less than S$100 million or the company must employ fewer than 200 people
  • Startup SG Tech offers cash grants to companies in the following industries:
  • Advanced manufacturing and robotics
  • Biomedical sciences and healthcare,
  • Clean technology (e.g. waste management solutions, sustainable energy generation)
  • Information and communications technologies
  • Precision engineering (e.g. composite technology and silicon photonics technology)
  • Transportation technology
  • Food science and technology

Startup SG Founder

The scheme was developed for new entrepreneurs with innovative businesses. Startup SG Founder provides up to S$30,000 by matching S$3 to every $1 raised by the startup. Along with funding, entrepreneurs also receive mentorship and business guidance from Singapore-based incubators. The program is open to Singapore citizens and permanent residents. To be accepted into the Startup SG Founder program, first-time entrepreneurs must apply through an Accredited Mentorship Partner (AMP); these include:

Action Community For Entrepreneurship (ACE) works with startups working in all sectors.

Advanced New Technology Incubator works with startups specializing in hardware, robotics, and automation.

FocusTech Ventures works with startups in IoT, advanced manufacturing, robotics, AI, and AR/VR.

JCS Venture Lab works with startups in advanced manufacturing and engineering.

Nanyang Technological University works with startups in advanced manufacturing and engineering, health and biomedical sciences, urban solutions and sustainability, services and digital economy.

NUS Ventures works with startups in IoT, AI, fintech, hardware, and software.

Singapore Management University works with startups in fintech, cybersecurity, data analytics and artificial intelligence, Smart City innovations, transportation, and logistics.

QuestVC works with startups in e-commerce.

Spaze Ventures works with startups financial services, fintech, healthcare, education, e-commerce, logistics, big data, enterprise solutions and IoT.

Joint Polytechnic Incubator Initiative works with startups in general tech.

TNB Ventures works with startups in IoT, AR/VR, robotics and AI.

Trendlines Medical works with startups creating medical devices and medical technology.

TRIVE Advisory works with startups in deep tech (cloud computing, data science, fintech, agritech, recycling tech, AI, blockchain, cybersecurity,energy, emissions, food science, healthcare tech, IoT, material sciences).

August Global Asset Management works with startups in fintech, security, medical technology, education technology, agriculture technology, and big data.

BWG Services works with startups working in all sectors.

ETPL works with startups specializing in deep tech (medtech, biotech, advanced manufacturing including robotics, digital technology including analytics and AI,electronics data system /IoT).

Found works with startups working in all sectors.

Sifood works with startups specializing in agriculture technology, food technology, clean technology, healthcare.

Singtel works with startups committed to making a positive environmental and social impact.

Budding Innovations works with startups specializing in digital health, diagnostics, food, nutrition, lifestyle technologies, medical technology, clean technology and advanced materials.

ImpactTech works with startups working in all sectors.

Mencast Innovation Centre works with startups specializing in nanotech, energy technology, industrial IT, life science and agriculture science.

Techstars works with startups in social messaging tech (bias towards Viber app).

Startup-O works with startups in AI, fintech, consumer technology, medical technology, IoT, SaaS.

Cheng Yew Heng Candy Factory works with startups in food technology & manufacturing.

ST Engineering – Innosparks works with startups focusing on smart cities and healthcare.

Mistletoe Singapore works with startups in preventive medicine and sustainability, lifelong learning, new city design, permaculture and token economy.

To receive the grant, the first-time entrepreneur must adhere the following conditions:

  • The first-time entrepreneur must hold or propose to hold a minimum of 30% equity in the new company.
  • The first-time entrepreneur must dedicate a reasonable amount of time to the business, not be employed full-time by another employer and must be a key decision maker in the company.
  • The first-time entrepreneur cannot have already received funding for the proposed business from another government organisation.
  • Upon approval, the first-time entrepreneur must register a private limited company in Singapore.
  • If the first-time entrepreneur has already registered a company, it must not be more than 6 months old and must have at least 51% shareholding in Singapore.

Startup Incubators

The following are Singapore government accredited incubators:

Action Community For Entrepreneurship (ACE) works with startups working in all sectors

Advanced New Technology Incubator works with startups specializing in hardware, robotics, and automation.

FocusTech Ventures works with startups in IoT, advanced manufacturing, robotics, AI, and AR/VR.

JCS Venture Lab works with startups in advanced manufacturing and engineering.

Nanyang Technological University works with startups in advanced manufacturing, health and biomedical sciences, urban solutions and sustainability, services and digital economy.

NUS Ventures works with startups in IoT, AI, fintech, hardware, and software.

Singapore Management University works with startups in fintech, cybersecurity, data analytics and artificial intelligence, Smart City innovations, transportation, and logistics.

QuestVC works with startups in e-commerce.

Spaze Ventures works with startups financial services, fintech, healthcare, education, e-commerce, logistics, big data, enterprise solutions and IoT.

The Finlab works with startups in fintech.

TNB Ventures works with startups in IoT, AR/VR, robotics and AI.

Trendlines Medical works with startups creating medical devices and medical technology.

Tri5 Accelerator works with startups in fintech, energy tech, education tech, and marketplace platforms outside of Singapore.

August Global Asset Management works with startups in fintech, security, medical technology, education technology, agriculture technology, and big data.

Angel Investing Networks

Angel investors are high net worth individuals who invest in startups at their seed stage. These investors (known as “angels”) invest in companies despite no proven success of the company’s business model. The investors invest either individually or as a group. This funding source is advantageous to startups that do not have a final business model and require quick access to capital. In Singapore, the angel networks include the following:

Business Angel Network South East Asia (BANSEA)

BANSEA is an angel investment network that was established in 2001 in Singapore. It organises conferences, workshops, etc to promote the angel investing network in Asia. BANSEA’s mission is to facilitate investment opportunities for members in early stage startups. BANSEA is open to entrepreneurs who have a great idea and require funding to establish themselves.

Business Angel Scheme (BAS)

SPRING SEEDS supervises the Business Angel Scheme (BAS) which is an equity investment scheme for Singapore-based enterprises. SPRING SEEDS partners with angel groups to invest in innovative startups. SEEDS invests a dollar for a dollar up to a maximum amount of S$1.5 million. The business angel group and SEEDS will take an equity share in the startup in proportion to their investment.

Singapore Angel Network (SGAN)

Singapore Angel Network (SGAN) is the investment arm of Thakral Group of Companies in Singapore. SGAN invests in startups usually at the later stage of their finance requirements. This angel network does not target any specific industry and invests in various business sectors in Singapore and other countries as well.

Venture Capital Firms

Venture capital funding is often suitable for startups or late stage businesses that have a large capital requirement.

Following are the venture capital firms that invest in Singapore startups:

Singtel Innov8: This venture capital firm is a wholly owned subsidiary of Singapore’s largest telecom company, Singtel. The firm invests in early-stage startups in Asia-Pacific, US, and Europe. The firm invests in digital media, internet applications, technology sector etc.

KK Fund: Singapore-based KK Fund invests in seed stage startups specialising in internet and mobile companies in Southeast Asia, Hong Kong, and Taiwan.

East Ventures: A venture capital firm based in Tokyo, East Ventures invests in startups based in Southeast Asia that focus on consumer internet and mobile products.

Golden Gate Ventures: This global venture capital firm targets startups based in Southeast Asia that create internet products.

Fenox Venture Capital: Based in Silicon Valley, this firm actively invests in Singapore. It invests in emerging technology startups and also assists entrepreneurs in North America who wish to expand their business globally with a base in countries such as Singapore, Thailand, and Indonesia etc.

IMJ Investment Partners: The Singapore-based firm invests in startups in the country as well as other Southeast Asian countries. The firm invests in internet, mobile and software companies. Besides Southeast Asia, the firm invests in startups based in Japan and the United States.

Ardent Capital: A venture capital firm that invests in seed and early stage ventures. Ardent capital invests in technology companies in Southeast Asia. The firm focuses on specific regions such as Thailand, Singapore, Malaysia etc.

Jungle Ventures: Based in Singapore, this firm invests in the early stage of startups in Asia Pacific markets. The firm focuses on investments in technology, software, e-commerce etc and considers businesses that have the potential to grow in Asia. The firm also organises incubation programmes for Singapore startups.

Sequoia Capital: This venture capital and private equity firm focus on financial, healthcare, energy, mobile and internet startups. The firm invests in seed, early stage, and late stage startups. Besides investing in these startups, the firm specialises in incubation programmes that help in the growth of startups.

500 Startups: 500 Startups is a seed fund and startup accelerator based in Silicon Valley. The firm has funded over 500 startups and invests in Southeast Asia including Singapore.

Life.SREDA: This Singapore-based venture capital firm invests in growth stage fintech companies.

Singapore Venture Capital & Private Equity Association (SVCA): SVCA is a Singapore-based association established to “promote the development of the venture capital and private equity industry”. The association extends support to entrepreneurs by providing its members with the opportunity to connect with venture capitalists through events that they organize. This makes it easy for startups to connect with venture capitalists.

Private Equity Firms

Private equity investment refers to an investment made by a firm to acquire ownership of a non-public business. These firms usually invest in profitable companies which are in a high-growth stage. Private equity firms in Singapore include the following:

3V Source One Capital: 3V Source One Capital is a private equity firm that invests in sectors such as biotech, education, media, industrial, real estate, software etc. This firm caters to businesses in Singapore and specialises in investing in growth to late-stage companies. The firm also invests in companies in Greater China and the United States.

Venstar: Venstar, a private equity firm with its headquarters in Singapore invests in startups at their growth and expansion stage. The firm invests in startups in Singapore, Southeast Asia, and China. Few of the sectors that the firm invests in include petrochemical, pharmaceuticals, resources, and energy etc. Besides investing in startups, the firm is also involved in the management of the investee companies.

Navis Capital Partners: Founded in 1998, Navis Capital Partners invests in Asia, Australia, and Hong Kong. It has a strong presence in South and Southeast Asia which includes Singapore, Hong Kong, Malaysia, etc. Navis invests in industries such as fast moving consumer goods, food processing, industrial products, etc.

AIF Capital: The private equity firm having offices in Singapore, New Delhi, Hong Kong and Beijing focuses its investment in Asia, Southeast Asia, China, and India. The firm provides capital to growth companies in sectors such as healthcare and pharmaceuticals, media and advertising, power generation, financial services, etc.

Tael Partners: Singapore-based Tael Partners is a private equity firm that invests in sectors such as shipping and logistics, natural and mining resources, utilities and infrastructure, real estate development, etc. The firm founded in 2007 has offices in Malaysia, Indonesia, Vietnam, and Thailand and is one of the largest private equity firms in Singapore.

L Capital Asia: This private equity firm specialises in growth capital and invests mainly in consumer product brands, lifestyle retail, lifestyle food and beverages, beauty and wellness, boutique hospitality, etc. The firm, based in Singapore, invests mainly in Asia Pacific, Southeast Asia, India, Australia and New Zealand.

Conclusion

There are many venture capital firms, private equity firms and angel investing networks available to entrepreneurs in Singapore. In addition, the government of the country has launched many schemes and grants that facilitate the growth of startups in Singapore.

Singapore being one of the best places in the world to do business, has access to investors not only from Singapore but from other parts of the world. For instance, venture capital firms such as 500 Startups, Golden Gate Ventures, Sequoia, etc also invest in Singapore startups. Singapore has emerged as a key startup hub in Asia because of its pro-business environment, efficient legal system, and stable political system.

Supalaunch your business with Venture Capital Firms, Investors and Accelerators in APAC

How do you beat the competition in the fast-paced world of startups in Asia? The right amount of funding is one of the main factors that stands between your company’s success or failure. With no cash, upscaling becomes a longer, more difficult challenge. We’ve shared with you the best APAC countries to start a business, now find out about Asian-focused investors from India to China that you can approach to help fund your startup.

Before we dive in, here’s the difference between venture capitalists, angel investors and seed accelerators. Venture capitalist firms focus on providing funds to startups that they recognise to have high potential for growth. More often than not, they provide more funds than a bank loan and there is no obligation to pay them back if the business tanks. Angel investors operate on a much smaller scale, often investing in a business as an individual or in a small group. For both, mentorship and guidance is optional. Seed accelerators offer the benefits of funding as well as mentorship. Competition to be accepted into an accelerator program is high as successful applicants receive an intensive period (typically 3 months) of training from experienced professionals on how to grow their businesses as well as a monetary investment in exchange for equity.

Here are 10 venture capital firms, investors and accelerators that have been the most active in the past 6 months.

1. 500 Startups (Malaysia)

Investments Made – 11

A renowned Global venture capital seed fund and a startup accelerator from Silicon Valley with over US$250 million in assets under management.

Key Investees/Graduates in APAC:
Grab (Malaysia/SG)
TukTuks (Thailand)
Supahands (Malaysia)
CatchThatBus (Malaysia)

Type of Fund:
Seed
Series A
Bridge/Loan

Investment Round Range:
US$100,000 to US$12,000,000

Top APAC Countries Invested in:
Singapore, Thailand, Malaysia

Top Industries:
E-Commerce
Marketplaces and Platforms
Fintech

2. Sequoia Capital (China)

Investments Made – 10

Known for their collaborative efforts with legendary founders like Steve Jobs (Apple), Elon Musk (SpaceX), and Peter Thiel (Paypal). Sequoia now provides the new generation of innovators the opportunity to build lasting companies of tomorrow.       

Key Investees in APAC:
Kfit (Malaysia)
Zilingo (Singapore)
Gojek (Indonesia)
Futu5 (China)

Type of Fund:
Seed
Series A, B & C

Investment Round Range:
US$1,000,000 to US$200,000,000

Top APAC Countries Invested in:
Singapore, Malaysia, Indonesia

Top Industries:
Social networking & communication
Marketplaces & Platforms
Logistics and Transportation

3. SAIF Partners (Hong Kong)

Investments Made – 8

An Asian-focused private equity firm that focuses mainly on businesses that operate in China or have significant operations or businesses in China.

Key Investees in APAC:
Voodoo (India)
Treebo Hotels (India)
UnionPay (China)

Type of Fund:
Seed
Series A, B, C & D

Investment Round Range:
US$ 200,000 to US $100,000,000

Top APAC Countries Invested in:
India, China, Indonesia

Top Industries:
E-Commerce & Advertising
Marketplaces & Platforms
IoT

4. Microsoft Accelerator (India)

Investments Made – 7

Microsoft Accelerator is a global initiative empowering entrepreneurs around the world on their journey to build great companies by offering 4-6 months programs for later-stage startups.      

Key Investees in APAC:
SadakPlay (India)
Raven Tech (China)
Taihuoniao (China)

Type of Fund:
Seed
Series A, B, C & D

Investment Round Range:
US $ 25,000 to US $ 4 000, 000

Top APAC Countries Invested in:
India, China, Indonesia

Top Industries:
Finance & Marketing
Mobile & Communication
Customer Acquisition

5. Blume Ventures (India) 

Investments Made – 6

One of India’s first venture capital firms that’s focused on early-stage tech companies that also co-invests with partner angel investors and seed funds.       

Key Investees in APAC:
Unacademy (India)
RoadRunnr (India)
GreyOrange (Singapore)

Type of Fund:
Seed
Series A, B

Investment Round Range:
US$50,000 to US $2,000,000

Top APAC Countries Invested in:
India, Singapore

Top Industries:
Software
Mobile
E-Commerce

6. East Ventures (Indonesia, Japan)

Investments Made – 5

An early stage fund VC, incubator and accelerator focusing on consumer web and mobile startups based in Southeast Asia, Japan and USA.

Key Investees in APAC:
Kargo (Indonesia)
Kaodim (Malaysia)
99.Co (SG)
TechinAsia (SG)
Hyper8 (Japan)

Type of Fund:
Seed
Series A, B
Bridge/Loan

Investment Round Range:
US$300,000 to US$4,000,000

Top Countries Invested in:
Singapore, Thailand, Japan

Top Industries:
E-Commerce
Marketplaces and Platforms
Fintech

7. Brand Capital (India)

Investments Made – 5

A venture arm of Bennett Coleman and Co Ltd; over 10 years the venture has partnered in building more than 850+ indigenous brands in India.

Key Investees in APAC:
Yeh China (China)
CityFurnish (India)
MeruCabs (India)

Type of Fund:
Seed
Series A
Bridge/Loan

Investment Round Range:
US$500,000 to US$5,000,000

Top Countries Invested in:
India, China

Top Industries:
Retail
Consumer Durables
Fintech

8. IMJ Investment Partners Pte. Ltd (Japan, Singapore)

Investments Made – 5

A Singapore based venture capital that provides funding to startups in SEA and Japan based on the principles of operational support, equality, and global outlook. They also provide direct operational support and connections for startups en route to success.

Key Investees in APAC:
Carsome (Malaysia)
Pawnhero (Philippines)
Fabelio (Malaysia)

Type of Fund:
Seed
Series A

Investment Round Range:
US$ 50,000 to US$ 2,000,000

Top Countries Invested in:
Indonesia, Philippines, Malaysia

Top Industries:
Lifestyle
Ecommerce
Consumer Internet

9. Kalaari Capital (India)

Investments Made – 5

An India-based venture company investing in tech-related companies in India, as an Indo-US venture partners. They are focusing on poised to break out Startups in India and future global leaders.

Key Investees in APAC:
HolaChef (India)
Curefit (Philippines)
Parablu (Malaysia)

Type of Fund:
Seed
Series A, B, C, D

Investment Round Range:
US$ 500,000 to US$30,000,000

Top Countries Invested in:
Indonesia, India, Philippines, Malaysia

Top Industries:
E-Commerce
Internet
Curated Web

10. Beenext (Japan, India)

Investments Made – 5

Founded by Teruhide Sato and other experienced entrepreneurs and founders, to support thriving startups around the globe with capital, knowledge, experience, operational expertise, and a unique global network. On top of that, they believe in helping entrepreneurs get to the next level by providing a highly unique perspective that comes from investing in startups in 9 different countries.

Key Investees in APAC:
Creo (India)
HappyFresh (Indonesia)
Voonik (India)
Kaodim (Malaysia)

Type of Fund:
Seed
Series A, B

Investment Round Range:
US$ 200,000 to US$40,000,000

Top Countries Invested in:
India, Indonesia, Philippines, Malaysia

Top Industries:
E-Commerece
Internet
Curated Web

Next steps to meeting investors

Research your different options before you start approaching investors for money as some focus only on later-stage startups, some in early-stage. They also tend to focus on a select few industries that is in line with their expertise. Besides that, have you also considered if you are ready to give up part of your ownership in order to scale up quickly? Investors generally place their money in a company in exchange for equity so you will have to face the possibility of not being your own boss anymore.

Finally, when it comes to taking that step to meet potential investors, be resilient. Send your proposal out to a number of relevant companies or individuals and don’t be afraid to use your network to your advantage. Gain exposure for your startup through a mutual contact that is also involved in the startup or investing scene. Getting your business funded is a long but often rewarding process so make sure you have a strong team to support you and stay passionate about your work. Good luck!

by JUINN TAN

Digital Marketing @ Supahands. I crunch numbers, I weave sentences, and my life revolves around my Google Calendar.

Top Venture Capital Firms and Angel Investors in Singapore

Angel investors in Singapore

Angel investors are private investors who typically not only invest capital but also contribute their business expertise/skills in early-stage businesses in exchange for a significant share in the company. They can be individuals, or be part of an angel network that engage in investing in businesses with high growth potential and in the industries that they are familiar with. That said, there are some business angels playing active roles in the business while others act as sleeping partners. Angel investors are typically wealthy High Net Worth Individuals or successful businessmen with an appetite for startup companies with higher risk (but that are promising enough to yield higher returns). Therefore your startup should have a high growth potential, in order to win the favour of business angels.

Venture capitalists in Singapore

Moving on to the venture capitalists, these are typically professional investors who have a more hands-on role in your business if they were to invest in your company, and they typically do so with the vested interests of their own clients’ profitability.

Venture capitalists offer not only funding but also advice on increasing your business profitability, and possibly in operational matters as well, especially if your business requires input from different areas of expertise in the team.

Popular startups for venture capital funds are those in high growth potential sectors such as IT, biotechnology and nanotechnology with a competitive edge in the market and longevity of profiteering. Startups whose business involve scientific breakthroughs, Intellectual Property creation and other similar large-scale impact businesses are often favoured by these venture capitalists.

The venture capital industry in Singapore is relatively new and small compared to the US and Europe. Nevertheless, there are actually more than 100 venture capital firms in Singapore ranging from independent limited partnership venture capital firms to corporate-backed venture capital firms.

If you intend to start a company in Singapore and need startup funding, read on for our list of the top 22 Venture Capitalist (VC) firms and angel investors in Singapore.

1) B Capital Group

One prominent angel investor in Singapore is Facebook’s co-founder Eduardo Saverin, and his venture capitalist firm B Capital Group which he launched in 2014 with a $144 million venture fund focused on India, South-east Asia and the US.

B Capital Group backs the next generation of ground-breaking technology companies and has offices in Los Angeles, San Francisco, and Singapore. It has partnered with the Boston Consulting Group, and its incubation arm BCG Digital Ventures.

2) Golden Gate Ventures

With founding partners in Singapore and San Francisco, this is an early-stage VC firm in Southeast Asia bridging Silicon Valley and Asia through investment, experience, and relationship building, and has over 30 investments across seven countries.

One of the founding partners of the firm is Jeffrey Paine who invests in consumer internet, social media, digital entertainment, e-commerce and crowd-sourcing. Some of his latest investments are Aptoide, Xfers and MyMusicTaste.

Another founder partner Vinnie Lauria who was based in Silicon Valley before moving to Singapore has invested in Coda Payments, Nitrous and Lenddo.

3) Jungle Ventures

A VC firm partners regional consumer internet category leaders in retail, financial services, travel and hospitality, healthcare and several other sectors. It aims to tap into ASEAN’s high-growth cities and their rapid growth in online consumer behaviour in terms of online media, social networks, mobile apps and aspirational consumption habits.

The firm, under its Managing Partner and founder of Sony Entertainment Television Jayesh Parekh, has invested in 500 Startups, PubNub, and Artiman Ventures.

Another founding partner Amit Anand has invested in DocDoc, eBus, iMoney and Fastacash.

4) 500 Startups

500 Startups is a global venture capital seed fund with a network of startup programs head-quartered in Silicon Valley with over US$350 million committed capital across four main funds and 13 micro funds. It has invested in +1,700 technology startups all over the world since its inception in 2010 including Twilio, Credit Karma, Grab, Udemy, Talkdesk, Intercom, and MakerBot.

The firm’s Managing Partner in Southeast Asia is Khailee Ng, a notable angel investor in Singapore. Another of its partner in Vietnam is Eddie Thai who has been listed in Forbes Vietnam’s 30 under 30.

5) Singtel Innov8

Singtel Innov8 is a US$250 million corporate venture capital fund with its own set of decision-making, approval and funding processes and owns presences in Singapore, Silicon Valley, Tel Aviv and other markets. The fund focuses its investments on technologies and solutions that lead to quantum changes in network capabilities, next-generation devices, digital content services and enablers to enhance customer experience. It works closely with the ecosystem of leading innovators, developers, government agencies, R&D and capital providers to bring cutting-edge technologies and solutions to the various markets the Singtel Group operates in.

6) Sequoia Capital

In aggregate, Sequoia-backed companies account for more than 20 percent of NASDAQ’s total value. In the last 45 years, Sequoia has worked with Steve Jobs, Larry Ellison, John Morgridge, Jerry Yang, Elon Musk, Larry Page, Jan Koum, Brian Chesky, Drew Houston, Adi Tatarko and Jack Dorsey, among many others.

7) Monk’s Hill Ventures

Monk’s Hill Ventures is a partnership of seasoned entrepreneurs who have built and backed global companies based both in Silicon Valley and Asia. It’s a VC firm investing in post-seed stage tech startups that will take advantage of the fast growing South-east Asian markets.

The firm’s co-founder Kuo-Yi Lim, hasinterests in enterprise software, mobile consumer internet, and Big Data; and has invested in DataXu, Gengo, Kalibrr and Reebonz.

8)Quest Ventures

Quest Ventures, based in China and Singapore, is a leading venture fund for companies that have scalability, and are replicable in large internet communities.

9) Life.SREDA

This is an international VC firm, headed by Slava Solodkiy and established in 2012 in Singapore. It has already invested in more than 20 FinTech companies around the world through its two funds Life.SREDA I (US$40M) and Life.SREDA II Asia (US$100M).

10) Wavemaker Partners

As part of the Draper Venture Network, which has 10 funds across four continents, this VC firm can help startups gain access to global insights and scale.
Paul Santos who is the Managing Partner at the firm has made investments in Ardent Capital, Luxola, and TradeGecko.

11) Crystal Horse Investments

Crystal Horse Investments was founded in Singapore and is the official fund manager of Angel’s Gate, Asia’s first reality TV series with a focus on business and entrepreneurship. It invests in companies in Singapore and Malaysia where it thinks there is value in the long-term and also where it can add value to the company.

12) Coent Venture Partners

COENT provides seed and venture-stage funding to entrepreneurs and companies across all sectors in Asia, as well as support in management, overseas business development and exposure to business networks.

13) East Ventures

East Ventures has offices in Jakarta, Tokyo, and San Francisco, and has invested in over 150 companies across Asia and the US. Its portfolio of companies focuses on commerce, social, game, SAAS, and mobile services.

The firm’s co-founder and Managing Partner is Willson Cuaca, who is also the CEO of Apps Foundry. His investments include Tech in Asia, Waygo, RedMart and Megafash.

14) Gobi Partners

Founded in 2002, Gobi Partners head-quartered in Shanghai has an investment focus on early-stage, digital media, IT and TMT companies. The firm has raised seven funds to date, and has invested in over 100 portfolio companies across China, Hong Kong and ASEAN over the past decade.

The firm’s founding partner Thomas Tsao participated in the development of several leading companies such as Brite Semiconductor, Camera360, CiB, CSDN, Line0, Madhouse, World Traveller and Yoyi Digital—often serving on the company’s board of directors.

15) Spiral Ventures

Head-quartered in Singapore, this VC firm invests typically in Seed to Series A companies, especially B2C and C2C platform business in South-east Asia. Its parent company is IMJ Corporation, which is the biggest digital agency in Japan.

16) Incubate Fund

Since the establishment of the Incubate Fund in 2010, it has invested US$170million in seed startup businesses, including more than 120 companies through its related fund in the last five years.

17) Innosight Ventures

It is a Singapore-based early-stage venture investment firm, investing in high-potential South-east Asian ventures. Aided by the Innosight Consulting Team, it claims to have developed a proprietary methodology that enables it to spot, shape and scale successful startup companies.

The firm’s partner Piyush Chaplot, has invested in MyVR, Anchanto, Chope and LuxeNomad.

18) KK Fund

This fund invests in seed stage internet and mobile startups across South East Asia, Hong Kong and Taiwan. Its founder and general partner Koichi Saito, was previously a director at IMJ Investment Partners and was responsible for investments in iMoney, Bukalapak, and Zipmatch.

19) Rakuten Ventures

This fund is part of the Rakuten Group, one of the world’s leading internet service companies. Rakuten has built and invested in innovative internet businesses in e-commerce, financial services, digital content and advertising since 1997. The company is head-quartered in Tokyo.

The firm is headed by its Managing Partner Saemin Ahn, who invests in diverse verticals such as advertising technology and artificial intelligence. His investments include Carousell, Pocketmath and Algorithmia.

20) Tri5 Ventures

Based in Singapore, this focuses primarily on angel to seed-stage investment in technology startups across South-east Asia. It specialises in deep technologies, AI and data science tech startups in the fields of Fintech, Energy Tech, Education Tech and Marketplaces. It has supported 38 startups with US$5.3m in seed funding.

Tri5’s Managing Partner Christopher Quek is also the director and incubator of Angels Gate Advisory (AGA), a community pro-bono advisory service which supports entrepreneurs in grants and advisory.

21) UOB Venture Management

UOB Venture Management Private Limited is a wholly owned subsidiary of United Overseas Bank (UOB) Limited, one of Asia’s leading international banking and financial groups. Operational since 1992, the fund has provided financing to more than 100 privately-held companies through direct equity investment, mainly in Southeast Asia and Greater China.

22) DreamLabs

DreamLabs is a $50 million fund established to invest in disruptive, scalable, people-focused companies in the areas of Cleantech, Fintech, eCommerce, Healthcare and Energy. Besides capital, the fund also provides mentorship, networking and physical infrastructure at their incubator in Singapore’s CBD.

23) Rikvin Capital

Apart from the above, entrepreneurs and companies can also access services of Rikvin Capital, which is Singapore’s alternative private funding specialists. In 2018, they funded various projects to accredited investors and corporates who needed short-term funding for investments against their secured assets. This is a non-traditional source of funding and is suitable for those that are affected by Total Debt Servicing Ratio (TDSR) or have no track record with financial institutes.

Business Angel Network

There are also networks for you to refer to in seeking a business angel investor(s). An example is the Business Angel Network Southeast Asia (BANSEA) that matches startups in the seed stage of enterprise formation with business angels. BANSEA invests in companies that offer exceptional opportunities for high returns on investment, which usually involves early-stage ventures with a high growth potential, either in a developing market (especially in emerging markets) or in an existing market with international expansion capabilities, and that is sustainable in the long-run.

Private funds in Singapore

Finally, there is the option of private funds such as banks, financial institutions, and investment companies. These sources of funding are very rarely involved in an active role in managing the business. This gives you the autonomy of conducting your own affairs in the manner you deem best, as their main purpose is to receive an attractive return (usually in the form of high interest from 7-12 percent) on their investment.

Thus, businesses that are already established, have a good credit track record, are already generating revenue in high amounts, and have a high growth potential would benefit from such sources.

In Singapore, however, there are micro loan programmes instituted by the Singapore government under the auspices of Spring Singapore and IE Singapore that facilitate your taking of small loans from participating financial institutions like UOB, OCBC, DBS, Standard Chartered Bank.

by Rikvin, subsidiary company of In.Corp Group, Singapore’s leading corporate solutions company with presences in multiple countries and thousands of clients around the world.

AirAsia launches $60m venture capital fund called RedBeat Ventures

AirAsia launches $60m venture capital fund called RedBeat Ventures

Budget airline AirAsia is launching a venture capital fund called RedBeat Capital that will invest in post-seed startups around the world who are entering or expanding their presence in Southeast Asia, it announced.

The fund targets travel and lifestyle, logistics, AI, internet of things, cybersecurity, and fintech companies. RedBeat Ventures, the entity running the fund, also said it is tying up with venture capital firm 500 Startups to access their deal flow.

Based out of San Francisco, the fund will be run by AirAsia Group deputy CEO Aireen Omar.

TechCrunch reports that the fund is targeting a first close of US$60 million and that some of the money has been raised from limited partners, which means this not quite a corporate fund. Its checks could go as high as US$1 million or even US$5 million.

Via RedBeat Ventures, AirAsia will still make investments that are more aligned with the corporate direction.

The airline is on a drive to diversify beyond its core business. CEO Tony Fernandes envisions turning AirAsia into a “digital travel company,” melding ecommerce, fintech, and travel – with all airline’s 22,000 employees – into one cohesive entity.

https://www.techinasia.com

What’s Your Valuation? 3 Must-Know Matrixs

What’s Your Valuation? 3 Must-Know Matrixs

What is a Valuation and Why is It So Critical To Know?

Unfortunately, 90% of the entrepreneurs that I meet don’t really know what a valuation is. I totally empathize with all these entrepreneurs’ ignorance because I didn’t know this stuff either when I started raising capital for my first company.  Fortunately for me, I had a few brilliant mentors who taught me what I needed to know. Unfortunately, traditional educational institutions don’t teach these must-know practical skills to entrepreneurs.

Your company’s Valuation is the worth (or value) of your company right NOW.

Unfortunately, your company’s valuation is a very ambiguous number when you’re a privately held company. There’s no private company “blue book” where you can look up its estimated value. In hard-core reality, your company is really worth whatever the last or highest buyer offered you (given that there’s even a market for it).

Calculating private company valuations is an ART, not a science!  It’s a value based upon what can you realistically justify and defend in a negotiation. There’s no one real way to do it, particularly if you’re a start-up.

However, with that said, your company’s valuation determines the ownership that you have to relinquish to investors for the capital that you seek (in an equity deal).

Therefore, it’s very important that you arrive at a justifiable formula and number to pitch and to sell your investors to close your funding. What you determine your company’s valuation to be prior to seeking funding will be initial “sticker price” of your equity.  More likely than not, this could just be the starting point of your negotiations with investors – or if you’ve made the argument well, you could get your asking price.

What Are Pre- and Post-Money Valuations?

Your Pre-money Valuation is the value of your company prior to having money invested in it. Post-money Valuation is the value of your company after the investment (the equation is shown in the diagram). The mistake that most entrepreneurs (and many investors) make is they think the equity price (or share price) is based upon the “Post-Money Valuation.”

It’s NOT!  It’s based upon the Pre-Money Valuation – what your company is worth right now!

Here’s a simple analogy:  Imagine you want to sell your house.  You price your house at $1M based upon your market research for similar homes to yours.  Now, someone wants to buy your house and then put in $4M worth of improvements and refurbishments into it.  Just because they’re going to put money into your house after your deal is done, doesn’t allow you to charge a higher selling price – it’s still only worth $1M – right now!  

You can’t say to the buyer, “Hey – but it’s potentially going to be worth $5M after you put $4M into it so I want to charge you $5M instead of $1M.”  That would be a ridiculous request – right? See how this works? It’s the same with companies – you can’t value your company based upon what the company will be worth after there is money put into it – you must value it based upon what it’s worth before the investment is put into it.  This is a critical mistake 90% of all entrepreneurs make and its why many deals don’t get done – the entrepreneur has over-inflated their company’s current value.  

How Do You do Your Company’s Valuation – A Two Step Process

If You Want to Maintain More Than 50% Ownership,
Then Your Pre-Money Valuation Must Be MORE than the Amount of Capital You’re Raising!

First, keep in mind that there are experts in this field that charge anywhere from $5K – $100K to do a valuation for a company.  It’s considered a skilled art.  However, it’s not difficult to learn.  At this stage of development, your company’s valuation is likely simple enough to do it yourself (or at least get a round-about value) and I suspect you can’t afford a high-paid consultant.

No one knows your company better than you do and when in a pinch – entrepreneurs must learn these new skills to lead their company.

Additionally, this exercise will teach you how to defend your valuation in your negotiations with investors.  This is critical as you’ll never be able to close a deal if you can’t defend what it’s worth (unless you find a highly novice investor that doesn’t want to negotiate).

Also, you should carefully evaluative any matrix you use.  I’ve read the advice of a few of these online funding platforms that describe how to do valuations and the matrixes they offer are very weak (if not wrong).  I say this because many of the matrixes I’ve seen proposed base the valuation too much on the “future value” (post-money valuation) rather than the “current value” of the company (pre-money valuation).  

Now, most entrepreneurs would prefer to use one of these flawed or weak formulas because their valuation looks much higher.  But once again, go back to analogy above of the milk and cereal – unless you’re one of the rare few entrepreneurs that happens find an uneducated, novice investors that will fall for your over-inflated price (value), you’ll likely never raise the capital you seek and likely your company will die.  

It’s much better to be realistic now and create more value if necessary prior to seeking funding (e.g., by staging funding, creating value using one of the “4-P’s” (see below)) if you need to, rather than to fail altogether.

Step #1 – Your Valuation Matrix

As stated above, valuations in privately held companies are determined by market demand, which is a very ambiguous number.  Therefore, a valuation matrix is a formula that makes-up a justifiable argument to demonstrate the company’s value.

Below are three matrixes often used in the industry.  Ideally, if you can use two matrixes and average their findings – it makes for a much stronger argument when negotiating with investors.  However, not all of the matrixes can be used by all companies depending on the stage of development (if you have revenue or not).  Below is an overview of each matrix:

Asset Matrix: (Great for all Companies especially Start-Ups and Early Stage). The Asset Valuation Matrix consists of adding up all of the assets in your company.  Maverick calls these the “4 P’s”: Perception, Proof, Partnerships and Intellectual Property.  The Asset Matrix lists a justifiable assumption for each category and establishes a value, then adds up all the values to arrive at a pre-money valuation.  The categories are: (1) physical assets; (2) management team sweat equity and capital contributions; (3) intellectual property; (4) customer contracts; (5) strategic partnerships and JV’s (joint ventures); (6) goodwill; (7) cash on hand; and (8) other miscellaneous assets.  

Strategic Partnership Matrix: (great matrix for companies with Strategic Equity Partners):  The Strategic Partnership Valuation Matrix involves projecting the company’s valuation based upon the terms of a strategic partnership (e.g., equity for services).  If by definition your company’s worth (valuation) is what the last or greatest purchaser paid for it, then logic states that if you cut an equity deal with a partner for services/products or some value, then you can value your company based upon the value of this strategic partnership.  For example:  If you cut a deal for equity for technology services, you could bid-out these same services to a few tech development companies and then average these bids to determine a value for the equity that you traded for services.  This is a very strong argument and can increase a company’s valuation tremendously.  Because these services are considered “soft-dollar” investments versus “hard-dollars” you should account for this in your discounting factor.  See explanation below.

Enterprise Valuation: (only for companies with revenue).  The Enterprise Valuation is the most widely used valuation matrix.  It is determined by taking your company’s EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) times a “multiple”.  This valuation matrix is really saying “we know for sure that the company is at least worth X based upon its profit before taxes – so, if we bought the company now, we know it would be worth at least X… times a multiple of Y.”  Now, the question is what is the multiple (Y)?  

To determine your valuation multiple, you can research publicly traded companies in your industry and determine their current valuation multiple.  However, please keep in mind that publically traded companies’ multiple are almost ALWAYS higher due to the liquidity of their shares than privately held companies.  Traditionally, multiples used by most investors for privately held companies are conservative (ranging between 3 and 7), with the majority of investors and investment banks using “3” as their default multiple.  I often get the argument from my tech entrepreneurs that think their multiple should be in the teens – well, don’t count on that! Remember: investors are always going to take a more pessimistic viewpoint.  

Step #2 – Applying your Discounting Factor and Subtracting out Debt

Regardless of what you determine your pre-money valuation to be, investors will almost always apply what’s called a “discounting factor”. It’s a percentage that is applied to the valuation to discount it based upon risk.  (e.g., 20%, 30% or more).  This discounting percentage is based upon many factors (e.g., how strong is the management team, how long to profitability, competition, level of experience, etc.).  It’s a series of weighted questions to determine the level of risk in your deal.  Just keep in mind you’ll need to apply some percentage to your valuation (because investors will if you don’t).  Also, you will need to subtract out any debt the company owes from the final pre-money valuation.

Transforming Your Valuation Into an Equity Offer

Using your pre-money valuation that you just determined, you need to calculate approximately how much of the company you’re willing to sell to get the money you need. Think of this in terms of percentages even though what you’re really selling is stock which is represented in the form of a percentage of ownership. Imagine a scale, and on one side is your company BEFORE you raise capital (now) counterbalanced by the value of the money the investor is investing.

One of the things you’ll notice about most investors is that they are math wizards! They seem to calculate everything quickly in their heads (of course, this is their area of expertise and they do this every day). You have to become as quick as them at these mental calculations to negotiate with any strength.  Therefore, you need to learn a few pre/post valuation mental-calculating short-cuts. At first, it may seem intimidating to a novice.

However, once you see how it’s calculated, you’ll see it’s really not difficult to do. Expect from the moment investors hear your pitch that they are calculating your pre- and post-valuations in their heads to determine what equity percentage they want for the money you’re requesting.  Here’s the math short-cut that starts with the equation:

Pre-Money Valuation + Money Invested = Post Money Valuation

HOW TO CALCULATE PRE/POST VALUATIONS QUICKLY IN YOUR HEAD

Example #1: You want to sell 20% equity for $1 million. What are you saying to the investor is your pre-money valuation? Here’s the math:

20% Equity = $1M Investment, therefore,
If 20% x 5=100%, then
$1M x 5 = $5M (Your Post-Money Valuation is $5M).

Remember the equation for Pre/Post Valuations is: (Pre-Money + Investment = Post-Money)
Therefore, Pre-Money + $1M = $5M
Pre-Money = $5M – $1M (the Investment)
Pre-Money Valuation = $4M

You are telling the investor when you ask for $1 million for only 20% equity in your company, that your pre-money valuation (current valuation) is $4 million. Can you justify that?

Note:  A critical mistake that both entrepreneurs and investors make is they forget to subtract out the money invested (part II above).  Remember: you’re seeking the pre-money valuation, NOT the post-money valuation!

Example #2: Let’s try to do it one more time, but now try to do it quickly in your head. You want to sell only 33.3% equity of your company’s to the investor, but you still want $1 million. What are you telling the investor is your current pre-money valuation?
33.3% x 3 = 100%
$1M x 3 = $3M (Post-Money Valuation)
$3M (post money) – $1M (investment) = $2M Pre-Money Valuation

So, you’re saying your company is currently worth $2M.  Can you justify that?

Hopefully, you’re seeing how easily this can be done. With this knowledge, you know now that you must be able to JUSTIFY a pre-money valuation of $2 million if you only want to give up 33% for $1 million. Got it? This is very important in negotiations.

Venture Capital vs. Private Equity: Understanding The Difference

Venture Capital vs. Private Equity: Understanding The Difference

With increasing coverage and interest in startups, fundraising and venture capital, many terms have become more ambiguous than ever. That can leave entrepreneurs pretty foggy on how they should really be approaching raising money. So, who is funding what? Why does it matter so much if you are launching or trying to scale a venture?

Startup Fundraising

Whether you are still juggling a startup idea or already have data and revenues and are ready to scale, it’s vital to understand who the investors are that will take you to the next level, and what your following milestone or exit is likely to be.

Fundraising and navigating potential exits can be incredibly time consuming and stressful. It can be confusing. The lines have certainly blurred. Far more so in the last couple of years. Different capital sources are playing a larger role in the startup ecosystem. Various players are stretching how and at what stage they will participate.

So, what are the differences between between VCs and PE firms? Who else is providing capital to this space? Who are the leaders that startup founders should be focusing on?

Private Equity

This space has become a little cloudier, with private equity firms diving into all types of new channels like single family rental homes and mortgage lending through conduits. Yet, in their most traditional forms, private equity firms are consider those who buy or get involve with more mature companies.

This means they are looking for established companies that already have established revenues. In some cases these are companies that may have even peaked and need new management to be optimized. Think classical music, farms and assembly lines in contrast with the typical jazz, disruption, or street art style of fast growth startups. They prefer predictability and lower risk. Even if that means lower returns.

This space is also differentiated by leveraged buyouts, in which PE firms utilize debt to complement their equity to acquire more corporate ‘real estate’. These firms are best known for taking majority stakes, if not full buyouts.

According to rankings from Private Equity International top private equity firms include:

  • The Carlyle Group
  • Blackstone
  • KKR
  • TPG
  • Bain Capital
  • Goldman Sachs
  • Accel
  • Berkshire Partners
  • Cerberu

Private equity is more likely to be your end game, or at least a large part of your exit as a startup founder, rather than an early investor. Though these firms may flow down debt that can be used for some ventures.

Venture Capital Firms

In contrast, venture capital firms are equity investors at an earlier stage in the lifecycle of a startup. Just not as early as most think.

For the most part VCs are funding startups at their latest stages in their businesses. This is changing some. More are participating in earlier funding rounds as they gain experience and competition grows for returns and opportunities. You may find them involved at Series A through D fundraising rounds. Or perhaps even at the seed stage.

VC firms will typically take much smaller portions of companies than their private equity counterparts. They are still investing at a much riskier stage and mostly try to spread their bets as wide as possible.

Top venture capital firms include:

  • Sequoia
  • Accel
  • Bessemer Venture Partners
  • Andreessen Horowitz
  • New Enterprise Associates
  • Insight Venture Partners
  • Index Ventures
  • Khosla Ventures

This demonstrates more crossover between traditional private equity and the VC world. Though before you go waltzing into one of these firms in your pajamas, know that they still expect a good amount of solid data and due diligence to make a decision on. They aren’t going to be your first investors on day one.

VCs are also typically looking for a shorter term exit. They have deadlines on their funds, and need to get results quickly. They are often going to push you hard to deliver on their promises to their own investors.

PE is more about numbers while VCs are more about people. However, with both PE and VCs everything starts with a solid pitch deck where the story of the company is told in 15 to 20 slides. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here) that I recently covered. Thiel was the first angel investor in Facebook with a $500K check that turned into more than $1 billion in cash. Moreover, I also provided a commentary on a pitch deck from an Uber competitor that has raised over $400 million (see it here).

Angel Investors

Angel investors are a much more likely funding partner for most startup founders. Angels are getting better funded, are grouping together, and are making more investments.

Angels are willing to participate in the earliest rounds of fundraising. They are typically basing their investment as you the entrepreneur and the idea, versus any data or profits. Expect to be raising from angels for a round or two before you even approach any VCs. PEs are probably four or five rounds of financing away at this point. Notable angels include:

  • Mark Cuban
  • Richard Branson
  • Barbara Corcoran
  • Ron Conway
  • Fabrice Grinda
  • Ashton Kutcher
  • Michael Jordan
  • Will Herman

Typically the best angels are those that were entrepreneurs before and fortunate enough to have an exit. I have the pleasure of interviewing some of the most successful entrepreneurs on the DealMakers Podcast where they share some of the patterns they are looking for when investing in other entrepreneurs.

Other Startup Investors

Startup accelerators and incubators are another rising form of early funding. They may invest anywhere from $10,000 to over $100,000 and offer an array of intensive programs, resources and training opportunities. These include names like The Founder Institute, Angel Pad, Y Combinator and 500 Startups. They can get you going if it is a good fit and you can get in. Then help you show off your startup to other investors.

Family offices are increasingly investing in startups as well. They don’t want to miss out on the game that VCs and big private equity firms are enjoying. Though they often like the advantage of investing directly, rather than losing returns to middlemen.

Family offices can be quite different when it comes to what they want and their future expectations though. They may be more likely to offer patient capital or to seek cashflow than other types of investors.

Corporate investors are playing a bigger role in the startup ecosystem today too. They are setting up their own accelerators and are making more strategic investments in startups that can propel their growth and extend their reach.

Summary

Despite the confusion and ambiguity out there, there can be distinct differences between private equity and venture capital when it comes to raising money and exiting a startup. There are many more options for fundraising and exiting than there used to be too.

by Alejandro Cremades – a serial entrepreneur and author of best-seller The Art of Startup Fundraising, a book that offers a step-by-step guide to today‘s way of raising money for entrepreneurs.

Feedback from Investors

Investors are drowning in “normal” deal flow, deals which look good but not great. They want to find the anomalies and things which are an excellent fit for them. Here are some takeaways on why less is not only more but all that matters in some cases:

1) Your one-pager is more important than your pitch deck because without it being excellent nobody will open the pitch deck. If you believe that, then it goes in line that the one-liner on your offering is more important than the one-pager or nobody will be enticed to take your call or meet with you, or open your attachments. The final stage of this logic is in the branding/positioning – if you can create a brand position that on its own attracts clients to you because of your unique focus and offering, that is the most powerful place to start.

2) We hear from 400 investors a year on our stage at our investor summits and they consistently say that someone approaching them has 15 seconds, or about one sentence to get their attention or they move on. This is why your one-liner on why you offer a unique solution is so critical, and why it should be created with care, twaeked and improved over 30 times before being used in the marketplace.

3) They also, for the most part, appreciate 1 pagers on the offering before they look through a 22 page or 40+ page pitch deck. They want to know in just a minute or two if the offering is real, credible, a serious venture, relevant, and unique enough from the flow of normal deals they get pinged with daily. They do not want to flip through 27 slides to figure that out on a high level.

by The Family Office Club. https://familyoffices.com/

10 Things you should know about the Singapore startup landscape

With Singapore Week of Innovation and TeCHnology (SWITCH) just around the corner, there is a significant interest directed at Singapore these days.

Of course, there has always been interest in Singapore’s tech and startup scene, especially when the city-state became the only Southeast Asian country to rank in Startup Genome’s Top 20 Startup Ecosystems in World report in 2015.

But if you’re only just discovering Singapore’s tech and startup scene, here’s ten things you should know about it.

1. A steadily growing entrepreneurial activity

Over the last five years, Singapore’s startup landscape has grown tremendously. According to Jonathan Lim, Director of Startup and Global Innovation Alliance of Enterprise Singapore, the number of tech startups has grown from 3,400 in 2012 to 4,000 in 2017.

While Singapore has been a significant hub for startups since the late 90’s, this 17 per cent boost in a span of five years is a significant number that can be attributed to a conducive business environment, ample government support, and a strong entrepreneurial community.

“Singapore has a very positive outlook when it comes to trying new things and finding innovative ways to solve different problems,” said Yuki Shimahara, CEO of LPixel, a startup specialising in developing AI for Life Science research.

2. Highest amount of startup funding in the region

In 2017, startup investments in Singapore reached US$7.3 billion, making up 45 per cent of all deals in the region. This is not a one-off; Singapore has been steadily growing to this number, with venture funding alone growing from US$136 million to US$1.37 billion in just a span of five years (2012 to 2017).

3. Singapore starts them young

The median age of entrepreneurs in Singapore is 28 years old – the youngest globally. By comparison, the world median is 40 years old. As an example, let’s take a look at Structo.

Structo is a startup that develops high-speed, industrial-grade additive manufacturing 3D printing systems using its proprietary Liquid Crystal Mask Stereolithography, with a niche in dental applications. It was founded in 2014 by four National University of Singapore graduates, and have managed to draw in investments about US$720 thousand investment from SEEDS Capital and Wavemaker in 2016 and an over-subscribed round of US$2.9 million investments from various investors.

Also read: National University of Singapore to spend US$18M to launch 250 deep-tech startups

4. It’s the home of unicorns

Singapore has seen the birth of five unicorns – Grab, Lazada, Razer, Sea, and Trax currently valued at a collective US$12 billion. Being headquartered in Singapore gave them access to the talent, funding, and connections that they needed as startups.

Singapore’s startup landscape has provided these companies with the support they needed to grow big – something that young companies like LPixel are banking on. “Overall, I think Singapore is an excellent place for new startups like us, to offer new values and solutions,” said Shimahara.

5. A launchpad to ASEAN

Market-wise, Singapore is small. This is not a hindrance, however, as it only pushes startups to create strong relations with neighbouring countries.

“Our aim is to develop Singapore as a reference test market for startups that want to access the region and we have made concerted efforts to strengthen our connections to those key markets like Indonesia, Malaysia and Thailand,” said Lim.

This is a claim that has a lot of history backing it; going back to the previously mentioned five unicorns, all of which operated regionally while headquartered in Singapore.

6. Tangible government support

Enterprise Singapore, part of the Singapore Government, has been actively working with different partners to develop Singapore’s startup landscape.

It works with partners such as private VCs and accelerators, Institutes of Higher Learning and public agencies to put in place a wide range of programmes that meet the needs of startups under Startup SG.

Startup SG represents the shared interests of the startup community and showcases Singapore as a leading startup hub. It is the brand for all local support initiatives and provides stakeholders with a platform to connect globally.

This support could mean mentorship, funding and investments, and incubations, which are all critical to the growth of startups.

SLINGSHOT@SWITCH powered by Startup SG, for example, was launched in 2017 to showcase the best global startups in deep tech. This year, the startup competition returns as one of the key events at SWITCH 2018.

“Winners of SLINGSHOT will have a chance to tap on Singapore’s network of startups, VCs, accelerators and corporate partners to expand not only in Singapore, but within Asia, given our strategic location in this region,” said Lim.

Also read: SWITCH has 9 partner events, here is why you should go

7. Ample opportunities for partnerships

While Singapore is geographically small, it packs a punch when it comes to conduciveness of starting a business – something that entrepreneurs all over the world are aware of. In the 2017 Startup Genome report, they estimated about 463 entrepreneurs moved into the country for the purpose of starting a business. The global average is 300.

This means more entrepreneurs, more businesses, and more opportunities for partnerships locally and internationally.

Government support also plays a significant role in these partnerships, such as with the experience of LPixel. “We got in touch with some medical institutions through the government’s network. We are actually in the middle of exploring joint research opportunities with some of them,” Shimahara said. “This process would not have gone smoothly without the support from the government.”

8. It’s a gateway to the going global

Singapore is ranked 3rd globally on the ability of startup leaders to connect and form relationships with entrepreneurs in other countries. The strong startup community in Singapore allows founders to build relationships and partnerships not only locally but also internationally.

Singapore is home to many international tech and startup conferences, after all. And while there is a strong local support for these conferences, there is also an equally strong international interest in them, resulting in potential million-dollar partnerships in the works.

“We want Singapore to be a vibrant and self-sustaining global startup hub that is deeply connected with other startup ecosystems, especially those in ASEAN,” said Lim.

9. Deep tech thrives here

There is an increasing number of deals and VC investment amounts in deep tech. As showcased in SLINGSHOT, the Singapore government focusses on attracting and building more startups in deep tech sectors like medtech, cleantech, fintech, and future mobility, among others.

These are also in line with the global trends – increased focus on Industry 4.0, increasing emphasis on healthcare due to an ageing population, as well as rapid urbanisation and digitalisation, particularly in Asia.

One such example is MiRXES, a spin off from A*STAR’s Bioprocessing Technology Institute. The startup has developed an alternative non-invasive solution to accurately diagnose cancer through blood tests, at an earlier stage and with a higher degree of accuracy. MiRXES has raised about US$2.9 million in Series A.

10. Singapore is one of the best countries for women entrepreneurs
In a study conducted by Mastercard, Singapore ranked 5th best market globally for having strong supporting conditions and opportunities for women to thrive as entrepreneurs. Women made up 27.5 per cent of total business owners in Singapore; one of the higher proportions in the total markets studied.

And while the numbers may seem paltry, the conditions on the ground are not. There is a growing, vibrant community of women entrepreneurs in Singapore that aims to inspire women to create the next big thing.

Whether you’re a homegrown Singapore local, or an international entrepreneur searching for a friendly place to plant your startup roots, Singapore is one of the best places to consider.

“Startups play a key role in contributing to Singapore’s economy, especially in creating innovative solutions to support the growth of our companies,” said Lim. “We have managed to build a vibrant startup ecosystem over the years through our good business environment, investment in R&D and strong MNC presence.”

by Lyra Reyes

The KPIs of Raising Capital

The best tool that we have found for managing business partners, joint ventures, and team members are Key Performance Indicators (KPIs). A KPI is a measure of an action or activity which lets you know if work is getting done, if that work is leading to results, and what the yield is on the time invested in that activity.

In capital raising, you will want to have different types of KPIs in place, with some activity-based and some results-based. These will be the leading indicators as to whether you are raising capital effectively or at least on the right track to raise capital.

Some potential capital raising KPIs could be:

  1. Write One Article Per Week
  2. Meet with 5 Investors Per Week in Person
  3. Schedule and Complete 10 Conference Calls per Week
  4. Speak at One Conference Per Month
  5. Call 20 Investors Per Day
  6. Meet with One Potential Connector or Networker Who Could Help in Raising More Capital Each Week

Each KPI must be measurable so you can say objectively if it was completed or not in the time frame expected. Even if you are just managing yourself this can be helpful, with the goal being to set up realistic but challenging KPIs that will shape activities and make it more likely that capital will be raised.

Good luck with your KPIs!

by Theodore O’Brien, Managing Director at The Miami Family Office – Investing Private Capital in Excellent Businesses


1 2 3 4 5 6 7 8 9