CAPITAL.MY

Alternative Funding Sources for Businesses

Questions an Investor will ask a Founder

Questions an Investor will ask a Founder

When you pitch your business to investors, you want to get questions. If you don’t get questions, then your pitch fell flat and nobody is interested. So, plan on answering questions—and hope you have some to answer!

Read More

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.

Read More

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.

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.”

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

5 Benefits of Crowdfunding and 5 Keys to Success

Crowdfunding is getting a group of regular individuals to collectively fund your venture. And when I say “regular individuals” I am contrasting them to professional investors and lenders like banks, venture capitalists and angel investors.

Read More

Crowdfunding, venture capital, angel investing?

Crowdfunding, venture capital, angel investing – there seem to be so many different ways to get funding for my business. Which one is best and are there any downsides to letting other people own a share of my company?

Eleanor Lawrie of This is Money replies: You could feel like a kid in a sweet shop when it comes to the different forms of investment on offer for your small business.

But while the offer of ‘free money’ may sound tempting, it’s important not to seek outside funding too quickly, get into anything you don’t understand, or give away more of your business than you want to.

Here we look at how to choose the right time to look for an external backer, the different forms funding can take – and how to successfully pitch to investors.

When is the right time to look for outside investment?

While many small businesses would like to take their time expanding, it’s important to be flexible in order to take advantage of opportunities as they arise.

Bivek Sharma, head of small business accounting at KPMG, says: ‘Slow, organic growth can be appealing, especially compared to the alternative of taking on debt or giving up equity, but competition complicates the picture.

‘If competitors secure cash injections and invest in talent, technology or materials that put them in a better position to jump on new business opportunities, they can quickly eat into the territory of the more cautious.

‘For most young businesses, the reality of growth opportunities is that they are often fast and erratic, not slow and steady. In these moments, outside investment rounds can be a great asset.’

If your business is keen to grow and is seriously considering outside investment, there are a few questions to ask first:

Why do I need outside funding?

Sharma says: ‘Being clear in your own mind about exactly why you need extra capital can give you a great steer on which funding route will best suit your business.

‘For example, a start-up may need seed funding to help establish their concept, before going for a larger round when looking to scale-up.

‘Established businesses may need investment that is focused on scaling, whether that’s for additional staff, equipment or new technology.’

How much should I ask for?

Once you know how you would put the money to work, you can start to calculate a good amount to ask for.

Sharma says: ‘Having an appropriate figure in mind is important when approaching investors. Ask for too little and you may need to generate further rounds of funding, which can damage the business’s credibility.

‘Apply for too much and you run the risk of being turned down or out-pricing potential future backers.’

Which type of funding is right for my needs?

Funding options have increased exponentially in the past few years, and it’s worth taking time to consider which route would suit your business best. These can really differ in terms of the amount on offer, the speed of the process and the strings attached.

SMEs need to consider what they are prepared to give in exchange for a cash injection, whether that’s paying interest on a loan, or giving away equity in the business.

Bivek says: ‘My advice is to ignore the hype and focus on your own needs and goals. Just because some businesses raise millions through crowdfunding doesn’t mean it’s right for everyone. Consider every option and whittle them down.’

Peer to peer lending/crowdfunding

Early stage companies may want to investigate peer-to-peer (P2P) platforms such as InvestDen and Funding Circle, which match growing companies directly with organisations and individuals who want to lend to them.

The idea is that, by cutting out the banks, individuals who lend to you get a better rate of return. At the same time, your business may be able to borrow at a cheaper rate than the banks offer – if you have a good credit score.

These loans are collated so that lenders’ money is put into a bucket of different companies or individuals put together by the platform to even out their risk profile.

The risks of this type of financing are borne mainly by the lenders as their money isn’t protected by the FSCS. However, SMEs who borrow through peer to peer lending need to treat it the same as they would a bank loan – you won’t necessarily be accepted, and if you don’t pay it back on time your credit score may be affected and you may be chased by a debt collection agency.

Meanwhile, crowdfunding lets individuals financially back your product or service. On some sites the aim of this is to help charitable or socially conscious projects get off the ground, and the backers get nothing back other than the satisfaction of seeing it come to life.

But usually, businesses offer something in return, like equity (shares) in the business, or debt (bonds or mini-bonds).

Once on the crowdfunding platform, you have a set time-frame to attract the funding you need. In most cases you will not receive any of the investment if you fall short of the target, but you are usually allowed to raise more than your target. This means it’s important not to set a target higher than you can realistically raise.

Crowdfunding can be a useful marketing exercise in itself, helping to raise the profile of your business while (hopefully) attracting your desired level of funding.

Angel Investors

Angel investors tend to be successful or affluent business people who want to financially back promising companies, usually in exchange for debt or equity. These investors will sometimes also offer guidance and support, and will often have expertise in the sector they are investing in.

Sharma says: ‘Angel investors can be a good option for the super ambitious, as they often provide a sizeable lump sum. They frequently act as business mentors too, and are happy to invest time to guide start-ups.

‘Making sure you are eligible for the Seed Enterprise Investment Scheme (SEIS) can make the investment considerably more attractive to these investors, and can mitigate the higher risk involved with large amounts of money.’

Venture Capital firms

Venture capital firms usually offer much bigger sums than angel investors – usually at least £1million – but are likely to expect a higher rate of return and/or more equity in your business.

Sharma says: ‘A more established high growth company with excellent potential, for example one with valuable intellectual property, may be well-suited to venture capital. This can work well if your aim is to increase value in a short time, for example, if you’re aiming to sell the business in three years.’

While this level of funding can have a huge impact on your business, venture capitalists can also take a long time to decide whether to invest, so this method may not be a good choice if you need funding quickly.

Businesses also have the option of selling their intellectual property – the ideas behind their product or service – often in the form of a patent or copyright that they have already secured.

Corporate investment

It may sound counter-intuitive, but small companies can sometimes attract funding from more established firms in the same industry. For example, in the 2000s, McDonald’s took a 33 per cent stake in upmarket sandwich chain Pret a Manger and Google invested $1billion in fellow search engine AOL, as part of a strategic alliance.

Sharma says says: ‘If you have a disruptive product, consider speaking with the companies you are looking to shake-up – they might be keen to buy a stake in the business as a defensive measure.

‘Just make sure a corporate investor is keen to share in your success, rather than simply neutralise the competition.’

What makes a winning pitch?

Once you’ve worked out which form of investment is right for you, the next step is to make sure you nail your funding pitch.
The best way of doing this will depend on your audience. For example, crowdfunding investors are unlikely to be experts in your field, so you need to be clear in your pitch about what your business has set out to achieve and why this represents an exciting opportunity for them.

Meanwhile, venture capitalists or angel investors are likely to ask probing questions about the inner workings of your business – so you need to be prepared for that and make sure you know all your facts and figures.

However, there are a few tips all small businesses would do well to bear in mind, regardless of who they are pitching to.

Sharma says: ‘You should be able to explain your business in one or two simple sentences. Being able to succinctly describe your product or service, and the problem it solves, is critical to securing investment.

‘For certain sectors, such as technology, it can be helpful to give a demonstration, or talk through a prototype, which will help potential funders to visualise a complex idea.’

While backers may think your idea is good, they will also want to know pretty early on what’s in it for them financially.
Sharma says: ‘One of the most important things to get across is how you plan on generating revenue. The bottom line is that backers look for a financial return, so you need to prove that your idea is a promising investment.

‘Lastly, excite investors! Enthusiasm for a venture, plus expression of your own expertise and tenacity can be a great asset.’

By ELEANOR LAWRIE for www.thisismoney.co.uk


1 2 3 4 5 6 7 8 9