sasin october sundowner - venture capital in southeast asia
DESCRIPTION
Sasin Entrepreneurship October Sundowner Topic: Venture capital in southeast Asia Speaker: Douglas Abrams Date: October 15, 2014 Time: 18:00-20:00 Place: Room 502, 5th floor, SasinTRANSCRIPT
October 2014
Sasin Sundowner Presentation VC in SEA
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About the lecturer
Wharton MBA
JP Morgan – Vice President IB Technology, GM Internet Marketing
Parallax Capital Mgmt – Co-founder and MD Venture investing
Extream Ventures – Co-founder and MD S$20 million seed fund
Expara & Expara IDM Ventures– Founder and MD Incubator, advisory, training
NUS – Adjunct Associate Professor, Business School, Entrepreneurship
Sasin - Visiting Professor, Venture Capital
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Why do ventures seek investment?
A big piece of a small pie?
A small piece of a big pie?
Risk and return?
Founder
Investors
Investors
Founder
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What is the relationship between risk and return?
Risk and return are highly positively correlated
You cannot increase return without taking more risk
Return
Risk
Potential outcomes
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Why invest in venture capital?
As of 31-Mar 2014 The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,494 U.S. venture capital funds (962 early stage, 163 late & expansion stage, 363 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2013. 1Pooled end-to-end return, net of fees, expenses, and carried interest. Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's, Thomson Reuters Datastream, and Wilshire Associates, Inc. *Capital change only.
Case Shiller Real Estate Index 4.1
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What is the venture funding process?
Founder’s Capital
Seed/Angel
Series A, B, C
Mezzanine Pre-Exit Exit
VC hurdle rates 60-100% 40-60% 20%
OM F,F&F
Incubators corporations government
Customers, suppliers, strategic partnersVCs, Banks for VC loans
R&D Establishment GTM/Rollout Accelerated Expansion MaturityEnablement growth
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Asia VC increasing exponentially
2014 VC investment in Asia $10.5B up from $6.3B in 2013
New VC/PE funds raising $113B targeted at Asia in 2014
Venture capital investment in Singapore went from 27.9 MM in 2011 to 1.71 B in 2013, a 60x increase
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SEA deal flow pipeline is full
S$90MM invested in Singapore seed stage in 2013 alone
Deals Amt (USD MM) Population GDP (USD B) Total SG 264 71.8 5.312 274 Total US 908 361.4 314 15000 SG / US 29% 20% 1.7% 1.8%
[1] Crunchbase Jan 2014, Wall Street Journal Feb 2014
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US and Singapore public sector VC
The US federal government alone invests as much in small businesses as total VC investment through SBA/SBIR
Federal contracts to small businesses dwarf total VC investment
Start-ups are also funded at state and local levels
Both US and Singapore invest about 1% of GDP into programs supporting start-ups and small businesses
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How do VCs make money?
Trade sale – sell to another company
IPO – sell to the public through listing on an exchange
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Exit markets at an inflection point
Exit activity in SEA, especially in Singapore, exploded in 2013 • Increased investment in startups since 2007 is beginning to yield results
• Number of exits increased from 6 in 2010 to 20 in 2013
• Singapore alone has had 30 exits since 2007, 13 in 2013
• Value of exits increased from 51 MM in 2010 to 400 MM in 2013
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Recent exits in SEA Company Country Acquiror Price Year
ZopIM Singapore Zendesk US$29.8MM 2014 Non-Stop Games Singapore King US$ 100MM 2014 sgCarMart Singapore SPH S$60 MM 2013 DS3 Singapore Gemalto S$50 MM est. 2013 Asian Food Channel Singapore Scripps Networks Undisclosed 2013
Reebonz Singapore MediaCorp and Existing investors S$250MM 2013
Yfind Singapore Ruckus Wireless Undisclosed 2013 Techsailor Singapore TO THE NEW Undisclosed 2013 travelmob Singapore HomeAway Undisclosed 2013 Catcha Digital Media Singapore Opt Inc Undisclosed 2013
GridBlaze Singapore Undisclosed Silicon Valley Startup Undisclosed 2013
Viki Singapore Rakuten US$200MM 2013 SGE Singapore Tech In Asia Undisclosed 2013 ThoughtBuzz India To The New Undisclosed 2013 AyoPay Indonesia MOL AccessPortal Undisclosed 2013 Tongue in Chic Malaysia PopDigital Undisclosed 2013 Ocision Malaysia Star Publication US$ 4.36MM 2013 Glamybox Vietnam VanityTrove Undisclosed 2013 PaymentLink Singapore Wirecard US$41.2MM 2013 Dealguru Singapore iBuy S$34.28 MM 2013 Buy Together Hong Kong iBuy S$21 MM 2013 Dealmates Malaysia iBuy S$10 MM 2013 PropertyGuru.com Singapore ImmobilienScout24 S$60 MM 2012 HungryGoWhere Singapore Singtel S$12 MM 2012 AdMax Network Singapore Komli Media Undisclosed 2012 TheMobileGamer Singapore Singtel US$1.5 MM 2012
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• EIDMV I portfolio of 16 companies 19% success rate 2008-2014
• First exit in Oct-2013 at 36x ROI and 2.2x on total invested capital
• Second (partial) exit in May 2014 at 250x ROI and 5.13x on total invested
• 42% IRR 2008-2014; 5.13x; two live companies in portfolio
Expara venture capital returns in SEA
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Why VC in Thailand now?
Historical challenges
• Exits • Enterprise ecosystem • Innovation • Legal and corporate
governance • Cultural attitudes
Mitigation
• Early stage valuations allow profitable local exits; regional focus allows larger exits
• Regional bridge and expertise in building local network
• Focus on innovative segments – new and traditional
• Changing environment • Channeling entrepreneurial
energy to scalability
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Developments in Thai venture funding
I4-x – first VC-funded accelerator
Telco incubators, accelerators and VC funds – TrueIncube – AIS The StartUp – DTAC Accelerate
New VC funds – M8VC – Ardent Capital – The VC Group
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Key elements of a VC deal
Board of directors
Protective provisions
Drag-along agreement
Conversion
Control
Price-per-share
Valuation
Amount of financing
Liquidation preference
Vesting
Options pool
Anti-dilution
Pay-to-play
Economics
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Contact us
Douglas Abrams
Expara Pte. Ltd.
www.expara.com
65-6323-3084, 65-9780-5381 (hp)
Block 71 Ayer Rajah Crescent, #02-10/11 Singapore 139951