By Rachel Lau – Managing Partner, RHL Ventures
Southeast Asia’s start-ups are drawing in more money every year. Last year alone, the amount of equity funding, at USD6.5 billion, was double the figure in 2016 and involved approximately 500 deals.
While start-ups are receiving more funds than ever before, much of this is buoyed by the USD100M+ ‘mega-rounds’ led by global giant corporates and into regional unicorns like Grab, GO-JEK, Tokopedia and Traveloka.
Outside of the unicorn funding stage, start-ups are finding it difficult to secure funding at post-seed, early stages. Crucial Series A to C funding often doesn’t materialise – creating a ‘funding barbell’ with most investments being channelled to either seed or later growth rounds.
The question remains: what about all the stages in between? The key moments for growth in start-ups life? The post-seed bottleneck is strangling many promising start-ups at a moment when Asia needs innovation-driven growth more than ever.
Fostering holistic change
Part of RHL’s mission is to step in during these vital middle-stages; allowing companies that have growth traction but insufficient capital, network or expertise to reach the next level.
RHL looks for innovations that solves everyday problems. What is the value proposition? Does it make people’s lives easier and better? And does it really disrupt the existing industry?
As a firm, RHL invests across industries with a focus area of agriculture, financial, property, healthcare, manufacturing and consumer. It doesn’t matter what sector you are in – what we need to know is whether the sector will keep growing and if your company has the ability disrupt and innovate the existing ways of doing business.
Digitalising sports talk
GameOn, a Silicon Valley company we’re working with, came up with an innovative chatbot for the sports industry. We decided to back them after their founder, Alex Beckman, approached us on how to build a stronger platform in Southeast Asia – after having already developed chatbots for the English Premier League (EPL), the National Football League (NFL) and the 2014 Olympics in Brazil (in collaboration with Sports Illustrated).
By using AI, machine-learning and Natural Landscape Processing on its cloud-based platform, GameOn links its users to their content; albeit with better context and curated to match one’s favourite sports interests.
If there’re two things we can say about people in Asia, is that we’re passionate about our games and the need to socialise. However, the platforms currently present in the region haven’t kept apace with growing demands by sports fans for a more intuitive chat interface.
Essentially, we’re working with GameOn to help stir up more fan discussions during regional sports events like the Asian Games or Arsenal games; which tend to be the one of the rarer occasions that people gather in full throng to back their respective countries.
Building a dating app fit for Asia
As people become more reliant on their phones for everyday interactions, we see the norms of dating evolving to be more digital. One out of four people have met their partners online. When it comes to dating apps, Tinder still rules for now. Yet, its reputation of being a hook-up platform may soon see it caught up by a slew of new alternatives that are designed to suit Asian dating trends better.
That was the motivation behind our decision to work with Coffee Meets Bagel, a dating app founded by three sisters in San Francisco. The app works differently from Tinder as the data required by members goes through an algorithm to help find matches curated to one’s interests and preferences; instead of being thrown in a random pool of strangers based on your location and orientation.
Coffee Meets Bagel focuses on developing real connections between people. As such, one’s profile on the platform needs to be more detailed than the meaningless one-liners typically presented on Tinder. It limits the number of people you can be matched in a single day; which helps users think twice before casually swiping for a match.
For us, Coffee Meets Bagel is the app designed for how we Asians date. Its data-driven process helps us narrow down better-suited matches and cut the time used to just meet someone new. It also helps to filter out inappropriate messages from dodgy matches – helping to ensure that the dating process can foster real conversations, rather than being degraded to the sharing of unwanted explicit imagery.
Guiding creative disruption
VCs across the world have been trying to search for the next big disruptor. But we understand that finding them may not be obvious at first. It requires the investor to go beyond just providing funds and help add value to their investees via mentoring and networking.
Disruption by technology can happen in any industry.
We know the importance of having entrepreneurs take the lead for their business’s growth, which is why we prefer to be partners, working side by side, and take equity stakes of up 30% in a firm – leaving the management rights with existing executives and owners.
We’ve outlined our philosophy as patient capital, as such as it helps to circumvent constraints put up by conventional private equity and public investors, namely conflicted interests in capital ownership and the restrictions to short-term market performances.
Our aim is to create a sustainable model to empower entrepreneurs, who in turn will be better positioned to innovate new breakthroughs.
Our goal is to create innovations that are truly global in scale and that leave no one behind.