03 future of money

integrating business operations with banking

SMEs must reinvent and go digital by implementing digital solutions beyond banking that will allow their business to continue, rethink their business strategy and formulate a way forward in this new normal.

investing in the disruptors of tomorrow

After the cautious 2020, investors find themselves sitting on a large stack of dry powder, and they know exactly what they want to fund.

alternative ways to finance SMEs

SMEs usually fail to meet the credit criteria of traditional financial institutions because of their low to zero credit track record and lack of assets to pledge. As a result, they are largely underserved. Where do they turn to instead?

business support for small and medium enterprises: perspectives from invest hong kong

While fighting the pandemic, what has been done on the government level to ensure that small businesses are able to operate and grow even through challenging times?

the rise of digital neobanks in the post covid era

With customer experience and technology being their primary focus, neobanks have made financial services convenient and accessible, tapping into segments that traditional banks have yet to reach.

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Investing in the Disruptors of Tomorrow

You might have thought investment stalled during the pandemic. Surprisingly, it didn’t. Across Southeast Asia more deals were struck in the first 6 months of 2020 than 2019. Though many of them were likely agreed upon before the COVID, investors remain cautiously optimistic about the future.

Who got the money

Uncertainty shrank deal sizes: there were more deals struck, but less money raised. Part of it is due to unicorns receiving fewer deals. That gave way to companies with smaller appetites, many of them in the early stage. 95% of the transactions were Seed, Series A, and Series B investments.

What industries are attractive

Some of the obvious recipients have been e-commerce, food and groceries delivery, and online media. Online travel has understandably stalled though investors still consider that in the future the industry will get its performance back.

And then there are the 3 industries on the rise gaining investors’ attention: fintech, healthtech, and edtech.

Fintech has seen the most momentum in 2020, growing both in number of deals and size of investment. This segment is less mature and consolidated than e-commerce, which might mean that investors will still explore it in the years to come.

Healthtech and Edtech are still relatively small. In 2020, these industries have arguably made the biggest leap in terms of attracting new customers, most of them for the very first time. Numbers suggest the customers will stay, and then so will investors.

40 million new users joined the internet in 2020
Source: E-conomy SEA 2020 Google, Temasek, Bain & Company report

How to get funded

The tide of the pandemic seems to have eased in Southeast Asia, so investors feel cautiously excited. There’s also money to be spent: funds have reported record capital levels in 2019, and much of that cash has yet to be committed. However, thanks to the lessons of the COVID crisis, investors have become pickier.

Be sustainable

Investor appetite for sustainable business models has started growing before the pandemic. Yet the crisis has accelerated this trend. 2-3 years ago many startups would ‘blitzscale’ - burn cash to acquire market share fast. This kind of approach has lost its appeal as investors tend to favor more sustainable growth models instead.

Find a niche

The way to become attractive may vary depending on the industry. Competing in e-commerce, for one, is hard: startups are aplenty, and many large companies come to the market with deep pockets. So either find a niche that makes you stand out against others, or go into a different industry altogether (medtech and healthtech grow nicely and are less populated as of yet).

Streamline

Take Grab for example: Southeast Asia's largest unicorn decided to sunset any non-core projects back in June. Focusing on their 3 main lines of business: transportation, delivery, and financial services, has helped maintain profitability. Grab now says their revenue is currently about 95% of pre-COVID level.

Bigger part of customer’s wallet

This means that instead of being everything for everyone, your business should focus on what you’re best at. Get a bigger part of your customer wallet before trying to bite a bigger market share.

In order to look attractive for the investors right now, you have to make a smart choice regarding how you grow your business. Focus on your core products and services and get rid of the distractions. Build loyalty and a bigger share of the customer’s wallet rather than being in a constant recruiting game. Now that seems like a great business to pitch.

Previous integrating business operations with banking

SMEs must reinvent and go digital by implementing digital solutions beyond banking that will allow their business to continue, rethink their business strategy and formulate a way forward in this new normal.

Next alternative ways to finance SMEs

SMEs usually fail to meet the credit criteria of traditional financial institutions because of their low to zero credit track record and lack of assets to pledge. As a result, they are largely underserved. Where do they turn to instead?

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