[PREMONEY 2014] Ardent Capital >> Adrian Vanzyl, "The Global VC: Southeast Asia"

[email protected]; Twitter: adrianvanzyl

Overview of Tech and Venture Ecosystem in SE Asia

Dr Adrian VanzylArdent Capital

[email protected]@adrianvanzyl

mailto:[email protected]


Who is Ardent? An “Operator VC”

• A successful operating company, focused on capturing a large share of the ecommerce value chain in Southeast Asia

• We do so by operating (majority ownership) or investing (minority ownership)

• Companies are deeply synergistic, and all cooperate with each other for mutual benefit

• Existing bets in B2B (aCommerce), B2C (WhatsNew), Sourcing & E-Retail

• A portfolio of seven companies, 350+ new jobs created

• A track record of significant current success, including aCommerce. ROI in excess of 40%

• Headquartered in Bangkok, investments across all of SEA


Active Investor, bringing money into the region

Ardent itself has investment from Recruit, GMO and Siemer and has co-invested with these companies

JAPAN

USA

INDONESIA

MALAYSIA

SINGAPORE

AUSTRALIA

THAILAND


aCommerce.asia – An example web 1.0 investment

Phone Orders

Storage Picking

Packing

Online Orders Order Processing

Order Documentation

Order Checking

Quality Control


About Me

• Dr Adrian Vanzyl• Based in Bangkok, previously in San Francisco & Australia• Ardent Capital, Bangkok - CEO and Co-Founder

– Operator VC. Investments include aCommerce.asia, WhatsNew.asia, PicoCandy

• Blumberg Capital, San Francisco - multiple roles over 12 years (CTO & CEO of two portfolio companies, LP, Advisor)

– Current fund $150M. Investments include Hootsuite, DoubleVerify, Nutanix

• SLI-Systems, San Francisco - Co-Founder, Board Member– NZX listed. Current Q2 market cap $112M

• LinkExchange, San Francisco - VP Business Development– Sold to Microsoft for $260M

• LookSmart, San Francisco – CTO– IPO NASDAQ. Peak market cap of $3.5B

• Sausage Software, Melbourne AU - CTO and Board Member– First internet IPO in AU. Peak market cap $1.5B

MD degree MB BS Hons I Monash University, Australia

http://www.linkedin.com/in/adrianvanzyl


• Thailand/Indonesia/Malaysia?– Maybe– Some angel money; limited experience– Almost impossible to raise > $2M

• Singapore– Maybe– Lots of money, dozens of funds– Highly competitive– Many strings attached – must incorporate in SG, have key execs in SG

• Japan– Maybe– Lots of money, dozens of funds– Language and cultural barriers– Highly complex due diligence

• So what is the solution?– We need more venture funds in the region, outside of Singapore!

How hard is it to raise venture capital in SEA?

Where does a Thai/Indonesian/Malaysian entrepreneur go for money?


Total Addressable Market. Why S.E. Asia?

Sustainable GDP per capita growth (Avg. 5-6%)

Rising disposable income

Growing mobile broadband penetration

Accelerating smartphone penetration

Increasing Credit Card penetration

Improving logistics and infrastructure

Social is everything – Facebook, LINE

Over $17B of branded and direct to consumer ecommerce coming into SEA in next 3 years


SEA Basic Data

Unit ID SG PH VN TH MY China US

Population M 248 5.2 95 88 67.5 28.9 1350 315

# Online M 75 3.9 33 31 32 18 513 246

% Online % 30% 74% 34% 35% 46% 63% 38% 79%

# Social Media Users # 66 3.6 38 24 27 17 NA 167.8

# E-commerce Shoppers # 5.6 1.8 5.8 13.2 14.5 10.5 164 184

E-commerce Shoppers % 7.5% 46% 18% 42% 45% 58% 32% 75%

Retail Sales USD B 134 31 34 108 139 51 2,380 4,700

B2C E-commerce Market USD B 0.9 1.1 1 0.5 1.1 0.7 190 343

E-commerce % of Retail % 0.7% 3.5% 3.1% 0.5% 0.6% 1.4% 8% 9%

Spend Per Spender USD 252 917 172 42 365 68 726 1,864

Source: UBS Research, Nielsen, Comscore, PWC HK, ATKearny, researchandmarkets.com, Dailysocial, smu.edu.sg, E-commerce.org.sg


Southeast Asia Online Landscape

162 millionActive Social

Network Users

Source: Global Digital Statistics 2014

SOUTHEASTASIA

ONLINESNAPSHOT

155 million Internet

Users

630 millionTotal Population

689 millionActive Mobile Subscriptions

109%Mobile

Penetration

26% Social Network

Penetration

25% Internet

Penetration

45:55 Urban: Rural

93%Mobile

Penetration

26% Social Network

Penetration

35% Internet

Penetration

52:48 Urban: Rural

GLOBALONLINE

SNAPSHOT


Internet Penetration is Exploding

24M

31M

18M

4M

55M

34M

194MNew internet

users

360MInternet users

Source: We are Social, Accenture

2010 2020

62% Est. internet penetration

25% 2010 internet penetration


Epicenter Outside US

Structural shift towards internet trend in Asia Pacific (>40%)US is no longer the epicenter of internet usage

1996 20120%

20%

40%

60%

80%

100%

66%

13%

34%

87%

Internet Usage

US Outside US

Source: UBS, comScore Media Metrix


NORTH AMERICA

SOUTH AMERICA

EUROPE

OCEANIA

AFRICA

ASIA

0% 10% 20% 30% 40%

19%

17%

16%

17%

38%

37%

Mobile Usage, In Terms of Page Views, as % of Web Usage (2014)

Asia is amongst the top mobile device users in the world

Source: Mary Meeker, Code Conference. StatCounter, 5/14.

Global Average

Mobile Device Users


SEA Mobile Penetration

All major SEA countries are above the global average in mobile penetration

Source: Bain&Company

Higher Mobile

Penetration

Singapore 144%Vietnam 133%Malaysia 122%Thailand 110%

SEA Average

Philippines 92%Indonesia 90%

Global Average

China 63%

Country | Penetration


Smartphone Penetration in SEA (2013)

Source: TigerMine Research

Credit card usage by country

Indonesia

Malaysia

Philippines

Singapore

Thailand

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

15%

23%

49%

80%

87%

SmartphoneFeature Phone


Comparative Study: Thailand vs China

Thailand requires 1.5 vs 3 years to reach the same online penetration level as China’s post 3G

20032004

20052006

20072008

20092010

20112012

20132014

20152016

20172018

0

0.1

0.2

0.3

0.4

0.5

0.6

Internet Penetration

Internet penetration in ChinaInternet penetration in Thailand

2008 2009 2010 2011 2012 2013 20140.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Smartphone penetration

Smartphone penetration in China

Smartphone penetration in Thailand

Source: CNNIC, UBS estimates


Mobile Advertising Opportunities

North America Western Europe Asia-Pacific Worldwide $0

$20

$40

$60

$80

$100

Mobile Ad Spending per Mobile Internet User

20122016

High discrepancy between Mobile Ad Spending per User and Actual mobile usage in Asia-Pacific, specifically in SEA

Source: eMarketer, WeAreSocial

101% 129% 109% 93% Mobile North America Western Europe Southeast Asia Worldwide Penetration


Online Advertising

SEA online shoppers are very responsive upon seeing online ads

Source: Google Southeast Asia Online Shopper Study

Thailand

Indonesia

Philippines

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

68%

79%

70%

73%

85%

79%

Used info from ads when researching product Took direct action from ads


2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 20150

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

24000

26000

Furniture & Floor Cover-ings

Sports & Leisure Equipment

Home & Garden Products

Books, News & Stationery

Apparel, Accesories & Luxury Goods

Music, Video & Enter-tainment Software

Food & Grocery

Electrical & Electronics

Year

US$

Bill

ions

7.1

23.5

13.5

3.52.5

Thailand, Philippines, & Indonesia Online Retail is Growing Fast!Online Retail Sales Forecast 2005 – 2015 – Source ICD Research

Ecommerce is Exploding

18.7


Online Shopping Categories

Apparel has highest purchase frequency but lowest average spend when compared with Mobile Phones and Consumer Electronics

Thailand Indonesia Philippines0%

10%

20%

30%

40%

50%

60%

46%

51%

35%

21%

14%16%17%

19%

14%

% bought last month

Apparel Consumer Electronics Mobile Phones

Thailand Indonesia Philippines 0

100

200

300

400

500

600

Average Purchase Price (USD)

Apparel Consumer Electronics Mobile Phones

Source: Google Southeast Asia Online Shopper Study


ASEAN Economic Community (AEC)

The ASEAN Economic Community (AEC) represents a tremendous opportunity to do business in Southeast Asia.

Free flow of goods

Free flow of services

Free flow of investment

Free flow of capital

What it means…

Free flow of skilled labor

What it comprised of…

More attractive to foreign direct investment

Easier to obtain/move capital across the region.

Easier to recruit talent from countries in Southeast Asia

Cheaper and easier to sell goods across borders

Easier to provide services and establish companies in the region

In 2015, Southeast Asia will transform into an integrated market, making it easier for businesses in Southeast Asia to expand

Source: ASEAN


Leading Ecommerce Players in SE Asia

By Country B2C Marketplaces

B2C Multi-brand

Retailers

B2C Private Sales &

Daily deals

C2C Marketplaces & Classifieds

Singapore

Thailand

Indonesia

Philippines


Biggest player in SEA - Who is Rocket Internet?

Rocket Internet has built over 100 companies in 50+ Countries

Started in 2007; headquartered in Berlin

75+ active independent portfolio companies

Employing over 27,000 people

Raised over $1B in 2012

30+ exits

$2.5B+ in revenue

7 companies currently in SE Asia

IndonesiaMalaysiaPhilippinesSingapore ThailandVietnam

IndonesiaMalaysiaPhilippinesThailandVietnam

Indonesia

IndonesiaMalaysiaSingaporeVietnam

IndonesiaMalaysiaSingapore ThailandVietnam

IndonesiaMalaysiaPhilippinesSingapore

MalaysiaPhilippines


Started in Dec 2011

Adaptation of Zappos.com

1,300+ employed across the region

Annualized Gross Run Rate: €115mm

Well over $126M in funding

Spent over $23M in marketing in 2012

Rocket’s SEA bets

Started in Feb 2012

Adaptation of amazon.com and alibaba.com

900+ employed across the region

Annualized Gross Run Rate: €92M

Well over $185M in funding

INVESTORS:


VC Firms: SEA Outside of SG

PHILIPPINES

Launch Garage: Seed ($30K)Ideaspace: Seed ($25K-$100K)Kickstart Ventures: Seed ($100K)Nest: Seed ($50K)Hatchd Digital: Seed ($100K)Narra Ventures: Seed/Growth ($500K - $1M)IPVI: Later Stage ($1M) ICCP: Later Stage PE firm ($1M and up)

INDONESIA

IDEOSOURCE: Seed ($500K)Mountain Ventures: Seed ( $250K)

Rebright: Seed ($200K)East Ventures: Seed ($50K)Grupara: Seed (Up to $50K)

VIETNAM

Silicon Valley Project: Seed ($10K-$20K) PVNI: Seed (Up to $250K)DFJ Vina Capital: A ($1M-$2M)IDG Ventures: Seed, A, B (Up to $2M)CyberAgent: Seed, A (Up to $1M)

THAILAND

True Incube: Seed ($15K)DTAC Accelerate: Seed ($15K-$50K)Ardent Capital: Seed ($100K-$200K)AIS Invent: Seed/ Series A (Up to $2M)

MALAYSIA

500 Durians: Seed ($50K-$100K)1337 Accelerator: Seed ($15K)The Star Accelerator: Seed (Up to $300K)Asia Venture Group: Seed (Up to $500K)Catcha Group: A, B, C, D (All Range)


• Singapore’s two sovereign wealth funds (“SWF”s) have more money under management than the entire US venture capital industry ($315B vs 200B).

• SG’s National Research Foundation (“NRF”) provides dedicated Early Stage Venture Fund (ESVF) to support early stage ecosystems (Series A)

• First Round (2008) – Seeded S$50M total funds to five VC firms. VC companies must co-invest on a dollar-to-dollar basis. (Totaling S$100M fund size)

• There is a buy-out option offered to other LPs/GP

• These companies have collectively invested over S$38M in 24 start-ups from various technology sectors to-date.

• Second Round (2013) – S$50M to five VC companies on the same dollar-to-dollar co-invest basis

• NRF will take profit up to 5% ROR (simple interest) and share rest with LPs/GP

Singapore, INC


• Generous support from the Singaporean government leads to large number of Singapore-based funds, but start-ups need to be based in Singapore to qualify for funding and often need to have key executives in Singapore

• Early Stage ($250K-$500K)

• Growth Stage ($1M up)

VC Firms: Singapore


VC Firms: Singapore

• There are also bigger funds that are heavily tied to Singapore

• There are also many Japanese investors – both funds and corporates investing in SE Asia, some with offices in Singapore

Corporate venture capital fund of SingTel; investments must be strategically beneficial

Venture arm of Temasek, an investment company owned by the Government of Singapore


Acquisitions and Exits

2005 2006 2007 2008 2009 2010 2011 2012 20130

5

10

15

20

1

2

2

2

1 1 24 5 4

71

3

1

5

3

12

3

111

Vietnam

Thailand

Philippines

Malaysia

Indonesia

Singapore

Num

ber

of E

xits

2% 8%

13%

13%

19%

45%

Exits since 2005

Vietnam

Thailand

Philippines

Malaysia

Indonesia

Singapore

Singapore and Indonesia make

up 64% of the total tech exits since 2005

Source: SGE

Since 2005, there have been 53 tech acquisitions in Southeast Asia


Running a fund in SEA - Challenges

• Number 1 issue – Talent– For your fund – key ‘on the ground’ staff– Company execs in portfolio

• Dealflow – how to see best deals• Legal – fund structure, investee structure• Tax – where are you liable? USA issues• Exits – who will buy? How do you get your money out?• Lack of transparency – legal/tax/operations• Lack of accurate data – no one knows the exact numbers

for anything!


Do & Don’t

• Don’t just open a satellite office and fly in fly out.• Cultural nuances

– Six completely different cultures, not just one place

• Local ownership restrictions– BOI in Thailand, Nominee in Indonesia, Licenses in Vietnam

• Location of Holding Company– Either in Singapore or Hong Kong– Importance for legal, fund raising, exits

• Local partners– Tap into local expertise, dealflow, sanity checks

• DO – come into the region, invest, educate, support


THANK YOU

Thailand Office946 Dusit Thani Building, 4th fl., Rama IV Rd. Bangrak, Bangkok, Thailand 10500

Indonesia OfficeAXA Tower 45th Floor, Jl. Prof. Dr. Satrio Kuningan Kav. 18, Kuningan City, Jakarta 12940

Thailand Distribution Center951/1 Soi Preeyanon, Sathupradit Road, Bangpongpang, Yannawa Bangkok 10120, Thailand

Adrian VanzylCEOArdent

[email protected]@adrianvanzyl

Singapore OfficeOxley Bizhub, 61 Ubi Road 1, #2-13 Oxley Bizhub, Singapore 408727

mailto:[email protected]

[PREMONEY 2014] Ardent Capital >> Adrian Vanzyl, "The Global VC: Southeast Asia"

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