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Entrepreneurship in the development of ASEAN Economic Community

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Entrepreneurship in the development of ASEAN Economic Community

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Entrepreneurship in the development of ASEAN Economic Community

  1. 1. May 2016 Entrepreneurship in the development of ASEAN Economic Community Douglas Abrams
  2. 2. 2 6XXXX Douglas Abrams About the facilitator • Wharton MBA • JP Morgan – Vice President IB Technology, GM Internet Marketing • Parallax Capital Mgmt – Co-founder and MD Private Equity • Extream Ventures – Co-founder and MD S$20 million seed fund • Expara – Founder and MD IDM Ventures Incubator, advisory, training • NUS – Adjunct Associate Professor, Business School, Entrepreneurship, Sasin – Visiting Professor, Venture Capital
  3. 3. 3 6XXXX Douglas Abrams Creative destruction • Innovative entrepreneurs drive long-term macroeconomic performance • Long-run economic growth • Economic fluctuations • Structural adjustment • Accounts for over 50% of productivity growth
  4. 4. 4 6XXXX Douglas Abrams Development of a thriving entrepreneurial sector • Not just an economic "nice- to-have" • In the knowledge-and innovation-driven globalized economy of the 21st century • It is a competitive necessity
  5. 5. 5 6XXXX Douglas Abrams Impact of VC-funded companies on econony • US companies receiving VC from 1970-2005 accounted for 10 million jobs and $2.1 trillion revenue in 2005 • 9% of total private sector workforce and 16.6% of total GDP • Job growth rate of 4.1% vs 1.3% and sales 11.3% vs 8.5%
  6. 6. 6 6XXXX Douglas Abrams Companies founded by MIT grads • 25,800 active companies • Employing 3.3 million people • Generating annual revenues of $2 trillion • Singapore: $307 billion; Thailand $373 billion; Vietnam $186 billion • Equivalent to the 11th largest economy in the world
  7. 7. 7 6XXXX Douglas Abrams Innovation and Entrepreneurship • Why countries need innovative entrepreneurship • Driving innovative entrepreneurship: enterprise ecosystems • The key players • Singapore enterprise ecosystem • Outlook for Thailand’s enterprise ecosystem
  8. 8. 8 6XXXX Douglas Abrams Innovation and ecosystems • Coral reefs – 10% of earth’s surface; 25% of known species • Cities 10x larger than neighbor are 17x more innovative • Residents of city of 5MM are 3x more innovative than resident of town of 100K
  9. 9. 9 6XXXX Douglas Abrams Factors that drive innovation require ecyosystem • Liquid networks • Slow hunches • Serendipity • Error • Exaptation • Platforms
  10. 10. 10 6XXXX Douglas Abrams Participants in enterprise ecosystems Enterprise ecosystem RIs IHLs Entre Govt Accel Incub Angels VCs Mentors Industry Capital markets
  11. 11. 11 6XXXX Douglas Abrams Who are the players? • Entrepreneurs – Lifestyle entrepreneurs – High-growth entrepreneurs (scalable business) • Venture investors – Venture capitalists (VCs) – Angel investors – Corporate VCs and investors – Banks – Government
  12. 12. 12 6XXXX Douglas Abrams What roles do they play? Identify opportunities Provide funding Oversee finances Assist with growth Generate returns for themselves or their investors Venture investors • Create opportunities • Raise funding • Manage finances • Increase value • Generate returns for investors Entrepreneurs
  13. 13. 13 6XXXX Douglas Abrams Small versus scalable business • Small business: limited scope, complication and risk. Slow growth. • Scalable business: significant scope, complication, and risk. Rapid growth.
  14. 14. 14 6XXXX Douglas Abrams Why do companies raise investment? • Lifestyle or scalable? • Paycheck or payout? • A big piece of a small pie? • A small piece of a big pie? Founder Investors Investors Founder
  15. 15. 15 6XXXX Douglas Abrams Stages and sources of funds Founder’s Capital Seed/ Angel Series A, B, C Mezzanine Pre-IPO IPO VC hurdle rates 60-100% 40-60% 20% Why are these rates so high? OM F,F&F Incubators corporations government Customers, suppliers, strategic partners VCs, Banks for VC loans
  16. 16. 16 6XXXX Douglas Abrams Why do investors invest in venture capital? As of June 30, 2014. The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,508 U.S. venture capital funds (963 early stage, 165 late & expansion stage, 374 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2014. (1)Pooled end-to-end return, net of fees, expenses, and carried interest.(2) 2007-2015 Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's, Thomson Reuters Datastream, and Wilshire Associates, Inc Case Shiller Real Estate Index 4.1 Expara IDM Ventures (2) 43.03
  17. 17. 17 6XXXX Douglas Abrams Companies founded with venture capital www.nvca.org
  18. 18. 18 6XXXX Douglas Abrams Industries created by venture capital www.nvca.org
  19. 19. 19 6XXXX Douglas Abrams Milestones in Singapore enterprise ecosystem 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 No VCs NRFNUSTIF
  20. 20. 20 6XXXX Douglas Abrams Strengths of Singapore’s enterprise ecosystem • Public policies promoting entrepreneurship and venture capital • Public policies supporting the venture capital industry • A business friendly environment • Strong IP protection regime and corporate governance • Strategic location in Asia
  21. 21. 21 6XXXX Douglas Abrams
  22. 22. 22 6XXXX Douglas Abrams 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
  23. 23. 23 6XXXX Douglas Abrams SEA exit markets at an inflection point
  24. 24. 24 6XXXX Douglas Abrams 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
  25. 25. 25 6XXXX Douglas Abrams Contact us • Douglas Abrams • Expara – dka@expara.com – www.expara.com • You can also contact me on: – Facebook, Linked-In, Line, Whatsapp, WeChat • Singapore mobile: 65-9780-5381 Singapore HQ Block 71 Ayer Rajah Crescent #$02-10/11 S139951 Regional offices: Bangkok, KL, HCM, Tokyo

Entrepreneurship in the development of ASEAN Economic Community

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