Mapping the Money: Who’s got cash to back deep tech in Singapore?

Hugh Mason 23 OCT 2020 hugh@jfdi.asia
2
Introductions
Coming Up
1
Unpacking “Deep Tech”2
Venture Financing 1013
Deep Tech as an Asset Class: Opportunities and Challenges4
Connecting Across Cultures - How to Open a Dialogue5
Q&A6

3
Welcome to a Talk Series on Tech Commercialisation

4
About You
Startups/SMEs
Researchers/Academics

5
● Born in UK, PR, Resident in Singapore since 2009
● BSc Physics with Physical Electronics
● Electronic Engineering Apprentice - GEC Marconi
● BBC, Discovery Channel TV Producer
● MA Leading Innovation and Change
● 25 Years Entrepreneur, Investor, Innovation Mentor. First
Startup Accelerator in SE Asia: backed 70 digital businesses
● Open Innovation Advocate with BOSCH, NXP, NTUC, BP, SPH,
Munich Re, OCBC, Singtel
● Adjunct Associate Professor, NUS Institute of Engineering
Leadership, Mentor @ NUS Enterprise
About Me

6
Meng Wong’s Map of the Money

7
Many Contributors Since Then
Meng Wong Florian Cornu
Arnaud Bonzom
Harshil Ved Oh Jia Zhen
Anthony Lawrence Asher Devang

8
Update Coming Soon: MapOfTheMoney.com

9
Introductions
Coming Up
1
Q&A6

10
Deep Tech as Defined by Propel (X) Ventures
Swati Chaturvedi
● “Companies founded on a scientific discovery
or meaningful engineering innovation”
● A way to categorize startups in life sciences, energy, clean
technology, computer sciences, materials, and chemicals
● Overlooked by investors searching for the next 'unicorn'
● Struggle to find initial funding because of complex nature.
● Deal flow only to a handful of connected people: Others
either did not have access or ability to perform adequate
diligence to make the judgment to invest.
- Chaturvedi (2015)

11
Innovation Happens Along Three Dimensions
Innovation Succeeds Here
IDEO

12
Business Model Innovation Happens Here

13
“Deep Tech” Pushes the Boundary Here

14
TRL Quantifies the Depth of “Deep Tech”
Technology Readiness Level (NASA / DoD)

15
IRL captures the Desirability and Viability Dimensions
Investment Readiness Level (Blank 2013)Technology Readiness Level (NASA / DoD)

16
IRL 9
IRL 1
TRL 1TRL 9
Low Risk
High
Risk
Could it be Done?
ShoulditbeDone?“Could it be Done?” versus “Should it be Done?”

17
IRL 9
TRL 1TRL 9
Low Risk
Could it be Done?
ShoulditbeDone?Fax Was Once the Future

18
IRL 9
IRL 1
TRL 1TRL 9
Low Risk
High
Risk
Could it be Done?
ShoulditbeDone?Deep Tech May Require New Business Models
Deep
Tech

19
Internet 1.0
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce

20
Internet 1.0
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce

21
Web 2.0 and the Mobile, Social Revolution
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile

22
Web 2.0 and the Mobile, Social Revolution
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile

23
The Platform Revolution
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile
Platforms
Online to Offline

24
The Platform Revolution
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile
Platforms
Online to Offline

25
Today’s Frontier
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile
Platforms
Online to Offline
Difficult Regulation

26
Today’s Frontier
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile
Platforms
Online to Offline
Difficult Politics

27
Today’s Frontier
1990 202020102000
Email, File Sharing
Infrastructure
Early Marketplaces
E-commerce
Social Networks
Online Media
Mobile
Platforms
Online to Offline
Difficult Politics
Difficult Technology

28
But Pioneering Techology has Always Been Difficult

29
Deep Tech Startups in Singapore

30
Deep Tech Startups in Singapore

31
Deep Tech Tends to Create its own Ecosystem

32
It’s Worked for Regions Like Penang
Ecosystem
Community 2
Precision
Engineering
Community 1
Semiconductor
Manufacturing
Circles
of
Action

33
Deep Tech Singapore Success Stories

34
Singapore has made Deep Tech a Strategic Focus

35
Local Interest Appears to be Growing
Medical Technology, Quantum Technology, IoT, Renewable Energy,
Artificial Intelligence, Robotics, Agricultural Tech, Autonomous Tech

36
Introductions
Coming Up
1
Q&A6

37
Why Look for Money?
Organic growth (‘bootstrapping’) is:
● Can be great because you keep control and are beholden to no-one.
● Relatively slow but perfectly respectable for ‘Shallow Tech companies’.
● Frequently impossible for Deep Tech companies.
● Therefore sometimes the only option.
External finance:
● Bridges a gap
● Makes delivering on someone else’s agenda a duty.
● Can come with a lot of added value or a nightmare of baggage.

38
Reasons to Look for Money
Good
● Pre-commercial Research
● Working capital
● Capital Expenditure
● Cost of implementing new systems and processes
● Professional development or Hiring key staff
● Development of a product or service
● Development of new customers
● Development of new markets
● Scaling up a business model that’s working
Bad
● Because everyone else is doing it.
● Because an investor is insistent and
you are not sure you are aligned.
● Because an investor wants to live out
a vicarious fantasy through your team.

39
Reasons to Invest Money
AVPN

40
A Landscape of Finance Sources
After Kingston / RSA
Style:
Hands
On
Style:
Hands
Off
Bank
Charitable Foundation

41
A Landscape of Investors
Style:
Hands
On
Style:
Hands
Off
Bank
Government Grants
Corporations
Crowdfunding
Public Markets

42
A Landscape of Investors
Style:
Hands
On
Style:
Hands
Off
Bank
Venture CapitalVenture Philanthropy
Business Angels
Corporations
Government Grants
Crowdfunding
Accelerators
Public Markets

43
Most Investors Seek to Create Financial Value

45
Yet This Conventional Path Doesn’t Work for Most People

46
Venture Capitalists
● Broker money from the wealthy to higher risk, supposedly high return investments.
● Run by a small number of General Partners plus analysts, admins and associates.
● Funding from cash-rich, time poor private investors (‘Limited Partners’).
● Identify and buy equity cheaply in businesses with huge growth potential, stick with
the company over a number of years and then make an exit.
● Will impose significant control conditions.
● Expect a return on investment of more than ten times.
● Economics of a VC fund only work out if they operate at a certain scale and if they
make a reasonably small number of relatively chunky deals.
● Verify claims of added value and talk with previous investees.

47
Business Angels Traditionally Put First Money In

48
Angel Networks Match Investors and Investees
Motivation is complex and can include:
● Altruism
● Vicarious Thrill-Seeking
● Bragging Rights, Startup Cabaret
Most are amateurs, not professionals.
The best bring value worth much more than money.
Experience, contacts and support are only useful if relevant, desired and bounded.

49
Angel Investor Information is Scarce in Asia

50
Angel Syndicates and Private Markets

51
Crowdfunding for Reward
Wolfgang Amadeus Mozart in January 1783, advertising in a newspaper:
These three concertos, which can be performed with full orchestra including
wind instruments, or only a quattro, that is with two violins, one viola and
violoncello, will be available at the beginning of April to those who have
subscribed for them (beautifully copied, and supervised by the composer
himself).
● kickstarter.com is technically called a threshold pledge system.
● Benefits of crowdfunding include non-financial contributions and connections.
● Works for projects that are easy to understand.
● Disillusionment may come due to failure of many projects to deliver.

52
Local Crowdfunding Platforms

53
Deep Tech Ventures are Getting Crowd Funded

54
Crowdfunding for Equity has a Chequered History

55
Token Sales: Today’s “Madness of Crowds?”

56
Structured Venturing Aims to Reduce Failure Rates
MIT’s experience with startup
support (Bill Aulet)
A - Incubator
B - Accelerator positive result
C - Accelerator kills business
D - Recycle talent

57
Deep Tech Focused Accelerators in Singapore

58
Comparing Incubators, Angels, Accelerators and Studios
Venture Studios:
● Focus on one vertical
● Initiate a few projects
each year
● Form teams
● Often offer distribution
channels
● Often have a follow-on
fund attached

59
Venture Co-Creation

60
Open Innovation with Corporations

61
Corporate Accelerators

62
Banks, Charitable Foundations and Government Grants
Banks generally make loans, not investments. Their business model means they need:
● Serviceability - clear evidence that a business can make the payments agreed.
● Security - some kind of guarantee that the bank will be able to recover its money
Government bodies use a variety of mechanisms from grants through to ‘soft loans’,
‘venture debt’ and venture capital. Their goals are usually strategic. Contact: NRF, SG
Innovate, Enterprise Singapore.
Charitable Foundations generally make grants. Venture Philanthropy aims to combine
impact intentions with the rigour of venture capital risk management.

63
Finding Foundations

64
Venture Philanthropy

65
Introductions
Coming Up
1
Q&A6

66
Distinctive Factors of Deep Tech Startups

67
Pros:
● Not everyone will understand it.
● Potentially many applications.
● Potentially scalable.
● May offer a “defensive moat”
Cons:
● Not everyone will understand it.
● How to value it?
● What benchmarks to apply?
● Technology and Regulatory Risk.
Who Might Support This?
● Government Agencies
● Specialist Venture Capital Funds
● Corporate Investors

68
Pros:
● Smart People.
● Potentially unique insights.
Cons:
● Dunning-Kruger effect.
● Motivated by business as well as
science?
● Will they work with commercial
folk as the company scales?
● Universities
● Investors with PhD’s

69
Pros:
● More stable and mature.
● Maybe more life experience.
● May have more connections.
● Studies suggest that median age
of most successful founders is
approximately 38-42
Cons:
● Maybe less coachable.
● Maybe have life commitments
and options that distract.
● Professional Investors

70
Pros:
Cons:
● Requires very “patient capital”
● Likely to need many rounds of
support before commercial
viability is clear.
● Energy sapping to keep raising
money and diluting earlier
investors with intangible
progress.
● Specialist Investors who
understand the sector.
● Corporates and Crowdfunders
who want a problem solved.

71
Pros:
● Fits with traditional corporate
and regulator stage gate
expectations.
● Tests provide concrete evidence.
Cons:
● Tests may not directly indicate
commercial viability.
● Time taken before revenue.
● Universities, Government.
● Specialist investors and
corporates who understand the
opportunity and how to interpret
the test indications.

72
Pros:
● Creates a barrier to competition.
● Creates integrity in reputation of
products in the market.
Cons:
● Regulator policy may change
over time relating to politics not
science or commercial realities.
● Universities, Government.
● Specialist investors and
corporates who understand the
opportunity and how to interpret
signals from regulators.

73
Introductions
Coming Up
1
Venture Investment 1013
Q&A6

74
Research is Bridging the Different Cultures

75
Talk About Benefits & Business Not Product & Science
Deep Tech Offers
new Features
Features build
Products and
Services
Customers pay
For Perceived
Benefits
Successful
Business

76
Show How You Will Create Impact and Value
Time
In the Startup Phase
Tech Issues will dominate.
If it’s not feasible,
It’s Science Fiction.
As the business scales up,
commercial issues dominate.
If it’s not creating value
sustainably it’s a charity or a
science project not a business.

77
Show You Understand the Market Context

78
IRL 9
IRL 1
TRL 1TRL 9
Low Risk
High
Risk
Could it be Done?
ShoulditbeDone?Understand Your Counterparty’s Attitude to Risk
Deep
Tech

79
IRL 9
IRL 1
TRL 1TRL 9
Low Risk
High
Risk
Could it be Done?
ShoulditbeDone?Show How You Will De-Risk the Venture Step by Step
Unfamiliar Science/Technology
Unfamiliar Use-cases
Benefits may be hard to explain
Maybe unfamiliar Business Models
May need new regulation
Maybe misinformation

80
IRL 9
IRL 1
TRL 1TRL 9
High
Risk
Traditional Vision-Driven “Go-To-Market” Strategy
Low Risk
1 “Prove the Technology”
2 “Go To
Market”
ShoulditbeDone?
Could it be Done?

81
IRL 9
IRL 1
TRL 1TRL 9
High
Risk
Consider This Approach Instead
Low Risk
Test and mitigate all three dimensions of risk in parallel
ShoulditbeDone?
Could it be Done?

82
Good Luck!
● Include team members who have complimentary skill sets.
● Have a clear rationale for why you want finance.
● Be explicit about the potential risks as well as the rewards.
● Understand who you are pitching to and what you are asking for.
● Have evidence that you can create and quantify a return on investment.
● Be clear about how the money will be deployed.
● Show the investor that you have skin in the game.
● Build toward a relationship not a transaction.
● Be realistic about what working with this financier is going to be like for a long time.

83
Introductions
Coming Up
1
Q&A6

84
Thank You
Susan Ooi Anthony Chong Bernadette Fah

Mapping the Money: Who’s got cash to back deep tech in Singapore?

Recommended

Recommended

More Related Content

What's hot

What's hot (17)

Similar to Mapping the Money: Who’s got cash to back deep tech in Singapore?

Similar to Mapping the Money: Who’s got cash to back deep tech in Singapore? (20)

Recently uploaded

Recently uploaded (20)

Mapping the Money: Who’s got cash to back deep tech in Singapore?