This document summarizes a presentation by Douglas Abrams about venture capital investing in Southeast Asia. It discusses why companies seek investment, the relationship between risk and return, the venture funding process, and recent growth and exits in the Southeast Asian venture capital market, including examples from Singapore and Thailand. The presentation provides an overview of key considerations in venture capital deals and contact information for Douglas Abrams and his firm Expara.

1. October 2014
Sasin Sundowner Presentation VC in SEA

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About the lecturer

Wharton MBA

JP Morgan – Vice President
IB Technology, GM Internet Marketing

Parallax Capital Mgmt – Co-founder and MD Venture investing

Extream Ventures – Co-founder and MD
S$20 million seed fund

Expara & Expara IDM Ventures– Founder and MD
Incubator, advisory, training

NUS – Adjunct Associate Professor, Business School, Entrepreneurship

Sasin - Visiting Professor, Venture Capital

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Why do ventures seek investment?

A big piece of a small pie?

A small piece of a big pie?

Risk and return?
Founder
Investors
Investors
Founder

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What is the relationship between risk and return?

Risk and return are highly positively correlated

You cannot increase return without taking more risk
Return
Risk
Potential outcomes

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Why invest in venture capital?
As of 31-Mar 2014 The Cambridge Associates LLC U.S. Venture Capital Index® is an end-to-end calculation based on data compiled from 1,494 U.S. venture capital funds (962 early stage, 163 late & expansion stage, 363 multi-stage and 6 venture debt funds), including fully liquidated partnerships, formed between 1981 and 2013.
1Pooled end-to-end return, net of fees, expenses, and carried interest. Sources: Cambridge Associates LLC, Barclays, Dow Jones Indexes, Frank Russell Company, Standard & Poor's, Thomson Reuters Datastream, and Wilshire Associates, Inc. *Capital change only.
Case Shiller Real Estate Index 4.1

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What is the venture funding process?
Founder’s CapitalSeed/ AngelSeries A, B, CMezzaninePre-ExitExitVC hurdle rates60-100%40-60%20% OM F,F&FIncubators corporations governmentCustomers, suppliers, strategic partnersVCs, Banks for VC loansR&D Establishment GTM/Rollout Accelerated Expansion MaturityEnablement growth

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Asia VC increasing exponentially

2014 VC investment in Asia $10.5B up from $6.3B in 2013

New VC/PE funds raising $113B targeted at Asia in 2014

Venture capital investment in Singapore went from 27.9 MM in 2011 to 1.71 B in 2013, a 60x increase

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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

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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

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How do VCs make money?

Trade sale – sell to another company

IPO – sell to the public through listing on an exchange

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Trade sale or IPO?
www.nvca.org

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Exit markets at an inflection point
Exit activity in SEA, especially in Singapore, exploded in 2013
•
Increased investment in startups since 2007 is beginning to yield results
•
Number of exits increased from 6 in 2010 to 20 in 2013
•
Singapore alone has had 30 exits since 2007, 13 in 2013
•
Value of exits increased from 51 MM in 2010 to 400 MM in 2013

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Recent exits in SEA
Company
Country
Acquiror
Price
Year
ZopIM
Singapore
Zendesk
US$29.8MM
2014
Non-Stop Games
Singapore
King
US$ 100MM
2014
sgCarMart
Singapore
SPH
S$60 MM
2013
DS3
Singapore
Gemalto
S$50 MM est.
2013
Asian Food Channel
Singapore
Scripps Networks
Undisclosed
2013
Reebonz
Singapore
MediaCorp and Existing investors
S$250MM
2013
Yfind
Singapore
Ruckus Wireless
Undisclosed
2013
Techsailor
Singapore
TO THE NEW
Undisclosed
2013
travelmob
Singapore
HomeAway
Undisclosed
2013
Catcha Digital Media
Singapore
Opt Inc
Undisclosed
2013
GridBlaze
Singapore
Undisclosed Silicon Valley Startup
Undisclosed
2013
Viki
Singapore
Rakuten
US$200MM
2013
SGE
Singapore
Tech In Asia
Undisclosed
2013
ThoughtBuzz
India
To The New
Undisclosed
2013
AyoPay
Indonesia
MOL AccessPortal
Undisclosed
2013
Tongue in Chic
Malaysia
PopDigital
Undisclosed
2013
Ocision
Malaysia
Star Publication
US$ 4.36MM
2013
Glamybox
Vietnam
VanityTrove
Undisclosed
2013
PaymentLink
Singapore
Wirecard
US$41.2MM
2013
Dealguru
Singapore
iBuy
S$34.28 MM
2013
Buy Together
Hong Kong
iBuy
S$21 MM
2013
Dealmates
Malaysia
iBuy
S$10 MM
2013
PropertyGuru.com
Singapore
ImmobilienScout24
S$60 MM
2012
HungryGoWhere
Singapore
Singtel
S$12 MM
2012
AdMax Network
Singapore
Komli Media
Undisclosed
2012
TheMobileGamer
Singapore
Singtel
US$1.5 MM
2012

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•
EIDMV I portfolio of 16 companies 19% success rate 2008-2014
•
First exit in Oct-2013 at 36x ROI and 2.2x on total invested capital
•
Second (partial) exit in May 2014 at 250x ROI and 5.13x on total invested
•
42% IRR 2008-2014; 5.13x; two live companies in portfolio
Expara venture capital returns in SEA

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Why VC in Thailand now?
Historical challenges
•Exits
•Enterprise ecosystem
•Innovation
•Legal and corporate governance
•Cultural attitudes
Mitigation
•Early stage valuations allow profitable local exits; regional focus allows larger exits
•Regional bridge and expertise in building local network
•Focus on innovative segments – new and traditional
•Changing environment
•Channeling entrepreneurial energy to scalability

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Developments in Thai venture funding

I4-x – first VC-funded accelerator

Telco incubators, accelerators and VC funds
–
TrueIncube
–
AIS The StartUp
–
DTAC Accelerate

New VC funds
–
M8VC
–
Ardent Capital
–
The VC Group

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Key elements of a VC deal

Board of directors

Protective provisions

Drag-along agreement

Conversion
Control

Price-per-share

Valuation

Amount of financing

Liquidation preference

Vesting

Options pool

Anti-dilution

Pay-to-play
Economics

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Contact us

Douglas Abrams

Expara Pte. Ltd.

dka@expara.com

www.expara.com

65-6323-3084, 65-9780-5381 (hp)

Block 71 Ayer Rajah Crescent, #02-10/11 Singapore 139951