Month: January 2019

Naspers takes full control of Russian classifieds site Avito in $1.16B deal

South African internet conglomerate Naspers is best known for backing Chinese tech giant Tencent, but it also operates a vast network of online classifieds businesses. That network just got a little larger after Naspers took full control of Russia-based Avito through a new $1.16 billion all-cash investment to top up its ownership to over 99 percent.

Avito is Russia’s top classifieds site, claiming 10.3 million unique daily visitors. It currently has close to 47 million listings covering categories that include goods, auto, real estate, jobs and services.

The deal, which was made via Naspers’ OLX Group, takes its ownership to 99.6 percent on a fully diluted basis and values the full company at $3.85 billion.

While classifieds may sound like a very retro corner of e-commerce, it remains a growing business (just ask Facebook, which has been growing its own marketplace and giving it increasing exposure across its own network).

Particularly in emerging and developing markets, leading local players continue to find traction. In the last six months ending September 30, Avito generated sales of 10.3 million rubles ($157.50 million), up 30 percent on the year before; and it operates with a 65.4 percent ebitda margin, with listings growing 7.4 percent to 17.46 million — according to Vostok New Ventures, one of the backers who sold up in this deal.

“Avito’s talented management team, led by CEO Vladimir Pravdivy, has demonstrated the capacity to achieve remarkable growth consistently over time,” said Martin Scheepbouwer, CEO of the OLX Group, in a statement. “Business performance is excellent and we look forward to continuing this trend by further leveraging the technology, knowledge and experience from Avito within OLX Group and vice versa.”

In Russia specifically, the market has a lot of potential in e-commerce — the country has very high internet and smartphone penetration, with a large population — but it lags behind the UK, France and Germany when it comes to total market size. Morgan Stanley estimates that the market will be worth around €31 billion by 2020, but as a point of comparison, in 2017, the UK was already pushing 200 billion, and France and Germany respectively both were clearing over €90 billion annually in e-commerce sales.

Analysts have highlighted how on challenge in Russia is that the market lacks one specific strong leader in e-commerce marketplaces, with Yandex (in partnership with Sberbank), Mail.ru (in partnership with Alibaba), Ozon (backed in part by Rakuten), and Wildberries together only taking 27 percent of the market. That leaves the door open for someone to come in and to consolidate that more, and that presents a double opportunity for Naspers: it can either find itself getting a good deal for Avito from another buyer, or take the plunge to do it buying itself using Avito as its foothold.

Naspers-OLX originally took a majority stake in 2015 through a $1.2 billion investment. Before that, it had been involved in Avito as early as 2013, when the company was formed by a merger between Slando.ru and OLX.ru, two rivals that were both backed by Naspers.

Consolidating its position in companies where it’s already strong helps Naspers also use the cash from those operations to invest in newer areas of business like tapping into more on-demand services and innovations in financial services to complement the legacy areas.

“Avito is the leading online classifieds player in Russia and our decision to increase our stake reflects our belief in the long-term prospects of this great business and the Russian internet market,” said Bob van Dijk, Naspers CEO, in a statement. “This investment further strengthens our global position in online classifieds, a core focus for Naspers alongside online food delivery and fintech.”

One-quarter of jobs are at ‘high-risk’ of being automated

No one will be entirely safe from automation in the future, but according to a new study out of the Brookings Institute, around 25 percent of U.S. jobs are at “high risk.” It’s a stark bit of foreshadowing in a job market that has yet to fully rebound.

Roles in transportation, food prep, production and office admin are among those at highest risk, with robotics and artificial intelligence threatening to automate in the neighborhood of 70 percent of tasks, according to the study. Activities involving processing, data collection and physical labor are, unsurprisingly, most at risk here.

Automation is expected to have an outsized impact in certain regions in the country, and among less well educated workers. Likewise, it’s expect to impact different segments of the population in different ways.

“Youth, and less educated workers, along with underrepresented groups all appear likely to face significantly more acute challenges from automation in the coming years,” according to the study. “Young workers and Hispanics will be especially exposed.”

There does seem to be a certain inevitability in all of this. And certainly we’ve seen versions of this scenario played out, decade after after. But local governments and industries can help brace for impact, by educating and developing skills among existing workers, says Brookings.

Zuckerberg is breaking promises to Instagram and WhatsApp. Be concerned.

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Mark Zuckerberg is doing exactly what he promised Instagram and WhatsApp he wouldn’t: messing with their independence by creating one system to rule them all. 

The Facebook founder plans to bring the back ends of Messenger, WhatsApp and Instagram closer together with that of his own social network, as Facebook has now confirmed to the New York Times

This consolidation may come with benefits for the billions of users involved, such as making it easier for anyone to send messages across the apps. But it’s also the biggest sign yet that Zuckerberg is tightening his grip on services he once promised complete autonomy — and it comes on the heels of  the Instagram and the WhatsApp founders exiting Facebook.  Read more…

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The Predictive Index brings in $50M to help businesses create winning teams

Funding will get you a long way, but people, at the end of the day, are the key to a successful business.

The Predictive Index, which develops behavioral and cognitive employee assessments, has raised a $50 million round of growth-stage capital from venture capital firm General Catalyst to help companies choose the right talent.

Kirk Arnold, an executive-in-residence at General Catalyst and new Predictive Index board member, led the deal for the VC firm, which says the round is the largest first check they’ve ever written a company. Predictive Index declined to disclose the valuation.

The workplace analytics service was founded in 1955, making it just a bit older than your typical growth-stage business. Current chief executive officer Mike Zani (pictured, right) acquired the company in 2014 with Predictive Index president and chairman Daniel Muzquiz (pictured, left). Prior to the acquisition, the pair were clients of the business.

With the infusion of VC funding, Zani said he’ll double employee headcount, create a playbook on how to “successfully design, hire and inspire winning teams” and create a talent optimization industry conference, amongst other big plans.

“Most companies are losing the talent war, and not because of the lack of fight, but rather because strategic talent strategies are non-existent or broken,” Zani told TechCrunch. “The irony is that talent is one of the only lasting differentiators in business today. Most tools in the marketplace help with process or tactical aspects of people and ignore the strategic. At [Predictive Index] we offer the strategic talent discipline, or talent optimization, to the hands of those who want to use talent as a business performance lever.”

Headquartered in Boston, Predictive Index says it counts some 7,000 customers in 142 countries, including Nissan, DocuSign and Blue Cross Blue Shield.

“This year, low unemployment and high turnover will further magnify the importance of talent,” Arnold said in a statement. “Having a talent strategy which aligns and supports business strategy is a requirement for any business to be successful.”

6 Tips for Cleaning Vinyl Siding

Vinyl siding is an affordable, flexible, durable and weatherproof exterior cladding material that needs to be cleaned from time to time. If not properly maintained, it can accumulate a lot of dirt and dust from the environment. Also, mold tends to grow in the vinyl in humid areas, discoloring its appearance.

If the siding has accumulated dirt, dust, pollen or has mold, here are six tips on how to clean vinyl siding:

Wear protective clothing

Always wear protective clothing such as closed shoes, rubber gloves, and safety glasses to protect your foot, hands, and eyes from the cleaning solution and the water.

Remove plants, furniture, and any other objects that can be affected by the cleaning chemicals from the area.

Stay safe

Cover electric sockets with a waterproof material and unplug any electrical devices near the vinyl siding. Also, remove any objects that could obstruct you or injure you during the cleaning process. You don’t want any Tim The Tool Man 911 calls.

Use a soft cloth

Highly granular scrubbing materials such as steel wool or a yard brush should not be used to clean the vinyl as these can cause damages.

When cleaning, use a clean, soft cloth or a long soft bristle brush. We recommend these two cleaning materials because they will not dent, scratch or puncture the siding during the cleaning process.

Punctured vinyl can be challenging to repair since you need to remove other sections of the siding to get to the damaged part. Depending on the damage, you may need to replace the whole piece of the damaged siding during the repair.

Likewise, punctured siding can retain water leading to the growth of mold on the siding. Hence, when washing vinyl, you are advised to use soft cleaning materials to avoid scratching or puncturing it.

Avoid cleaners that contain undiluted chlorine, nail polish remover, and liquid grease remover as they can damage the siding.

Start cleaning at the bottom of the vinyl siding

To ease the cleaning process, divide the portion you want to clean into pieces of five foot by five foot. Then start cleaning at the bottom as you move upwards to prevent streaks from forming on the washed portions.

Once you finish one section, move to the next section and again begin washing from the bottom heading to the uppermost part of the vinyl, repeat this process until you finish.

Thoroughly rinse the residue as you go

If you wait too long before rinsing the residue, the residue might dry on the washed part. With that, you will be required to re-wash the surface again to avoid dirty spots from forming on the vinyl. Wash on a cloudy day to ensure the residue does not dry up too fast.

Start rinsing from the top as you move to the lower parts of the vinyl. Rinse as often as you can.

Use a pressure washer

Depending on the siding installed, you can use a pressure washer. Check the manufacturer’s recommendations first before using a pressure washer.

If the manufacturer has approved the use of a pressure washer, we advise that you spray the stream of water at eye level and keep the stream straight at the siding and not at an angle. This way, water will not find its way to the back side of the siding.

Wash with caution in openings such as doors, windows, and plumbing areas. Always remember to be gentle throughout the cleaning process to avoid causing any damage.

If you follow these six tips, your vinyl will look as good as new once you have finished washing the vinyl siding.

See Also: How To Keep Mold Out of Your Basement

Derek Worchel is a general contractor and realtor in Bellingham Washington. He has done his fair share of vinyl siding installation and cleaning. You can find him at https://www.aspmwa.com.

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Chris Pine and Jimmy Kimmel nerd out over their first ever concerts

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What was your first concert? Did one of your parents take you or did you go it alone?

Chris Pine’s a keen Metallica fan, but it wasn’t his first concertHollywood Chris and star of both Patty Jenkins’ Wonder Woman and I Am the Night, Pine had a delightful nerd-out with Jimmy Kimmel on Friday over music, from their first concerts to Pine’s teenage band in which he rapped Vanilla Ice (and still can).

While Kimmel’s first concert was Sammy Davis Jr. in Vegas, Pine’s first concert was Faith No More, with Kyuss and Babes in Toyland. And although it wasn’t his first concert, Kimmel went to Lionel Richie with his mother.  Read more…

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Theranos documentary review: The Inventor’s horrifying optimism

A blood-splattered Theranos machine nearly pricks an employee struggling to fix it. This gruesome graphical rendering is what you’ll walk away from HBO’s “The Inventor” with. It finally gives a visual to the startup’s laboratory fraud detailed in words by John Carreyrou’s book “Bad Blood”.

The documentary that premiered tonight at Sundance Film Festival explores how the move fast and break things ethos of Silicon Valley is “really dangerous when people’s lives are in the balance” as former employee and whistleblower Tyler Shultz says in the film. Theranos promised a medical testing device that made a single drop of blood from your finger more precise than a painful old-school syringe in your vein. What patients ended up using was so inaccurate it put their health in jeopardy.

But perhaps even more frightening is the willingness of Theranos CEO Elizabeth Holmes to delude herself and everyone around her in service of a seemingly benevolent mission. The documentary captures how good ideas can make people do bad things.

“The Inventor: Out For Blood In Silicon Valley” juxtaposes truthful interviews with the employees who eventually rebelled against Holmes with footage and media appearances of her blatantly lying to the world. It manages to stick to the emotion of the story rather than getting lost in the scientific discrepancies of Theranos’ deception.

The film opens and closes with close-ups of Holmes, demonstrating how the facts change her same gleaming smile and big blue eyes from the face of innovative potential to that of a sociopathic criminal. “I don’t have many secrets” she tells the camera at the start.

Though the film mentions early that her $9 billion-plus valuation company would wind up worth less than zero, it does a keen job of building empathy for her that it can tear down later. You see her tell sob stories of death in the family and repeat her line about building an end to having to say goodbye to loved ones too soon. You hear how she’s terrified of needles and how growing up, “my best friends were books.”

But then cracks start to emerge as old powerful men from professors to former cabinet members faun over Holmes and become enthralled in her cult of personality as validation snowballs. Oscar-winning director Alex Gibney has a knack for creeping dread from his experience making “Enron: The Smartest Guys In The Room” and “Going Clear: Scientology and the Prison of Belief.” He portrays Holmes’ delusions of grandeur with shots of her portrait beside those of Archimedes, Beethoven, and her idol Steve Jobs.

The first red flag comes when Holmes names her initial device Edison after the historic inventor the film assures you was quite a fraud himself. Soon, sources from inside the company relay how the Edison and subsequent Theranos hardware never worked right but that demos were faked for customers and investors. Instead of sticking to a firm timeline, Gibney bounces around to hammer home the emotional arcs of employees from excited to dubious, and of Holmes from confidence to paranoia.

Carreyrou’s “Bad Blood” meticulously chronicled every tiny warning sign that worried Theranos’ staff in order to build a case. But the author’s Wall Street Journal day job bled through, sapping the book of emotion and preventing it from seizing the grandeur of the tale’s climactic moments.

Gibney fills in the blanks with cringe-inducing scenes of Theranos’ faulty hardware. A ‘nanotainer’ of blood rolls off a table and fractures, a biohazard awaiting whoever tries to pick it up. The depiction of working in Theranos’ unregulated laboratory scored the biggest gasps from the Sundance audience. Former employees describe how Theranos recruited drifters they suspected of hepatitis as guinea pigs. Their stale blood evaporates into the air surrounding machines dripping with inky red, covered in broken test tubes. Gibney nails the graphics, zooming in on a needle spraying droplets as a robotic arm sputters through malfunctions. I almost had to look away as the film renders a hand reaching into the machine and only just dodging an erratic syringe.

A still from The Inventor: Out For Blood in Silicon Valley by Alex Gibney, an official selection of the Documentary Premieres program at the 2019 Sundance Film Festival. Courtesy of Sundance Institute | photo by Drew Kelly.

At times, Gibney goes a bit too melodramatic. The toy music box twinkling foreshadows a dream becoming a nightmare, but it gets maddening after an hour straight. The pacing feels uneven, sometimes bogged down in Holmes’ personal relationships when later it seems to speed through the company’s collapse.

Though elsewhere, the director harnesses the nervous laughter coping mechanism of the former employees to inject humor into the grim tale. With accuracy so low, Shultz jokes that “if people are testing themselves for syphilis with Theranos, there’s going to be a lot more syphilis in the world.” Visual dramatizations of journalists’ audio recordings of Holmes and the eventual legal disputes bring this evidence to life.

Alex Gibney, director of The Inventor: Out For Blood in Silicon Valley, an official selection of the Documentary Premieres program at the 2019 Sundance Film Festival. Courtesy of Sundance Institute.

The most touching scene sees Fortune’s Roger Parloff on the brink of implosion as he grapples with giving Holmes her first magazine cover story — momentum she used to eventually get Theranos’ useless hardware in front of real patients who depended on its results.

The Inventor succeeds at instilling the lesson without getting too preachy. It’s fine to be hopeful, but don’t ignore your concerns no matter how much you want something to be real. It takes an incredibly complex sequence of events and makes it at once gripping and informative. If you haven’t read “Bad Blood” or found it drab, “The Inventor” conveys the gravity of the debacle with a little more flare.

Yet the documentary also gives Holmes a bit too much benefit of the doubt, suggesting that hey, at least she was trying to do good in the world. In the after-film panel, Gibney said “She had a noble vision . . . I think that was part of why she was able to convince so many people and convince herself that what she was doing was great, which allowed her to lie so effectively.” Carreyrou followed up that “she was not intending to perpetrate a long con.”

Yet that’s easier to say for both the director and the author when neither of their works truly investigated the downstream health impacts of Theranos’ false positives and false negatives. If they’d tracked down people who delayed critical treatment or had their lives upended by the fear of a disease they didn’t have, I doubt Holmes would be cut so much slack.

Some degree of ‘Fake it ’til you make it’ might be essential to build hard technology startups. You must make people believe Inc something that doesn’t exist if you’re to pull in the funding and talent necessary to make it a reality. But it’s not just medical, hardware, or “atoms not bits” startups that must be allegiant to the truth. As Facebook and WhatsApps’ role in spreading misinformation that led to mob killings in India and Myanmar proved, having a grand mission doesn’t make you incapable of doing harm. A line must be drawn between optimism and dishonesty before it leads to drawing chalk outlines on the ground.

How To Distance Yourself From Toxic People Without Them Noticing

Whether it’s a fantasy football league, a book club or your happy hour crew, there may come a time when you feel the need to move on from social groups that no longer make you happy. Whether it’s you who has changed or it’s them, it’s completely normal for social interests to shift as we age.

Unfortunately, getting out of social engagements and relationships can be a delicate thing to maneuver. If you find yourself in that situation, here are some things to consider.

What can you do when you just don’t like being around certain friends anymore?

You must restrict access. When I tell some people that, they often say something like “but that’s not easy to do.”

My answer to that is this: “True, and it’s easier than living with the results when you don’t.”

I call this “hard/easy vs. easy/hard.”

When you make hard decisions up front, things become easier for you later. However, if you make easy decisions upfront, they become harder for you down the road.

One of the ways to restrict access without angering someone or burning bridges is called “benign neglect.” This involves any decision you make that allows a person in your life (or an activity associated with that person) to move toward the back. Doing that allows someone else to step closer in your life.

As a rule, there’s no need to burn bridges. Simply, don’t engage as often or engage in what we call “homeopathic doses. This is the minimal interaction necessary to address the individual over time”.

Are there times when you just need a break from some people?

Yes, this is not uncommon for most individuals. This is particularly true when the two of you have personal values that are not in alignment. Personal values don’t have to be exactly the same. Diversity is valuable, however, the values need to be “resonant” with one another.

When values are “dissonant” with each other, it creates varying levels of frustration and even conflict. When this happens, you’ll need a break from interacting with that individual.

See Also: 5 Signs You Need to Start Removing Toxic People

How do you address personal boundaries with your friends?

Most people don’t enforce the boundaries they desire in life. Worse yet, many people don’t communicate those boundaries to others.

Don’t make apologies for the boundaries and don’t get mad when people want to encroach upon them.

Why? Because it is inevitable that people will try to encroach. Simply state your boundaries clearly and politely, and then stand firm. Learning to say “no” is an important skill in setting boundaries.

One of the best techniques that I use to say no to someone is to say something like “If I said yes to that, I’m afraid I’d let you down.” You may say that because you don’t have the bandwidth, the knowledge or the expertise to do what they are asking but in any case, you’re not the person to do what they are asking.

Is it okay to say your interests or values have changed and you want to spend more time with your family or other friends?

It is inevitable that people’s interests and values change over time. For some people, there may be subtle changes. For most, they can be major changes in interests and values. In either case, changing interests and values are normal.

The key to growing throughout your life is to remember to “live in your flame and not your wax.” When you do things you hate to do (especially over time), you are in your wax. This means that you are doing things that are sapping your energy.

When you are doing things that you love with the people in your life, you are living in your flame. You are energized and excited.

If you want a life of harmony, strive to do things that are in your flame, not in your wax. Say yes to people and activities that make you feel alive, align with your values, and add to your experience of life.

Written by Dr. Ivan Misner, Ph.D., author of “Who’s in Your Room? The Secret to Creating Your Best Life”, and founder of Bni.com

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Singapore’s Credit Culture raises $29.5M for its soon-to-launch digital loan business

Singapore’s digital fintech companies are attracting investor attention and dollars in 2019. Fresh from Singapore Life — a digital-only insurer — raising $33 million across two recently closed rounds, so Credit Culture, a digital loan specialist — has banked SG$40 million ($29.5 million) ahead of its imminent launch.

Credit Culture has raised its capital from Malaysia’s RCE Capital Berhad in a deal that allows the investor to potentially take a stake of up 30 percent in the startup. Its investment is via five-year bonds that are secured with the loan receivables from Credit Culture and include granted call options for taking that stake — in other words: this isn’t your regular startup deal.

RCE Capital Berhad said in a filing that Credit Culture has already raised SG$4 million ($2.9 million) via a seed investment, and it appears that it is financially set ahead of its launch.

“We are currently well-positioned with the recent injection of funds. That being said, we are always open to exploring various options to grow especially for regional expansion,” Credit Culture a representative told TechCrunch in an emailed response.

Founded by former bankers, Credit Culture is set to become one of Singapore’s first digital financial service startups after its parent company, DEY, secured approval to operate a moneylending business as part of a pilot to test online fintech services.

Since it hasn’t launched yet, there’s not a huge amount to say about the business, but its goal is to offer personal loans to Singapore-based customers using digital channels, so its website and mobile apps. The company plans to vet applicants using a mixture of existing platforms for data, including government initiative like MyInfo, and its own credit-scoring engine for creditworthiness assessment. It will also require face-to-face verification for loans to be granted, it confirmed.

Like Singapore Life and other digital-only ventures, including Hong Kong’s Bowtie, the objective is to pass on cost savings from being a purely online player — i.e. not operating branches and other physical consumer-facing outlets — and make prices fully transparent to applicants.

As you’d expect, Singapore is the initial focus for the company but it is already eying potential market expansions.

“We do have plans to expand to other Southeast Asian countries like the Philippines and Indonesia,” a spokesperson told TechCrunch. “There is a large potential given the need for personal financing and the large unbanked population segments.”

Robert Irwin let three mischievous African serval kittens run over Jimmy Fallon

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Jimmy Fallon invited The Tonight Show regular and Animal Planet host Robert Irwin back on the show, with his usual assortment of cute baby animals.

The 15-year-old son of the late Steve Irwin, Robert has the same level of infectious enthusiasm as his dad for all creatures great and small — including peppered cockroaches.

But that’s not all he brought to the show on Wednesday. Irwin introduced Fallon to three mischievous African serval kittens, a tiny Australian marsupial called a sugar glider, and an affectionate camel called Wednesday. Read more…

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VCs give us their predictions for startups and tech in Southeast Asia in 2019

The new year is well underway and, before January is out, we polled VCs in Southeast Asia to get their thoughts on what to expect in 2019.

The number of VCs in the region has increased massively in recent years, in no small part due to forecasts of growth in the tech space as internet access continues to shoot up among Southeast Asia’s cumulative population of more than 600 million consumers.

There are other factors, including economic growth and emerging middle classes, but with more than 3.8 million people becoming first-time internet users each month — thanks to smartphones — Southeast Asia’s ‘digital economy’ is tipped to more than triple to reach $240 billion by 2025. That leaves plenty of opportunity for tech and online businesses and, by extension, venture capitalists.

With a VC corpus that now numbers dozens of investment firms, TechCrunch asked the people who write the checks what is on the horizon for 2019.

The only rule was no more than three predictions — below, in no particular order, is what they told us.


Albert Shyy, Burda

Funds will continue to invest aggressively in Southeast Asia in the first half of this year but capital will tighten up by Q4 as funds and companies prepare for a possible recession. I think we will see a lot of companies opportunistically go out to fundraise in Q1/Q2 to take advantage of a bull market.

We will see two to three newly-minted unicorns from the region this year, after a relative lull last year.

This will (finally) be the year that we start to see some consolidation in the e-commerce scene


Dmitry Levit, Cento

A significant portion of capital returned by upcoming U.S. IPOs to institutional investors will be directed to growth markets outside of China, with India and Southeast Asia being the likeliest beneficiaries. Alternative assets such as venture and subsets of private equity in emerging markets will enter their golden age.

The withdrawal of Chinese strategic players held back by weakened domestic economy, prudent M&A by local strategics and ongoing caution among Japanese, Korean and global corporates, combined with ongoing valuations exuberance by late-stage investors allocating funds to Southeast Asia, will continue holding back large liquidity events. Save perhaps for a roll-up of a local champion or two into a global IPO. Fundraising will get more troublesome for some of Southeast Asia’s larger unprofitable market leaders. Lack of marquee liquidity events and curtailed access to late-stage capital for some will lead to a few visible failures (our money is on the subsidy-heavy wallets!) and a temporary burst of short-term skepticism around Southeast Asia as an investment destination towards the end of 2019.

The trend towards the emergence of value-chain specific funds and fund managers will continue, as digitalization is reaching ever further into numerous industry sectors and as Southeast Asia hosts an increasing portion of global supply chains. We foresee at least dozen new venture firms and vehicles emerging in 2019 with clear sector-led investment thesis around the place of Southeast Asian economies in the global value chains of fashion industry, agriculture and food; labour, healthcare services; manufacturing, construction tech and so on, with investment teams that have the necessary expertise to unravel this increasing complexity.


Willson Cuaca, East Ventures

Jakarta becomes Southeast Asia’s startup capital surpassing Singapore in terms of the number of deals and investment amount.

As Indonesia’s startup scene heats up, regional seed and series A funds move away from Indonesia and target Vietnam, Malaysia, Thailand and the Philippines (in market priority order).

Southeast gets two new unicorns.


Rachel Lau, RHL Ventures

North Asian companies will provide well-needed liquidity as they withdraw capital from developed American and European markets due to the Federal Reserve’s actions. The FED raised interest rates and reduced the size of its balance sheet (by not replacing the bonds that were maturing at a rate of $50 billion a month). This has been seen in the recent fundraising exercise by Southeast Asian unicorns. Grab has recently seen an impressive list of North Asian investors such as Mirae, Toyota and Yamaha . A recent stat stated that 85 percent of the funding of Southeast Asia startups have gone to billion dollar unicorn such as Grab and Gojek, bypassing the early stage startups that are more in need for funding, this trend is expected to continue. Therefore, we will see early-stage companies and venture capitalists becoming more focused on generating cash flow from operating operations instead as fundraising activities become more difficult.

A growth in urbanization in Southeast will create new job opportunities in small/medium businesses, as evident in China. Currently, only 12 percent of Asia’s urban population live in megacities, while four percent live in towns of fewer than 300,000 inhabitants. New companies will see the blurred lines between brick and mortar businesses vs pure online businesses. In the past year or so, we have seen more and more offline businesses going online and more online businesses going offline.

Fertility rates in the Philippines, Laos, Cambodia, Indonesia and Vietnam exceed 2.1 births per woman — the level that sustains a population — but rates below 1.5 in Singapore and Thailand mean their populations will decline without immigration. As we see more startup activities coming to Southeast Asian countries, we expect to see more qualified foreign talent moving to the region vs staying in low growth American and European countries.


Kay-Mok Ku, Gobi Ventures

First Chinese “Seaward” Unicorn in Southeast Asia. In recent years, a growing number of Chinese startups are targeting overseas markets from the get go (known as Chuhai 出海 or “Seaward”). These Chinese entrepreneurs typically bring with them best practices in consumer marketing and product development honed by a hyper-competitive home market, supported by strong, dedicated technical team based out of China and increasingly capitalized by Chinese VCs which have raised billion-dollar funds.

Consolidation among ASEAN Unicorns. While ASEAN now boasts 10 unicorns, they are duplicative in the sense that more than one exists in a particular category, which is unsustainable for winner-takes-all markets. For example, in the ASEAN ride-hailing space, while one unicorn is busy with regional geographic expansion, the other simply co-exists by staying focused on scope expansion within its home market. This will never happen in a single country market like China but now that the ASEAN ride hailing unicorns are finally locking horns, the stage may be set for a Didi-Kuadi like scenario to unfold.

ASEAN jumps on Chinese 5G bandwagon. The tech world in the future will likely bifurcate into American and Chinese-led platforms. As it is, emerging markets are adopting Chinese business models based on bite-sized payment and have embraced Chinese mobile apps often bundled with cheap Chinese smartphones. Looking ahead, 5G will be a game changer as its impact goes beyond smartphones to generic IoT devices, having strategic implications for industries such as autonomous driving. As a result, the US-China Trade War will likely evolve into a Tech War and ASEAN will be forced to choose side.


Daren Tan, Golden Equator Capital

We are excited by growth in the AI and deep tech sectors. The focus has generally been on consumer-focused tech in Southeast Asia as an emerging market, but we are starting to see proprietary solutions emerge for industries such as medtech and fintech. AI also has great applicability across a wide range of consumer sectors in reducing reliance on manpower and creating cost savings.

Data analytics to uncover organizational efficiencies and customer trends will continue to be even more widely used, but there will also be greater emphasis on securing such data especially confidential information in light of multiple high-profile data breaches in 2018. Tools enabling the collection, storage, safe-keeping and analysis of data will be essential.

We are seeing the emergence of more institutional funds from North Asia. So far it has predominantly been Chinese tech giants like Tencent and Alibaba, now we are starting to see Korean and Japanese institutions placing greater emphasis on investment in the Southeast Asian region.


Vinnie Lauria, Golden Gate Ventures

Even more capital flowing from U.S. and China into Southeast Asia, with VCs from both locations soon to open offices in the region

A fresh wave of Series A investments into Vietnam.

Ten exits over $100 million.

 


Amit Anand, Jungle Ventures

The emergence of a financial services super app, think the Meituan or WeChat but only for financial services: The Southeast Asian millennial is one of the most underserved customer from a financial services perspective whether it is payments, consumer goods loans, personal loans, personal finance management, investments or other financial services. We will see the emergence of digital platforms that will aggregate all these related services and provide a one stop financial services shop for this digitally native consumer.

Digitisation of SMEs will be new fintech: Southeast Asia is home to over 100 million SMEs that are at the cusp of digital transformation. Generational change in ownership, local governments push for digitization and increased globalization have created a perfect storm for these SMEs to adopt cloud and other digital technologies at neck-breaking pace. Startups focussing on this segment will get mainstream attention from the venture community over the next few years as they look for new industries that are getting enabled or disrupted by technology.


Kuo-Yi Lim and Peng Ong, Monk’s Hill Ventures

Lyft and Uber go public and show the path to profitability for other rideshare businesses. This has positive effect for the regional rideshare players but also puts pressure on them to demonstrate the same economics in ridesharing. Regional rideshare players double down on super-app positioning instead, to demonstrate value in other ways as rideshare business alone may not reach profitability — ever.

The trade war between China and the US reaches a truce, but a general sense of uncertainty lingers. This is now the new norm — things are less certain and companies have to plan for more adverse scenarios. In the short term, Southeast Asia benefits. Companies — Chinese, American etc — see Southeast Asia as the neutral ground. Investment pours in, creating jobs across industries. Acquisition of local champions intensifies as foreign players jostle for the lead positions.

“Solve the problem” – tech companies will become more prominent… tech companies that are real-estate brokers, recruiters, healthcare providers, food suppliers, logistics… why: many industries are very inefficient.


Hian Goh, Openspace Ventures

Fight to quality will happen. Fundraising across all stages from seed to Series C and beyond will be challenging if you don’t have the metrics. Investors will want to see a path to profitability, or an ability to turn profitable if the environment becomes worse. This will mean Saas companies with stable cash flows, vertical e-commerce with strong metrics will be attractive investment opportunities.

Investor selection will become critical, as investors take a wait and see approach. Existing or new investors into companies will be judged upon their dry powder in their funds and their ability to fund further rounds

The regulatory risk for fintech lenders will be higher this year, rising compliance cost and uncertainty on licensing, which would lead to consolidation in the market.


Heang Chhor, Qualgro

Southeast Asia: an intensifying battlefield for tech investments

There has never been so much VC money in Southeast Asia chasing interesting startups, at all life cycle stages. The 10 most active local and regional VCs have raised their second or third funds recently, amassing at least two times more money than a few years ago, probably reaching a total amount close to $1 billion. In addition, international VCs have also doubled down on their allocation into the region, while top Chinese VCs have visibly stated their intent not to miss the dynamic momentum. Several growth funds have recently built a local presence in order to target Southeast Asia tech companies at Series C and beyond. Not counting the amount going to the unicorns, there might be now more than $3-4 billion available for seed to growth stages, which may be 3-4 times the amount of three years ago. There are, of course, many more good startups coming up to invest into. But the most promising startups will be in a very favorable position to negotiate higher valuation and better terms. However, they should not forget that, eventually, what creates value is how they make a difference with their tech capabilities or their business model, how they acquire and retain the best talent, with the funds raised, not only how much money they will be able to raise. Most local and regional corporate VCs are likely to lose in this more intense investment game.

Significant VC money investing into so-called ‘AI-based startups’, but are there really much (deep) Artificial Intelligence capabilities around?

A good portion of the SEA startups claim they have ‘something-AI’. Investors are overwhelmed, if not confused, by the ‘AI claim’ that they find in most startup pitches. While there is no doubt that Southeast Asia will grow its own strong AI-competence pool in the future, unfortunately today most ‘AI-based’ business models from the region would still be just ‘good algorithms or machine learning’ that can process some amount of data to come up with good-enough outcomes, that do not always generate substantial business value to users/customers. The significant budget that some of the very-well-funded Southeast Asia unicorns are putting into their ‘AI-based apps’ or ‘AI platform’ is unlikely to make a real difference for the consumers, for lack of deep AI competences in the region. 2019 may be another year of AI-promise, not realized. Hopefully, public and private research labs, universities and startups will continue to be (much more) strongly supported (especially by governments) to significantly build bigger AI talent pool, which means growing and attracting AI talent into the region.

Bigger Series A and Series B rounds to fuel more convincing growth trajectory, towards growth-stage fundraising.

Although situations vary a lot: typical Series A in Southeast Asia used to be around $5 million, and Series B around $10-15 million. Investors tended to accept that normally companies would raise money after 18 months or so, between A and B, and between B and C. There has been an increasing number of larger raises at A and B recently, and very likely this trend will accelerate. The fact that VCs now have much more money to deploy into each investment will contribute to this trend. However, the required milestones for raising Series C have become much more around: minimum scale and very solid growth (and profit) drivers. Therefore, entrepreneurs will have to look for getting as much funding reserve as possible, irrespective of time between raises, to build growth engines that take their companies past the milestones of the next Series, be it B or C. In the future, we will see more Series A of $10 million and more Series B of well-above $20 million. Compelling businesses will not have too much difficulties for doing so, but most Southeast Asia entrepreneurs would be wise to learn to more effectively master fundraising skills for capturing much bigger amounts than in the past. Of course, this assumes that their businesses are compelling enough in the eyes of investors.


Vicknesh R Pillay, TNB Aura

Out-sized valuations will be less commonplace in 2019 as Southeast Asian investors learn from experience and become more sophisticated. Therefore, we do see opportunities at Series A/B for undervalued deals due to lack of early-stage funding while we expect to continue to see the trend of the majority of venture capital investments going into later stage companies (Series C and beyond) due to lower risk appetite and ‘herd’ mentality.

2018 has also seen the rapid emergence of many corporate venture capital funds and innovation programs. But, 2019 will see large corporations cutting back on their allocation towards startup investing which would be the easiest option for them in case of adverse news to the jittery public markets in 2019.

With the growth of AI, the need for API connections and increased thought leadership to embrace tech, Southeast Asia is going to see an upsurge in SaaS startups and existing startups moving to a Saas business model. Hence, we expect increased investments into Saas companies focused on IoT and cybersecurity as hardware data and software are moved onto the cloud.


Chua Kee Lock, Vertex Ventures

Southeast Asia VC investment pace has grown steadily and significantly since 2010 where it started from less than $100 million in VC investment in the region. For the first eight months of 2018, the region’s VC investment was over $5.4 billion. For the whole of 2018, it will likely end around $8 billion. For 2019, we expect the VC investment pace to surpass 2018 level and record between $9-10 billion. Southeast Asia will continue to attract more VC investments because:

(1) Governments in Southeast Asia, especially ASEAN, continue their support policy to encourage startups.

(2) young demographics and the fast technology adoption in Southeast Asia give rise to more innovative and disruptive ideas.

(3) global investors looking for a better return and will naturally focus on growing emerging market like Southeast Asia.

The trend towards gig economy will begin to have an impact in the region. In developed economies like the U.S, gig economy is expected to reach over 40 percent by 2020. The young population will look for more freelance opportunities as a way to increase income levels while still maintaining flexibility. This will include white-collar work like computer programming, accounting, customer service, etc. and also blue-collar work like delivery services, ride-sharing, home services, etc. We believe that the gig economy will grow to over 15 percent in Southeast Asia by 2019.

AI-heavy or -driven startups will begin to make inroads into Southeast Asia.


Victor Chua, Vynn Capital

The BIG convergence — there will more integration between industries and sectors. Traveloka went into car rental, Blibli went into travel business and these are only some examples. There is a lot of synergistic value between travel startups and food startups or between property startups and automotive startups. Imagine a future where you travel to a city where you stay in an apartment you rented through a marketplace (like Travelio, my portfolio company), and when you need to book a restaurant you can make the reservation through a platform that is integrated with the property manager, and when you need to move around you go down to the car park to drive a car you rent from an automotive marketplace. There is clear synergy between selective industries and this leads to an overall convergence between companies, between industries.

More channels to raise Series B/C, early-stage companies find fundraising more challenging — We have seen a number of VC funds raising or already raised growth funds, this means that there are now more channels for Series A or B companies to raise growth rounds. As the market matures, there will be more competition for investments amongst growth funds as there is considerably more growth in the number of growth funds than companies that are raising at growth-stage. On the flip side, the feel is that there is a consistent growth in the number of early-stage companies, yet the amount of capital in early-stage funds is not growing as much as more VCs prefer bigger and later stages, due to the maturity of their existing portfolio companies.

Newcomers gaining weight — there will be at least 10 companies that will hit a valuation of at least $100 million. These valuations will not be based on a single market exposure. Companies that raise larger rounds will need to show that they are regional.


Thanks to all the VCs who took part, I certainly felt like the class teacher collecting assignments.

Digital Garage teams up with Blockstream to develop blockchain financial services in Japan

The global crypto market may have tanked last year, but notable names have joined forces to develop Bitcoin and blockchain financial services in Japan, which has emerged as one of the world’s most crypto-friendly markets.

Blockstream, a blockchain startup founded by Bitcoin contributors, announced this week that it has launched a joint venture in Japan alongside Digital Garage, an early-stage investor/incubator that’s backed local launches from Twitter, Square and others, and financial services firm Tokyo Tanshi.

Crypto Garage — as the new venture is called — is “is dedicated to building Bitcoin and blockchain solutions for the Japanese institutional market.” The venture was first unveiled last year, and it looks like Blockstream recently came onboard through an undisclosed investment. The startup said it is providing “technical expertise” for the effort.

That’s about all the color on the venture for now, although it has released its first product, “SETTLENET.” That is described as a platform that uses Liquid Network, Blockstream’s blockchain that is designed for exchanges and brokers with a focus on speed and security.

Settlenet — because nobody likes all-caps product names — is said to have already gotten clearance from the Japanese Financial Services Agency (FSA), which regulates exchanges and crypto projects, and its first launch will be a stablecoin for the Japanese Yen. The goal is very much to arm exchanges with liquidity and, as such, the stablecoin will be tradable for Bitcoin pegged to the Liquid sidechain using atomic swaps.

The companies have collaborated for some time already. An existing investor in Blockstream, Digital Garage has plowed a further $10 million into the business in what is its third investment since 2016. That deal takes Blockstream to around $110 million raised to date.

Tokyo Tanshi, meanwhile, is a brokerage firm that was founded over 100 years ago. It has worked with Digital Garage on crypto projects since last year, when the two companies first announced Crypto Garage and a broader goal to operate blockchain financial services in Japan.

Note: The author owns a small amount of cryptocurrency. Enough to gain an understanding, not enough to change a life.