Looking to revitalise Malaysia’s start-up ecosystem

This article first appeared in Personal Wealth, The Edge Malaysia Weekly, on March 12, 2018 – March 18, 2018.
We envision a future where technology start-ups seamlessly collaborate with the larger incumbents as a complementary force rather than being viewed as a threat. We want to bridge this gap, bringing old money into the new economy. > Victor. Photo by Haris Hassan/The Edge

Less than a year after being the only Malaysian to be featured in the Forbes 30 Under 30 Asia: Finance & Venture Capital list, Victor Chua has decided to strike out on his own and launch venture capital firm Vynn Capital. Together with partner Darren Chua, he hopes to create more home-grown opportunities and boost the local start-up ecosystem.

“In Malaysia, there are not that many venture capital firms. A lot of venture capitalists (VCs) actually come from outside the country. We want to change this and revitalise the start-up ecosystem. We want to create more synergy, contribute more talent opportunities and get more foreign companies interested in what Malaysia has to offer while providing good financial returns to our investors,” says Victor.

Rather than take the typical route where venture capital firms invest in larger, more established start-ups with a track record to mitigate risks and allow higher exit potential, Vynn Capital will do the opposite, says Victor. The firm will invest in the seed and

Series A stages to fill the gap in early-stage investing.

“There are a lot of early-stage deals that are not invested in. This is our opportunity to go in because a lot of corporates and families think that this stage is risky. So, if they invest in our fund, they can spread the risk with the other partners,” says Victor.

He adds that the Kuala Lumpur-based firm is targeting a debut fund of US$40 million and will be deploying capital in a company involved in the property and travel space in the first quarter of this year. Its advisers include Malaysian advertising mogul Tan Sri Vincent Lee, founder and chairman of Indonesian industrial estate developer PT Jababeka Tbk

Setyono Djuandi Darmono and Thailand-based Dr Mario Hardy, CEO of the Pacific Asia Travel Association (PATA), a not-for-profit travel and tourism body in Asia-Pacific.

Vynn Capital is looking to work with corporates and families that want to generate real results for their bottom lines, apart from financial returns. “Families used to be very conservative. They tended to focus only on the return on investment and internal rate of return,” says Victor.

“Today, however, the second and third generations are thinking long term — what else can they do beyond what their grandparents and parents have done? That is why they are thinking about technology and innovation to strengthen their business operations. But it doesn’t make sense for them to do it on their own. Why would they spend so much time investing petty cash in companies that require handholding?

“They should focus on the bigger deals on their plates. That is why we encourage corporates and families to outsource this to us. We take away their headaches and align everything together.”

The core focus of the venture capital firm is to help traditional businesses create new engines of growth by bridging the knowledge and resource gap between large established companies and families with the ingenuity and hustle of start-ups, says Victor. “We envision a future where technology start-ups seamlessly collaborate with the larger incumbents as a complementary force rather than being viewed as a threat. We want to bridge this gap, bringing old money into the new economy.”

Vynn Capital’s investments will focus on five core industries — travel, property, food and fast-moving consumer goods, female economics, and logistics and enablers (which include financial technology). Victor describes female economics as companies and businesses that cater for the life cycle of women, which includes cosmetics, marriage, baby products and even children’s education.

He says the firm’s main thesis is built on two main elements — looking for companies involved in the entire value chain of these industries and those whose businesses are able to expand across related sectors.

Seeking out companies in a value chain is an important element due to the increase in the middle-income population in the region, which is leading to increased consumer spending and demand, he says. This, in turn, impacts the previously mentioned sectors the most, not just the consumer-facing businesses.

Even those involved in business-to-business (B2B) models need to be more efficient to keep up with the growing demand. Vynn Capital will also focus on businesses that are looking to enhance their operations in the value chain.

The second element — business convergence — plays on the synergy theme that the firm is hoping to create, says Victor. “It is a convergence in terms of markets, industries and business exposure. We are seeing a lot more players today expanding into related sectors, creating a synergistic value between the industries we are looking at.

“For example, the convergence between property and travel. If a property company is not able to sell residential properties due to a soft market, it could work with a travel company to do something like the Airbnb business. Travel companies could also work with food and logistics firms. That is the synergy strategy we are working on.”

The Southeast Asian edge

Despite sharing the same surname, Victor and his partner are not related. Singapore-based Darren has years of experience in strategic management and private equity investment, having worked at International Enterprise Singapore, a statutory board under the city state’s Ministry of Trade and Industry that facilitates the overseas growth of Singapore-based companies and promotes international trade.

“Darren is a friend I met on my VC journey. Two years ago, he was helping the South Korean government to hold a start-up competition called K-Startup, an effort to get global start-ups to set up in South Korea. In addition to recruiting start-ups from all over Southeast Asia, he was looking for judges as well. So, I participated as the only Southeast Asian judge,” says Victor.

“We became good friends and were trying to explore something we could do together. When the opportunity came, we decided to launch the fund together. We also have other partners, but we cannot announce them yet. We need to make sure that we are as careful and as efficient as we can be before announcing anything.”

Although Vynn Capital is looking to invest across Southeast Asia, it has decided to be based in Malaysia as it is considered a gateway to Asean, says Victor. The five countries the firm is looking at is Malaysia, Singapore, Thailand, Vietnam and Indonesia. It is maintaining interest in second-tier markets such as Myanmar and the Philippines.

Victor says Myanmar is an exciting market as Darren actually has experience investing there. This is an advantage to the firm as not many Malaysian investors are savvy enough about that market.

“Our knowledge about Myanmar should be sufficient for us to invest in the Greater Mekong Subregion. Yes, everyone is talking about Indonesia — a huge country with a population of 270 million. But there are inherent obstacles. For starters, it is a country of 17,000 islands. The subregion, on the other hand, is just one piece of land with a population comparable with Indonesia,” says Victor.

In the Greater Mekong Subregion, Thailand is the most advanced while Vietnam is showing good potential, considering the push for innovation by its government. Myanmar is showing upside potential, with increased spending and democratisation of technology.

“The cost of a SIM card went from US$1,000 to a few dollars in a span of a few years. That shows how great the reform is in the country. And there are still gaps to be filled. For example, it does not have a strong core banking system, so users still need to carry cash to transfer money from Yoma Bank to CB Bank. However, most banks already have digital banking systems,” says Victor.

“The best thing about Myanmar is that the players are open to innovation. Even the families are eager to participate — a lot of the successors who studied abroad want to bring change to the country by leveraging technology. Vynn Capital has the regional expertise, so we will be able to create value for corporates, families and start-ups there.”

Lower risk in early-stage investing

Victor was previously vice-president at another venture capital firm, Gobi Partners, where he managed two Southeast Asia-focused early-stage funds. Some of his notable investments include Malaysia’s car-buying platform Carsome, Vietnam’s travel platform Triip.me and Indonesia’s short-term home rental platform Travelio. One of his investee companies — beauty product e-commerce platform Hermo — was even acquired by Tokyo-listed istyle, giving Gobi Partners an internal rate of return of 91% in just 1½ years.

Victor says investing in early-stage start-ups is not as risky as it used to be, due to the abundance of other venture capital firms looking for Stage B and Stage C investments. “Since there are so many of them, there may not be enough deals to go around. That means we do not have to worry about the next round of funding. We can always channel it to the VCs looking for mature deals as a natural progression. At the same time, should our partners think the companies are suitable for their traditional business, they can choose to acquire them.”

Victor says the region will need a lot more work to become a strong ecosystem that can match those in the US, China and Japan. Malaysia still presents a good opportunity to deploy VC funds, especially as the country is one of the most mature markets in the region.

“I think the reason countries such as China, South Korea and Japan choose to invest in Malaysia is that we are so used to diversity and are operationally savvy. That is why when we are looking for investee companies, we have to make sure they can expand to this country,” says Victor.

Source: The Edge

Traditionally innovative: How Vynn Capital plan to bridge between startups and big corporations

Newly launched Vynn Capital is raising a US$40 million fund for startups in Southeast Asia. Here is how they plan to do things differently.

In February, TechCrunch reported that former Gobi Partners vice president Victor Chua is planning a US$40 million maiden fund for his new venture capital (VC) firm Vynn Capital.

Co-founded with IE Singapore’s Darren Chua, the Kuala Lumpur-based firm is aiming for Southeast Asian (SEA) markets such as Malaysia, Indonesia, Thailand, Vietnam, Singapore, Myanmar, and the Philippines.

The fund aims to invest in 15 to 30 companies, with figures that varied between US$300,000 and US$500,000 for seed stage and around US$1 million for Series A stage.

In explaining the firm’s investment philosophy to e27, Victor Chua puts a great emphasis in the importance of collaboration between startups and corporations.

This has become an urgency as Chua notes a growing pressure for big corporations and family offices to be more involved in VC investment in the recent years.

“[We aim] to create a synergy between incumbents and newcomers who want to do things differently, in a more innovative way. We try to create what we called ‘traditionally innovative’ businesses,” he says.

In a way, Chua even sees the firm’s portfolio companies as a form of R&D centre for its LPs. For example, a family office that works in the hospitality sector might want to implement a new technology, but has neither the experience nor expertise to develop it. Then they can work together with the portfolio companies.

“That really helps to distinguish ourselves as compared to the rest of the competitors,” Chua says.

vynn_capital_interview_2

Vynn Capital Managing Partner Victor Chua (right) with Partner Darren Chua

Facing Southeast Asia

Chua is definitely not a new face in the Southeast Asian startup ecosystem. His previous venture capital firm Gobi Partners has more than 25 portfolio companies in the SEA region alone.

He had also been named in last year’s Forbes 30 Under 30 Asia list for the Finance & Venture Capital category.

The most notable thing about the market, according to Chua, is the dynamic, and how it required businesses to adapt accordingly.

“In this region we need to be prepared to be flexible and agile, and even be able to adapt to different kind of stages that we have come to,” he says.

“For investors and startups, you need to be able to have the long-term conviction. You need to be able to look at the long-term trend, to do something about it. And that is what we stand for,” he continues.

The collaborative approach will also be used in reaching out to one of the VC firm’s targeted segment — businesses that are targeting women as their core audience.

During his time at Gobi Partners, firm’s leading success stories included the acquisitionof their portfolio company Hermo to Japanese cosmetics e-commerce company istyle in May 2017.

Despite its huge potential, investing in female-focused businesses can be challenging due to the fierce competition. To tackle this issue, Chua once again stresses the firm’s collaborative approach.

“The female-focused segment has been operating in silo basis. If you look at many companies [operating in SEA today], they are offering just fashion [products], or just e-commerce [services]. Like, in Indonesia, they have Sociolla and I used to do Hermo in my Gobi days,” Chua says.

“We understand that for female-focused businesses, it is something very difficult … and sometimes it can scare off companies,” he adds.

This is also why, in searching for potential investment, Chua stresses the importance for startups to be willing to “get their hands dirty” and collaborate with different parties.

“Because we encourage our portfolio companies to collaborate with one another; we also encourage them to work closely with our LPs as well,” he says.

The year 2018 will be a monumental one for the firm.

In addition to closing its first fund, Vynn Capital also expects to foster partnerships with both the private and public sectors.

Reported by E27

 

VC Spin-Outs Are On A Roll In Asia. Ask Gobi.

The trend of venture capitalists spinning out their own funds continues as former Gobi Ventures vice president Victor Chua teams up with Darren Chua to form a new venture capital fund, Vynn Capital, focused on Southeast Asia and going after a $40 million close. Gobi has inked several successful deals in the region since opening there a few years ago from its China base. Chua said the strategic-value focused VC firm is now live to work with families and corporates as well as entrepreneurs who are looking to create more synergistic value and build the ecosystem together.

The past year has seen venture partners from Sequoia Capital, Kleiner Perkins, Khosla Ventures and others go out on their own with new funds.

China co-working market continues to be red hot, as China’s co-working space giant Ucommune secures $17.4 million in new funding, barely two months after it raised $47 million in a Series C funding round, also led by the same M&A fund, Qianhai Wutong.  The startup is backed by renowned investors such as Sequoia Capital, Zhen Fund, Noah Wealth Management and Sinovation Ventures. Its valuation was estimated to be $1.3 billion after the Series C round as of December 2017.  Interestingly, the same M&A fund backed China’s largest co-working space operator UrWork (rebranded as UCommune) in fundraising of $45 million late last year.

DataVisor, a provider of fraud detection solutions using machine learning, snapped up a $40 million Series C round of financing led by Sequoia China, with participation from existing investors New Enterprise Associates and GSR Ventures. Rock Wang, managing director at Sequoia China, will join DataVisor’s board of directors. With this new round of financing, the Silicon Valley based startup with offices in Beijing and Shanghai plans to expand its global footprint in the fraud detection and prevention market, which is estimated to reach $41.6 billion by the year 2022,  according to research firm MarketsandMarkets. Yinglian Xie, CEO and co-founder of DataVisor, called Sequoia China an ideal partner to help scale the business as it improves its technology and expands globally in the fraud fight.

New funding of $2.5 billion goes to the logistics unit of Chinese e-commerce giant JD.com, the closest rival to Alibaba. The deal was led by investment firms Hillhouse Capital Group and  Sequoia Capital China, plus internet giant Tencent as well as several state-owned companies. The money is being earmarked to further develop drone deliveries and robotic assists.

Silicon Valley-based bike-sharing company LimeBike has raised a series B extension of funding of $50 million led by Fifth Wall Ventures (typically a real estate investor) and Shenzhen manufacturer Rainbow Technology Co. The connection to real estate is that Fifth Wall will work with LimeBike to establish hubs nearby buildings and local retail establishments where bikers can rent bikes, explained Brandon Wallace, co-founder and general partner at the Los Angeles-anchored VC fund.

The busy week for LimeBike was also marked by its roll-out of electric-assisted bikes in Seattle and communities in the Bay Area.

The funding follows last October’s round of $50 million from DCM Ventures, GGV Capital, AME Cloud Ventures, Stanford StartX-Fund, Section 32 and Durant Company, founded by professional basketball player  Kevin Durant.

IPOs

Chinese search leader Baidu is making plans to take its video streaming platform iQiyi public in New York sometime soon.

And, Alibaba is taking a 33 percent stake in its online payment affiliate Ant Financial in a deal that could lead to a public listing of the unit, which was spun off from Alibaba in 2014 as a separate entity.

China is racing ahead in AI with funding and patents, grabbing nearly half the venture capital and closing the gap on the talent race.  Baidu is betting its future on artificial intelligence, launching its Alexa of China series of lamps, projectors and speakers while racing to keep up with Google in autonomous driving. Baidu just opened a second R&D lab for AI research in Silicon Valley.  Alibaba is also playing its AI hand, relying on the technology to making shopping more convenient, efficient and fun. You know about its new Hema grocery stores that are fully automatic and digitalized – no cashiers, no check-out lines — just QR codes and AliPay.

RECOMMENDED

If you want to be in the center of action in Tel Aviv on your next business trip, you should stay at the new boutique hotel Poli House, in 1930 Bauhaus style.  It’s really cool with a panoramic rooftop pool, sun deck, cocktail bar, spa treatment room and quaint cafe for breakfast. The Poli House is one of a growing trend of boutique hotels in Tel Aviv as the city by the sea populates with newer, luxurious hotels such as the very chic Carlton, right on the beach with breakfast overlooking the surfers.

Rebecca A. Fannin is founder/editor of news, events and research group Silicon Dragon. She is an author of three books on innovation and venture trends, and is a public speaker.

Source: Forbes

The “Vynn-ing” Plan

By Victor Chua

2017 represented a great year of change, exploration and development for me as a person and the greater venture ecosystem in Southeast Asia as a whole. With all these successes, 2018 marks a year where new journeys begin and we embrace ourselves with even more “more-work-to-be-done” moments ahead. It is under this backdrop that we decided that it is the right time for a “different-yet-familiar” kind of growth in the region. Understanding this, we embarked to create a new way of venture investing – and Vynn Capital is our solution to address the unique opportunity in the market to bridge familiar industries with new and emerging sectors to create economic growth.

Why Now?

This “different-yet-familiar” kind of growth is really about corporate innovation. A lot of people have been discussing corporate innovation where traditional blue-chip companies are working to leverage new technologies to revitalize their business operations against an inexorable tide of digitalization. While it makes sense for larger corporations to explore business diversification, family businesses and mid-tier companies are also making their way into this space and investing to satiate a more primal purpose – survival.

Traditional big boys took their time to study the market and realized that digitalization is inevitable and those who resist change will be ruthlessly swept away with the times. So many have tried to venture build on their own or simply invest directly into startups without professional experience or know-how, resulting in disappointment and fruitless efforts. As such, Vynn Capital aims to work directly with traditional industry partners to assist them in tackling the startup space to create meaningful solutions to facilitate business growth, allowing corporations and family businesses  better understand how tech investing works and how it is able to generate real results for their bottom lines.

What are we doing differently?

The core spirit of Vynn is all about helping traditional businesses create new engines of growth, bridging the knowledge and resource gap between large established companies and families with startup ingenuity and hustle. It is essentially a matchmaking of skill sets.

From there, we examined the best way we can add value to both our investors and startups we aim to back and formulated a strategy, which we believe is uniquely suited to the market based on the following characteristics:

  • Concentrated industry focus – we are focusing on five core industries, which we believe are synergistic to one another or offer a natural next-phase expansion possibility. Namely, “Travel”, “Property”, “Food & FMCG”, “Female Economics” and “Logistics & Enablers (fintech is lumped under this category)”;
  • Consciously engage with investors that have businesses in our industry focus – we will actively encourage investors to engage with our portfolio companies in a healthy and transparent manner, which we hope will allow startups to tap into the business knowledge of our investors, while our investors can gain meaningful exposure to the tech industry to address their individual business needs;
  • Focusing on cross-border or inter-industry opportunities – we will identify and invest in startups that are looking to branch out in terms of geography and industry, leveraging the Vynn team’s proven experience supporting business expansion and strong local and regional network to provide meaningful value to our portfolio companies. In turn, creating companies that are built for long-term sustainable growth.

Who do we work with?

Given our focus on synergistic industries, we work with companies and families that are operating in these sectors or who have an interest in learning about and gaining exposure to these particular industries.

We are a platform that allows our partners, be it investee companies or our investors, to explore new markets and industries by working closely within the ecosystem that we are creating. This is the reason our investors are companies and families with business interests in these industries and why we aim to invest in startups operating in this space.

Where are we headed?

We envision a future where tech startups seamlessly collaborate with larger incumbents as a complementary force for change, rather than being viewed as a threat or disruptor to traditional sectors. At the end of the day, why re-invent the wheel when you already have something that is running. By improving what we already have through combined efforts and resources, we can create a more meaningful future for businesses, startups and society as a whole.

This is our first major step as a new team. We appreciate all the support we have received and we welcome more collaborative opportunities with long-term partners who can appreciate these values with us. We hope to fulfill this “Vynn-ing” strategy with our trusted partners and achieve a shared vision.

Newly found VC firm Vynn Capital plans SEA-focused $40m debut fund

Vynn Capital, a new Southeast Asia-focused venture capital firm founded by former Gobi executive Victor Chua and Singapore’s Darren Chua, is raising a $40-million debut fund, according to a recent report.

The Kuala Lumpur-headquartered VC firm is also planning to start making investments by the end of this month and will target seed and pre-Series A deals to start with, a report from TechCrunch said. The firm is looking to invest in about 15-20 deals.

The report said Vynn has already mopped up $10 million for its maiden fund. It will target startups in travel, property, FMCG, logistics, property and “female-focused economics”. The fund will focus on countries such as Malaysia, Indonesia, Thailand, Vietnam and Singapore.

An email to Victor did not elicit any response at the time of publishing of the article.

Victor, a former Vice President of Investments for Gobi Partners, managed two Southeast Asia focused early stage funds there. Among some of his notable investments include Carsome (Malaysia), Triip.me (Vietnam) and Travelio (Indonesia), according to the firm’s website.

Prior to that, he worked on direct and indirect investments at Malaysia’s largest venture capital fund, MAVCAP. He spent his formative years with Willis Towers Watson, advising corporate, pension and sovereign wealth funds on investment strategies.

Meanwhile, Darren also has numerous years of experience in strategic management and private equity investment, having completed stints with the Singapore government, technology startups and multinational firms.

Before starting Vynn Capital, he led investment and strategy projects across Southeast Asia and the Greater East Asia region. He has also worked on technology transfers across Asia and Europe. At IE Singapore, he guided more than 10 SMEs in corporate development and market expansion across Asia.

The firm has appointed Tan Sri Vincent Lee, a key executive of the Malaysian advertising industry, as one of its advisors, according to its website.

Other advisors are Setyono Djuandi Darmono, the founder and Chairman of industrial estate developer PT Jababeka Tbk, and Mario Hardy, CEO of the Pacific Asia Travel Association (PATA), a not-for-profit travel and tourism body in Asia-Pacific.

Read more at: https://www.dealstreetasia.com/stories/vc-vynn-capital-plans-sea-focused-40m-debut-fund-92567/

Vynn Capital plans maiden $40M startup fund for Southeast Asia

Southeast Asia has a new venture capital fund on the scene after Victor Chua, formerly a vice president at Gobi Ventures, launched Vynn Capital.

The Kuala Lumpur-headquartered venture is founded by Chua and Singaporean Darren Chua, previously with IE Singapore, and it is targeting a $40 million total close. Chua declined to say how far advanced the project is, but we did a little digging and industry sources suggest it has closed around $10 million thus far.

The fund is focused on startups in a range of industry verticals including travel, property, FMCG, logistics, property and “female-focused economics,” Chua told TechCrunch in an interview. On that last vertical, Chua cites Gobi’s successful exit from Malaysia-based skincare and cosmetics startup Hermo — the firm received $13 million for its 60 percent stake courtesy of a deal with public Japanese firm Istyle.

Chua said the deal represented a massive return on investment despite the fact that Hermo had never expanded beyond Malaysia. He believes that the opportunity for female-focused business will only increase in the region.

Geographically, the fund’s focus is on Southeast Asia, and in particular Malaysia, Indonesia, Thailand, Vietnam and Singapore. Myanmar and the Philippines are on the radar.

In particular, Chua said he will tap his network in Thailand and Vietnam — developed from his time at Gobi — while Chua has extensive experience working in Myanmar among other markets. Two other partners are in the process of joining the firm but cannot be named at this point, he added.

Vynn Capital plans to begin investments by the end of February with a primary target of seed and pre-Series A deals. Chua said it would reserve significant funds for follow-on deals that would take it into Series A investments and potentially belong. All told, the firm is looking at making around 15-20 deals with its inaugural fund.

Chua declined to give specific LP information, but he said the firm is backed by “traditional families keen get into the new era of business where technology plays a huge role.”

Three publicly-announced advisors to the fund include Malaysia-based advertising industry pioneer Tan Sri Vincent Lee, Indonesian business leader SD Darmono, Dr Mario Hardy, the Thailand-based CEO of the Pacific Asia Travel Association (PATA).

Chua, who spent three years with Gobi, is not the only Southeast Asia-based VC to switch out of a larger fund to establish his own.

Yinglan Tan, formerly with Sequoia, launched his $20 million Insignia Venture Partners firmlast year. Other prominent firms covering the seed to Series A and beyond include Golden Gate VenturesMonks Hill VenturesVenturra CapitalNSI Ventures, and Jungle Ventures’ SeedPlus unit. Of course, there is also Gobi itself, which is heavily anchored in China but has a local presence in Southeast Asia.

Note: The original version of this post was updated to correct the spelling of Darren Chua’s name and clarify the markets of focus for the fund.

Coverage by TechCrunch