Message for Readers

If you find this blog post useful to your work or if you have interacted with me and have found my sharing helpful, you can pay it forward as follows :

1) Share what you know freely to all who are able to listen with no expectation of reward.

2) If you make big bucks, donate some of that to charity and give back to tech by becoming an angel investor or LP.

Friday, May 26, 2017

Finally SPH has a new CEO

So SPH has finally changed CEO. Board issued a statement thanking former CEO Alan for his contributions though if we read the quote, it just states what he did without numbers to back it up. Reading between the lines.. it's perhaps the best they can do.

I know how strong SPH position was back in 2002 in the media advertising space. And my general take is that they have grossly underperformed their potential last 14 years. But we don't make decisions on feel but on facts. So let's see if the facts support my gut.

SPH from 2002 ( year Alan was made CEO) to May 2017 has returned about 60% including all dividends. That's a return of 3.3-3.4% annualized. To see if that is a good return, let's compare against 3 metrics. First GDP growth between the same period. Second, the return of STI in the same period. Third ad spend in Singapore between the period.

First, GDP for Sg has increased 230+% between 2002 to 2016. If we assume same proportion spent on advertising, it's clear SPH has failed to keep its proportion of advertising revenue dramatically.

Second, STI index was 1786 jan 2002 and 3219 now. And if we factor in the 3% dividend yield, we are talking about 122% returns. More than GDP and again more than double SPH returns.

Third ad spend in the period grew by about 50+% from 1.5b to 2.3b or so. Harder to find accurate data here. But that's a 53% increase in potential top line for SPH even if they just keep market share of ad spend. But in 2002, SPH had operating revenues of 903m and in 2016 it was 1177m. That's a meager 30% growth in revenues when market grew 50% and GDP grew 233%! And I am being kind to use operating revenue as it includes property.

So the data does show that SPH has underperformed badly under the old Mgmt. As a shareholder briefly via ETF in the period, I must say I would be so pissed with mgmt if I really just held on to my shares.

We have a good quality and well intentioned business and political elite in Singapore. So I am asking our powers that be who own SPH to start calling a spade a spade faster. Not so much faulting the polite face saving departure statement but more of how we can allow such underperformance to last for 15 years. The board should have taken action and removed mgmt earlier.

SPH Mgmt shares is 43.05% owned by govt or govt linked entities with a further 9.5% owned by Dbs which is 30% owned by temasek. The rest are the 2 local banks and Great eastern. So changing CEO is not outright but well within the temasek/govt ability/role.

I really worry for singapore inc if we continue to allow underperformance to be allowed to fester like that. Much of our future economy is tied to our GLCs doing well and growing well while we groom and build up more locally owned enterprises from private sectors. So temasek and Singapore inc needs to be tougher on our CEOs! 

We see other worrying developments happening with Singapore Airlines, Keppel,SMRT, Comfort and Sembcorp Marine who are all being tested by disruption. For now, I still feel our GLCs have a huge important role to play and have proven that our Singapore Inc model works historically but if they don't have high standards of Mgmt to ride on disruption and end up all following SPH path, then I think we might have to admit more private citizen ownership of corporates is a more stable configuration for our future economy. I hope not because so far there are clear benefits to having strong state ownership of GLCs in area of unemployment and stability.

Btw, many people are joking about the incoming CEO. I don't know enough about NOL situation or container logistics market to judge whether he did a good job in NOL and so whether is a good choice or not. But I do know we should hold him tightly to performance of SPH moving forward. It's a tough job to turn around a slowly sinking ship but he needs to figure out fast and reflate those revenue sails. 

Tuesday, February 28, 2017

Why we need more startups!

(This is an op ed piece i wrote on why we need more Startups)

We frequently hear about startups being sold for many millions and how these deals make instant millionaires of their founders and investors. While it is clear how successful startups can benefit their stakeholders, it is less obvious how these establishments can contribute to Singapore’s economy.
Using examples from my experience building and running a job portal service, I would argue that there is a need for more startups here in Singapore – and that building a larger and stronger startup ecosystem here will benefit Singapore’s economy.

In Singapore, over 20 job portals sprung up between 1999 and 2000. During those years, revenue from recruitment advertisements for incumbent print media players was estimated to be between S$120-150M. By 2015, the total estimated spending on recruitment advertising including print had decreased to S$70M, of which approximately 60% could be attributed to online platforms. This was in spite of Singapore’s GDP growing by more than 300% over the same period.

In this regard, job portals have helped to create massive savings in recruitment advertising for employers. On top of cost efficiencies, job portals have also generated substantial time savings for jobseekers in the application process, and for employers who now use software to screen and manage applicants.

Without job portal startups, the incumbent print media players would likely have taken a longer time to roll out digital platforms to avoid cannibalizing existing products. They would likely have also charged higher prices on their digital offerings to maintain their revenue.

The development of online recruitment portals is a good example of how startups can disrupt industries and change consumer behaviour through new technology. In the process, such efforts also result in great economic efficiencies for the industry.

Many startups will fail. From the pool of more than 20 job portals established in 2000, only 3 to 4 still exist today.

These high failure numbers are a natural feature of a healthy startup ecosystem. The job portal companies which survived are no longer startups, having grown into mid-sized enterprises employing around 50 to 150 staff in Singapore alone, making tens of millions in revenues and paying taxes on their profits.

Hence, by encouraging startups, we are essentially securing a pipeline of potential SMEs to represent ‘Singapore Inc.’ in the future. Moreover, by raising the quality of our startups, we can expect to see larger and stronger SMEs.

Furthermore, some of these high growth startups in disruptive or blue ocean fields will grow past the SME stage very quickly to become smaller-scale multinational corporations (MNCs). Razer and Garena are good examples of such companies that have taken much lesser time to spread their wings overseas.

Not all startups end up failing or growing into SMEs. A number are also acquired by MNCs or Large Local Enterprises (LLEs) which are interested in the startups’ technologies and know-how or are keen to access their geographical or niche markets.

Many larger organisations find in-house development and innovation challenging, and have turned to acquisition and venture investments as alternative y to create new products or expand their customer base. For example, SPH acquired real-estate listing portal Streetsine a few years ago, as part of their plan to grow their property advertising business. Another example is Zendesk’s acquisition of chat service provider Zopim to boost their chat product offering.. Recently, we also observed the National Research Foundation (NRF) supporting local corporates such as CapitaLand, Wilmar, YCH and DeClout to establish and scale up corporate venture funds to focus on engaging startups.

The value of a strong entrepreneurial work ethic also cannot be overemphasised. At JobsCentral, we hired more than 300 people over the course of 14 years. I dare say many of our early stage employees learned a lot more with us and became more entrepreneurial than if they had joined a larger organisation. These experiences served many of them well when they went on to work with MNCs and LLEs.

Startups provide an experience for their staff that is more akin to going on an adventure filled with ambiguity. Founders and pioneer employees are required to take on multiple roles and be comfortable with regular change.  In general, employees who have been through the startup journey are trained to think on their feet, are comfortable with changes and making decisions, and constantly seek to innovate and improve on their products.

These traits are invaluable to any company. Hence, having a vibrant startup landscape in Singapore will contribute to the pipeline of entrepreneurial and innovative talent who can support the future needs of the economy.

Netting the greatest benefits from a strong startup ecosystem would require us to bear in mind two key considerations, ownership and the respective role of government and the private sector.

We want to encourage more local ownership of companies, because locally owned companies are more likely to continue to base high value functions here and returns on capital will be better captured here. This applies especially to startups and entrepreneurs supported by government incentives, which tap on public funds contributed by tax payers.

JobsCentral was 100% owned by Singaporeans, and although costs were higher compared to neighbouring countries, we located our IT and design team here to tap on local expertise. At that time, most of our competitors had only sales and marketing outfits here. Likewise, I have noticed that the majority of the Singaporean-owned enterprises do base strategic and higher-valued operations here. And if an exit happens or if dividends are paid, there is a higher chance of profits and capital gains being retained and spent here since the proceed are paid out to locals.

However, even as we continue to support locally owned companies, we must continue encouraging foreign entrepreneurs to set up base in Singapore. Currently, we simply do not have enough good entrepreneurs and startup employees to build a strong ecosystem on our own, and we have much to gain from remaining open to new entrants and ideas from abroad and we should remain open to new entrants of new ideas and businesses here.

Startups do not operate in a vacuum and will only thrive with the involvement and support of both the public and private sectors.

First, the Government can help to catalyse developments in sectors like Information and Communications Technology (ICT). This can be through the provision of funding tools, the facilitation of special manpower needs, and encouraging partnerships between startups and MNCs, Government-Linked Companies (GLCs), the Government, and overseas partners.

Second, the Ministry of Education can look into incorporating entrepreneurship as part of the education curriculum, and promote entrepreneurship as a career choice to be on equal footing with other prestigious careers like doctors

Third, government bodies can encourage collaborations with local SMEs by considering contracts with SMEs that provide competitive product and service offerings.

Fourth, the Government can consider taking a light touch on some regulations in specific areas, to allow more room for innovation. The idea of a regulatory sandbox for the Finance Technology (FinTech) sector mooted by Minister Vivian Balakrishnan in May this year is a good start.

Lastly, Government can also influence talent development and the channelling of talent. For instance, the recent move to adjust engineering and ICT payscales within government is a good signal that we value such skillsets.  The promotion of STEM careers is another such measure.

I also understand that the government is currently advocating more startups in high value-added and deep technology areas such as ICT and Medical Technology. There are also efforts to encourage more Singaporeans to pursue an entrepreneurial career. Such efforts should continue and be reviewed regularly for them to remain relevant even with economic changes into the future.

For the private sector, established corporations can consider setting up corporate venture funds for investments into startups, organising hackathons to foster ideas and support commercialisation efforts, creating specialised startup procurement models and engaging in partnerships with startups.

Collaboration between larger private-sector players and startups should also be encouraged. Experienced professionals and successful entrepreneurs may also consider providing angel investments and mentorship to startup founders.

As with anything worth doing, we must define and measure our startup ecosystem. Success is not just about the number (value?) of funding rounds and exits, though those are important metrics. It is also about the diversity and quality of our investor base, the calibre of employees who choose to work in startups, and the number of startups that graduate to become the next SIAs of Singapore, creating jobs and wealth for our country as they grow.

It is my hope that in 10 years’ time, our startup ecosystem will be both robust and sustainable – a core engine of growth for the Singapore economy, with a deep pool of talented founders and employees. I believe our startups will play a critical role in advancing innovation and value–creation, not just in our country, but across the world.

Monday, February 20, 2017

Entreprenuers Need to Keep Learning too!

This is an article i wrote for the CFE which was published on Channelnewsasia. Below is the unedited version.


A key thing that I discovered through my personal experiences and from my fellow entrepreneurs is that entrepreneurship is a learning journey, and many successful business owners embrace continuous learning as a way of life.

The founding team and I built JobsCentral, over 14 years from 2001 to 2014, into a leading regional job portal generating multi-million dollar profits and employing 150 full time staff. During this period, I had evolved from a hands-on, multi-tasking founder into a strategic and metric-focused CEO. I was also privileged to have made friends with many fellow entrepreneurs through organisations like Entrepreneurs Organization and ACE.

I strongly believe that having a positive attitude towards lifelong learning, coupled with a long-term, obsessive focus on business are attributes that separates successful entrepreneurs from the rest.

The most apparent way to learn is to ‘learn by doing’. Many entrepreneurs picked up skills to build, to market and to sell a great product via on-the-job lessons every day. We all make mistakes. But we always try to iterate and improve for the next round. This can be applied beyond business to many areas such as people and self-management.

When we first started JobsCentral, staff were managed with an iron fist and the management team ended up micro managing. This resulted in our first sales team leaving the company en masse. From that painful experience, we learned to manage by focusing on clear objectives and balancing between micro-managing and giving autonomy to the staff.

This incident also gave us an opportunity to learn how to better manage ourselves. Some introspection is required to prevent us from repeating the same mistakes. However, many entrepreneurs with large egos find it hard to admit to their wrongdoings.

What we found important is for business owners not take criticism personally and to always refer to metrics to develop solutions.  For example, during the ‘group buying’ craze, we were sure that a ‘pay-per-course sign up model’ a.k.a. the ‘Groupon model’ would be very scalable. But after 6 months, indicators such as sales figures and usage metrics highlighted that traditional direct advertising models were more effective. In this situation, we admitted our mistake openly and switched our tack.

For entrepreneurs, on-the-job training and learning from mistakes will naturally be the longest and most painful way to learn. A faster and more effective way would be to learn from competitors, experienced hires and fellow entrepreneurs.

Many mistakes could have been avoided if there had been upfront consultation with or reference to books by people who have been there and done that.

The Information and Communications Technology (ICT) ecosystem is a great example  where knowledge gets spread rapidly via sharing sessions, media and online communication tools. I remember hosting visits for internet-based companies which wanted to understand how JobsCentral had built its strong consumer brand. Learning from our experiences helped these entrepreneurs build confidence and certainty in their marketing plans. Likewise, JobsCentral was able to negotiate a fair sale deal back in 2011, after seeking feedback from experienced entrepreneurs who had bought and sold businesses..

This sharing is not even across other sectors. Singaporean firms typically refrain from sharing information. While there is intense competition and secrecy among companies in the same sectors, there is nothing stopping entrepreneurs from sharing openly with non-competitive peers and helping each other grow.

I have personally found great satisfaction in playing a small role in helping fellow entrepreneurs build their businesses. Also, as Singaporean entrepreneurs, we must recognise that we need to operate on a regional and global stage to grow. So while we compete among ourselves domestically, we need to be mindful that we are also going up against overseas players.  It would be fantastic if we had open platforms for sharing and learning within our business community, to uplift the industries here – for instance, through our Trade Associations.

If we are able to learn from our mistakes, as well as the knowledge and experiences of fellow entrepreneurs, chances are that we will build a strong business.  However, to truly build a great business, more needs to be done.

For example, entrepreneurs need to understand and appreciate industry-specific processes and know-how, to be able to envision the future and achieve their goals. Our last 2 years in CareerBuilder was about transforming a global job portal into a HR Software-As-A-Service (SAAS) business.  Our management in the USA was able to observe next generation software companies like SalesForce and Zendesk and realised we would be better off in the long-term if we establish the direction to transform our company into a HR SAAS player. This insight was synthesized from studying SAAS trends and coupling that with in-house knowledge and current strengths in market positioning.

Each entrepreneur needs to find the most effective way to learn. I learn best by reading widely and talking to fellow entrepreneurs. The latter approach requires putting in effort to network and get to know people.  Organisations like Entrepreneurs’ Organization (EO), Young Presidents’ Organization (YPO), Business Leaders Alumni Club (BLAC), and Action Community for Entrepreneurship (ACE) are great platforms to support this. It does take some experience to figure out who and what to ask. 

Another effective way of learning for me is to read business/economy-centric newspapers, quality business cases and books written by successful entrepreneurs or functional experts. Besides acquiring information from these publications, entreprenuers need to also adopt a habit of self-reflection to apply our learning to ourselves and our businesses.

As entrepreneurs, we are always asking our employees to keep learning  and to improve themselves. Lets  also  walk the talk and take some time to reflect and embrace continuous entrepreneurial learning, too. This means reflecting on our mistakes, learning from peers, understanding our industry and having an curiosity about the world. There is always something new to learn!

Third Angel Investing Course on 27th April 2-630pm

Some of you may be aware but i have been conducting Angel Investing Workshops for people who are keen to invest and find out more about this asset class. Reception has been very good and we have trained about 56 people over the last 2 classes held in Dec last year and Jan this year.

This half day course covers comprehensively all the things we need to think about.

* How Angel Investments fit in your overall portfolio
* Ecosystem data
* Positioning as an Angel
* Evaluation of Startups
* Due Dilligence & Legal
* Post Investment Issues

Best of all, i use real data from our own portfolio as examples and to show what is really happening now.

And after the workshop, you will also gain access to pitch sessions of startups which are validated by more experienced investors. So far 2 pitch sessions have been organized.

Find out more at :

ps: DrWealth is the event organizer for the workshops and this is a paid event.

Friday, November 11, 2016

Year end update : So how is semi retirement after 2.5 years?

This is a slightly indulgent article. Not much to do with entrepreneurship or startups, so bear with me or just skip this entry! It will be relevant if you are thinking of purpose in life or if you have recently retired. I am writing because I do get a lot of curious comments from all walks of life when they hear that i sort of retired at 38+.

Its been slightly more than 2.5 years since I stopped full time work. Last update was done 1 year into retirement. Many people assume retirement when young is all fun and games but actually having no structure in life and no over riding purpose can be difficult. I can be both busy and restless, bored at same time.

Quick summary of what happened since official no work status to give context since June 2014 :

1) Mum passed away in oct 2014 after a brief but painful 4 mth battle with lung cancer.

2) Baby #4 came along in June 2014 and he is so precious and cute.

3) 2 older kids entered teenagehood and secondary school. 3rd one entered primary.

4) Started a business Doctor Wealth using chairman model which failed due to mgmt issues and had to be given a new lease of life via some corporate development work.

5) Between Ning and me, we invested in 8 more private startups (iMoney, metro residences, Worq, aldoktor are public knowledge) and 5 VC in the region.

6) Volunteered for the Committee of the Future Economy, ACE and 2 other govt boards. Started ACE peer sharing groups for startup founders which has helped over 35 startups.

7) Launched a crowdfunding platform for Swcdc. Mixed success in terms of scaling up but still running. So far projects have raised some 40-50k in total.

8) Got healthy. 6 day a week Yoga, weights and jogging routine. Traveled a fair bit but no where near what I would like to or to the places I want to. About 60-70days a year.

9) Built an entire balanced type portfolio over the years and implemented decision making, tracking and benchmarking processes. Met target of beating private bank discretionary portfolios and index benchmark.

10) Created and trained singapores first angel Investing workshop in 2016. So far only 25 pax trained but will do more next year.

I lead what I call a balanced portfolio life nowadays. The logic behind it is that while obsessive and crazy focus is needed to achieve first success in business, it is not exactly great for ones spiritual, mental or physical health. It also frequently leaves family members and loved ones shortchanged of attention and love.

So nowadays I spend around 20% of time on exercise and leisure stuff (reading, tv, gaming etc), 20% on volunteer work, 30% on family activities, 20% on portfolio and finances and last 10% on angel investing related. Each of these activities have specific goals linked to a purpose or reason for why I do them.

Eg. Portfolio is to return min 5% annualized with fund mgmt standard vol and sharpe ratios. Angel and volunteer is to impact fellow entrepreneurs and build a culture of entrepreneurship in sg in my own small way.

Some key observations:

Personal related
1) Losing a parent is very painful. I think of my mum every few days and it truly is a permanent gap in my heart. So if you are lucky enough to have both parents around still. The best sharing I can give is to spend as much time doing stuff with them as possible. 

2) Kids grow up real fast and are loads of fun. Have more of them if you can afford it in terms of time, attention and resources. We have 4 children and without a full time work focus, children, wife and rest of family are the main purpose that drives me.

3) Being present and aware of life as it happens is very fulfilling. In business, we are always projecting into the future. Now I try to focus on the present. Really listen and look at what is before me. A side effect is that I notice more about people and I hope in time to be the sort of person people like having around. Not to get their approval but because life is more fun when others are comfortable around you and share their stories! Being aware also means we become more understanding of others and that most people are just trying. So patience gets developed a bit more.

4) Learning still matters perhaps more so than ever. Since learning new stuff is the reward once payment is taken out of the equation. The other driver is being useful which I cover below. Big stuff I learned about include portfolio thinking, board roles, angel investing and about myself and people in general.

5) Undergone some major personality and health change. Both are connected. I am far less competitive though I can still be triggered to the old mode if I suddenly meet a whole bunch of alpha super successful males. How I overcome this is to remind myself that in the end it's all the same. See learning (1). So if I am lucky enough to get out of the competition while relatively young, why continue? For recognition? For the net worth scoreline? To buy more stuff? This diminished desire to win others coupled with a lot of exercise and nutritious food has resulted in a  healthier me. Sleep much better and smile more and feel more at peace.

Work & Portfolio  related
1) Being useful works. This is my criteria for doing the volunteer and angel work. I try to do stuff that plays to my strengths. But I must admit it is hard to be satisfyingly  useful when one is only occupying an investor or board member role since they are not operational.. My philosophy is that  I say exactly what I think that could be constructive to listener . And those who want to hear more, I am always happy to help further. In terms of being paid, it is strange to suddenly not get paid for all the work I do. But I try to see it as giving back. 

2) Being open is something new I am trying. . Last year I was laser focused on angel and startup work. This year I tried being open to anything. It's a work in progress as all the knowledge and skills I have are tech and startup related. So people tend to pigeonhole me there. But joining some government boards and committees has been intellectually interesting and makes me feel I am doing something useful. Though I must say I am not used to the much more slower pace compared to startups due to the size of the issues and organizations we deal with. I am also hoping to go beyond all this corporate and business type areas. 

3) Portfolio mgmt.   It is a full time thing to do it well. Need to research a lot which fits me since I like to read and pay attention to numbers.. Attitude and psychology matters a lot. Attitude meaning we need to admit we are rookies and so have to learn almost everything from scratch. So far so good and I like the stretch and challenge as the thinking is almost opposite from what an "all-in" first time  entrepreneur needs to do. There is also a lot of tracking involved to know how I am doing.  Honestly, I think few entrepreneurs should do this activity diy  as the traits needed are quite at odds with what make them succeed.

4) Startup investing via angel and Vc investing is quite fun. I learned a lot in terms of how to assess, how to handle post investment and am now waiting to see if all the effort will pay off. Unlike stocks and bonds, this activity is more long term. But I am optimistic it will do the best. This activity is most fun as I also contribute a little in helping the startup in terms of mentality and strategy. The best sort of work is one where you put in time and money and it all works out! I think this is a must do for most entrepreners who have made enough money.

Next year, my goal is to continue what I now do and be open to what life will bring. It may mean full time work in the form of starting a new business, it may not. But I want to make sure I continue adding value to people and organizations around me and also be present for all my loved ones!

Tuesday, November 1, 2016

Thoughts on Paktor fund raising

This one pipped my curiosity as its the 3rd >30M dollar deal for a Sporean company that I am aware of this year alone! Ninja Van, then Caurosell and now Paktor. You can read more about what I think about caurosell here. I never reviewed Paktor space before though I did meet and are friends with Violet & Jamie who run Lunch Actually which is a more traditional offline dating company which now has also ventured into the online space. No vested interest in both parties.

Company story & financing so far
Paktor is founded by Joseph Phua, Charlene Koh & Ng Jing Shen. They run a combination of various dating apps and offline dating services in 4 countries. They started in 2013 and grew the company via VC money.

Paktor did revenues of 21.5K SGD In 2014 and 1.05M SGD in 2015. This rapid growth is impressive and does perhaps show that there is demand on consumers part to pay for dating and social dating related services. However, this growth came with spending 9.1M SGD in 2015. So I think any reasonable person would say the jury is definitely still out on whether their current business model makes sense. The strength is that they claim to have 22M users. So that is a cheap $0.5 per user acquired if I just use their last 2 years costs. Not bad and if these users are engaged, then that is a reason for optimism.

Joseph further claims in his msg to me to be profitable 3Q16. If he is referring to GAAP accounting profitable as a consolidated entity, I am extremely impressed as it means top line must have grown 10X with costs constant. Perhaps this explains the investment. However, I would wait for ACRA report next year to verify this fact. They had deferred revenue of 261k sgd for 2015, assuming that is 1 month sales, their run rate in Jan 2016 is still just 1/4 of what they need per month.  I have yet to see any ASEAN startup grow revenue so fast AND be profitable. Its usually one or the other. Happy to be wrong though. Actually, if Paktor grows revenue 10 fold for 2016 to 10M SGD without increasing costs, nevermind profit, I think they would have justified the round already simply because the speed of revenue growth is screaming at demand.

Company Founders
Joseph is the main owner with about 31-32% before most recent round. The other 2 founders own  2-3% each. Of course, may be there is private agreement to split more shares. On salary front, they don't overpay themselves and it is a fair sum for the 2 directors of a well funded startup.

I have never met any of them but Joseph immediately contacted me after I posted a comment on FB and I must say I like his style and what he says. Considering he is from a very privileged background, he does genuinely come across deeply engaged with his business and clearly cares. He also talks about profits which resonates very well with me. Of course to have some many VC (esp Vertex who has had some nice wins this year) support them it should be that way. Anyway feedback is also good about how the company culture is run.

Financing Details
Since  2013, Paktor has raised Seed, Series A, B of about 18M USD from Vertex, Majuven, Yahoo Japan etc and now apparently $32.5M USD Series C from MNC group and K2 global vc with follow on from existing investors. I say apparently because the newest round have not been lodged as far as I can see.

The most recent rounds valued Paktor at about 33.6M USD. So this latest run in Nov is really a large and quick round considering they raised and settled last round only in Jul 2016. Valuation (if indeed it is a full cash Series C round) should be anything from 60-100M USD premoney.

This is a pretty large investment for MNC and K2 Global.  The latter is a newish fund that came out last 2 years saying they aim to raise 100M to invest in pan Asian plays. So even if K2 took 10M of the 32M, it is a bold first investment. For MNC group, they are large media player in Indonesia with holding company having a market cap of around 660M USD. However, they have large bond/debt obligations which need to be refinanced which caused their Ottawa USD to be marked down a fair bit. I can't imagine MNC taking all the rest, so their existing investors must have ponied up more money. We will know when the filing is made.

Deal Rational/Market Sizing
In the USA, group does around 900M USD and has profits in excess of 300+M. So the potential is huge if they are able to make it work the same way  in Asia.  Match was valuing themselves at around 4-6 times revenues. Closer to home, Jiayuan which was china's listed dating online/offline play, was taken private in 2015 at 233M USD market cap which was just 2+ times revenues of 110M USD.

So if we account for per capita differences and of course higher mobile adoption, it looks like there is an opportunity here on paper. However, experience tells me things always take longer. China and USA are ahead of us in this area and I suspect total dating revenues in ASEAN will be lucky to approach 50M USD next 5 years. But of course, readers know I am conservative. The VCs obviously think Paktor will be closer to Match rather than Jiayuan. I don't know why though.

BTW, closer to home Lunch Actually has much larger revenues at least back in 2015 but has taken many years just to get here. This is another reason why I think the market will take time.

How about this whole social entertainment thing? Its rather vague so I am not sure that it means. I guess we will know as they execute. But there is a company called Migme which I analysed before which tries to monetize social networks differently. Still very much a work in progress and is facing a big cash crunch next few months.

In a nutshell, Paktor will need to find some scalable new  product within this dating and social space that is radically different from jiayuan or lunch actually in order to grow well to justify this kind of round and deliver for their investors.

Overll, my assessment is that this round is very much a selling the future type of story similar to Caurosell. It is is a lot of funding  for a proven S$1M revenue. They need not just superb business execution as they expand regionally and improve/create products, they also need market wind behind them for adoption via subscriptions or advertisements to grow fast enough to justify their spend and valuations. It will be interesting to see what happens next. My gut is market wind is not that strong next 5 years but this is a viable good market but it may be a long haul game. Good luck to Joseph and team!

One a final note, if more such deals happen and set the benchmark, we are going to see larger deals with even less fundamentals moving forward! Is this good or bad? Well, I see it as part and parcel of the ecosystem evolution. Some founders/investors who get the timing off will lose big and those who read it right will gain big as the markets run up and down, but so long as usage grows, revenues grow, the overall ecosystem will continue to do well. Just be clear what is niche and what is broad market and make sure you have enough cash in the bank to do the battle!

Tuesday, August 2, 2016

Analysis on Carousell

Edit: James has reached out to say Quest came in pre-seed. Very likely since it is ordinary shares. It also means their multiple on paper is higher than 47 times!

Mobile marketplace carousell just announced a 35.8m usd round valuing themselves at about 236m usd or about 320m sgd. this is probably the largest pre revenue valuation i have ever seen in this region and is testimony to their rapid growth and probably cheap money driving valuations.

No one has exited so far so it's all paper gains and all in the game. Biggest winner I can see is NUS who incubated them and so own a small stake worth on paper over 5m sgd. Each of 3 founder owns same stake at about 12.5% of company in ordinary shares now. That's about 40m on paper if I assume no funny liquidity preference or coupon terms. Wonder if private banks will give some liquidity based on such stakes. Maybe cut by 50-75% to offer loans? 

Seed round vc/angel like 500 durian, quest and Darius make about 47 fold on paper. Sigh.. Pity I passed on it last time. Can't even remember why. Would have made about 1m paper profit. Only consolation is that invested in 500. But much smaller order of paper gain :(

The other thing that is interesting is that Rakuten is the lead investor for seed, then sequoia did the vc series a round at 20.4m valuation and now Rakuten is back valuing them 11-12 times more after 2 years. Why skip the series A when it was so much cheaper? And in a sense it is also a form of averaging up for Rakuten. They are now biggest shareholder with about 33% stake. I don't pretend to know how huge corporates work so perhaps someone can share.

I met siu rui recently at a panel where minister Chan Chun sing was presiding. He hustled and tried to get minister to use carousell and struck me as very driven in his goal to make everyone use it. When questioned about revenue model, he spoke about classifieds margins and how freemium and other measures can be great monetization. He then refocused on usage regionally and stated that as his goal.

I also tried carousell once to see what it was all about and it is truly very easy to use and I managed to sell a few items but only the well discounted ones. It has a strong appeal for bargain hunters and perhaps to just get rid of stuff.

The beauty of raising without revenue based on usage is that no one really knows the ultimate potential. The true test will be when revenue tap is switched on. What will be the gmv sold? How many will pay for whatever premium service created?  How will epayment fees, delivery, escrow fees eat into the model. Will it be a lucrative business generating >10m profit annually to justify this valuation? My gut is this situation is not like Facebook or google. If fees are across the board or just certain categories but everyone pays, cheaper competitors will enter and users may move. If fees are only charged on freemium model, then will it be large enough to justify these numbers? Left to me, I would pick the latter first. Entrench more and evolve more sticky features and then do the former. Perhaps that's why so much money was raised. To have a war chest to slowly experiment. Carousell spent lost only 1m in 2014. Even if losses are at 3m this year, they have a 10 year runway!

Good news is all the shareholders seem to think numbers can grow even more. No one is exiting at all at least based on filings so far. Perhaps revenues and profits are the wrong target, perhaps with huge traffic across the region, a buy out by Rakuten or another corporate giant is also possible. We shall see. But in mean time, things are really heating up in our startup space!

Wednesday, July 27, 2016

Listing as a form of Series A or B - Migme

21aug 2016 Edit : Steven reached out and corrected me on some items. Here are amendments. First mgmt owns a fair bit more due to 53m restricted shares and about 20m option pool. About 73m shares in total which majority will be mgmt. so about 25-30% owned by mgmt. Second, migme has announced they will be raising 6.5m to 10m more very soon. At current burn, it will last 6 month to 9 months more. Their game strategy must really take off and reduce cash burn from current 5m per quarter. It looks like a key period coming up for the team!

Migme has resumed trading after a 1+month trading suspension. It is not normal for a listed company to stop trading for long because the basic idea of a listed firm is be liquid and tradable all the time for it's shareholders.  Migme has announced raising $8m more various investors of which Mnc group is one. Mnc is a large conglomerate in indo with a lot of broadcasting interests. A good strategic investor. However market is punishing it today with a 23% drop in stock price to 0.36 below the subscription price of 0.4. What I wrote earlier still stands. The key period is upon migme now. It has to use this 10m over next 9mths to prove it can improve financials and maybe even be cash flow breakeven. To me, this whole suspension episode is a good reason against raising via public markets instead of usual Vc. Mgmt has so much more public stress than needed. Readers can read Steven fb post to feel his pain.


I am writing this because someone asked me what I thought of migme.

Have commented about this before. Essentially, migme was a 7m series A "ish" round raised via an ipo route. Then over the last 2 years raised another 15m or so ala a series B. So while there is added complexity clearly there is some advantage to be listed. However end of the day cash flow and subsequently profit is king.

So in migme case they are still like most series A and some series B type company, deeply unprofitable and need cashflow aka more funding. One thing good as a listed entity is that has a bit more options to raise via more non vc routes like rights issue, corporate investors etc. they proved this by further raising the 15m.

An interesting downside for listco style raising is that a listed entity structure may deter traditional vc firm from investing. Too many moving parts, less control, public disclosure and also have to spend more to maintain listing status.

So if we treat migme like a usual money losing  series b firm, then there is nothing surprising it needs to keep raising. The only issue is that it has to be all public due to listed status!

The question then turns to whether non vc investors will have the patience to fund migme moving forward. Financials are not pretty. The 22m or so raised all spent. But business still losing 10m per half. In 2015 negative cash flow of -17m!

1H2016 Cash receipts growing only 7% QonQ so not massive growth. The good part is cash receipts was 12m in 2015 and looking like 20-30m this year. But again it is not revenue and we don't know how much is high margin stuff or how much is just low margin ecommerce. How much is recognisable revenue, how much is future revenue. Too many questions.

Final point is that Mgmt has too small (about just 20m shares or < 10% of company) a stake now and it is a concern. Granted the company is extremely generous with options. For the financials of company, CEO was paid 1.35m of which 933k is in options which are in the money still as issued very early so low strike price. In contrast, Patrick grove of iprop paid himself $1 for first few years and had a much more sizable stake.

It will be interesting to see how this story turns out. There is a limit to investor patience and when it is all public, it can all go downhill very fast esp if key business metrics don't perform. Ibuy/ensogo is a good example. From 100+m company to just 20+m market cap, CEO resigned and shares

Monday, April 18, 2016

Building a strong startup culture in SG

I have been thinking about the role of startups and the role they play in the SG economy. Part of this is interest, part is because I am a volunteer on a economic planning committee. Here are the key thoughts I have on this topic. Please do feel free to comment.

Startups matter because they are the future MNC and SMEs of our country. They also matter because they add vibrancy and innovate quicker than established companies. Personally, I also advocate entrepreneurship for those with the right temperament because it is a way of life that is immensely empowering.

I don't believe only certain sectors will produce all the high value add companies. We should encourage all types of startups and focus more funding, grant money, govt help on the low lying fruit like ICT, certain services (eg. fund mgmt. startups), Medtech etc. But if a startup in F&B starts growing like bazookas and builds a strong regional brand, we should embrace the company. It is actually the way the entrepreneur innovates, dreams and executes that counts most at the end.

We also want startups that succeed with or without govt help. Government schemes that end up creating a crutch mentality are a major no no. All government level help given to the startup ecosystem needs to viewed through this lens.

Local ownership of startups matter because citizen ownership implies knowledge and profits stay in SG. However, we have a shortage of founder and cofounder talent, so we need to open our doors to outside talent to come here and start companies at least in the short to medium term.

We need to dispel the idea that failure in work life is bad. We need society to view enterprise as something very positive and as a worthy career path if one is so suited. We need an active funding landscape at Seed, Series A, all the way to IPO level. One that not just funds SG startups, but also regional startups that take SG money.

We need to raise the quality of our startup entrepreneurs. The best entrepreneurs are always comparing, benchmarking, improving their knowledge. To this end, we must provide both formal and informal learning channels for startups to learn from each other, from mentors and from universities.

One important role of government is to catalyse specific startup segments like what was done with ICT. This can be via funding, grants, special manpower quotas, partnerships with MNC/GLC/Govt/Overseas etc. Another key role is to get MOE to start including entrepreneurship as a career choice at school level. Government can also take the lead in awarding more contracts to SMEs esp majority locally owned ones.

Finally, government can also influence talent development and where it goes. Recognition of stock options as compensation, raising ICT salaries and training more ICT graduates are all good measures.

As with anything worth doing, we must define and measure our startup ecosystem. Its not just about funding rounds and exits though those are important metrics. It is also about the broadness and quality of our investor base, quality of employees who choose to work in startups and of course, the number of startups that graduate to become the next SIAs of Singapore creating many jobs and wealth for our country.

It is my hope that in 10 years time, startups become a core strength of our economy with a constant, deep pool of talented founders and employees creating vibrant, innovative new products and services demanded by sg, regional and global consumers and businesses.

Thursday, November 5, 2015

iProperty sold to REA group in biggest dot com exit in ASEAN to far

I have met with Patrick grove two or three times last 10 years. Always impressed me with his deal making prowess. He has done it again by getting REA to pay 28.7 times last 12 month sales (not profit!). Furthermore on a forward earnings basis, iProp is expected to do about A$35-40M if they maintain growth rate of > 50%. Divide by A$750M valuation and we get about 19-20 times forward sales. Either way we look at it, this is a super high valuation that exceeds what all companies including SAAS companies get which is about 10 to 20 times sales. It eclipses both the Zopim and Hungrygowhere multiple by a factor of 2! Also to note, it has not even broken even and is slightly loss making though MY is solidly profitable.

So what could prompt REA to pay so much? Obviously it is a new geographical market in countries where buyers are like Australians pretty crazy about property. iProp operates in Malaysia, HK, SG, ID and Thailand. So from a geographical synergy point of view, it makes great sense. REA has also tested waters owning a <20% minority stake in iProp for quite a while already. So they are clearly comfortable with the ex REA management team that Patrick has gathered for iProp.

In addition, the demographics are in favour of Asian property portals. The population here is huge and HK is an entry into the China market. Both make for excellent long term stories to investors of REA.

The other synergy could be in terms of putting REA practices to help leapfrog what iProp does to really rule the region. iProp is relatively basic classifieds system and maybe with REA better products and processes, it can accelerate growth even quicker and take a lead over chief competitor Propguru in the region.

Of course REA can afford the acquisition, they have about 280M EBITDA, strong cash position of A$80M which will allow them to finance the needed 480M debt comfortably. On the competitor side, Propertyguru will probably view this as a positive as it takes time for new management to effect positive change and this kind of valuation will probably help them in their next rounds or IPO. Propertyguru has raised a lot of cash last few years and so will probably be able to take iProp on even with REA as a shareholder. A possibility could be for REA to do what SEEK did (bought out both JobsDB and Jobstreet) and buy out both iProp and Propguru since in terms of revenues, I believe the overlap is not huge with Propguru being so dominant in SG while iProp does so in MY.


In terms of shareholders, iProperty major beneficiary will be the shareholders of Catcha Pte Ltd which owns 16.7% or about 31M shares worth A$124M. Patrick last I checked owns about 61.5% of Catcha Pte Ltd, so that is a A$76M payday. Very similar to what Jobstreet Mark Chang got for his sale of Jobstreet last year. He has only 2 other partners, Luke and Ken who own the rest of the 38.5% with Ken having more. Very nice pay day for them too.

Another positive thing is that this deal also gives the shareholders of the companies which Patrick acquired to build up iProp a nice bonus. These smaller shareholders took cash and iProperty shares at various prices over the years depending on when he acquired them. If they held on they would have gotten a nice premium due to this sale. Its a great win win which will help Patrick be even more credible in his future deals when he stitches for more companies together.

The last lesson I have from Patrick is that deal making can be a supremely effective skill set for an entrepreneur. Besides iProp, Patrick via Catcha Group has his fingers in Ensogo, Rev media, iFlix, iCarsasia and also a VC fund! He has leveraged his smallish sized print publishing Malaysian catcha media into a veritable internet empire! And most of it has been done by buying out smaller players who don't have his ability to sell a regional vision and to tap the capital markets in ASX.

Will be waiting to see if he can do the same with the other companies in his portfolio. My hats off to this deal maker!

Ps: there is a break deal penalty of 7.5m and the deal will only complete 1q or 2q next year. So as usual everything needs to look lovely both ways and it ain't over till the money's in the bank!