Thoughts and ideas from Asean Angel Alliance Summit 2018

• Malaysia allocates US$250 million for social enterprises, less than a handful profitable
• Collaboration and M&A type process necessary to grow angel investing across Asean

OVER the two-day Asean Angel Alliance Summit 2018 on Nov 27- 28, many topics were covered by speakers to present their ideas on elevating the angel investor and startup ecosystem in Asean countries. The closing plenary provided a succinct overview of main take-away points for attendees to mull over.

The session was moderated by Digital News Asia founder, Karamjit Singh and included these speakers and sessions below:

• Property Crowdfunding by Shaan Ahmed (Co-founder of UOWN, United Kingdom)
• Impact Investing by Jan-Cayo Fiebig (General Partner, 3B Ventures, Denmark)
• From Idea to Exit in 36 Months by Kalo Yankulov (former co-founder of HeadReach who sold his company in less than 36 months)
• Women & Angel Investing by Renuka Sena (CEO & Chief Explorer, Proficeo Consultants, Malaysia)
• Corporate Angel Investment by Alan Lim (Principal Advisor, Nexea Angels & Secretary, MBAN, Malaysia)
• Investing In ASEAN: Success & Failures by James Lette (MAIN.PH, Philippines)

Property crowdfunding addresses changing housing market

Shaan Ahmed and his brother, Haaris Ahmed are the founders of UOWN, a property crowdfunding platform based in the UK.

“We started a property crowdfunding company is because there is a serious problem in the way that the housing market is structured, not only in the UK but across the world. Property is becoming harder and harder for people to access,” Shaan said.

While Shaan and Haaris’ grandfather and father worked hard years ago to buy houses and slowly build their portfolio, it’s an entirely different landscape for the generation of today. “Today we can’t do that, so property crowdfunding is about providing access and changing the way people access property.”

Malaysia came up on Shaan’s radar recently due to the Twitter buzz from Malaysia’s entry into the property crowdfunding market with FundMyHome. During his presentation, Shaan said that companies in this sector may have different goals.

“While UOWN offers property investment opportunities, Shaan says FundMyHome is geared towards actual home ownership.

“Property crowdfunding depends on your goals and how you use market forces to reach them. It could be an engine for fueling the property market in Malaysia and the rest of the world,” he said.

Is impact investing taking off?

The founder and CEO of SOLS 24/7, Raj Ridvan Singh shared one particularly worrying statistic during the summit: “Malaysia has allocated US$250 to 300 million over the past five years for social enterprises via incubators and funding, but yet social enterprises only make up less than 0.00001% of businesses in the country. There are less than a handful of social enterprises in Malaysia that are profitable.”

In the closing plenary, Jan-Cayo reiterated this fact and stressed that impact investing is not a piece of cake.

“While it has been said that aiming for the United Nations’ Sustainable Development Goals will open up US$13 trillion in opportunities for the private sector, the fact remains that we don’t see that money being given out easily – that is one of the challenges.”

Another challenge within impact investing is the varied definitions of what impact means. “If someone has a family member that suffers from cancer, he may be keener on investing in healthcare while others with children may be more interested in education. And rightly so, the type of impact a person wants to create is highly personal.”

He advises investors to, “think about what impact is for you and then, take a look at your current portfolio to see if it matches your definition of impact. Screen the applications and pitches you get. Nobody invests in a full package of only impact investments, but small actions lead to a larger extent.”

Should startups target fast exits?

With a presentation geared towards entrepreneurs entitled “From Idea to Exit in 36 months”, Kalo set expectations straight by saying that “92% of startups actually fail within this time span, which is understandable due to the risk involved.”

According to him, the main reason most of these startups fail is because they do not understand their customers and the market.

“An entrepreneur’s most important job is to talk to customers and understand their pain points – whether the product is something they want and need to use. With this in place, startups can scale and gain first-time customers.”

“Many entrepreneurs are too concerned about investors when they should be more focused on customers. Once you have customers and are growing fast, investors will come to you,” he advises.

Kalo also highlights that it is not necessary to exit in 36 months: “It’s a long-term game building a startup. The important thing is not the timeframe, it’s about creating something that people will use.”

Are women the next wave of angel investors?

While the all-women panel session highlighted some pertinent points, it did not result in a gender-specific conclusion of ways to increase the number of women angel investors. Renuka said, “I don’t think there is a gender lens in terms of investments. The activities Malaysian Business Angels Network (MBAN) has done in the past applies equally to both male and female. It’s up to entrepreneurs to then decide who to invest in.”

In conclusion, Renuka said “For those who invest, it is about building relationships, believing in the founder and having an emotional connection that you have something to add to the business.”

Despite there being no clear formula to propel women angel investing, Shoko Suzuki, the managing director of Harbourfront Ventures shared that focusing on building more women entrepreneurs might lead to more women investors in the long term.

Corporate involvement in angel investing

According to Lim, one main take away from the session is that corporates play an integral part in the startup ecosystem. “Corporates are where startups can get a lot of help in terms of testing their products and accessing a customer base.”

It also offers a unique win-win symbiosis for corporates and startups: “Angel investing is necessary for corporates to accelerate their digital transformation and corporate innovation journeys.”

At the moment, corporate investors have left a gap in the market as they tend invest in more later-stage startups. “We need them at an earlier stage and should look into how there can be more venture capitalists from corporates to participate more aggressively.”

The Asean angel landscape

The summit provided an overview of angel investing in eight countries. “Each has a different model and approach to angel investing, but all share the same aim of wanting to support angel investing,” Lette said.

Since each country’s ecosystem is at a different stage, it needs different responses, levels of support and models of investment.

“Some countries need more support at early stages to get the ecosystem going while others are more sophisticated and have had some exits. In the latter cases, the founders are reinvesting and creating that virtual cycle of angel investments.”

In order to grow the startup and angel ecosystems in each of these countries, Lette believes collaboration among each other is of utmost importance. “Individually, we have startups that are operating in the same space but are doing so in separate countries and they are each struggling to reach Series A funding. But if there was a merger and acquisition type of process in place, you can merge startups across different countries to grow a larger business out of disparate parts of Asean.”