Week in Review: More money to power tech in SEA

By Karamjit Singh March 25, 2016

Singapore ploughs in US$3.2bil for Industry Transformation Programme
Gobi Partners and Mavcap launch US$15mil Asean SuperSeed Fund

Week in Review: More money to power tech in SEA IT is not surprising actually that Singapore has announced a slew of programmes and initiatives to support a deeper adoption of technology and innovation in business.

After all, the aspiring Smart Nation is already one of the world’s most wired cities. Clearly, it is hungry to see its companies weave technology and innovation into their corporate DNA, so to speak.

It is committing S$4.5 billion (US$3.2 billion) into this initiative through an Industry Transformation Programme, Finance Minister Heng Swee Keat announced in his Budget 2016 speech.

As part of this, a Business Grants Portal will be launched in the fourth quarter, to consolidate the grants available from different government agencies.

Consolidating various grants available from different agencies is tough to do, and I am not sure if this means taking funds away from existing agencies and consolidating it, or if the Business Grants Portal acts as a single gateway to the relevant agency where all those funds are parked.

Malaysia actually tried to consolidate all its disparate funds for technology and innovation under one body, Agensi Inovasi Malaysia (AIM) or the Malaysian Innovation Agency, back in 2010 – but its then chief executive Dr Kamal Jit Singh told me that all he got for his efforts were “a back full of arrows shot at me.”

So I, for one, will be keen to see how Singapore actually does this as it makes clear its belief that technology stands central in any effort to improve business competitiveness.

In this sense, Singapore’s proposed allocation of over S$450 million (US$438 million) for a national robotics programme over the next three years is also logical for its small and medium enterprise (SME) focus.

It is, after all, among the most expensive cities in the world to do business in. Its SMEs have no choice but to innovate or die.

Not surprisingly, it also announced moves to strengthen what is already the strongest startup ecosystem in South-East Asia, and arguably Asia.

I want to end with some thoughts on the just launched RM60-million (US$15-million) Gobi Mavcap Asean SuperSeed Fund by China-based venture capital firm Gobi Partners and Malaysia Venture Capital Management Bhd (Mavcap).

It is a seed fund – okay, make that ‘super seed’ – with an average investment of US$500,000 into startups.

What strikes me though is the aggressive forecast of US$10-million revenue the fund expects its portfolio companies to have earned by the end of 2016, and the 600% year-on-year growth it expects.

Gobi and Mavcap announced five investments, with three more in the works. Even if they end up with 10 by the end of the year, that’s an impressive average of US$1 million revenue per company. That’s a lot for any South-East Asian startup.

That just serves to remind me of how startups in the region are still under pressure to earn revenue at an early stage. I wonder how many startup founders have raised money by selling the pitch of building an engaged user base first and monetising later. Hardly any, I would assume.

Entrepreneurs just have to accept the fact that early revenue must be part of the game plan in raising funding.

Have a restful weekend and a productive week ahead.

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