This article summarizes insights from a panel discussion titled “Cross-Border Funding: Opportunities and Hurdles in ASEAN” at Techsauce Global Summit 2024. The panel featured executives from three venture capital (VC) firms: AddVentures by SCG (Thailand), Kejora Capital (Indonesia), and Gobi Partners (Philippines).

The three executives from 3 VCs who participated in the panel discussion on “Cross-Border Funding: Opportunities and Hurdles in ASEAN” were:

• Mr. Carlo Chen-Delanta, Partner and Head of ESG, Gobi Partners  
• Mr. Raymond Hor, Fund Director, Kejora Capital  
• Ms. Jane Prescott, Managing Director, AddVentures & Head of Investment and Venture Building, SCG

The panel discussion was moderated by Mr. Paolo Rentero, Co-founder and Managing Director of TechShake.

Perspectives from Thai and International VCs

Jane Prescott, Managing Director, AddVentures & Head of Investment and Venture Building, SCG, explained that AddVentures is a corporate venture capital (CVC) firm under SCG. They focus on B2B investments in Series A startups globally, with over $100 million (approximately 3.5 billion baht) invested. The core team is based in Bangkok, with additional teams in Beijing and Geneva, all sourcing promising companies worldwide.

Raymond Hor, Fund Director of Kejora Capital, shared his journey as a startup entrepreneur who successfully took two companies public in 2005 and 2008. He transitioned into VC investing in 2010, founding Kejora Capital, a top Indonesian VC firm. Over the past seven years, Kejora has invested over $400 million (approximately 13.992 billion baht) in early-stage to Series B startups, focusing on Southeast Asia. They also collaborate with Orbit Capital Malaysia for cross-border investments in Malaysia and Indonesia.

Carlo Chen-Delanta, Partner and Head of ESG, Gobi Partners, is a partner with funds in the Philippines and regionally. He also leads ESG initiatives at Gobi Partners, a VC firm specializing in investing in other VC firms across Asia. With 16 offices spanning from Pakistan to China, including Karachi, Bangkok, Ho Chi Minh City, and Guangzhou, Gobi manages over 10 funds and invests in startups from Seed to Series D stages. They have helped create 15 unicorns (companies valued at over $1 billion) and over 50 centaurs (companies valued at over $100 million).

Investment Perspectives in ASEAN from 3 VCs

• AddVentures: A Thai CVC's Perspective on Opportunities and Challenges

AddVentures, backed by SCG, a conglomerate with diverse businesses in construction, materials, chemicals, packaging, and logistics, sees opportunities in the current trends of AI and CleanTech. As a subsidiary of SCG, AddVentures seeks businesses that align with future trends and the parent company's interests.

Jane explained that their investment process prioritizes either vertical-specific expertise or a technology-first approach (thesis-driven). They identify existing solutions in Southeast Asia and then seek opportunities to fill gaps in the regional market.

We have teams working all over the world, so we can act as a gateway for those outside Southeast Asia to enter this region. Especially in the current geopolitical climate with tensions rising and China growing and expanding, how can we seize these opportunities? We then delve deeper to understand the real pain points or problems that are happening in the market, some of which are also happening in other parts of the world.

Regarding AI investment, Jane mentioned the concept that a likely issue in Southeast Asia is data. The use of Prescriptive AI and Gen AI both have challenges that need to be addressed, and AddVentures aims to fill those gaps.

In terms of challenges, Jane pointed out that many countries in Southeast Asia face similar problems when it comes to investment. For example, Singapore has a well-developed infrastructure, while Indonesia, the Philippines, and Thailand have different infrastructure, particularly in logistics and fintech. This leads to overlaps, as problems in one country may also be present in another, as demonstrated by the cross-regional growth of Grab and Gojek.

“Businesses aiming for regional scalability might initially focus on a single country. However, by developing multiple revenue streams, or layers of monetization, they become more attractive to venture capital. Take fintech, for example. While it's not a major industry in Thailand, it has significant potential in Indonesia and Vietnam due to their different infrastructure. If a fintech company can successfully monetize its services and create additional revenue layers, it becomes a very attractive investment opportunity.” said Jane

Furthermore, Jane emphasized the importance of AI and CleanTech as attractive investment themes in Southeast Asia. However, since AI is a broad term with various applications, it's necessary to consider the different layers or levels of technology that can truly help solve problems in the region. It's not always necessary to pursue or invest in advanced Gen AI.

• Kejora Capital: Prioritizing Cross-Border Investments

Raymond explained that Kejora Capital has partnered with various funds to invest in ASEAN businesses, including:

• SBI (Japan): They invested in two funds focused on fintech in Indonesia.
• Sunway Group (Malaysia): Kejora Capital and Sunway Group established a joint venture called Orbit Capital Malaysia, focusing on creating deals in Malaysia and Indonesia.

Trends observed in the past 2-3 years include investments in Fintech, HealthTech, AgriTech, Renewable Energy, and E-Commerce, but these are evolving as the market changes. Kejora Capital also operates Jakarta Express, a shipping service to help startups in Malaysia and Singapore expand into Indonesia more quickly.

Over the past 10 years, Kejora Capital has invested over $400 million in more than 50 companies across Vietnam, Indonesia, the Philippines, and Thailand. Challenges in replicating business models across different countries highlight the need for localization.

• Gobi Partners: Focusing on Strengthening a Single Country

Carlo shared his perspective on Asia, emphasizing its unique diversity in culture, religion, and economy. He then posed a thought-provoking question to the audience: “How can we bring various players to the same level in such a diverse region?”  

He explained that Gobi Partners adopts a strategy of focusing investments on a single country. They aim to inject capital to empower companies to compete effectively in their local market, with the hope that these businesses will eventually expand regionally. Gobi Partners has already invested in 10 companies in the Philippines, and some have successfully ventured into Vietnam and Thailand.

Carlo pointed out that 60% of companies in the Philippines tend to be service-oriented. The Philippines lacks the outflow of talented students pursuing education abroad like Vietnam, and it doesn't have the tourism infrastructure, digital infrastructure, or food scene like Thailand. He then rhetorically asked, “What does the Philippines have to compete with other countries in the region?” 

“Everyone says the Philippines will grow to be the Next Indonesia, but how will we grow? In terms of policies, we don't have visas for startups, we don't have a tax system for startups, while Singapore has it all, Malaysia is doing well. How will the Philippines find founders who can truly build businesses that match or solve problems for the market?”

Carlo continued, 

“However, the Philippines has attractive points in terms of 1) its potential as a startup hub, as the Philippines has a population of about 120 million, the second largest in the region, and 2) there's a strong demand for technological solutions. The Philippines is therefore considered a large and attractive market for investment.”

Next, Carlo gave an example of investing in Kumu, a Filipino entertainment social platform. In the first year that Gobi Partners invested, the platform grew significantly because it targeted users who were not in their local area, such as marine workers, who make up one-third of the country. When they are away from home, they can use the platform via the internet to communicate with their families.

Startups in the Philippines face challenges due to the underdeveloped infrastructure. If they want to expand their investments to foreign markets, they need to adapt their strategies significantly to succeed in those areas. Furthermore, as the Head of ESG at Gobi Partners, Carlo emphasized that investments must also consider correctness and sustainability. For example, when considering co-investors, it's important to see if they conduct business with integrity, transparency, and openness, demonstrating why investors should invest in them.

Session Concluded with the Risk Mitigation Approach of the New Generation of Thai Business Leaders.

Ms. Jane disclosed that social movements and geopolitical tensions have shifted investment perspectives. Accordingly, AddVentures is looking to diversify its portfolio by investing in companies located in North America and Europe.

“Investors in technologies like CleanTech need to be mindful of political factors. Upcoming elections, commitments to agreements like the Paris Accord, and potential policy changes can all impact their investments. In the US, for example, the November elections could bring shifts in renewable energy incentives and regulations that might favor domestic companies. 

Despite these uncertainties, we remain committed to introducing promising technologies to Southeast Asian markets. However, if startups are significantly affected by policy changes, their ability to expand internationally could be hampered.”