SingTel Innov8, Singapore Telecommunications’ (SingTel) corporate venture capital investment arm, has built a portfolio of 20-odd startups since it launched its maiden S$200 million fund in September 2010. The firm’s investment strategy is built around the objective of identifying innovative companies with technologies that can potentially enhance SingTel’s own businesses. SingTel serves 434 million mobile customers across the Asia-Pacific region and Africa. The venture capital arm usually invests across stages, from seed to early growth, and investment ticket sizes can range between S$100,000 and S$30 million. Some of the companies from its current portfolio include Bubble Motion, Baynote, VIVOTech and Capella. Monica Tsai, director-investments, at SingTel Innov8’s Singapore headquarters spoke to StartupCentral about the venture capital investing environment in Singapore and what kind of startups may make sense for it in India. Edited excerpts:
1. SingTel Innov8 currently invests from a $200 million fund. Does the fund have third-party limited partners?
We invest for the SingTel group regionally and don’t have other partners or (external) limited partners. When we go out to make investments we do look for co-investors. It helps us validate our decision.
2. How much of this fund has been invested so far? How many Singapore-based startups has the fund backed?
We have backed close to 20 startups now but I can’t reveal the amount we have invested so far. To us, it’s always strategy first and we are financially disciplined in all our investments. We have a worldwide mandate and are not focused on only Singaporean startups.
3. Has the fund seen any exits so far? Do you anticipate any exits in the next 12 months?
We don’t comment on exits.
4. How does the firm evaluate and pick startups for investment? Do you specifically look for startups in technology areas that you can absorb into SingTel?
We look for new trends, technologies, products or services that we can offer our (SingTel) customers. I can’t say we look for technologies we can absorb but we have three types of areas that we look at. One is that we look for unique solutions that serve our customers. Two, we look at revenue enhancement, and finally, energy savings. We invested in Bubble Motion. They bring social networking to mobiles by offering Bubbly, an application that enables users to share text and voice-based updates with friends and family. It’s like Twitter with a voice. It’s popular with celebrities, because you actually know it’s them and not someone else posting on their behalf. The product enhances experience and it’s a unique idea.
We evaluate investments like any venture capital investor. We make small stake investments. If we see something interesting, we make a referral to the right group irrespective of our decision to invest. If we meet a company that has a very interesting solution for an associate in Thailand, we would introduce them to the right people. That’s something we do as well. We don’t get involved after that.
5. Are you looking to invest in India? What kind of companies or sectors would interest you?
Yes, we have been looking at India and have come across Indian opportunities. We are still evaluating and have to keep it confidential. We have a worldwide mandate. We are not restricted in terms of investment opportunities. We have offices in the US, China and we recently started one in Israel. We look more at platforms and services that address Asian markets. We like local companies and by local I mean regional. A lot of people try to grab the US market but we are not operating in the US. The markets we operate in are not like the US. The bulk of our (SingTel’s) operations are in China, India, Philippines, Thailand, Indonesia and Africa. We like Asian startups because they understand the pain points that our subscribers face everyday and look for solutions that could make it easier for them. Something that gets across, something that’s simple, useful and relevant. We look for startups that have roots in the region.
6. How do you assess the potential of Singapore-based startups to go global?
In the past ten years, it was challenging to get into markets outside of your home country but today the barriers no longer exist. Language could be a concern but with English, you could try everywhere. We don’t label all these different startups today as being Singaporean, American or Australian. You could be anywhere. You could be in Antarctica and be a player in the US market. What people think of when they invest is the target market, product and how uniquely positioned the product is.
7. How would you describe the firm’s investing style? Do you work closely alongside your portfolio companies in helping them build their businesses?
We help our companies as we definitely see value in them and their relevance to the SingTel Group. We make sure we can put them in front of the right people. In fact, right now, we have a portfolio company CEO here who has a software-based solution that helps monitor energy usage. This could help our operators better manage usage. It could save 30 per cent of the energy spent and that’s huge for us at SingTel. It’s a common pain point across all operators and we have put them before the right people. They talked to all our associates. We make referrals even if we don’t always invest in them. If we see something interesting, we might help and that’s how we differentiate ourselves from other venture capital investors.
8. Can you tell us about the venture capital investing environment in Singapore? What are the challenges involved?
It’s vibrant here. When we organised startup weekends, we had over 1,000 participants. There’s a lot of talent. Many people come with interesting ideas that address pain points in local markets. There is more initiative now and there’s this whole community aspect of pulling the ecosystem together. Having Startup Weekends and getting local and international mentors to come down.
Investing, in general, has challenges. One thing here is it’s not as standardised as yet. In the US, for instance, there are limited negotiations and people know what to expect. Here, things take longer. There are not many players in certain stages and some companies find it more challenging in some stages than in others. Most are first-timers here but in the US, people have done it many times and have more experience.
9. You recently partnered the 100-day JFDI 2012 Bootcamp. Are you in talks for investing in any of the startups from the bootcamp?
We are in talks with some of the teams to make potential investments. Discussions are still underway at this point and so I am not ready to discuss which teams are being evaluated. We do think that from the demo day, some of the teams have come quite far. We have been watching them as far back as the regional Startup Weekend sponsored by the Singtel group across six different countries. They have been here from January 2012 and it’s amazing how much progress they have made. Some teams are still here though the bootcamp has ended.
10. Do you plan to raise a new fund soon?
That’s something we are constantly thinking about and evaluating but for now, we’ll carry on as usual.
Image Courtesy: SingTel Innov8