IncuVest, a Singapore-based investor group, announced earlier this month that it had funded six seed-stage startups — Baseride Technologies, Intellect Motion, Matchimi, Smartmissimo Technologies, Gamera Networks and Monkimun — over the last three months.
The company says it has seen over 1,000 deals, formally reviewed over 400 and invested in 15 companies since it was founded in 2011, with over 30 per cent of those receiving follow-up funding.
e27 spoke with Alex Toh, Associate, IncuVest about the investor group’s current activities in Singapore and Southeast Asia.
What is your role at IncuVest?
As an associate, I’m pretty involved with the whole investment process. I source deals, do the pre-screening, and if it fits our investment criteria, we go to the investment committee. From the terms sheet to the investor rights agreement is covered by me, and I do the follow-up monitoring of the companies.
IncuVest’s announced recently it had made six seed-stage investments over the past three months. Can you tell us more?
We’ve been looking at some of these guys for quite a while. Usually we take about one to three months of due diligence before investments. For those that we do through the TIS Scheme (We are an approved Incubator under the National Research Foundation Technology Incubation Scheme), an additional two to three months is required before making an investment. We’d already seen some at a very initial stage as early as January, but not all were ready.
How many of these startups are based in Singapore?
All except one are, or at least they have a Singapore holding company. The one that isn’t is Monkimun, which is a Delaware company. Baseride Technologies, Intellect Motion and Smartmissimo Technologies have actually Russian, Kazak and CIS founders. We liked the founders and their technology, so they left (their countries) and set up base in Singapore. Right now, they are operating out of here and their holding companies are here.
It’s tough to find enough really good startups to invest in Singapore. Most VCs will look at global coverage, so we look everywhere from Russia, Silicon Valley, Israel, Latin America, Europe, and of course Southeast Asia.
Are you seeing some good startups coming from Russia then?
Yes, we believe that Russian tech is very strong, and most of the Russian founders are very strong technologically.
Do your startups have second-thoughts about moving out to Singapore?
This is where we make our decisions. If the company is very hesitant, then we wouldn’t want to back them. We believe that any company that wants to be global, or at least regional, must be able to pack up and move whenever they can. Some of these guys have families, but if they really believe in the business, they should make that move.
There are many advantages to being in Singapore, such as tax relief and grants. The Singapore government supports startups, and there is no capital gains tax. That’s why we want our companies’ main holding to be here. At the seed stage when they are one to two years old, we want eyes on them and to be able to help and mentor them all the way until they are big enough to expand out of Singapore.
Do these companies tend to have established user bases in their home countries?
About half of our companies already do, but some of them, like Intellect Motion, were still at the very early stages when we met them and so didn’t have a presence yet.
They never talk of Russia as being their main market, it is always Southeast Asia. Russia, if they have any presence, is more of a testbed. Then they shift to Singapore as a launchpad into the rest of Southeast Asia.
Before this round of seed investments, how active was IncuVest?
We’ve always been pretty active, but we had a slowdown at the start of 2013. Beyond these six deals, we have quite a few more in the pipeline waiting on approvals. Half of our deals go through the Singapore government TIS Scheme, which can mean they take slightly more time to process.
The last investments prior to these were around December 2013 or January 2014. From 2014 onwards, we are trying to do maybe 15 investments per year. The largest investment we have done is S$2 million (approx. US$1.6 million).
Can you give us details on amounts of these investments?
Some of the amounts are confidential, but for co-investments in the TIS Scheme, it’s usually around S$589K (approx. US$470K). For investments outside, it’s usually in the six figure range (S$100K to S$500K).
What is your investment process?
We validate with industry players and Series A guys. Taking Baseride as an example, we thought it was an interesting idea, we liked the team, but we wanted to make sure that it would actually fly. They’re in the transport and logistics space, and there’s already a lot in this space, but they are doing something one step further with route optimisation.
We wanted to validate this with Singapore’s largest fleet-management company. The CEO took a look and was interested from the start. Right now, they are actually doing a pilot with the company. That gave us strong validation that this is something the market would use, and that it was a company we wanted to get involved with.
We approached some other Series A guys saying that after a year of our funding, this company would have X number of vehicles, X amount of revenue, is this something you would be interested to invest in? We validated this with, I think, three other Series A guys, and all said yes, this is something they are comfortable with.
All that led to our decision to go ahead.
Sounds like you are not a group that will make a decision on the first meeting?
No, definitely not. Usually, we would meet a startup a minimum of three times with the whole investment committee. Probably spread across one to two months if the company is at a stage we are happy with.
What kind of support and interaction do you provide to founders after investing?
We are one of the more hands-on incubators in Singapore. We provide them with whatever help they need. If they need space, we have space for them. If they need people, we have good contacts with people in the HR industry, including headhunters. All our partners sit on various spots of Singapore universities, so interns that the companies require are also very easily available.
We meet them on a monthly basis for strategy. We handle them for the first few major deals to make sure they have enough brand weight and are going on the right path. Then we let them loose and give them more breathing space, with just a monthly review.
Which key markets within tech are you focussing on just now?
We focus on cloud SAAS, e-commerce, analytics, mobile and consumer tech. But to be honest, I think we are actually quite broad. We’ll do any deal where we think the founders are strong and the company is doing enough to make a change in the ecosystem.
What we don’t do is stuff such as cleantech and biotech. Almost everything else we are open to.
How should startups get in touch with you?
They can register on our website www.incuvestasia.com. We have system whereby they can log in and send stuff to us. Our co-investors or Series A partners can log in and see if there are any updates and how their startups are progressing.