Category: Business

Hong Kong’s first unicorn Tink Labs has Closed Down

Tink Labs, Hong Kong’s first billion-dollar startup founded by 25-year-old entrepreneur Terence Kwok is set to close down after quietly laying off nearly all its employees.

The startup has already informed hotels in several markets, including Morocco and Thailand, that it will no longer be providing its Handy smartphone services and that mobile services to the handsets will be terminated.

“We recently wrote to notify you that, due to operational changes, Tink Labs will no longer be supplying or servicing Handy smartphone devices in your geography,” read the email sent out to Thailand and Moroccan hotel clients on July 31.

Tink Labs has also announced to employees internally on July 11 that several markets, including China, Denmark, Indonesia, South Africa, and the Philippines, among others, will cease to have Handy services.

This layoff, however, was first reported by Financial Times, which notes that the development follows reports saying that the startup has continuously faced growing pains, layoffs, and major restructuring plans.

Founded in 2012 and led by Chief Executive Officer Terence Kwok, Tink Labs is backed by a strong portfolio of investors to become the city’s first unicorn based on its business model of providing free-to-use smartphones in hotel rooms across the world.

This smartphone service operated by Tink Labs is called Handy and allows the phones to be used by hotel operators to promote their services, either in the room or when taken out by lodgers as a free-to-use city guide and mobile device.

At its peak, Handy has equipped its devices in over 82 countries and 600,000 hotel rooms, which made it became one of Hong Kong’s few startups to have commanded a valuation exceeding US$1 billion.

The startup has even attracted notable investors including Sinovation Ventures’ Lee Kai-fu, Meitu founder and chairman Cai Wensheng, Foxconn subsidiary FIH Mobile, as well as Softbank’s mobile unit which invested via a joint venture with TInk Labs in Japan.

On its launch, the startup has targeted to reach 1 million rooms by 2018. That target, however, seemed too hard to achieve based on the latest developments at Tink Labs.

Several current and former employees told Financial Times, Tink Lab announced internally that it will close on August 1 after a massive retrenchment in recent weeks.

Meanwhile, hotels in Hong Kong and Singapore were informed that their contracts with Tink Labs were being reassigned to a separate entity, Blockone Limited which will continue providing Handy devices for a fee.

An email to a boutique hotel in Hong Kong states, “There are options available if you would like to continue to offer your guests Handy, including paid subscriptions and tailored revenue-neutral agreements.”

The relationship between Blockione Limited and Tink Labs is currently unclear.

Upon looking at the startup’s website, it is now forwarded to another company, Hi Inc, which operates the brands Hi Hotels and Hi Destinations.

So far, Tink Labs has not issued a statement about its impending closure.

Investment Boom in Southeast Asia is Going Stronger than Ever

In Singapore, venture capital and private equity investment in Southeast Asia has soared to record levels of more than US$4.2 billion.

According to a Nikkei Asian Review, this figure was derived from 35 venture capital funds that have a complete or partial focus on Southeast Asia. Comparatively, this is a twofold increase from the US$2.12 billion Southeast Asia VC investments that was raised last year.

But this is just in the small city-state of Singapore. If you look beyond venture capital and family funds, several startups have also launched their own venture capital funding vehicles.

One example is, AirAsia which had launched its own RedBeat Capital – a fund that focuses on post-seed stage startups engaged in sectors of travel and lifestyle, financial technology, artificial intelligence, and cybersecurity.

Elsewhere, investments targeting Southeast Asia are also seeing a major surge with China VC investments in the region increasing fourfold, according to a report by Financial Times.

Last month, Warburg Pincus has also announced a new US$4.25 billion fund which interestingly targets not just China but has expanded to include Southeast Asia. Meanwhile, Sequoia’s India fund has also extended its reach into Southeast Asia, in addition to launching an accelerator program to help grow startups in the region.

While some of these funds are yet to hold a final close this year which makes it hard to estimate the total funding in Southeast Asia, the funding spree is undoubtedly on an increasing trend that goes to indicate high investor confidence in Southeast Asia’s startup ecosystem.

This is a major endorsement for the region as a startup destination, which before this though have been seen as having immense growth potential, is often overshone by its more mature neighbors like China and India.

Why is Southeast Asia the Best Investment Destination?

Several important shifts have contributed to the steady influx of investment activity in Southeast Asia, one being that there are still key gaps in the funding scene that presents opportunities for existing participants and new entrants.

Nikhil Kapur

Nikhil Kapur, a partner at venture firm STRIVE (formerly known as GREE Ventures) told Business Times, “I think there definitely is a lot of capital now… and there are many more new fund managers who are coming up. But the demand has actually outstripped the supply, and I think there are a lot of people who are still finding it difficult to raise their seed round.”

That is to say, the region’s startups are currently maturing. More than 1,300 companies in Southeast Asia received its first round of seed, or Series A financing since 2011, with 261 startups in 2017 (i.e. five times the number of startups in 2011).

A recent poll at the Asian Financial Forum has also shown a result of 39 percent believing that Southeast Asia presents the best investment prospects in 2019.

Then again, the increasing number of VCs that has taken interest in the region, in no small part is due to forecasts of growth in the tech space as internet adoption rapidly expands among 600 million consumers.

There are of course other factors, including economic growth and emerging middle classes, but most importantly thanks to smartphones – a report by Google and Temasek has forecasted Southeast Asia’s digital economy to more than triple to reach US$240 billion by 2025.

Southeast Asia Benefits from US-China Trade Wars

Besides, Southeast Asia is finding there is some upside to the trade war, as it becomes an alternative base for firms relocating production away from China to avoid levies.

US-China Trade War

Source: MalayMail

Vietnam saw manufacturing inflows jump 18 percent in the first nine months of 2018, driven by investments including a US$1.2 billion polypropylene production project by South Korea’s Hyosung Corporation.

In January through July, Thailand’s net foreign direct investment (FDI) rose 53 percent from a year earlier to US$7.6 billion, with manufacturing inflows surging almost five times, according to central bank data.

Unicorns Success Stories Boost Confidence

But fundamentally, one last reason lies in the success stories of the Southeast Asia unicorns, companies that have achieved a valuation of US$1 billion or more. And depending on how you count it, there are currently more than 10 unicorns in Southeast Asia.

It is these unicorns that have contributed to putting Southeast Asia firmly on the booming ecosystem map. From Grab and Go-Jek to Traveloka and VNG, these unicorns serve as important symbols of success in their respective markets and for the region.

Imagine them like Southeast Asia’s Steve Jobs or Jack Ma that has further motivated startup and venture capital activity.

Among them, ride-hailing giants Singapore’s Grab and Indonesia’s Go-Jek have attracted the most media attention as well as heavy fundings beyond Series F from global technology giants like Alibaba, Tencent Holdings, Alphabet Inc’s Google, and Japan’s SoftBank Group Corp.

Despite that, both unicorns remain yet to be profitable. So while investing in Southeast Asia is taking off, investors need to navigate adeptly if they are to find solid returns and find the next startup that will make waves by solving big problems.

India’s New Unicorns are shifting from consumer needs to B2B

Unicorns are shiny.

Being chased by media and investors, unicorns are often innovative and unconventional, poised to disrupt the industry. From autonomous driving to AI machines that develop personalized healthcare, these startups are using technology to change the way our lives works.

In comparison, things have been a little different for the unicorns in India.

Home to 19 unicorn startups, Indian unicorns are built on fulfilling the simplest of human needs. From online payments Paytm and ecommerce Flipkart to ride-hailing Ola and education Byju’s, Indian unicorns are providing solutions to daily problems.

As Sarbvir Singh, the managing partner at Waterbridge Ventures sees it, the country’s unicorns are removing frictions in areas where people are already spending. Such as public transport startup Chalo, one of Waterbridge’s recent investments, is offering commuters real-time bus timetables and locations, to help the hundreds of millions of users who take the bus.

Basically, Indian unicorns had been Online Consumer Startups

From India’s first unicorn InMobi, a global platform enabling consumers to discover new services and products as well as creating an advertising market for marketers, Indian unicorn scene has begun in the online consumer sector.

According to data compiled by CB Insights, nine out of India’s top 10 unicorns by valuation are also currently in the online consumer space. The only outlier is ReNew Power, an independent wind and solar-energy producer.

We see the same trend among freshly-minted unicorns as well, such as ride-hailing company Ola’s electric vehicle arm Ola Electric that has raised capital at a high valuation when it is still yet to roll out its service.

While having the backing of its ride-hailing parent company Ola does bring merits, this high valuation is also indicative of the growing confidence in India’s EV market which is projected to reach US$707.4 million by 2025.

Other new 2019 unicorn that operates in the online consumer space is BigBasket. The Indian grocery startup entered the unicorn club in May after raising US$150 million in its Series F round from Mirae Asset-Naver Asia Growth Fund, CDC Group, and Alibaba.

However, at the same time, the new entries into the Indian unicorn club are also signing a somewhat different tune, that hints a newly developing trend.

Emerging New Indian Unicorns are B2B Companies

Delhivery

For starters, there is the first unicorn of 2019, Delhivery that entered the coveted unicorn club after securing an investment from Softbank in March. It is a third-party logistics service provider to offline businesses operating in 1,700 cities across the country.

Then, there is Icertis Inc., which makes cloud-based applications in the contract lifecycle management space for enterprises. The SaaS startup has raised US$115 million last week, propelling it into the unicorn club as reported by Bloomberg News.

In fact, the startup counts companies such as Google, Microsoft, Daimler, Airbus, Johnson & Johson, Lupin, Infosys, Wipro, and Cognizant as customers. In the pharmaceutical industry, the startup already has five of the top seven players as clients.

Also, among s list of 30 soonicorns identified by Indian media outlet Inc42 that shows potential to fetch a US$1 billion valuation by 2020, five startups are in the enterprise tech. This includes Druva Software is a cloud data-protection provider with a suite of global clients and Atlan, which makes data-management software.

According to the co-founder of iSPIRT and think tank for India’s software products industry Sharad Sharma, the ability to sustain capital-efficient growth, SaaS companies are less likely to raise the large amounts of capital that lend huge valuations.

Moreover, a large number of SaaS companies in India remain unfunded, following in the footsteps of bootstrap champ Zoho, India’s largest software products company, which has a topline of around $550 million.

“Nonetheless, India’s SaaS journey is extremely exciting,” said Sharma. “Indian SaaS is doing well at all levels. Companies here are targeting all levels of the market, with firms like Druva catering to large enterprises, Freshworks playing in the mid-market and you have Zoho in the lower-end,”

In the end, it is most likely that India will produce more unicorns in the B2B and SaaS space. But we will still likely see B2C firms continue to top the valuation charts.

Byju’s Rises to US$5.5 Billion Valuation, Connecting the World of Education Technology

From wired-up mannequins acting as tutors to virtual and augmented reality in educational applications, technology is helping to revolutionize the way Indian schoolchildren are learning.

India’s most valued ed-tech company, Byju’s which counts Sequoia, Lightspeed, and Tencent among its backers have topped half of ten billion dollars in valuation with its ongoing Series F funding round that started in December 2018.

This new valuation reportedly at US$5.5 billion, almost doubling from its last valuation of US$3.5 billion. This development came after the startup raised US$86 million from new investors like Qatar Investment Authority (QIA), the sovereign wealth fund of the State of Qatar, and Owl Ventures, an ed-tech investor.

Funding capital from this new round would support the company’s aggressive plans for international market expansion and the creation of world-class learning products for students across the globe.

To date, the startup has raised ₹3,159.4 crore (about US$460.8 million) in the round, led by investors such as South Africa’s Naspers, private equity firm General Atlantic, and Canada Pension Plan Investment Board.

While this certainly is an unprecedented jump within a single round, the reason behind why many investors are clamoring for a piece of the education startup is largely due to it turning a profit and reporting huge rapid growth.

Byju’s is Turning Green, and that’s Good News

Bengaluru-based Think and Learn Pvt. Ltd., which runs Byju’s grew its revenue threefold in the year ending 31 March to a total of ₹1,430 crore (about US$208.5 million) and turned profitable on a full-year basis.

The firm explained that this was fuelled by a deeper penetration across India and a significant growth in the number of paid subscribers.

Byju’s is currently benefitting from Indian parents’ willingness to spend on education to give their children an edge. The startup has helped millions of students understand concepts in Maths, Science, and English.

In April 2019, Byju’s has reported over 35 million registered users and 2.4 million paid subscribers crossed Rs200 crore (about US$29.06 million) in monthly revenue.

“It is likely that it is commanding steep increases in valuation on a month-on-month basis, not year-on-year, as other startups might,” said Vivek Durai, the Founder of Paper.vc. “Among India’s unicorns, Byju’s has the highest leverage today vis-a-vis prospective investors.”

India education

In India, there are an estimated 270 million children aged between five and 17. The country’s online education sector is projected to be the fastest-growing in the internet market, worth US$2 billion and become Asia’s third-largest economy by 2021, according to a study conducted by Google and KPMG.

Then again, the startup is not only looking at India with its aggressive expansion plan.

Byju’s to Replicate Successful India Model in the United States

According to investors, the edtech startup is also aggressively expanding its global footprint. First, entering into the United States market, as well as the launch of new course material for students in grades I-III have contributed to the valuation jump.

Besides, in January this year, Byju’s has also used US$120 million to acquire US-based Osmo, which provides a playful learning system, bringing physical toys into the digital world through augmented reality and its proprietary reflective artificial intelligence.

“This new acquisition will bolster team Byju’s international plans. With the integration of Osmo, Byju’s will also look to offer a unique, customized, engaging, and fun-learning solution for younger kids,” the startup had said.

Byju’s growth is expected to continue as it expands its learning programs for K-12 students and ventures into new markets.

“Given that in ed-tech there are not too many other large companies available to invest, Byju’s will attract a premium. There are other parameters such as customer acquisition costs, lifetime value of users, which is also much higher for Byju’s than other competitors,” said an investment banker.

But aside from the US, the edtech startup in February has also announced its intention to expand into the UK and Australia.

Then again, the most fundamental reason behind the startup’s success is that it provides a solution to the school-age population who faces fierce competition for university places.

Byju’s gives Students Better Understanding and Results

Byju's Education

16-year-old Akshat Mugad told Phys.org news, “I have been using Byju’s since last year and my performance has really improved. I understand mathematical concepts much better now.”

This is just one of the many students that have seen improvement from using the online learning site. The platform provides a fun and interactive way for students to learn differently from the rote memorization techniques that are used across much of Asia.

“When learning is a stressful process, it hampers motivation and a student’s quality of education. With gamification, personalization and positive messaging, learning is continuous, interactive and highly effective,” said Byju’s Chief Technology Officer Prakash Ramachandran.

The 4-year-old startup offers a learning app and platform that provides personalized learning programs for school students based on their proficiency levels and capabilities which help them learn at their own pace and style.

The platform also helps in more competitive situations, offers training for preparation of different entrance and competitive examinations like CAT, JEE, IAS, GRE, and GMAT.

This Might Not be the Highest Record yet

“There could still be more valuation jumps”, opined Santosh N., a senior advisor-valuation at Duff and Phelps, one of the largest valuation service providers in the world.

In many cases, investors are offered a different set of rights and conditions such as liquidation preference and anti-dilution protection.

“The amount that an investor pays for a stake in the startup or a new-age company could include an insurance premium for certain rights like liquidation preference and anti-dilution protection,” said Santosh.

The value of these rights could be as high as 20 percent of the total investment amount, and the remaining 80 percent is the value of pure equity.

Byju’s is already the most well-funded edu-tech player in the country, and experts say that the startup will most likely continue attracting a premium since there aren’t many other large companies in this space.

Byju’s is now aiming for a revenue target of over Rs 3,000 crore in the current fiscal, up from Rs 1,430 crore last year.

Go-Jek’s Series F continues with the latest investment from Siam Commercial Bank

Ride-hailing giant Go-Jek has secured yet another investment in its ongoing late-stage Series F financing that started since October last year.

Its latest investor is Siam Commercial Bank, Thailand’s oldest homegrown lender that sees King Maha Vajiralongkorn as its biggest shareholder. The investment amount, however, has not been disclosed.

In a report from Bloomberg, people familiar with the matter said that the partnership will help this Indonesian tech startup boost is financial service, while Siam Commercial will benefit from the online growth that will help increase company revenue.

Previously, the startup has already raised over US$1 billion in its Series F first close in February from investors including Alphabet’s Google, JD.com, Tencent Holdings, and Provident Capital.

In fact, at the same week, Go-Jek has also announced additional investments from Mitsubishi Motors, Mitsubishi Corp. and Mitsubishi UFJ Lease & Finance as part of the Series F financing.

But these financings come with little surprise, as Go-Jek is rivaling competitor Grab.

To date, Grab has already raised up to US$4.5 billion in its ongoing Series H which sees investors such as Softbank, Tokyo Century, and Experian, among some.

As a matter of fact, both ride-hailing giants have moved toward digital payments through partnerships with local banks in Thailand.

Grab, the Singapore ride-hailing giant has also raised funds from a Thai Bank, Kasikornbank which has invested US$50 million and the pair together has introduced a co-branded mobile wallet called GrabPay by Kbank.

It’s a win-win situation for both banks and ride-hailing unicorns as the Thai banks, on one hand, can rely on these startups to offer financial services from digital payments to consumer loans. Meanwhile, the ride-hailing firms can have easier access into the region which the business is not fully-regulated.

Go-Jek, which debuted its app for hailing motorbike taxis in Jakarta in 2015, is expanding beyond Indonesia to cater to consumers across Southeast Asia, aiming to popularize an all-purpose consumer app similar to Tencent’s WeChat in China.

In Thailand, Go-Jek began its operations earlier this year under the name Get. The app offers motorcycle rides and food delivery, as well as GetPay, a wallet function that users can top up through Kasikornbank and Siam Commercial Bank’s apps.

It is valued at US$10 billion according to CB Insights, and hosts more than 20 on-demand services on its platform from food delivery to cab-hailing.

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