Uncovering innovation in Asia

Asia is undergoing a boom in technological innovation with the support of an increasingly diverse funding ecosystem. The region is benefiting from the high levels of data available from its 2 billion smartphone users, the majority of who are happy to trade privacy for convenience, SuperReturn Asia 2018 heard.

Forest Lin, Managing Partner at Tencent Investment, said: “I think within five years the magnitude and depth of China’s data will be more than any other country in the world.” Amit Anand, Managing Partner at Jungle Ventures Pte, agreed that data was a key factor in innovation, adding that one of things he looked for when investing in companies was whether they were producing proprietary data that would be valuable over time, not just to themselves, but to global networks.

“Every technology company has to be looking to the data aspect, and without having proprietary data, the value of the technology will be significantly lower,” he said.

Eric Benhamou, Founder & Global Partner at Benhamou Global Ventures, explores how to create value through technological innovation. 

Technology leaders

Healthcare is one area that is likely to see significant data-driven innovation. Joe Zhou, Founding and Managing Partner of Keytone Ventures, said: “There is a great effort from the government in China to aggressively gather patient data and utilise it to help with diagnosis, cancer treatment, and a lot of new applications. Healthcare in China can potentially lead the world.”

China was also leading in terms of facial recognition technology, and firms were looking to use this alongside artificial intelligence and machine learning to make retail more efficient, said Zhou. He predicted it will soon be possible for consumers to walk into a shop in China and be registered with their face, enabling them to walk out with any merchandise they want automatically paid for.

“This will be adopted earlier in China than anywhere in the world,” he said.

Looking beyond China

While China is leading the field in many technologies, Anand thinks other locations have advantages too. For example, Singapore are taking a significantly forward-looking stance on Artificial Intelligence and are looking to produce a set of guidelines for the ethical use of artificial intelligence to be used as a gold standard for the world.

He added that consumers and SMEs were becoming more homogeneous in the region, and this also created opportunities. “There will be certain pockets of opportunity where companies that start in Asia can become dominant as a regional player rather than a single country player,” he said.

Funding options

Not only are technology companies in Asia benefitting from high levels of data, but they are also being supported by a diverse range of funding options as family offices become active in the sector.

Manish Kheterpal, Managing Partner at WaterBridge Ventures, said: “The prominence of family office in the context of funding has gone up. Some estimates suggest there are USD4 trillion to USD5 trillion of assets with family offices around the world.”

He added that not all family offices were backed by old money, with a lot now backed by new money from technology, which made them more comfortable with investing in the sector.

Melvin Chen, Head of International at technology firm Latch, agreed and adding that while smaller family offices were not yet particularly active in investing in technology companies, larger ones were better informed and more sophisticated, and could have deep insight in the sector.

Kheterpal pointed out that while venture capital funds used to have a significant advantage in the area of sourcing, the advent of platforms, such as AngleList, was making it easier for family offices to access the sector. “Family offices can bring a very interesting value-add where they can give strategic advice and open up manufacturing or supplier relationships for companies,” he said.

But Chen added that despite the increase in family office money coming into the sector, it still remained “minuscule” compared with other types of investment, such as venture capital funds and corporate venture capital funds. Kheterpal agreed, pointing out that in 2017, anywhere between 20% to almost one third of all venture capital globally came from corporate venture capital.

Chen said from the standpoint of a technology company, he preferred corporate venture capital as a source of funding, as they were also able to help the company develop. “We have taken money largely from strategic investors in the industry who will buy our products, rather than plain venture capital investors that can’t add as much value,” he said.

“From that perspective it is better capital, as opposed to normal venture capital. They come in and help you on the financial side, but those top tier venture capital funds tend to push terms against you more aggressively," said Chen.

During the discussion, a member of the audience also pointed out that there were also other advantages to corporate venture capital. Having a global corporate investor, he said, made the likelihood of a startup going international 2.4 times higher than if they have no corporate venture capital.