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Southeast Asia’s East Ventures on female VCs, foreign investment, consolidation

Melisa Irene‘s path to becoming a partner at one of Southeast Asia’s most esteemed venture capital firms is an unconventional one.

“I always consider myself to be quite lucky,” said Irene, who was promoted to be a partner at East Ventures in January 2019. At 25 years old, she was the Jakarta-based investment firm’s first female partner.

During TechCrunch Disrupt’s first online conference, I spoke to Irene about what she humbly described as a “lucky” career, her experience as a young, female investor, the rush of American and Chinese VC money into Southeast Asia, and what the COVID-19 pandemic means to East Ventures . A video recording of the conversation is at the bottom of the article.

Partner at 25

Irene admitted that timing played a big part in her ascension in the VC world. The development of Indonesia’s internet infrastructure came around relatively late — around 2010 — compared to more developed markets, but growth happened rapidly. In 2015, five years after East Ventures backed the Series A of Tokopedia, now an e-commerce leader in Southeast Asia, Irene joined the firm.

In those days, “I didn’t compete with a lot of investment bankers,” said Irene, who majored in accounting in university and began as an intern at East Ventures. “The capability that they looked for was how fast you can immerse in the ecosystem.”

Contrary to popular belief, the Southeast Asian investment ecosystem is “quite friendly” towards women. “People rejoice the promotion of female professionals in this industry. It’s not a rare circumstance to see females becoming a vice principal or principle in Southeast Asia,” the investor said.

The support goes beyond simply checking the gender-diversity box and reflects a real demand for more empathetic investors in the tech industry.

“Sometimes people like to talk as a business partner and sometimes as a friend. [Empathy] is something that can be seen as natural coming from females,” she added.

However, the investor cautioned that “the number of [female] decision-makers definitely needs to improve,” though she foresees the local ecosystem “is supportive of that.”

SEA gold rush

In recent years tech giants from both the U.S. and China have been clamoring to get into Southeast Asia, a region home to about 670 million people and a fledgling internet market. They often begin by financing local upstarts, which, beholden to the investment, will provide directional advice to their foreign corporate investors.

Indeed, the familiar names have all bet on the region’s rising stars. Alibaba invested in Tokopedia and its rival JD.com backed travel portal Traveloka, which is also in the East Ventures portfolio. Tencent, Google, Facebook and Paypal are all investors of Gojek, the Indonesian ride-hailing titan going neck and neck with SoftBank-funded Grab.

When offered big checks, startups must stay level-headed and think what’s best for them, Irene advised. “The thing is everyone has money. Companies need to decide which side to be on, what companies they want on board, and what companies are able to give them strategic advice.”

It’s not uncommon to see investors and founders clash over priorities. Some investors want a quick exit, while the entrepreneurial mentality is to build a business in the long run. “That’s why alignment is important,” asserted the investor.

The future of tech in SEA

As unicorns and “super apps” like Grab and Gojek emerge in Southeast Asia, concerns that incumbents can kill off competition grow. East Ventures has a unique insight into the region’s competitive dynamics as an early-stage investor that has seen some of its startups like Tokopedia and Traveloa grow into behemoths.

Irene believed as Southeast Asia’s internet ecosystem matures, there are actually a lot of opportunities for startups in “upcoming sectors.”

“If you look at the unicorns, you see a lot of younger and smaller companies supporting them,” she said. The point is that giants can’t accomplish everything by themselves, and some of the more niche functions can best be tackled by smaller players with specialized focuses.

On the other hand, the investor believed consolidation is possible — and should happen — in areas that can benefit from scale and network effects.

“People think of Indonesia as one country. We are not. We are the largest archipelago, which means there are very different infrastructures within different provinces. For example, it’s expensive to set up a bank branch in a small island… That means a lot of things need to come into a collective effort and one big ecosystem to offer the consumers with different kinds of offerings.”

Lastly, there’s the inevitable question of COVID-19. Like many investors, Irene saw a silver lining during the dark times.

“Before COVID, it was very difficult to assess the quality of companies. They all had a lot of money and the infrastructure was actually good… Now we suddenly can tell who makes good decisions, who makes it at what speed, and what is the outcome of those decisions. The way entrepreneurs respond to COVID can tell us a lot about their enterprises.”

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Grab launches new consumer financial services, including micro-investments and loans

Grab announced today that its financial unit, which previously focused mainly on services for entrepreneurs and small businesses, is launching a slew of consumer products, including micro-investments, loans, health insurance and a pay-later program.

Based in Singapore, Grab began in 2012 as a ride-hailing company before expanding into on-demand deliveries and other services. In January 2019, it formed a joint venture with ZhongAn Insurance to build a digital insurance marketplace. Since then, its financial services portfolio has grown through a series of partnerships and the acquisition of Bento, which allowed it to offer investment and wealth management services as well.

In February, Grab announced that it had raised up to $856 million to speed up development of its payments and financial services.

Yesterday, Bloomberg reported that Grab raised $200 billion from South Korean private equity firm Stic, bringing its total funding so far to more than $10 billion at a valuation of about $14.3 billion. A Grab spokesperson declined TechCrunch’s request for comment on that raise.

Tapping into a growing market

During a call with reporters today, when asked if Grab has a timeline for reaching profitability, Reuben Lai, senior managing director at Grab Financial Group, said there isn’t one yet, but “research has shown that there is a real demand for the products we are launching today. What we really want to do is focus on consumers and make sure we deliver products they use. We think profitability and sustainability will follow.”

Grab Financial Group’s new products including AutoInvest, a platform that allows consumers to invest small sums of money through Grab’s app; consumer loans; a buy now, pay later program; and expanded insurance offerings, including hospital insurance that will first launch in Indonesia.

While Grab’s new consumer products were in the works before the COVID-19 pandemic, Lai said the crisis has accelerated demand for services like online shopping, digital payments and insurance.

Grab’s consumer products will compete with services like StashAway, an online investment platform based in Singapore, but Lai said Grab Financial Group’s competitive edge is that there are already millions of Grab users in Southeast Asia. This gives it a built-in consumer base and also data to continually refresh the scoring models it uses to determine creditworthiness.

According to a 2019 report by e-Conomy Asia, a research program run by Google and Temasek, about 70% of people in Southeast Asia are “underbanked,” meaning that they lack access to credit cards or long-term savings products. Even in Singapore, one of Asia’s financial centers, about 40% of consumers qualify as underbanked. Bain and e-Conomy estimate that the digital financial services in Southeast Asia can generate $60 billion in revenue by 2025, making it a lucrative market for Grab.

Micro-investing and insurance

Most of the unit’s insurance was previously focused on Grab’s ecosystem, including drivers and merchants on its platform. But new products, like hospital coverage that will launch in Indonesia first to supplement the country’s national healthcare system, are targeted at consumers.

Chandrima Das, who founded Bento in 2016 and is now head of GrabInvest, said Grab’s new micro-investment product will be accessible through Grab’s digital wallet. Returns can be cashed out and spent on Grab services or merchants that accept GrabPay. it is partnered with liquid fixed-income funds managed by Fullerton Fund Management and UOB Asset Management, and allows users to invest as little as SGD $1 at a time, with the potential to earn returns about about 1.8%. It will launch first in Singapore at the beginning of September.

While Grab Financial Group already offers working capital loans to drivers and purchase financing for merchants on its platform, its new consumer credit products include PayLater, which allows users to pay for Grab services at the end of each month, and will first be available in Singapore and Malaysia.

The company is also offering consumer loans from third-party licensed banks and financial institutions with an application process that it Ankur Mehrota, Grab Financial Group’s head of lending, says is so simple “you can do it while sitting on your couch watching Netflix.” Once approved, Grab serves a distribution platform for the loans.

Mehrota said benefits of the program for merchants include increased gross merchandise value, larger basket sizes and lower cart abandonment rates.

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Grab to lay off 360 people, or about 5% of its employees

Grab is laying off about 360 people, or slightly under 5% of its employees. Co-founder and CEO Anthony Tan made the announcement in a letter to Grab employees today.

A Grab spokesperson told TechCrunch that the company will not be shutting down offices, and that this is the last organization-wide layoff the company will perform this year.

“We do not face capitalization issues. We conducted the layoffs to become a leaner and more efficient organization and we did this by sunsetting non-core projects, consolidating teams and pivoting to focus on deliveries,” the spokesperson said. “We remain laser-focused on adapting our core businesses of transport, deliveries, payments and financial services to address the challenges and opportunities of the new normal.”

She added that the company will talk to affected employees over the next few days.

Grab is the largest ride-hailing platform in Southeast Asia, and like other travel-related companies, including Uber, Lyft, Oyo and Airbnb, its on-demand ride business has been hit hard by the pandemic. Grab also operates several other businesses, however, including deliveries and digital financial services, which is is currently reallocating resources toward because demand for them has increased during the pandemic and stay-at-home orders.

In his announcement, Tan wrote, “Since February, we have seen the stark impact of COVID-19 on businesses globally, ours included. At the same time, it has become clear that the pandemic will likely result in a prolonged recession and we have to prepare for what may be a long recovery period.”

“Over the past few months, we have reviewed all costs, cut back on discretionary spending, and implemented pay cuts for senior management. In spite of all this, we recognize that we still have to become leaner as an organization in order to tackle the challenges of the post-pandemic economy.”

He added that Grab will sunset some “non-core projects,” consolidate functions and reduce team sizes. It is also reallocating more resources to its on-demand delivery verticals.

“We were able to save many jobs through this redeployment of resources and it helped limit the scope of the reduction exercise to just under 5 percent,” Tan wrote.

Grab employees who are laid off will receive severance pay, as well as an enhanced separation payment; a waiver of annual cliffs for equity vesting; medical insurance coverage until the end of the year; encashment of unused annual leave and GrabFlex credits; and, for expecting parents, encashment of their parental benefits, as of the last day of employment.

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How Grab adapted after COVID-19 hit its ride-hailing business

The COVID-19 pandemic is taking a heavy toll on ride-hailing services, like Uber and Lyft. Grab, Southeast Asia’s largest ride-hailing company, has also been impacted, but the company has adapted by quickly transitioning many of its ride-hailing drivers to its on-demand delivery verticals and expanding services needed by customers during social distancing measures.

The company told TechCrunch that its ride-hailing drivers saw their incomes decrease by about a double-digit percentage in April 2020, compared to October 2019, in line with a double-digit drop in gross merchandise volume for Grab’s ride-hailing business in some markets. Between March and April, more than 149,000 Grab ride-hailing drivers switched to performing on-demand deliveries. In some markets, the transition was done very quickly. For example, in Malaysia, 18,000 drivers moved to delivery in a single day. The platform also saw an influx of new driver requests, many from people who had been laid off or furloughed, as well as merchants who needed a new way to make income.

Russell Cohen, Grab’s regional head of operations, told Extra Crunch that to redeploy driver capacity to delivery verticals, the company worked with governments in its eight markets to understand how different COVID-19 responses, including stay-at-home orders, affected on-demand logistics. Anticipating shifts in consumer behavior, it also started adding new services that will continue after the pandemic.

Quickly moving driver capacity from ride-hailing to on-demand delivery

Grab currently has about nine million “micro-entrepreneurs,” or what it calls the drivers, delivery, merchants and agents on its platform. Cohen says the company began to see an effect on ride-hailing and transportation patterns in January and February as flights out of China, and air travel in general, began to decrease. Then COVID-19 started to have a material impact on its ride-hailing business in March, with a sharp drop after countries began implementing stay-at-home orders.

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Igloo raises $8.2M to bring insurance to more people in Southeast Asia

Singapore-based Igloo, formerly known as Axinan, has raised $8.2 million as the insurance-tech startup looks to broaden its foothold in half a dozen Southeast Asian markets and Australia.

InVent, a corporate venture capital arm of telecommunications firm Intouch Holdings, led Igloo’s extended Series A round, the startup told TechCrunch. Existing investors Openspace Ventures, a venture capital fund that invests in Southeast Asia, and Linear Capital, a Shanghai-based early-stage venture capital firm focusing on tech-driven startups, participated in this round, which makes four-year-old Igloo’s to-date raise to $16 million. It raised about $1 million in its Seed financing round.

Igloo — founded by Wei Zhu, who previously served as Chief Technology Officer at Grab — works with e-commerce and travel firms such as Lazada, RedDoorz, and Shopee in Southeast Asia to offer their customers insurance products that provide protection on electronics, and coverage on accidents and travel.

The startup, which also operates in Vietnam, Philippines, Thailand, Singapore, Indonesia, and Malaysia, said more than 15 million users have benefitted from its insurance products to date, and in the last one year it has processed more than 50 million transactions.

Igloo, which rebranded from Axinan this month, said insurance products are proving especially useful to — and popular among — people during the coronavirus outbreak.

Raunak Mehta, Chief Commercial Officer at Igloo, told TechCrunch that the startup has seen a surge in transactions and customer acquisitions in the last 45 days. “While some travel related business have seen a dip, the larger e-commerce business continues to see a surge,” he added.

“With COVID-19 impacting every facet of personal life and business, digitisation can help the world adjust to the new normal. This is especially apparent in insurance, where we can tap on digital channels for distribution and also for creating awareness,” said Zhu.

“We see that digital insurance is on the rise in Southeast Asia, and we believe that Igloo, with our digital-first approach and expansion of our product portfolio into personal health, accident and other related products can help fill those gaps and address consumers’ needs for personal well-being,” he added.

He said the digital insurance penetration remains low in Southeast Asia, and Igloo sees massive opportunity in the space. According to one estimate (PDF), Southeast Asia’s digital insurance market is currently valued at $2 billion and is expected to grow to $8 billion by 2025.

The startup, which competes with a handful of startups including Singapore Life and Saphron, will use the fresh capital to expand its business development and engineering teams and broaden its presence in the half-dozen markets. It is already engaging with telecom operators, banks, non-banking financial firms, and travel agencies, it said.

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Massive Slowdown In 2020 VC Funding Hasn’t Happened … Yet





When crashes happen, inevitably the startup space gets hit, too. Funding slows, the IPO window closes and investors say no to bankrolling huge losses in the name of growth.
Now that stocks are officially in bear market territory, and measures to curb coronavirus have turned the biggest tech hubs into …

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Indonesia’s Gojek Reportedly Lands $1.2B For Expansion





Ride-hailing startup Gojek raised $1.2 billion, bringing total funding for its Series F round to nearly $3 billion, according to a new report from Bloomberg.
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The company, which is based in Indonesia, provides a wide range of services, from rides to payments to food delivery.
Gojek’s …

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Singapore’s Grab Raises $700M From Mitsubishi UFJ Financial Group






Singapore-based ride-hailing startup Grab has raised more than $700 million from Japan’s largest bank, according to a new report from Bloomberg.

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Mitsubishi UFJ Financial Group wants to plug the institution’s financial services to Grab’s users, Bloomberg reported, citing a person familiar with the deal.

Although Grab started off as a ride-hailing app, its services now go far beyond that. The company wants to be an “everyday everything” app–it currently lets users book rides, meals and hotels, and offers payment services, among other things.

The company operates throughout southeast Asia, including in Indonesia, Malaysia, Cambodia, Myanmar, Thailand, Vietnam and the Philippines.

The new investment makes Grab extremely well-capitalized. It last raised an extensive Series H round in 2018 and 2019. In 2019, it received a $1.5 billion investment from the SoftBank Vision Fund, followed by a $300 million infusion with Invesco as the lead investor as part of the Series H round.

With the new funding from Mitsubishi UFJ, Grab’s total funding comes to about $9.8 billion, according to Crunchbase.

While it attracts large amounts of venture capital, Grab also invests. Last year it participated in Splyt Technologies’ $8 million Series A.

Grab is backed by firms including SoftBank Vision Fund, Invesco, Beacon Venture Capital, and automakers like Hyundai Motor Company and Yamaha Motor Company.

Illustration Credit: Li-Anne Dias







Women and family health startup Maven raised $45 million in its Series C round, bringing its total funding to more than $87 million.

Source: Crunchbase News

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Grab and Singtel team up to apply for a digital full bank license in Singapore

Grab and Singtel, one of the largest telecoms in Singapore, announced today that they are applying for a digital full bank license together. If approved, the license will allow them to offer simple credit and investment products, before progressing to a full-functioning bank if they meet the Monetary Authority of Singapore’s (MAS) criteria.

Grab will hold a 60% stake in the consortium, with Singtel holding the other 40%. A joint statement said the companies are “committed to contributing to the financial services sector with a differentiated offering that addresses the unmet and underserved needs of consumer and enterprise segments in Singapore,” including SMEs that need access to credit. Securing working capital is a major pain point across Southeast Asia, with several startup and financial institutions working on new tools to gauge creditworthiness and manage loans.

Grab launched in 2012 as a ride-sharing company, but now bills itself as “Southeast Asia’s leading super app,” with app that provides a wide array of service, including transportation, logistics, food delivery, ticket and hotel booking and financial services, through one portal.

It entered financial services in 2016 with the introduction of GrabPay Wallet, a digital wallet, before launching Grab Financial Group in 2019. Grab Financial Group’s services include online payments, lending and insurance products that it says reaches 100 million users across Southeast Asia.

In a press statement, Grab Financial Group senior managing director Reuben Lai said the consortium’s plan is to “build a truly customer-centric digital bank that will deliver a variety of banking and financial services that are accessible, transparent and affordable.”

MAS announced in June that it will issue up to two digital full bank licenses and three digital wholesale bank licenses, as part of a bid to to liberalize Singapore’s banking sector.

Source: TechCrunch