“What are you doing here in (insert country), you should be in Silicon Valley.”

Do these words sound familiar to you?

In Asia, it’s very common for Founders with great ideas to either run their companies in boot strap mode or relocate to Silicon Valley. Even great talent is expected to take huge pay cuts when they join a startup.

We don’t need a scientist to figure out the primary cause of this issue. This is primarily because of the scarcity of risk capital in Asia. Entrepreneurs with good ideas have to slog for cash. One key factor that gives wings to the dreams of most Silicon Valley startups is the free flow of capital that lets them dream big…really big.

Silicon Valley is blessed with excess capital. And, that is probably why failure is embraced.

But how do they get that kind of money? What is the source? Who are these Limited Partners (LP)?

As per Wikipedia, the sources of funds are Public pension funds, Corporate pension funds, Insurance companies, High Networth Individuals (HNI) / family offices, endowments, foundations, fund-of-funds and sovereign wealth funds. In addition, there are many cash-rich corporates that have their strategic investment arms hunting for opportunities.

Compare that with the sources of funds in Asia:

1. Do you think any government in Asia would allow pension funds to become Limited Partners in Venture Capital funds?

Certainly not. At the most, governments would allow use of pension funds to be invested in real estate and approved listed equities. CPF Board of Singapore allows a portion of provident funds into property, gold, selected equities and top 25 percentile managed funds. All the usual suspects of low risk investing. Nothing wrong with that. I also view that as prudent considering the fact that venture capital industry as a whole is a loss-making industry.

Of course, we hear everyday about the success stories of Facebook, Google, Twitter, and so on. But we choose to ignore the stories of failures. I read a report recently that says how the average VC fund in US fails to return investor capital after fees.

2. Do we have foundations and endowments who can risk a portion of their money?

No. Most endowments and foundations outside America would choose to place their money into fixed deposits with highest-rated banks or managed funds.

In Singapore, the three local universities (SMU, NUS and NTU) together have about S$2.7B (US$2.11B) in endowment funds plus another S$1.7B (US$1.33) in accumulated surpluses and operating funds, some of which is actively managed. Portfolio allocation to venture capital is probably close to zero.

Compare that with Yale and other educational institutions in the United States. Yale allocates 33 percent of its portfolio to private equity (venture capital and leveraged buyouts). Average actual allocation of an American educational institution to private equity is around 10.5 percent.

Since 1976, Yale participated in a number of startups that helped define the technology industry, including Compaq computer, Oracle, Genentech, Dell Computer, Amgen, Amazon.com, Yahoo, CISCO, Red Hat, Juniper, Google, Facebook, Linkedin, Twitter and Zynga.

Its investment policy document says : Alternative assets, by their very nature, tend to be less efficiently priced than traditional marketable securities, providing an opportunity to exploit market inefficiencies through active management.

3. Do HNIs have any incentives to back risky tech startups?

Not at all. High net worth individuals are so busy doubling and tripling their money every year in emerging economies and traditional sectors that no one has any bandwidth left for technology.

I recently met some HNIs who were busy buying hotels and warehouses in Myanmar and Sri Lanka. What kind of internal rate of return can GPs offer to beat emerging market returns?

What I mean to say is that the traditional sectors are growing at such a fast rate that HNIs have no incentive to look for other alternative investments. Society is highly entrepreneurial but unfortunately there’s no incentive yet to try out tech entrepreneurship.

So what are we left with? How can tech entrepreneurship flourish in Asia?

In my view, corporates can play a big role here. In Southeast Asia, SingTel has shown leadership by launching their fund Innov8 and sponsoring an incubator called JFDI. They have also acquired a slew of tech startups, most recently Singapore’s HungryGoWhere for US$9.4M.

If the top 10 to 20 corporates in each country can launch similar funds and sponsor incubators, it would certainly create a demand. And maybe that demand for investment opportunities would act as a catalyst for some wannabe entrepreneurs as well as angel investors.

In addition, if University endowment funds can also allocate five to 10 percent of their portfolios toward venture capital, it would be a great boost for the entire tech startup ecosystem.

Photo: jamarmstrong

About the author

Piyush Chaplot works with Innosight Ventures as VP-Finance & Investments. His current role is to source, evaluate, structure, monitor, and manage early stage investments in Singapore. He serves on the Board of www.chope.com.sg and also acts as part time CFO for some of the other investee companies. Additionally, he manages the finance and compliance functions within the Innosight Ventures group. He has more than 10 years of experience in financial and risk management roles in India, Indonesia, Australia, UAE and Singapore. Piyush is a member of the Institute of Chartered Accountants of India, CPA Australia and CPA Singapore. He holds a Masters of Commerce degree from M.D.S. University in Ajmer, India. He is also a Certified Internal Auditor (CIA).

SingTel announced in a press release today that it is acquiring GTW Holdings, the owners of HungryGoWhere, Singapore’s most visited foodie site, for S$12M (US$9.4M).

The site, which was started in 2007, has a presence in Hong Kong, Malaysia, Vietnam, Cambodia, and Australia. Under the terms, GTW will become a wholly-owned subsidiary of SingTel. It will merge operations with inSing.com, another SingTel subsidiary with an audience of two million customers.

With the purchase, SingTel claims it has the largest food and lifestyle audience in the island state.

GTW’s Singapore-based founders will play a crucial role in growing SingTel’s services in Singapore and beyond.

GTW will become a wholly-owned subsidiary of SingTel. Its operations will be merged with inSing.com, also a subsidiary of SingTel, giving the combined portal an audience of 2 million customers, which SingTel claims makes it the largest food and lifestyle audience in Singapore.

GTW’s Singapore-based founders will continue to play an important role in expanding SingTel’s services in Singapore and internationally, according to the press release.

(Read our 2009 interview with Wong Hoong An, HungryGoWhere co-founder)

“A cornerstone of SingTel’s growth strategy is to build digital solutions that help consumers in their daily lives – as they live, work and play. Possessing the local knowledge and content is critical as it allows us to compete effectively in these areas,” said Allen Lew, CEO of SingTel’s Digital L!fe group.

“SingTel will continue to form partnerships for important and unique content, including in retail, entertainment and other lifestyle needs. The talented HungryGoWhere team has built a much-loved brand which has become the go-to site for restaurant reviews and information, delivering a great experience around one of Singapore’s favourite pastimes.” he said.

Dennis Goh, founder and managing director of HungryGoWhere, said: “This deal allows our award-winning content to be seen by even more people in the region and will accelerate the investment and distribution of our new online restaurant reservation system.”

SingTel plans to grow HungryGoWhere’s existing restaurant reservation system, TableDB, and help it scale across Asia. In Singapore, TableDB is competing with Chope and Reserveit.sg, which are the front-runners in the space.

The telecommunications company has been making a number of acquisitions in the digital media and advertising space of late. In March this year, it purchased US digital ads company Amobee for US$321M. In May, it bought AdJitsu, a 3D mobile advertising company.

Expect the Singapore giant to make more acquisitions in the coming months, especially in emerging markets. It has hinted that it will acquire non-phone businesses in China and India, in a move away from slow-growth markets in Singapore and Australia.

Related articles:

Cheatsheet of technology startup acquisitions in Southeast Asia
Restaurant reservation sites take off in Singapore

In a statement released last week, the phone company mentioned that it may raise its stakes in its Asian and African associaties, as well as make other “strategic investments”. The company also reported a 30 percent jump in fourth-quarter profit, at S$1.29B (US$1B), in the three months preceding 21st March.

The Singapore-based mobile carrier plans to grow investments in emerging markets for its digital services division. At this stage, SingTel needs to find new ways to monetize as the traditional carrier business begins to lose its dominance, said an analyst.

“When we look at acquiring the technology know how in the start up space, we could be looking at quite a few different places,” SingTel CEO Chua Sock Koong said at a press conference. These include the Silicon Valley, California or countries such as India and China, she added.

The mobile carrier recently purchased AdJitsu, a Silicon Valley-based 3D mobile advertising business unit of Cooliris. The acquisition was made through Amobee, a US-based digital advertising company that was itself bought by SingTel for US$321M.

[a•mo•bee] Acquires Adjitsu – 3D Mobile Ads from Amobee on Vimeo.

Amobee, a US-based digital advertising company owned by SingTel, has announced today the acquisition of AdJitsu, the standalone 3D mobile advertising business unit of Cooliris.

This purchase enables Amobee to leverage on AdJitsu’s technology to create greater innovation in 3D mobile ads. Amobee will also collaborate with ad networks, premium publishers, brands and agencies to create 3D ad units. 

Such ads could lead to higher click-through rates and revenues for advertisers and publishers.

“Instead of a passive experience, mobile users now interact and play with the ad, which is key to starting a love affair between the
consumer and the brand,” says Trevor Healy, Amobee CEO, “the Asian market loves 3D technology. It plays very well there.”

AdJitsu is a wholly owned business unit of US-based Cooliris, a company that turns digital content into interactive visual experiences to improve user experience.

The business unit was formed less than a year ago, according to Cooliris CEO Soujanya Bhumkar, with a “ninja team of six” who were on a “shoestring (or ramen) budget.”

Amobee itself was acquired for US$321M this year by SingTel, Singapore’s largest mobile carrier, in its bid to diversify away from the traditional telecommunications business.

A division of SingTel’s Digital L!fe Group which focuses on creating new digital growth engines, Amobee offers comprehensive, end-to-end mobile advertising solutions and services for advertisers, publishers and operators worldwide while AccuWeather on the other hand, is an innovator in mobile advertising by making its mobile inventory, mobile applications and mobile web highly contextual by providing over 100 weather, lifestyle and location attributes for advertisers to choose from.

With its US$321 million acquisition of Amobee last month, SingTel has set its sights on expanding into the mobile marketing arena, especially in the area of one-to-one connections between brands and consumers.

The exclusive partnership between these two giants in their respective fields is expected to revolutionize mobile advertising on a global scale by bringing the most relevant mobile advertising inventory to advertisers across the world with greater focus on Asia. Under the agreement, AccuWeather will use Amobee’s Pulse for Publishers solution to power advertising across its mobile Web sites, as well as its smartphone and tablet apps for iOS, Android and other mobile operating systems.

Looking at figures, the weather company estimates the global audience for its mobile apps at half a billion device while it fulfills 2.2 billion data requests from mobile devices worldwide, triple the amount at the start of 2011. Jim Candor, Executive Vice President and Chief Business Officer, Digital Media, from AccuWeather, believes that the massive joint-venture will “offer large brands and agencies powerful advertising opportunities to target the most premium audiences on a global scale.”

Amobee’s flagship product is an end-to-end advertising platform for publishers, advertisers, and operators. They’ve recently made a push into Asia, announcing partnerships with advertising companies in Vietnam and Indonesia.

The move is seen as SingTel’s continuation of its strategy to diversify away from the traditional telco business. The company expects to generate growth by expanding its mobile ads business and offering targeted special deals to customers.

Smartphones have become increasingly ubiquitous in developed and emerging market, putting a strain on a cash cow of many carriers — the long-serving SMS. Research firm Ovum estimates that free messanging apps like Whatsapp are costing carriers a combined US$14B last year. This trend is expected to continue.

Now, SingTel hopes that smartphones will be a driver of the company’s future growth in the future. It is charging users for data and subsidizing phone prices in exchange for tying down consumers to the carrier’s subscription plans for two years or more.

The company has also set up the SingTel Innov8 venture capital fund as a means of transforming itself from a traditional carrier to a multimedia and infotech service provider.

Some of Innov8′s past activities have included a Series A investment in daily deals platform company Dealised, as well as the funding of other firms like mobile social communications company Bubble Motion, in-app mobile payment company Stream Media, and mobile marketing firm 2359 Media.

They are also involved in some joint ventures with the Singapore startup community, most notably the SingTel Startup Weekend Singapore and the JFDI-Innov8 Bootcamp.

Philippines telecom operator Globe has partnered with Singapore counterpart SingTel to bring MyAppsMall, a cross-platform mobile app store, to Globe prepaid and postpaid subscribers in the Philippines, reported ABS-CBN.

The app store contains over 20,000 free and paid apps, which includes categories like games, social networks, Internet browsers, lifestyle, news, entertainment, and more. The app can be accessed via a web browser on both PC and mobile.

Being cross-platform, the app store contains content for Android, Symbian, Java, and BlackBerry devices. It serves as an additional platform for developers, especially Filipino ones, to create, distribute, and monetize their apps internationally.

SingTel has made the app store available outside the Philippines.

Customers of Globe and other SingTel affiliates can pay for content via operator billing, which means expenses incurred on the app store are charged directly to their monthly mobile bill.

Network subscribers outside the SingTel Group can still buy content from the app store, but they’ll have to use their credit cards.

MyAppsMall is billed as an initiative to promote Filipino talent to the international market by giving them an extra distribution channel for their works. In crowded marketplaces like Apple’s App Store and Android’s Marketplace, it can be hard for new app developers to get their content noticed.

More epic stuff:

5 trends that will shape the app world
S’pore-based company offers glimpse of future with HTML5 game Dollar Isle

Event Details

When: Friday, 25th November 2011
Time: 2pm-5pm
Where: IDC Asia Project Lab, Block 20, Level 3/53 , School of Enginnering, 21 Tampines Ave 1 Singapore 529757 (Map)
Register here

SingTel, Singapore’s largest telco company, has acquired the intellectual property rights to Singapore-based OrSiSo‘s flagship social media dashboard for an undisclosed sum. The app aims to organize and simplify the user’s online social life.

“We have been working with Singtel for 2 years, developing different social apps (all based on aggregation) and some social business intelligence tools. In the end they choose to buy the IP so that they can build it further internally,” says OrSiSo founder and CEO Thorben Linneberg, who broke the news to us.

It’s unclear what role Thorben and his team will play in future development, although it seems likely they will work closely with SingTel. OrSiSo has put up a brief note on their website, stating that their free app is no longer available as a download at the moment.

OrSiSo is designed to make managing multiple social network accounts easier by converging them into one place. It allows users to merge their friends’ identities from various networks, and also intelligently filters updates according to levels of closeness.

Incorporated in 2008, the company has since received about US$400,000 in angel funding. Prior to starting his company, Thorben, a Denmark native, has worked for a number of years in the mobile internet and wireless technology fields.

To find out more about Thorben, his company, and the product, check out our interview with him, as well as this video interview done by INSEAD Knowledge in 2009:

Other features of the service include: Email notifications for new or unpaid bills, downloadable PDF bills, and limitless archive for bills. Through the service, users can also request service providers to stop sending them paper bills.

Currently, you can view digital bills from StarHub, M1, SingTel, SingPower, and NUSS in Singapore; Maxis, Digi, TNB and Astro in Malaysia; and Optus, 3Mobile and CityLink in Australia. The company says more billers will be added in 2011.