Financing the future

Tell Khailee Ng that Southeast Asia lacks talent when it comes to deep technology and you’ll get more than an earful.

“Some people say the region doesn’t have the talent for deep tech. We say that’s bull****,” Mr. Ng says in a recent interview with Asia Asset Management (AAM). “You just need to look harder. They are there, and they are ready.”

Mr. Ng is the managing partner of 500 Startups, an early-stage venture fund and seed accelerator founded in 2010. He oversees its Southeast Asian operations.

The region is seeing an emerging group of start-ups dabbling in deep tech, which encompasses the whole spectrum from artificial intelligence (AI) to drones and robots and augmented reality. One example is Malaysia’s Glueck, which produces computer vision, AI and deep machine learning algorithms to assess responses to stimuli in real-time environments.

“The important part about investing in Southeast Asian deep tech is to know that the relevant companies in the region may not be only receiving investments locally, but from companies in Europe, Hong Kong, Taiwan and India which may target Southeast Asia,” Mr. Ng says.

He sees Singapore becoming a major deep tech player.

“Their universities have international talent that graduate into the ecosystem ready to take their research into commercialisation,” he says. “The government provides all kinds of support to help make this happen.”

But Mr. Ng is not discounting other countries in the region as some of them offer what 500 Startups is looking for, such as investments in space, energy, infrastructure and agriculture.

“Malaysia and Indonesia both have a groundswell of innovation in agriculture and biotechnology that have always existed but are now getting more attention from us and foreign investors,” he says. “These industries are exciting and we’ve also invested in these.”

But Southeast Asia has its fair share of challenges. Victor Chua, founder of Malaysian venture capital firm Vynn Capital, believes the biggest gaps are in talent, as well as the mentality of financial backers.

“Deep tech companies require large amounts of brain power to be able to create something that is marketable and meaningful,” Mr. Chua tells AAM. “At the same time, the backers need to be able to emphasise really long-term objectives, not just immediate monetary value.”

But Mr. Chua is confident Southeast Asia can deliver.

“We are looking at Vietnam, Malaysia and Singapore, mainly due to the availability of tech talent,” he says. “On top of that, it is due to the amount of training that these countries have received from global tech giants.”

Mr. Ng believes deep tech start-ups may require help to market themselves to a larger audience.

“These companies may need help telling their story to the world and planning their financial strategy. Their sales cycles and funding needs may be quite different from mobile or internet companies,” he says.

According to Mr. Ng, 500 Startups will work towards creating circles of experts in every field.

“We will offer them a forum to learn about the latest innovations in their own field, and in exchange tap into their expertise,” he says. “This creates a brain trust of leading edge thinkers that will ultimately help more entrepreneurs create the future.”

As for Mr. Chua, he envisages turning to solutions for traditional industries.

“We are looking at companies that have a very strong data play to allow for better understanding of these industries,” he says. “From there, we will look at the correlation of success factors which in turn allows us to project a more accurate future for investing.”