Ideas

Laos is located in the centre of the Indochina region and is surrounded by China, Myanmmar, Vietnam, Cambodia and Thailand. While foreign attention has traditionally been focused on its more well-known neighbours, the country is gradually coming into the limelight with recent economic developments.

In December 2022, Quest was privileged to be part of a Singapore delegation that travelled to Laos as part of the Asian Exposure Programme, which was organised by Social Collider in collaboration with the National Youth Council, a public agency of Singapore. 

Some of the highlights of the trip include conversations with Laotian senior officials and business owners, a visit to a local school and various places of interest, as well as being hosted by the Singapore Ambassador to Laos in the embassy itself. This article hopes to explore some of the insights about Laos that was gained from the trip.

From Land-locked to Land-linked

One of the key challenges faced by Laos is its geographical limitations. As a country that is completely land-locked, it cannot directly participate in international maritime trade. In order to connect beyond its immediate region, the country has to use the Vung Ang Port in Vietnam’s central province of Ha Tinh to gain access to sea trade routes. The lack of connectivity naturally raises the costs of exporting and importing goods, and this was evident in the relatively expensive prices of foreign-imported goods sold in shops when Quest visited.

Its internal geography poses additional limitations too. Its landscape is dominated by inhospitable forest-covered mountains and this means that transportation within the country is often inefficient and expensive. One segment of the trip involved a journey by car from Vientiane, the country’s capital, to the northern city of Luang Prabang. It took an entire day to complete the journey that only spanned a distance of less than 400km.

Various infrastructure projects in recent years, however, are changing the logistics landscape in Laos. Most notably, the US$6 billion China-Laos Railway began operations on 3rd December 2021, connecting Kunming, the capital of China’s Yunnan, with Vientiane. The segment of the railway in Laos ends in the town of Boten on the Laos-China border, and reduces travel time from 15 hours by car to 3 hours. Within the first five months of its opening, more than 2.7 million passengers and 2.9 million metric tons of cargo had been transported, and this included cargo bound for regional destinations such as Thailand, Myanmar, Laos, Malaysia, Cambodia, and Singapore.

Improvements in infrastructure can help Laos to leverage on its central location to become a regional logistics hub. This is especially advantageous as its neighbours are fast-growing economies. For example, Vietnam, its neighbour to the East, recorded a remarkable GDP growth of 8.02% in 2022 according to a Bloomberg report, the highest in Asia. There is already a proposed railway route that, once completed, would connect the port city of Vung Ang in Vietnam with Vientiane. An extensive modern transportation network, both internally and externally, can help to cement Laos’ position as a regional logistics hub.

A Resilient People

During the Laotian Civil War (1953–1975), which was fought between the Communist Pathet Lao and the Royal Lao Government, the country was subject to a series of military interventions carried by the US as part of its Cold War counterinsurgency operations in Southeast Asia. As a result, more than 270 million cluster bombs were dropped in Laos and many of them failed to explode. Till today, there are new civilian casualties every year who are harmed by these unexploded ordnances, many of whom are innocent villagers who accidentally struck them while working in the fields.

The resilience and strong community spirit of the Laotian people were evident in Quest’s visit to COPE, a local non-profit organisation that provides prosthetic and orthotic devices, as well as related rehabilitation services. A third of the organisation’s prosthetic patients are survivors of accidents caused by the unexploded ordnances and COPE uses Polypropylene, a highly durable but low cost material, to construct its devices so that it is able to keep its services free-of-charge.

The greatest asset of the country is arguably its people, and it was especially heartening to meet the Laotian youth in a visit to Pathana School, which covers education from kindergarten to high school. The student leaders were enthusiastic in showing the delegation around the school and showcasing a traditional dance, and they spoke good English as well. With more than 30% of the Laotian population consisting of those aged under 15 years, there is a sufficient young population to support the workforce in the future.

From conversations the delegation had with people living in Laos, it seemed that Education is a burgeoning sector in Laos as parents recognise the importance of investing in their children’s education in order to give them a competitive edge in the future. Several of the schools were also reported to have adopted the syllabus of Singapore’s schools, and this presents a potential opportunity for businesses in the education field to venture into Laos.

Opportunities for Sustainable Tourism

One of the recurring observations made by Russ Neu, the leader of the Singapore delegation who was based in Laos for a period of time about fifteen years ago, was the vast change in the country’s appearance. The banks of the Mekong river in Vientiane, which were once tranquil and undisturbed, are now scattered liberally with stalls hawking souvenirs and apparel. The former dirt streets are also now paved and populated with cafes, bars and restaurants that serve up international cuisine.

Endowed with stunning natural landscapes that lend themselves to activities such as kayaking, cycling, zip lining and trekking, Laos also has the potential to become a choice destination for adventure tourism. The boom in tourism offers a huge benefit to the country. Hotels, restaurants and attractions enjoy an increase in footfall, and the expanding tourism industry offers employment opportunities for locals too. With China relaxing its travel restrictions and reopening its borders in 2023, it is likely that Laos will enjoy an influx of Chinese tourists due to its close proximity with China, and especially now that the China-Laos Railway is in operation. 

The concern is that the rapid development of the country, coupled with the desire to cater to the tastes of international tourists, could erode Laos’ culture uniqueness and its reputation as an escape from the hustle and bustle of urban life. This underscores the need for sustainable tourism, where socio-economic benefits trickle down to local communities and cultural heritage is preserved, thereby maintaining authentic tourist experiences. Startups in the travel industry which have an ESG focus may find it beneficial to explore opportunities in Laos, instead of only the usual suspects like Thailand or Vietnam. As a matter of fact, some of the members of the Singaporean delegation were from a social startup that seeks to uncover hidden gems within local communities. They were in Laos to recce for potential partners and interesting experiences to add to their online publication Depths Magazine.

While Laos may once have been a lesser-known economy in Asia, this is set to change with its potential as a tourist destination coupled with recent efforts to improve its infrastructure, both within the country and with other countries. It is certainly not a place to look past for investors who are interested in the Indochina region.

Few will argue that a great product or service is one that solves the most pressing problems for consumers at the best value for money and with the highest quality.

A consumer study found that post-pandemic, consumers in Singapore also care deeply about the way brands treat the environment and community, as well as their attitudes towards racial and economic disparities. Sixty percent surveyed expect “brands to be purpose-driven, going beyond profits and transactional relationships, to demonstrate trustworthiness, empathy, shared values, and care for society.”

Against this backdrop, it has become imperative for businesses to consciously and intentionally incorporate social purpose and impact into their business model early on.

Yet, between ensuring product-market fit, addressing the challenges of building a business, and developing the pitch-perfect deck to draw investors, start-up founders often feel that weaving social impact into their company plan is something that can be worked on at a later stage. Founding teams new to purpose-driven business models may also be doubtful if they can integrate social impact in a way that makes business sense.

Social is good for business

Research from the EY Beacon Institute and Harvard Business School shows that companies that lead with purpose are more likely to win customer confidence and be profitable. Today’s consumers and employees demand values that align with their own from brands, and accountability from businesses and employers. We are seeing consumers switch to brands they trust more while employees look to work for socially-minded employers.

Unsurprisingly, companies with strong social missions appeal to talent as revealed in a LinkedIn study. Employees in social impact start-ups enjoy higher work satisfaction, are more engaged, and stay loyal to their companies. The benefits do not stop there.

Social drives innovation and promotes creativity

Weaving social good into a start-up’s business model could also be an impetus for creativity and innovation. Beyond the traditional objective of profitability, having to think about how one’s business can help to address current social challenges forces us to look at the situation through new lenses. This potentially creates imaginative ways of doing things to solve problems.

For example, coffee specialty company Bettr Barista solves systemic issues in the coffee value chain by trading directly with partner farms to optimize commercial benefits to these farmers and their extended communities. In Singapore, they run vocational social programs that nurture both professional and emotional skill sets. Upon graduation, trainees are offered employment opportunities in a workplace that is fair and inclusive. The company also extends micro-enterprise opportunities to marginalized women and youth-at-risk.

This virtuous loop of doing good and reaping bold, inventive ideas in the process also nurtures a more productive and positive work environment for employees, which in turn builds a strong corporate culture and better performance.

Sustainable Impact is attractive to investors

As companies start to incorporate Environmental, Social, and Governance (ESG) practices into different aspects of their business, investors are also applying ESG factors to identify risks and growth opportunities. More than 450 investors have allocated US$1.3 trillion to impact investing worldwide. Among the fastest-growing regions for such investments are East and Southeast Asia, which grew at 23 percent in 2020.

This trend connotes that investors are placing emphasis on sustainability in pitch decks and exacting ESG compliance. Start-ups with a clear social purpose thus become more attractive to potential organization partners and venture capitalists as they look to expand their reach and sustainable impact.

The burgeoning appetite for impact investments makes this an opportune moment for social impact start-ups to seek funding from venture capitalists who are after the dual goals of profit and social impact. This mutually advantageous partnership drives an effective market-based approach to resolve critical problems faced by communities everywhere – from gender inequality and access to basic human needs to climate change.

Demonstrating social value

In order to appeal to investors, it is crucial for startups to be able to measure and articulate the social impact they create. It validates their potential to do well and do good and facilitates fundraising activities.

To help start-ups and social enterprises in Singapore facing this conundrum, the Singapore Centre for Social Enterprise, raiSE, has developed the Social Value Toolkit (SVT) which guides companies to monitor, assess, and articulate their social impact.

This measurement framework is also used in Asia’s first VC-backed Sustainable Impact Accelerator program that we launched recently with raiSE to help start-ups improve their competencies and scale up impact.

Participants in the program will receive financial support and non-financial support, which includes Quest Ventures and raiSE’s combined expertise, networks, and resources in the social impact business arena.

Being socially responsible can create long-term value for start-ups. With the support of investors and partners in the private and public sectors, we can join hands to solve some of the most pressing, complex problems of our times.

This post first appeared on TechNode Global.

A huge pot of gold can be found in the silver economy globally and in Asia, this article identifies the key opportunities for venture capitals.

The opportunities in the silver economy are manifesting more visibly globally and in the Asia Pacific region.

By 2025, the ageing population in the Asia Pacific will reach 600 million, potentially accounting for US$4.56 trillion. The markets ageing most rapidly in the Asia Pacific include China, Singapore, Thailand, Malaysia and Vietnam.

With the pandemic aggravating the existing ageing issues, there will be great potential for ageing technologies and innovations to grow and scale. We believe there is a huge pot of gold to be found in the silver economy globally and in Asia.

Through intensive research on the silver economy and correspondence with the Quest Ventures team, Zacchaeus Chok, a Quest Ventures Fellow, identified key opportunities for venture capital in the article below.

Zacchaeus Chok was attached to Quest Ventures through the Reactor Venture Scout Program.

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The combination of longevity and a decline in birthrate engenders a pressing economic and social need for innovation. Although population ageing poses a double whammy to public spending and productivity, a technology-driven silver economy ecosystem is poised to meet the unique demands of an ageing population.

The reward for being the first to capture the sunrise marketplace will be huge, with the Asia Pacific’s silver economy potential projected to reach US$4.56 trillion by 2025. Boasting a silver economy potential of over US$500 billion, Singapore, Japan, and Australia are Asia Pacific’s top three markets.

The demographic shift presents two sides: a growing market segment for investors and a potential liability for governments. In turn, public and private sector investments in supporting seniors will increase.

Opportunities in the silver economy

Senior citizens have long been ignored by venture capital money. Yet, seniors will account for over 22 per cent of the population in the Asia Pacific by 2050 and entrepreneurs will be keen to cash in.

Investment opportunities span a wide range of industries, including housing, food, tourism and transport, with healthcare-related products featuring strongly.

Businesses need a strong understanding of the lifestyle aspirations and healthcare goals of seniors in order to successfully court the region’s 600 million senior citizens.

Building-integrated care solutions through telemedicine

The incoming class of senior citizens are likely to be more well educated, affluent and tech-savvy than their parents. For Singaporean residents aged 75 and over, smartphone usage grew from 41 per cent in 2019 to 60 per cent in 2020, along with an increase in internet usage.

At the same time, the adoption of digital services among seniors has sharply risen with COVID-19. Older patients can now book medical appointments online and have their medications delivered to their doorstep, rather than go to the clinic.

With senior citizens demanding greater accessibility, affordability, and personalisation in healthcare, the way healthcare is delivered could benefit from decentralization. Digital technology improves the affordability of previously inefficient care delivery practices, such as home-based urgent care, hospital-at-home model and virtual primary care.

Homage, which recently closed its US$30 million Series C funding in late 2021, uses a matching engine to connect families with caregivers and therapists.

Investor sentiment in healthtech has reached record levels in Southeast Asia, with deal value has grown more than four times since 2017. Deals in the care delivery vertical represent the largest portion of healthtech deal values, with significant growth in digital health solutions, online pharmacies and remote patient support.

Despite the progress made in telemedicine, challenges remain in managing the infrastructure and logistics, defining data collection standards and coordinating medical equipment needs.

IT can play a central role in overcoming the fragmented nature of caregiving

The rapid ageing of the population has resulted in increased pressure on health care delivery arrangements. Even though the value of preventive and promotive care has been given more weight, remarkable fragmentation in patient-centred care for the elderly persists.

For example, the patient referral procedure is locked in archaic data management systems and in some cases, paper-based record cards. When patients move to other facilities, re-evaluations are duplicated, causing healthcare professionals to spend unnecessary time and money.

Volunteer management is another area where the consolidation of services results in significant social impact. For example, SG Assist provides timely and affordable assistance to dependents at home through a digitally crowdsourced Community Responder network.

By streamlining the caregiving and volunteering sector through digital processes, a generation of tech-enabled social enterprises is paving the way for greater efficiency in the care sector.

In addition to mobile and web technology, several Blockchain healthcare start-ups have emerged in Singapore, addressing health analytics, data privacy, and insurance issues.

MediLOT uses blockchain technology to securely store patients’ health records while Hearti Lab uses the same technology for policy agreements, smart contracts and risk management.

However, many healthcare providers in Southeast Asia are still reluctant to share data or transition to cloud services. Besides Singapore, other governments in the region have been spending less on healthcare.

There remains significant work in integrating real-time patient data, defining standards, ensuring the interoperability of patient record systems and building security infrastructure.

Fortunately, there are signs of a greater governmental push to adopt technology in the near future, with the Philippines and Thailand governments introducing measures to incorporate technology into legacy systems.

Widespread adoption of assisted living devices

Cutting-edge wearable technologies supported by AI and the Internet of Things, alongside fitness monitoring devices, are gaining steam among senior citizens, caregivers and community healthcare providers.

In the inaugural Healthcare Open Innovation Challenge launched by Enterprise Singapore in 2020, several innovative solutions to prevent falls among seniors and promote adherence to prescribed medication regimes were presented.

Singapore-based Longway AI designed a solution to predict and prevent falls while IoT startup EloCare developed a smart pillbox solution to promote medication compliance and traceability.

With more seniors wanting to live autonomous and dignified lives without burdening their caregivers, assisted living devices and the wearable technology markets present major investment opportunities.

Challenges in the silver economy

Social entrepreneurship is an important linkway to developing the silver economy. Early-stage social enterprises are “catalytic innovators” that produce disruptive innovations outside of established corporations and bureaucracies, solving pressing social problems like our ageing population.

Since they carry significantly higher risk, they complement the low-risk appetite of government units. There are numerous examples of how early impact can lead to large scale adoption and system-changing impact, such as Indonesian health tech startup Halodoc whose digital platform services were recently tapped by the Ministry of Health to facilitate coronavirus vaccinations.

Young entrepreneurs are interested in creating products designed for senior citizens with needs unique to them but face numerous barriers to entry pertaining to talent, insight, distribution and capital.

Removing barriers to entry and silver marketplace growth

The silver ecosystem is enabled by the right type of funding and capability building at every stage. Even though there exists significant government funding in the social sector, innovation capital is typically disbursed in limited amounts e.g., philanthropies awarding small start-up grants.

In the earlier stages, philanthropic grants offer capital to seed promising business ideas. Private impact investors and venture philanthropists source, develop and optimise these promising businesses by providing systematic organisation-building support. Successful social programmes with a track record are scaled further by the government and NGOs.

While wealth owners are on the lookout to apply their assets toward more social causes, capability-building support is equally important to support innovation. Like venture capitalists, impact investors contribute their networks and expertise to nurture a new generation of social enterprises.

Social impact has largely focused on leveraging the skills and capabilities of the ICT industry but there is considerable potential to transfer skills, networks, and infrastructure in the venture capital ecosystem to the world of social impact.

No clearly defined playbook for silver economy startups

The term “Silver Tsunami” captures the unique nature of this demographic shift, and investors have only just begun to take notice. Developing active-ageing products aimed at the elderly is not a mainstream idea.

Of the 204 digital health startups registered in Singapore in 2022, only a small fraction develop eldercare-centric products.

Unlike e-commerce start-ups with clearly defined marketing playbooks, many investors still have the perception that seniors are not tech-savvy and that the total addressable market for senior-focused digital technology is limited.

Achieving scalable social impact hinges on a sustainable business model; silver social enterprises have to consider who is their target customer and how will they pay for the product. Overcoming perception challenges, social enterprises also need to consider how to position their technology products as simple as possible.

Golden dividends in a silver economy

The full potential of the silver economy is yet captured by investors and entrepreneurs. Seen differently, longevity is a macro tailwind behind the digitalisation of healthcare, the consolidation of caregiving and the proliferation of emerging technologies like blockchain.

These step changes in senior-centric healthcare are here to stay and investors are already paying attention to hot spots like telemedicine, wearable devices and patient analytics.

Small is beautiful, but the scale is necessary. Early-stage social enterprises are entering a fast-forming tech-enabled silver marketplace in Singapore, where novel ideas can be tested before expanding to larger markets in Japan and China.

Provided the right type of funding at the right stage, start-ups in the silver economy can optimise their business models for a growing consumer class and reap the dividends of a maturing silver market.

This post first appeared on e27.

Drawing on the Russia-Ukraine war, we observe that ESG framework is not set in stone and will be evolving based on changing global landscape.

The ESG (Environmental, Social, and Governance) community was flabbergasted and alarmed at talks on labelling weapons as sustainable ESG assets with the backdrop of the Russia-Ukraine war.

Supporters justified this by claiming weapons maintain peace and “are of key importance to uphold and defend democracy, freedom, stability and human rights”. And this may not be the first time ESG investing is dealing with such controversial debate, with industries and companies moving from outcast to hero status in times of crisis.

There is absolutely nothing wrong with this, as ESG investing achieves the best results when it evolves according to the dynamic world we live in, considering the changing risks and opportunities at different points in time. Even as ESG investing may look different as it develops across time, it is here to stay.

According to Bloomberg, global ESG assets are on track to exceed US$53 trillion by 2025, representing more than a third of the US$140.5 trillion in projected total assets under management.

In Asia, more than two-thirds of institutional investors indicated increased interest in ESG investments in the post-COVID world, and total ESG assets in Asia have grown from a mere US$801 million in 2019 to US$7.9 billion in 2020.

The shift to Social (S) in ESG

In the venture capital (VC) space, there are observations on rising numbers of thematic funds specific to the environmental (E) aspect (e.g., climate change, decarbonisation, and nature-based assets) and a focus on governance (G) aspect (e.g., internal audit, management commitment to ESG, stakeholder engagement).

This exemplified that ESG investing is gaining steam, but it may seem that the “S” in ESG has taken the role of the forgotten middle child.

But not for any longer, as investors realise that people/ social impact forms the basis of ESG investing. Everything does not matter if it de-risk or benefits the people, as sustainability arising from environmental and governance factors would ultimately translate into the social value created for the people.

Just like how weapons are used to be excluded in ESG investing before the Russia-Ukraine war, its social value is now taking the centre stage together with the environmental impact.

The human-centricity of ESG investing will become more apparent, and the social impact investment will take a more proactive form.

Dynamic ESG based on changing landscape to future-proof the firm and portfolio

Drawing back to the Russia-Ukraine war, we observe that the ESG framework is not set in stone and will be evolving based on the changing global or regional landscape. Just like how ESG investors avoided weapons before this war, now there is an ongoing talk about labelling it as a social-positive asset because it has the potential to prevent death and destruction.

From this, the ESG community demonstrates that ESG investing will not be rigid to target outperformance above-market returns. Many investors, including VCs, have acknowledged that ESG does not hamper financial performance but creates long-term value and outsized returns.

More and more started to price in material risks, along with material benefits, effectively de-risking the portfolio while adopting a pro-impact approach. This optimises the future-proofing of the firm and portfolio.

For example, for Quest Ventures‘ portfolio companies like Fefifo, food security and sustainable agriculture could materially influence topline sales. For Flex and GajiGesa, financial inclusion can materially convert non-consumers into a new market that is untapped in emerging Asia.

Building back better towards a resilient and sustainable future for the people

Investors, including VCs, invest in sustainable market-creating innovations that shape all nations and regions’ resilient and sustainable futures.

According to Global Sustainable Investment Review 2020 (GSIR), Sustainable investment assets under management make up 35.9 per cent of total assets under management, up from 33.4 per cent in 2018.

The most common sustainable investment strategy is ESG integration (US$25.2 trillion AUM), followed by negative screening (US$15.9 trillion AUM), corporate engagement, and shareholder action (US$10.5 trillion AUM).

Integrating ESG into the investment process will build more sustainable companies early through incorporating ESG during portfolio engagement/ investment stewardship.

However, as Harvard Professor Clayton M. Christensen mentioned in Prosperity Paradox, “all good theories must be used in context. They are only useful in certain circumstances. Every country in the world is different in size, population, culture, leadership, and capabilities. Those circumstances play a role in their destiny.”

We must note the nuances across regions and markets when doing ESG investing and building a resilient and sustainable future. With the Russia-Ukraine war in the backdrop, it compels us to keep ESG supporting flexible while allowing for comparison when measuring its impacts.

Taking a pragmatist approach to ESG investing (investing in companies with moderate unmanageable ESG risk and high ESG unmanaged manageable risk) would be optimal in Southeast Asia, as the emerging market presents vast opportunities to improve ESG financial performance at higher-risk companies vastly.

According to the profiling by Pitchbook, a pragmatist VC may:

• Conduct pre-investment due diligence on the ESG risks derived from broad industry sustainability.
• Conduct slightly less-intensive pre- or post-acquisition identification of manageable risk mitigation gaps and opportunities.
• Evaluate how scale will influence sustainability and ESG.
• Have proactive implementation of ESG-related policies and procedures and quarterly monitoring.

Concluding, the Russia-Ukraine war, amidst its wide-ranging and devastating impacts on people from both nations, had triggered the ESG community and could be changing the conversation on ESG investing through:

• There is a shift to social (S) in ESG, with a social impact no longer isolated from environmental and governance aspects.
• The development of a dynamic ESG based on changing regional and global landscape to future-proof the investment firms and portfolio.
• Building back better towards a resilient and sustainable future by adopting a pragmatist ESG approach.

If you are curious about my position regarding the war: Echoing Singapore’s statement on the Russia-Ukraine war, I too believe that a country’s “sovereignty, independence, and territorial integrity must be respected”.

This post first appeared on e27.