Tech Talent Compensation Singapore 2021/2022

Verified compensation data of Software Engineers and other technology talents. Analysis of top paying companies.

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This joint report recognises an unsolved pain point in the tech community – existing compensation solutions and reports were insufficient despite the abundance of data. They could not accurately capture the nuances of the tech industry where the 90th percentile of software engineers are paid as much as 3x more than those in the 10th percentile.

Salary data for Singapore are derived from NodeFlair’s proprietary database of over 30,000 data points from companies of all sizes and industries. This includes user submissions verified by documents (payslips and offer letters) as well as job advertisements from various aggregated from various job portals for the year 2021. Salary data for India and Indonesia are derived from over 5,300 data points from companies of all sizes and industries. These data are from job postings in these countries for the period of Q4 of 2021.

Salary data is not provided by the industry experts interviewed in the report.

In-depth interviews about the best talent management best practices with over 10 founders and engineering leaders. These leaders and companies are primarily in Singapore, but also with engineering footprints in other Asia countries such as India, Indonesia, Vietnam, Malaysia, Taiwan, Hong Kong and more.


Mr James Tan
Managing Partner
Quest Ventures

Tech talent compensation in Singapore increased 22% last year. The massive demand for tech talent is fueled by the wave of venture capital into tech startups in the region and global tech companies setting up in Singapore, layered on top of a limited tech talent supply.

In 2018, Quest Ventures invested in NodeFlair’s vision to build a solution for tech talent and businesses. Recognising the gravity of the global tech talent squeeze and its impact on Singapore and Asia, the team went on a mission to diagnose the pain points for tech talent and hiring entities. Salary is identified as the largest push and pull factor, and the reason responsible for failed job placement.

This report uncovers the tech talent salary black box and empowers tech talent and employers by analysing more than 30,000 data points from NodeFlair’s proprietary database, and in-depth interviews with founders and engineering leaders.

Salary transparency is paramount to both tech talent and employers. It makes the hiring process more time-efficient and prevents unnecessary unhappiness resulting from misalignment in salary expectations. Tech talent will also be more empowered in job interviews and compensation negotiations when they have access to up-to-date market salary benchmarks. Employers can further develop and finetune their human capital strategy and budget to be more competitive in their hiring process, increasing tech talent attraction, and improving retention. Beyond salary, the report also consolidated practical and actionable insights from founders and engineering leaders.

We congratulate NodeFlair on the release of this ambitious report.

Top challenges for Hiring Tech Talents in 2022

The talent war for experienced talents will intensify even more. The demand for senior engineers is higher due to the bullish funding scene and competition from foreign tech firms. Companies with deep pockets would “buy time with money” by prioritizing senior hires, as they are more operationally ready and take less time to onboard and contribute. On the supply side, while the border is opening up from the pandemic and companies are adopting a more remote approach for their engineering team, we expect this transition to take some time.

The rise of salary for tech talents is not slowing anytime soon. A better salary package is the top reason (65%) talents are looking for new opportunities. That ranks higher than other reasons like their desire to work on new technologies, work-life balance and growth opportunities. While companies can, and will, work on the non-compensation aspect to attract talents, the easier way out in the short term will be to increase their hiring budget, especially when they are on a hiring spree.

Companies can expect a talent drain as newer and more attractive technologies and sectors like blockchain and Web3 arise. In 2021, investors poured $30 billion into blockchain and cryptocurrency due to the growth and demand for Web3, NFTs and other related areas. We have observed that due to the underwhelming supply
of engineers specialized in blockchain development, companies have adjusted their hiring strategy by targeting software engineers who are interested in picking up blockchain
development instead. With the boom in space not slowing down anytime soon, companies will face tougher competition.

Most in-demand skills and competencies in 2022

Talent management skills will become increasingly important. As the war for tech talents grows fiercer, companies will see a drop in average tenure and a higher turnover rate. At some tipping point, the tangible and intangible cost of attracting, recruiting and onboarding talents will rise to be too expensive for companies if they do not retain these great talents well. Companies need to invest in leaders who can grow and retain these talents through non-compensation means, such as enforcing a higher quality engineering culture and creating a better Developer Experience (DX). While companies can solve their recruitment challenge by offering higher compensation, they require a distinguished engineering leader to manage the team well to ensure their hiring investment is not wasted.

How should companies position themselves to stay competitive in the tech talent market in 2022?

Instead of focusing on recruitment, companies should also focus on retention. Many companies are spending a lot of manpower, time and money in recruiting talents, but few allocates sufficient resources to talent retention. Non-technical leaders and CEOs have to understand that talent churn is much more expensive for engineering than a simple one-off recruitment cost. The time needed to replace these members and onboard new ones is longer for engineering is longer than other functions.

Attract talents with better non-compensation benefits. After salary, the top 3 reasons why talents are looking then considering new opportunities are 1) Wanting to work with new technologies, 2) Better flexibility and work-life balance and 3) Growth or leadership positions. Re-evaluate your existing working environment to improve these aspects, such as getting rid of rigid working hours and allowing for working from home (even if it is not required by government regulation).

Be more flexible with the hiring requirements. Companies often have a long list of required skill sets that they look for in their ideal candidate. However, in many situations, many of these skills are not crucial or can be picked up relatively easy as long as someone has experience in similar technology. Instead, have a clear list of the must-have and good-to-have and rank candidates based on how many good-to-have checkboxes they ticked. Doing so widens your pool of candidates and reduce the time you take to hire the right person.

Re-evaluate the hiring process. Often, companies have too many interview rounds than they need. Also, most of the assessments are not conclusive in determining if a candidate is suitable for the role. Instead, companies should figure out and eliminate interview rounds that are repetitive and ineffective. This way, they can complete the entire interview process much faster and have a lower chance of candidates withdrawing their applications.

Build up their engineering presence through various channels. At any time, only 20% of the market are active job seekers, while 54% are passive and open to new opportunities. The top 2 methods talents are learning about companies are through their network and reading about news and articles of the company. As such, invest money and effort in meetups and sharing, engineering blogs and developer advocacy, so that their company have huge mindshare.

Download the full report here.

Tenets for Greater Sustainability

Powering Southeast Asia’s charge to a sustainable future

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Mr Ang Wei Xuan, Summer Analyst

Mr James Tan


The world’s population reached 7.9 billion in 2021. Its resources are already being pushed to the brink, and we are facing unprecedented social inequalities, environmental degradation, and governance issues.

Without taking the necessary steps to mitigate these effects, we are poised to see temperatures rise by 1.5 to 2ºC by 2050. The resultant detrimental effects, including a large increase in the frequency and scale of natural disasters, spread of diseases and ecosystem disruption will make life untenable for many regions, including Southeast Asia.[1] This will derail the lives of millions, and it would not be unfair to say that how governments, corporations & communities come together to tackle this mammoth problem will define the lives of many generations to come.

The severity and urgency of the problem has seen hitherto silent stakeholders begin taking action to ensure sustainability on all fronts. In this regard, we believe that early stage venture capital can serve a crucial role in resolving critical problems by financing and developing innovative tech-based solutions. The dual goals of profit and impact allow leveraging of market forces to scale quickly and effectively. This report aims to provide an insight into the ongoing sustainability efforts, trends and outline the reasons for our bullish sentiments towards sustainability-focused investing.


Mr James Tan
Managing Partner
Quest Ventures

The ‘take-make-waste’ industrial model is no longer feasible. With a larger GDP than the rest of the world combined, and as the fastest growing economic region, what Asia does as it rises will have a significant impact.

With a trillion dollars in economic benefits if efforts to go green in Asia go right, and climate change and other disastrous effects if the efforts do not, the stakes are high. 

We believe that governments need to push for sustainable practices on a national, regional and international level.

We believe that businesses must align between sustainability and corporate gains. Old and new businesses alike must commit to incorporating ESG goals in their key decision making.

We believe that the financial services industry can encourage industries to implement ESG criteria into their decision making, as well as rewarding efforts made towards sustainable development.

Time is not on our side. Our three tenets are merely a starting point. Governments, corporations, and individuals that want to do more can count on increasing awareness and support globally to drive changes. We look forward to working with them towards a sustainable future.

Defining Sustainability

The 1987 United Nations Brundtland Commission’ defined sustainability as the goal of “meeting the needs of the present without compromising the ability of future generations to meet their own needs. Today, sustainability is inevitably centered around environmental issues. However, we must keep in mind that sustainability also encompasses social issues like inequality, as well as economic issues such as trade, and that all these issues are often intertwined. 

Since the Industrial Revolution, the onset of capitalism and the industrial economic model has seen humanity consume resources at an unprecedented rate. Conservation of the environment was but an afterthought as natural resources were exploited for economic growth. Modern superpowers such as the USA and various European countries built their success on the back of the deployment of large quantities of less efficient technology, powered by finite natural resources. That has already caused irreversible damage to the ecosystem, creating issues such as global warming, extreme weather events and environmental degradation.

As of June 2021, the world population has reached approximately 7.9 billion. Sustaining so many on the old ‘take-make-waste’ industrial model is no longer feasible, and will only exacerbate the harm to our planet. We need to find ways to make more from less, focusing on social and environmental outcomes instead of economic ones. 

However, it is a tremendously unfair request from the Western developed countries (NOA, EUR) for countries in developing regions (APAC (including SSEA and EAS), MENA, LAC, SSA) to forgo the same tools and methods that had worked so well for them in their pursuit of economic development. 

As such, an integral determinant to the success of the sustainability push is how developing regions incorporate sustainable development as they rise.

Of particular importance will be Asia’s approach. Asia is the fastest growing economic region today, with a larger GDP than the rest of the world combined, both in nominal and PPP (Purchasing Power Parity) terms. By 2030, Asia will be home to 60% of global growth and 4.9 billion people.[2] While China, Japan and South Korea are already global leaders in green technology, how the rest of Asia adapts will become of paramount importance to the global fight for sustainability.

The physical effects of unsustainable growth, combined with growing research in and awareness of climate science & environmental issues have pushed sustainability to the forefront of the collective human consciousness, where it had once lingered at the back of for years. People today know that the fundamentals underpinning economic growth must change.

The UN has contributed towards pushing for global cooperation in this regard, and the well-known Sustainable Development Goals (SDGs) spur ambitious targets for companies, countries and individuals. Reaching them can only be achieved via sustainable practices. This can be defined as generating positive value for stakeholders, or not harming them at minimum, and improving environmental, social and governance (ESG) performance in areas where one has an impact.[3] However, the increase in adoption of sustainable practices by countries and corporations in recent years has its roots not just in lofty aspirations, but also in more practical reasons.

Governance Case for Sustainability

Traditionally, governments have avoided pursuing an overt sustainability agenda. While Bhutan has achieved carbon negative status, it did so at the expense of economic growth; few developing countries are willing to make that tradeoff.[4] Sustainability seemed to be a luxury only wealthy countries could afford. 

However, in the face of worsening climate risks, developing Asian governments have become increasingly aware that they can no longer afford to focus exclusively on economic growth and leave sustainability for later. They have to achieve both in tandem, or risk facing larger problems in the future.

High Stakes & Strong Motivations

Asia, and to a large extent Southeast Asia (SEA), is particularly vulnerable to climate change, due to the concentration of economic activity and population along coastlines and the reliance on agriculture, forestry & natural resources for livelihoods. Rising temperatures, sea levels, increased frequency of natural disasters (floods, cyclones, heat waves) and decreasing rainfall are effects that governments cannot afford to sit back and ignore. The rapid onset of pollution and degradation has had far-reaching consequences on the standards of living for citizens in Asian countries. Studies have also shown that deforestation and climate change increase the risk of zoonotic disease transmission (such as COVID-19). Becoming more sustainable has become a key socio-political promise for governments, with good reason. 

In the absence of appropriate adaptation and mitigation measures, McKinsey predicts that by 2050, up to $4.7 trillion of GDP in Asia will be at risk annually due to increased heat and humidity causing a loss of effective outdoor working hours.[5] It has also been predicted that by 2050, the exacerbation of natural disasters could cause $1.2 trillion of damage to capital stock from flooding in any given year and cause up to 40% of land area to experience shifts in biomes, affecting ecosystems and livelihoods. These effects have been corroborated by independent research done by the Asian Development Bank (ADB), which projects a decline of up to 50% rice yield potential and 6.7% combined GDP each year by 2100.[6]

Significant Potential Upside

On the other hand, Asian and South-East Asian economies have much to gain by focusing on greening their economy. A report by Bain claims that SEA could see up to US$1 trillion in economic benefits up for grabs by 2030 if it successfully builds a green economy and becomes a more attractive investment destination. [7]

Research done by think tanks ClimateWorks and Vivid Economics posit that a low-carbon industrial strategy could be the golden opportunity for ASEAN to recover from COVID-19.[8] They argue that ASEAN member countries are uniquely positioned, being both in close physical proximity as well as possessing strong existing trade relations with China, Korea and Japan, the current leaders in low-carbon technology. Combined with lower wage structures, improving infrastructure and a supportive legal environment, ASEAN is an attractive prospect for the leaders looking to scale up production and build more resilient supply chains. This opportunity for technology and expertise transfer for ASEAN countries to restructure their own economies while providing sustainable jobs for the economy.

Business Case for Sustainability

Thankfully, the policymaker’s viewpoint is shared by the corporate world. Leading management consulting firms such as Accenture and McKinsey have argued that sustainability and the circular economy represent the greatest business opportunity in over 100 years.[9] Traditionally, ESG goals were only pursued by companies on the basis that it coincided with their business philosophy or core values. Today, ESG goals are pursued because the double bottom line has been proven to be achievable, and there are tangible benefits to proactively integrating sustainable practices into one’s business strategy.

Managing Risks

Supply chains have a history of being affected by events outside any company’s control. Resource depletion and degradation of natural capital assets have the potential to rack up staggering losses for overly dependent corporations. By investing in the appropriate green technology and pivoting to more sustainable practices, corporations can reduce their vulnerability to resource scarcity and supply chain disruptions, but also avoid potentially having stranded assets. 

Bolster Performance 

A summary of 200 studies investigating the link between corporate performance and ESG goals done by the University of Oxford and Arabesque has posited that good ESG performance positively correlates to better stock price performance, operational performance and lower cost of capital in more than 80% of all cases. [10]

Mounting Investor Expectations

While ESG reporting is not a new phenomenon, it has only been in recent years that institutional investors have pushed for greater accountability of companies with regard to ESG challenges. This is in line with greater civic consciousness and expectations for companies to step up and contribute to solving issues like income inequality, climate change etc.

The 2020 EY Global Institutional Investor Survey of nearly 300 institutional investors shows that 91% used non-financial performance as a pivotal consideration in investment decision-making, and investors are set to consider it even more rigorously as the links between ESG performance and financial performance become clearer.[11] Despite the setbacks of the COVID-19 pandemic, investors have not reverted to short-term performance models. Rather, it has cemented the importance of long term resilience and the crucial role ESG performance plays in achieving that. Investors are also holding companies accountable, and those that fail to meet expectations risk losing precious access to capital markets. 

The wealth transfer to the younger generation has also seen a shift in investing philosophies, with surveys showing that Millennial respondents are more committed towards achieving social impact and long-term value creation with their investments than simple financial gains.[12] 

Larry Fink, CEO of Blackrock, has testified to the shift in client priorities towards climate change and sustainability agendas, most recently in his 2021 letter to CEOs.[13] This is a reflection of the growing number of institutional investors, not just Blackrock, that are demanding both greater reporting and moving their investments towards sustainability-focused companies. 

Companies looking to navigate through the changing financial services landscape will have to adapt to mounting pressure from investors with regards to sustainability. 

Mounting Consumer Expectations

In the past, consumers had previously balked at paying extra for sustainable products, and companies with sustainable products at higher prices were typically doomed to failure. However, changing consumer trends, spurred in part by the coming of age of the environmentally & socially-conscious millennials/Gen Zs and enabled by increasing levels of wealth in a post-recession world, have fuelled an increase in the demand for products whose brands display evidence of corporate social responsibility, sustainability and respect for others.

Recent empirical research strongly supports the existence of ‘shared value’, the proposition that companies can do well by doing good.[14] This offers companies the opportunity to build new global brands specialising in green products and surpassing large incumbent competitors. For example, EV companies have the opportunity to upstage traditional car manufacturers as trends change. 

According to the Harvard Business Review, companies can even charge up to 20% price premiums based on positive corporate responsibility practices.[15] This strong customer motivation to support sustainability further shows itself in the form of consumer support for a range of trustworthy sustainable products & services, creating superior revenue growth channels for companies. [16]

Achievable Double Bottom Line

Corroboration by multiple sources and the cumulative efforts of research done over the years has made it apparent that the double bottom line is no longer imaginary. A pivot to sustainability is as inevitable as it is necessary. The earlier companies recognise and make efforts to reposition themselves, the better poised they will be to ride through the green revolution. We can expect that as the business case becomes more apparent to top management, sustainability will be adopted at an increasing pace.

Categorising Businesses Based On Their Approach to Sustainability

Today, we can categorise businesses into 4 main categories based on their approach to sustainability.[17] Out of these four, three types are receptive towards ESG goals, namely: 

1. Businesses in industries with traditionally unsustainable supply or value chains, but are committed to pivoting towards environmentally friendly processes and products. Examples include those in the automotive industry that are making the switch to EVs or those in the consumer electronics industry that are considering social issues such as minimum wages, living standards and conservation of resources/recycling. 

2. Businesses that disrupted older business models and brought about positive ESG-related impact as a byproduct. Examples include ride-sharing companies such as GoJek, Uber, Lyft, Grab that have reduced the need for everyone to purchase a car by making ‘private’ transport ubiquitous and cheap, conserving the resources associated with car production and ownership. In Singapore, BlueSG is pioneering accessible EV rental. Airbnb has minimised hotel wastages by capitalizing on spare bedroom capacity globally.

3. Businesses that are driven by sustainability from the onset. This includes any form of social enterprise or primarily impact-focused businesses. Internationally, examples include Unilever and Novelis.

The last type of businesses however are standing in the way of widespread adoption of sustainability. This group comprises of: 

4. Large businesses in legacy/sunset industries such as those in coal, gas or petrochemicals, that still have significant political/lobbying influence where they are based.

Three Tenets For Sustainability

Growing awareness within the public and private sectors of the perils of feckless and unrestrained industrialisation has prompted increased attention to the subject of sustainability. It is heartening to see that all UN member states have signed commitments to the UN’s Sustainable Development Goals (SDGs), and companies are making visible efforts to achieve sustainable milestones. Regionally, we are also seeing increased attention and support by blocs such as the EU and ASEAN, and there have been many other international agreements in pursuit of sustainability goals, such as the Paris Agreement, the Sendai Framework for Disaster Risk Reduction, the New Urban Agenda etc.

To bring the quest for sustainability to the next level, we believe that there are three mutually reinforcing keys that need to be employed in tandem.

Firstly, there needs to be support from the respective governments to push for sustainable practices on a national, regional and international level. 

Secondly, businesses must become increasingly aware of the ever-growing alignment between sustainability and corporate gains. This can be achieved in two tranches. Existing businesses need to be convinced of the positive correlation, and subsequently commit to re-pivoting & incorporating ESG goals into their key decision making. Additionally, new sustainable impact-focused businesses must be given the opportunity to grow, provided that they meet critical criteria for success, both in terms of impact and in terms of profitability. 

Lastly, the financial services industry needs to accomplish the dual roles of pressuring industries to implement ESG criteria into their decision making, as well as enabling and rewarding efforts made towards sustainable development. This will be crucial in pushing industries towards the tipping point.[18] 

Quest Ventures is a long-standing believer in the business case for sustainability. In our 2020 publication done in collaboration with INSEAD MBA, we firmly stated our belief that business and ESG impacts are not mutually exclusive.[19] 

While most demonstrated success has been in tech-related startups in Indonesia, Quest Ventures today is actively searching for start-ups with impactful value propositions and solid business models, operating within SEA, across a range of verticals. In our opinion, technology is key to ensuring that sustainability is synonymous with growth. 

We have high hopes for the SEA region in particular, as there is notable progress being made towards unlocking the region’s sustainability. In this report, we will also be discussing Asia’s potential, how close it is to realising that potential and where we expect to see the largest developments in sustainability unfold.

The First Tenet: Governments

Private Sectors Follow The Government’s Lead

The business environment in Asia has historically been strongly intertwined with government prerogatives and the public sector. Governments provide the necessary support and confidence for businesses looking to test new waters, and their commitment provides strong impetus for the private sector. 

This is exemplified by the Singapore government’s approach to building ecosystems within the economy, such as the start-up ecosystem back in 2015.[20] This ranged from broader policies such as positioning itself as a launchpad into SEA and a general openness to foreign talent and investment, the long-term commitment to the end-goal and vision for the local start-up scene to smaller details such as the fostering of a close community within a start-up hub (Block 71 in Ayer Rajah, JTC Launchpad), the nurturing human capital (the NUS Overseas Colleges (NOC) programme, SMU’s Institute of Innovation and Entrepreneurship (IIE) etc.) and capital investments (indirectly) through Temasek Holdings. It is clear that when governments are onboard and committed to certain agendas, there will be sufficient traction to overcome inaction and uncertainty in the private sector. 

Another case study would be the importance of government initiatives in promoting the uptake of green technology. Globally, early attempts to introduce electric vehicles to the markets failed to make headways. Alongside improving technology and lower costs, electric vehicles have finally managed to take off, but only after governments stepped in with additional initiatives to supplement the manufacturers’ best efforts. These include CO2 emissions regulation schemes (e.g. in China, EU, California), efforts to expand the charging infrastructure in countries and subsidies to make EVs viable and competitive options against vehicles with internal combustion engines.[21] It is clear that the EV market would not have developed to where it is today if governments had taken the backseat. In Singapore’s Green Plan 2030, it intends to double the number of EV charging points to 60,000 by 2030, and gradually phase out internal combustion engines. It has also tightened the various vehicle emissions schemes in a bid to shift consumers to hybrid and electric vehicles. This marks the first of many ASEAN countries’ attempts to shift the citizenry towards EVs, where there has been little to no mainstream adoption before. 

In this regard, governmental buy-in is an essential first step for convincing businesses and individuals to come aboard. Likewise, when it comes to ensuring a concerted push for sustainability across sectors, governments must lead the way, in order for this to be implemented into business strategies and personal actions.

While the COVID-19 crisis has had a devastating impact, it has also provided the opportunity for countries to restructure and rebuild back greener. In this regard, Europe leads the rest of the world in its efforts to resurrect itself as a greener economy. In the next few years, billions of dollars will flow into infrastructure and business investments across Southeast Asia and the entire Asian continent as well, and this opportunity needs to be grasped to strike a proper balance between social & environmental capital and economic outcomes, as discussed briefly earlier.

Questions Over Commitment

However, some remain skeptical of the prospects, pointing to studies showing that governments have been split with regards to their approach. An ING report offers the following analysis of several APAC/SEA countries and their Environmental Performance Indicator and green spending as a percentage of total Covid-19 stimulus. There is a clear discrepancy between countries like Singapore and countries like the Philippines and Indonesia.

Figure 1: Environmental Performance Indicator & Green Spending as Percentage of Total Covid-19 Stimulus [22]

Additionally, some point to certain indicators within Asia-centric measuring indexes, such as the Hinrich Foundation Sustainable Trade Index (STI) that allows us to get a more in-depth analysis of 19 Asian economies and how they fare in terms of sustainability across 3 factors: economy, environment and society.[23] 

Taking a closer look at Indonesia, we see progress being made with regards to labor standards and educational attainment, and it has also increased factors like financial sector depth and technological innovation while reducing trade in natural resources.[24] However, Indonesia continues to do poorly in terms of environmental factors such as transfer emissions and air pollution. 

Meanwhile, Vietnam regressed relative to other Asian economies in terms of social and environmental sustainability, showing declining labor standards and a lack of improvement in environmental considerations relative to 2018. [25]

Furthermore, some point towards ASEAN’s lackluster performance with regards to reaching its 2030 Sustainable Development Goals, where it continues to poorly perform with regards to environmental sustainability despite having made significant progress on socio-economic fronts.[26]

Cause for Optimism 

Nevertheless, we are optimistic that Asia and ASEAN will still be able to build back post-COVID, more sustainably than ever, due to several mitigating factors. 

Firstly, as the ING report rightly acknowledges, several countries are progressing on a “background of general environmental progress”.[27] It is also important to note that sustainability goes beyond environmental performance, and that we are looking for more than government spending, but the development of an environment that encourages private sector attention and adoption of sustainability on a national and regional scale. 

Secondly, we cannot focus solely on negative aspects highlighted in the STI. While some countries have consistently done well on the STI, such as South Korea and Japan, others are still making good progress in other areas.[28] For example, China has made significant progress in reducing air pollution, while Pakistan reduced its deforestation considerably. Indonesia, Myanmar and Laos managed to diversify their trade bases away from natural resources, and Singapore also managed to reduce air/water pollution while implementing carbon pricing and lowering transfer emissions (pointing towards cleaner export industries).

This leads us to the conclusion that there is still progress being made overall, bearing in mind that the STI ranks economies relative to one another based on current achievements, and uses that as a proxy to measure progress towards meeting the Sustainable Development Goals.   A low ranking does not necessarily mean that nothing is being done in any particular regard. In fact, we are witnessing pivots to sustainability in many countries that might require several years to bear fruit. The existence of the STI serves to continually suggest areas for improvement for both the public and private sector to come in and plug the gaps, and should not be taken as a pessimistic outlook for the region. Rather, the existence of such academically rigorous comparisons indicate that sustainability on all fronts is being taken increasingly seriously, and play an important role in encouraging the various governments to do better. 

In fact, encouraging development has always been brewing in Asian countries. To provide some balance to the earlier discussion, it is important to note what countries like Vietnam, Indonesia, Singapore and even China have been doing with regards to meeting the SDGs. 

Vietnam managed to move from being one of the poorest countries in the 1980s-1990s, to lower middle-income status by the 2010s, while keeping the SDGs in sight, and even presented a National Report on Sustainable Development at the UN Conference on Sustainable Development (RIO+20) in 2012 and a Voluntary National Review of its progress towards the SDGs in 2018. [29,30]

Vietnam continues to incorporate SDGs into its national development strategy, such as its previous 2011-2020 Social and Economic Development Strategy (SEDS) and 2016-2020 Social and Economic Development Plan (SEDP), and upcoming 2021-2030 SEDS and 2021-2025 SEDP.[31] The government has also done good work in encouraging sustainable practices and investments in the private sector, with initiatives such as the setting up of the Vietnam Business Council for Sustainable Development (VBCSD) and the creation of an enabling legal environment.[32] A more detailed report of Vietnam’s development and SDG progress is available from the IMF.[33] 

It is also crucial to note Vietnam’s track record of efficiency with regards to adopting sustainable practices. This is shown through their achievement of installing 5 gigawatts (GW) of solar energy by 2020, exceeding their 1GW goal.[34] This also highlights the ability of Southeast Asian countries to execute plans quickly and effectively, bolstering our confidence in the region’s prospects. With Vietnam being Asia’s top performing economy through the pandemic, it is not a stretch to say that sustainable development will find its way into the government’s priorities again soon, and that this run of poor form is but a blip on an otherwise stellar trajectory. [35]

We also saw Indonesia launch its first sustainable development plan, the RPJMN 2020-2024 in January 2020. Research done by the Ministry of National Development Planning in collaboration with the World Resources Institute found that sustainable, inclusive growth could “deliver average GDP growth of 6 percent per year through 2045 and, compared to business as usual, create more than 15 million additional greener and better-paying jobs, halve extreme poverty, and save 40,000 lives annually from reduced air and water pollution – all while reducing greenhouse gas emissions by nearly 43 percent by 2030, exceeding Indonesia’s current international target.”[36] Buoyed by the prospects, Indonesian policymakers are doubling down on efforts to roll out low carbon development initiatives, and we believe that Indonesia stands a good chance of success with the scale of their efforts. 

In Singapore, the government also continues to push for greater sustainability across all sectors of the industry, having recently unveiled the Singapore Green Plan 2030.[37] This is a comprehensive plan that aims to garner buy-in from the citizenry and private businesses through initiatives including, but not limited to, the Eco Stewardship programme, greening of resource-intensive industries such as the petrochemicals industry, and the Enterprise Sustainability Programme to support local enterprises to adopt sustainable practices and seize opportunities in the sector. Singapore intends to position itself as a sustainability solutions hub, offering tech solutions for water treatment, upcycling, urban farming, decarbonization etc. There is also awareness that sustainable technology in areas such as agriculture can be used to further other goals, such as Singapore’s ‘30 by 30’ food self-sufficiency. 

We remain optimistic that individual member states of ASEAN recognise the importance of sustainability, and that armed with the data from research and the growing technology available, they will be able to tackle the various issues that have drawn attention from detractors. As a regional entity, we believe ASEAN will continue to play a formative role in promoting sustainability by providing the right environment for growth. This includes, but is not limited to: regional cooperation, laying out regional standards for sustainable finance and monitoring sustainability efforts. 

On a larger scale, we have seen Asian countries make significant pledges to meet the Paris Agreement’s goals. A large number of these initiatives revolve around achieving carbon neutrality, adopting new energy sources or reducing the emissions intensity of GDP. [38] It is inevitable that governments will have to step in and provide the necessary carrots and sticks to attain these goals.

The Second Tenet: Businesses

Becoming Aware Of The Business Case

While the business case for sustainability constitutes an indisputable fact, sustainability cannot succeed if corporations and businesses do not acknowledge or implement strategies according to it. Presently, the business case is catching on quickly via two methods.  

The first method is organic, as management becomes self-aware of the impacts caused by both the supply chain and value chain. This can come about through generational power transfers, as existing businesses hand over management responsibilities to a younger generation of CEOs. A study of young CEOs in China proved that they are more conscious about their ESG footprint and have higher tendencies to adopt sustainable practices within their companies (Shahab, Ntim 2019).[39]

The second method is through third-party pressures strong enough to overcome entrenched resistance. In this approach, there are some overlaps with the business case, such as investors and consumers demanding greater accountability and moving towards more sustainability-focused companies.

Internally, throughout the corporate ladder, employees are becoming increasingly vocal about value-alignment with the company they are working with. When it comes to hiring and retaining top tier talent from the millennial generation, a survey showed that nearly 40% decided between jobs based on the company’s sustainability performance, while almost 70% of respondents said that a company’s sustainability plans would influence their long-term decision to stay.[34] Performance indicators and employee happiness also increase when employees think what they are doing has meaning.This complements a large body of research that points to the growing phenomenon of workers choosing value creation over wealth generation.[41] Ultimately, the speed and efficacy will depend on the willpower and action of various stakeholders mentioned above. 

For the companies that have caught on to the winds of change, there are several essential steps that can be taken to prepare their company. 

First, corporations should conduct an honest appraisal of their current business practices and environment. This will involve examining the industry they operate in, their supply chain, as well as their value chain to note the impacts that their product/production processes are generating. 

There are many available scoring systems that companies can choose to use, one such system being Hedstrom Associates’ proprietary Corporate Sustainability Scorecard.[42] In short, this evaluates a company’s sustainability efforts in terms of 4 key aspects: Governance and Leadership, Strategy and Execution, Environmental Stewardship and Social Responsibility. Each section had 17 elements and 8-12 sub-elements, totalling about 150 Key Sustainability Indicators (KSI). A thorough evaluation will allow management to determine how far along the company is on the path to sustainability, how they compare to peers and competitors, and what the best practices today are. This will pave the way forwards with regards to the next steps that the company should be taking. 

Figure 2: Corporate Sustainability Scorecard [43]

With regards to environmental stewardship, a common ideal for businesses across industries should be the attainment of a circular economy. This refers to an economy where waste and pollution is reduced, products and materials are reused & recycled and natural resources are regenerated. This concept applies across the supply chain and the value chain, so we will briefly cover some of the general aspirations.[44]

Reduction: This can be defined very broadly to encompass a variety of processes. Constraining ourselves to the supply chain, there are several ‘reductions’ that companies should aim for.

One of them is to reduce the negative externalities created during production. For example, aiming for carbon neutrality is a fine goal for those in the manufacturing line, and beverage companies such as the Coca-Cola Company might pursue water neutrality. Additionally, companies should seek to reduce the amount of raw materials necessary, especially if the process of obtaining said materials endangers the environment (mining, logging). This amounts to a need for innovation, both to discover alternatives and to discover more efficient ways of production. 

With regards to the value chain, reduction is typically done by consumers, by being more mindful of their consumption and not to be as wasteful. On the companies’ end, we prefer to term their efforts in reducing waste as reusing and recycling. 

Reuse & Recycling: Companies should try to recover and recollect used consumer goods or byproducts from the production process, and reuse or recycle them for other purposes. This is especially pertinent when it comes to plastic products, which do not biodegrade in landfills, or for rare metals used to produce electronics and are already in scarce supply. By lengthening the lifespan of each material, we will need to use less in the long run. 

Regeneration: Companies that have no choice but to use natural resources such as timber should be proactive in the regeneration of forests. Switching to renewable resources (such as solar power as opposed to fossil fuels) for certain processes will also go a long way in stretching the lifespan of the finite resources we have left. In fact, they should be prioritised and implemented where possible. 

When it comes to social responsibility, all corporations, regardless of the scale of their operations, have the bare minimum responsibility of making sure that their business activities do not infringe or compromise on the quality of life for local communities, diminish their dignity or threaten their way of life. The best practice for corporations would be to rise while simultaneously uplifting the community that they are based in. This could be through providing fairly compensated employment, providing sufficient employment benefits, bearing the cost of building shared infrastructure (e.g. roads) or supporting the community through various other means. Companies should be going beyond the bare minimum stipulated by the law. Even in the absence of proper regulation, companies should be mindful and aware of these issues, not just out of compassion but also to not draw the ire of the public eye, as Apple, Nike and Volvo have learnt the hard way. 

By virtue of their size and the value of the foreign direct investment they represent to developing countries, large corporations have the power to make certain prerequisites before committing to a new plant or factory in developing countries. This gives them the opportunity to make positive change, such as pushing governments to incorporate proper labour laws, safety regulations and requirements in order to become more attractive. Companies should not exploit the lack of such governance, but rather set the precedent and industry standards where possible. 

Second, businesses need to engage in greater sustainability reporting. In some cases, certain metrics are not being measured at all, and in other cases, the impacts are not fully investigated. Where possible, corporations should continuously seek to implement new technology that allows for accurate tracking, diagnosis and reduction of detrimental impacts. 

Instead of having to retroactively modify old policies, start-ups might find it easier to embed ESG policies into their fresher business practices. On the other hand, startups might also be pioneering new concepts and technology that already have a sustainability-related value proposition. 

Regardless, the key for businesses is to possess a management both aware of the risks ahead and committed to contributing to sustainable development. We can thankfully count on the fast-changing financial services landscape to bolster these dual factors.

The Third Tenet: Finance

An Overview of Sustainable Finance

Sustainable finance, as defined by the Monetary Authority of Singapore (MAS), is “the practice of integrating environmental, social and governance (ESG) criteria into financial services to bring about sustainable development outcomes, including mitigating and adapting to the adverse effects of climate change.”[45] In addition, the European Commission states that “Sustainable finance also encompasses transparency when it comes to risks related to ESG factors that may have an impact on the financial system, and the mitigation of such risks through the appropriate governance of financial and corporate actors.”[46] In recent years, there has been growing understanding that businesses and governments will need the financial sector’s assistance in order to grasp the high-risk high-return opportunities associated with sustainability, and that the UN SDGs will be unobtainable without them. 

This has opened the door for companies to issue financing instruments (sustainable bonds) for the specific purpose of environmental/social projects. These instruments include green bonds, social bonds and sustainability bonds, which must be exclusively used for projects that bring about positive environmental/social impact. These open new financing channels for companies to pivot successfully, or undertake new climate/environmental related projects. 

Another class of financial instruments, Sustainability-Linked Bonds (SLBs), are bond instruments which tie the financial/structural characteristics according to whether the issuer achieves predefined sustainability KPIs or ESG objectives. This provides financial institutions with the opportunity to lay down industry-agnostic and industry-specific metrics for sustainability/ESG objectives. These have grown in number along with the development of measurement metrics for sustainability objectives, such as the Sustainability Accounting Standards Board’s Materiality Map.[47] As our understanding of important indicators develops, it becomes easier for investors to not only trust green investments, but also sift through and evaluate opportunities. 

Movements in Asia by governments and financial institutions mean that these new classes of financial instruments are rapidly catching on. According to a Moody’s report, Asia Pacific issuers accounted for 24% of global dollar-denominated green bond issuance, up from 8% 5 years ago.[48] 

As of 2019, the Asian Development Bank (ADB) has issued $7.9 billion worth of green bonds since its first issuance in 2015.[49] Nikkei Asia estimates that the Asian dollar-denominated green-bond market is now worth USD 50 Billion, and HSBC adds that despite the downturn caused by COVID-19, issuance will return to pre-pandemic levels in 2021.[50]

In March this year, J.P. Morgan led Asia (ex-Japan)’s first SLB, with a $200 million note for Hong Kong-based property developer New World Development (NWD).[51] This offering was hugely oversubscribed, and is reflective of a greater phenomenon in the sustainable finance sector, with demand for green bonds consistently outstripping supply (by almost 6x). 

These new types of financial instruments have caught the eye of fund managers and Asian investors for several reasons. 

Firstly, there is evidence that bond returns from green bonds are in line with returns generated from traditional financial instruments. This helps to allay concerns that expected returns will be compromised for the sake of particular agendas. Another draw is that Asian green bonds remain priced consistently with conventional bonds, whereas in Europe investors would have to pay an 9 basis-point price premium on average for holding European green bonds. The homogeneity between asset classes has contributed to the positive reception in Asia. 

Secondly, the governments of regional powers have moved to support the burgeoning investment sector. For example, the Monetary Authority of Singapore (MAS) has set up a sustainable bond grant scheme by subsidizing part of the costs incurred by first-time and repeat issuers, and has also set up a Green Finance Industry Taskforce (GFIT) to coordinate efforts in the space by banks, asset managers and issuers.[52] Japan has most recently issued its first government backed green bonds for environmentally friendly houses. Many Asian countries including China and ASEAN countries have also stepped up by publishing green guidelines and frameworks for the financial services industry. Regionally, we have also seen the ASEAN Green Bonds Standards being established, and China’s publication of the Green Bond Project Endorsed Catalogue of the People’s Republic of China. 

Issuance in the first half of 2021 has already surpassed the record total in 2020. We expect to see the issuance of such bonds increase even further in the future, as governments provide the necessary support required to promote the issuance of such bonds in order to meet their carbon neutrality and sustainability goals, companies recognise the credibility green finance instruments provide to their brand image and investors increasingly include them in their portfolios.

Sustainable investing has also gotten increasing attention and acceptance from the financial services industry. It refers to the investment philosophy of achieving competitive (comparable relative to traditional investing methodologies) portfolio risk/return profiles while also achieving positive ESG effect. It’s rise is mainly due to the rising pervasiveness of values-based and performance-based mindsets. The former refers to genuine concern about the long-term health of the environment and society, while the latter refers to the acknowledgement of the growth potential in ESG-related investments as well as the recognition of potential ESG risks and the need to mitigate them.  

Sustainable investing encompasses a range of strategies that are each best suited to a particular class of investor. These strategies are best expressed via the diagram below, and we will go into more detail on several of these strategies below.

Figure 3: Overview of Sustainable Investing Strategies [53]

Institutional Investors

The UN Principles for Responsible Investment give us a succinct summary of the roles institutional investors can play in pushing for ESG agendas in countries. 

Figure 4: Overview of ESG Roles of Institutional Investors

Institutional investors are more likely to engage in the ‘Avoid’ strategies, such as negative screening, in a bid to reduce their investments and/or support for unsustainable businesses.

This is an approach favored by banks, such as the Overseas Chinese Banking Corporation (OCBC), which has moved away from financing infrastructure reliant on fossil fuels, in favor of providing loans to build sustainable infrastructure such as wind and solar farms.[54] Such an approach has also been codified by the World Bank’s private lending vehicle, the International Finance Corporation (IFC), in their Green Equity Approach (GEA) aimed at eliminating coal financing within its portfolio.[55] More recently, the Asian Development Bank announced in May 2021 that it would no longer finance fossil fuel projects if other cost-effective technologies were viable alternatives.[56]

Furthermore, funds such as Blackrock, State Street, Vanguard & Temasek are leading the rest of the pack with regards to integrating sustainability into the active investment process and reducing exposure to sectors with heightened ESG risk.[57] Different financial groups in Asian countries are also gradually renouncing unsustainable investments, and incorporating climate risk into their assessments of investments.[58] In the coming years, we will definitely see more financial groups come under pressure from a multitude of stakeholders and eventually conform to the green standards set by supranational organizations such as the United Nations or ASEAN. As financial institutions walk away from short-term profit and overturning decades-old stances on highly resisted policies such as coal bans, it is inevitable that the next pockets of growth will reside in verticals that can best capitalise on new-found demand for green solutions. 

Additionally, we have also seen institutional investors increasingly factor sustainability metrics and risks (eg. climate risks, transition risks, physical risks, long-term impacts on profitability) into their decision-making process. For example, asset/wealth managers like Blackrock, UBS, Citi and Blue Harbour Group are increasingly integrating proprietary ESG measurement tools to assess related risks, characteristics and signals of companies, with the goal of offering a suite of index funds and exchange-traded funds (ETFs).[59, 60, 61] With the influence that they have on management, large asset managers can show their support for certain management proposals and actions during the proxy voting season. For example, Blackrock has voted against management recommendations on more than 250 resolutions in 2021 compared to 53 resolutions in 2020, based on environmental considerations.[62]

These asset managers are also pushing for corporate sustainability reports to follow sector-specific standards, frameworks & regulation, which would make it easier to conduct research, make comparisons and allocate capital.[63] A UBS survey of over 100 asset managers also showed almost 75% of asset managers were intending to vote in favor of climate-related disclosures.[64] In Asia, ESG reporting is largely guided by voluntary reporting frameworks such as the GRI Standards.[65,66] However, we are also seeing convergence to common standards, with single standard discussions dominating events such as the Asia Sustainability Reporting Summit 2020.[67] In ASEAN, Singapore, Malaysia, Indonesia, Vietnam, Thailand and the Philippines all require some form of ESG disclosure and each government offers guidelines to issuers.[68, 69] 

According to research done by Morningstar, there were 534 sustainable index mutual funds and exchange-traded funds globally, accounting for $250 billion as of June 30 2021.[70] This is not just due to funds pushing forward with their own beliefs about sustainability, but reflective of growing demand from individual investors and the trust in ESG-based assets to outperform the broader market.[71]

Institutional investors might also consider impact investing in the private markets as another way of achieving positive ESG effects. This can be done through direct equity investment in private companies (SMEs), or through investing in private equity (PE) funds or fund of funds (FoFs). 

Impact Investing

Impact investing refers to capital placed into private equities in the hopes of generating ESG value alongside financial returns. This can take place across many different sectors and aim to achieve many different objectives, but the unifying themes are as follows. 

Impact investors draw their faith from several underlying beliefs. Firstly, the historical success private businesses have shown in innovating and solving the problems of the day. Secondly, there are untapped financial opportunities to be found by focusing on overcoming the gaps between achieving ESG goals. This is termed as ‘base-of-the-pyramid investing’, where providing basic services to the poor offers large opportunities for SMEs to expand. Lastly, they also believe that greentech and sustainability is the next pocket of growth. 

Some investors may choose to focus on capital preservation (‘impact first’), while others might be more focused on financial returns (‘financial first’). However, both are similar in that they seek a base-level of financial return as opposed to philanthropic grant giving. Detractors might say that impact investment is profiteering off others’ suffering, but studies have shown that this is a more efficient way of raising capital for those in need, and provides the right incentives to ensure that allocated capital brings long-term value as opposed to one-way grant allocation.[72]

The IFC has stated that private investments in SMEs is the top way of achieving maximum social impact on local economies.[73] This is due to the knock-on effects such as job creation, poverty reduction and economic development. 

We echo this sentiment at Quest Ventures, and firmly believe that private equity investments are particularly powerful in emerging markets such as Southeast Asia. According to the Business & Sustainable Development Commission, a significant percentage (> 50%) of the SDGs’ business opportunities are in developing countries, and emerging markets constitute the biggest opportunities in the agritech, smart cities, cleantech, healthtech verticals.[74] Advancing impact investment in emerging markets could create more than USD 12 trillion in market opportunities and up to 380 million jobs by 2030, of which many would be in emerging market cities. 

Finally, impact investors such as venture capitalists are uniquely positioned to guide and ensure tangible impact. By taking equity at an early stage, lead VCs sit on the board of their portfolio companies, allowing them to observe the impact trajectory of the startup. VCs are also able to lend their expertise to ensure SMEs have the best chance of succeeding, both as a business and as a changemaker. In companies that do not have an explicit impact agenda, VCs can still influence company direction and monitor indicators in the same way as larger asset managers. Some VCs even go as far as to explicitly include ‘sustainability clauses’ in term sheets, calling on firms to “regularly measure their carbon footprints, implement carbon offset schemes and promote environmental responsibility when engaging with customers and suppliers.”, as reported by CNBC.[75] 

Impact related venture capital investments are not new – between 2006 to 2011, $25 billion was invested by Silicon Valley VCs into cleantech startups, aimed at reforming the energy sector. However, these bets did not pay off and failure rates were high, contributing to low IRRs and poor risk/return profiles, with almost half of the invested amount being lost.[76] 

However, we believe that the developments over the past 10 years make it the right time to start rethinking about impact investments now. A concerted global movement across governments, businesses, individuals and the financial services industries have created the right policy environment and corporate demand for new green/sustainable solutions to flourish. 

The level of technology today far outstrips that of the start of the millennium, which has opened up many opportunities for technological innovation in various verticals. There are many new applications (AI, blockchain, etc.) that can simultaneously disrupt and greenify industries. Analysis done by PwC and Microsoft show that applying AI alone in 4 sectors of the economy has the potential to eliminate 2.4 gigatons of global CO2 emissions in 2030, a clear sign of the potential that lies ahead.[77]

Green investments today are no longer limited to the energy sector, but also include any technology that helps to decarbonise the economy (broadly termed as climate tech, including energy, smart cities, smart mobility etc.). Impact investors are also increasingly looking at other verticals such as fintech and agritech, that can help to improve social conditions and achieve sustainability. 

Additionally, we can learn from the failures between 2006 to 2011 to refine our criteria for seeking out the companies that are more likely to succeed. In order for start-ups with a sustainability objective to achieve the IRR needed for venture capital investing, it goes without saying that they have to be evaluated stringently. 

With early stage investments, venture capitalists need to be discerning in selecting the right start-ups. The right fund manager will ask the right questions when assessing startups for feasible business ventures and substantial impact outcomes before making a decision with confidence. For example: 

What level of impact value can potentially come from this business? 

At Quest Ventures, we believe that outcomes for individual companies are measurable. We do so via the Logical Framework Approach (LFA), which is further expounded on, along with other impact investing frameworks for early stage venture capital in our previous publication.[78] Keeping the end in mind, the company can be assessed Focusing on a particular part of the value chain that can create the most impact? 

Other considerations also include: 

  1. How scalable and replicable is this business model across the region? 
  2. What is the path to profitability? 
  3. Will large amounts of upfront capital be required to prove the model? 
  4. Is this the most effective solution to solve this particular problem? 

Research done by PwC has stated that VC investment into climate tech is rising again, from $418 million per annum in 2013 to $16.3 billion in 2019, backing up our belief that there is an increasing amount of sound business opportunities that are capital efficient, create substantial & tangible ESG value and are technically feasible, making them suitable for venture investment.[79]

Trends and Developments I

There are several spaces that we have identified and are keeping an eye on. Below we provide a high-level overview of each particular industry, focusing on upcoming technology, as well as innovative business models.


Given the increasing public awareness of the need for cleaner energy and the efforts by governments to encourage a phasing-in of clean/sustainable energy sources, it is inevitable that we will see the toppling of the oil & gas era soon. These winds of change also mean that the energy sector’s landscape has morphed considerably since the early 2000s. 

Today, solar and wind power technologies are well-proven and established, but still require additional innovations to provide a set of solutions that can rival and beat fossil fuels. Notably, there will need to be improvements in battery development, which is critical to overcoming the intermittent nature of renewable energy sources and reducing reliance on nature. In order to transition smoothly from fossil fuels, there also needs to be continued innovation in reducing emissions in electronics and supporting the spread of renewable energy (load-balancing and supply-demand balancing mechanisms). Lastly, the energy sector needs to continue to refine emerging technologies such as hydrogen fuel cells and biofuels. 

Achieving sustainability for the environment in the energy sector would be a smooth and accelerated transition to a zero-emission economy, globally and regionally. This can be measured via increasing the penetration of renewables and declining carbon emissions. On a social scale, impact for sustainability can be measured by bringing affordable and environmentally friendly electricity to communities that are off-the-grid and relying on damaging fuel sources such as coal and kerosene. 

Renewable Energy Generation

Besides solar and wind energy, the other forms of renewable energy that are often brought up are nuclear, geothermal and hydro power. We are bearish towards these forms of renewable energy for several reasons. 

Nuclear power is still risky, as evidenced by the various incidents, and there is the real possibility of societal and political backlash from the risks as well as the potential ecosystem & environmental damage that arises from the radioactive waste produced. Nuclear plants require large capital expenses to build and maintain. With safer, cheaper and equally viable alternatives in solar and wind energy, there is no strong reason for ASEAN countries to overtly support or implement nuclear power. There is also a long way to go before safer nuclear fusion technology becomes a reality. According to Dealroom data, VCs have steered clear of nuclear generation focused start-ups, similar to Quest Ventures’ position.[80] 

Likewise, geothermal and hydro power are also limited in where they can be applied across the region, and will require much more R&D and capital investment over a longer horizon before becoming commercially viable and/or see widespread adoption. 

While it will be interesting to see how and where these three forms of renewable energy will come into play in the future, we expect that the renewable energy will continue to mainly come from solar or wind power. 

Energy Storage

Lithium-ion batteries are the de-facto option for energy storage today. In recent years, they have been heavily used as part of electric vehicles (EVs), and in renewable energy-powered power grids and solar/wind farms. However, there are several issues with the existing lithium-ion battery technology that are limiting its applications. 

Firstly, their energy density is still inferior to fossil fuels. Fossil fuels remain more convenient and efficient – a fully charged battery in an EV will not allow one to travel as far as a full tank of petrol, and will likely weigh more as well. Batteries are also limited in terms of how well they can hold their charge over periods of time. This limits the applications of batteries to small electronics such as drones and smartphones, or electric cars and electric trucks at best. While inventions such as commercial electric planes would reduce air travel costs and emissions significantly, they regrettably remain unachievable. 

Even the most advanced lithium ion batteries today contain 14 times less usable energy than jet fuel, and a plane cannot possibly carry the weight of X such batteries to make up for the difference in energy density.[81] According to a study, batteries would need to be 4x as energy dense as the most advanced lithium ion batteries today before they can power a commercial airplane for ~1000km.[82] 

Secondly, battery costs remain high. Battery costs are measured in terms of the amount of money spent for every kilowatt-hour of electricity the battery can hold. While lithium ion battery costs have fallen from $1000/kWh to $200/kWh from 2010 to 2017, further reductions must be made in the next decade.[83] The US Department of Energy estimates that battery costs will need to fall to $125/kWh in order for EV ownership to rival gas-powered car ownership, and for renewable energy power grids to replace traditional grids, battery costs will have to fall even further to $10/kWh.[84] Besides costly production, batteries have a limited lifespan and will require replacements after a particular number of charge cycles. This adds additional cost considerations that will detract from adoption of renewable energy solutions. 

Thirdly, lithium-ion batteries use rare metals such as lithium, nickel, manganese and cobalt as key materials. Besides being only found in small quantities, they are often mined in countries with dubious labor and environmental regulations, such as the Democratic Republic of Congo. 

There have been some noteworthy developments coming from start-ups across the world aimed at tackling these limitations. 

The overall battery’s energy density can be increased theoretically by increasing the energy density of either the cathode, anode or both. The most promising cathode appears to be the lithium nickel-manganese-cobalt (NMC) 811 cathodes (the numbers refer to the ratios of the respective metals). However, more innovation needs to be done to increase its short lifespan. While most batteries have relied on graphite as the anode, materials such as silicon and lithium are being considered as potential better alternatives. Silicon anode technology is being used by start-ups such Silanano, and companies like Daimler and BMW have expressed their interest. Some startups are even looking at producing silicon sustainably (e.g. produced from barley husk ash or sand).[85] Other startups and researchers have also proposed alternative batteries, such as graphene batteries, lithium-sulfur batteries, solid-state lithium-ion batteries, gold nanowire batteries, sodium-ion batteries etc.[86] Each of these technologies has the potential to rival lithium-ion batteries in the next decade. 

Figure 5: Energy Density Comparison Charts [87]
Large battery makers and start-ups are coming up with solutions to reduce or replace unsustainable rare metals, in a bid to reduce supply chain and environmental risks. For example, some battery producers are adopting lithium nickel-manganese-cobalt (NMC) cathodes with lower ratios of cobalt (NMC 811, 532 or 622 vs NMC 111 respectively), while others are replacing cobalt completely with other mixtures (e.g. lithium iron phosphate (LFP) cathodes made by Aceleron). 

In the pursuit of sustainability, we are also seeing technology being applied by startups to search for rare metal deposits where extraction causes less negative externalities.[88] For example, Kobold is deploying AI to search for cobalt in places around the world with better environmental and labour regulations, while Deep Green is exploring deep-sea mining. Additionally, start-ups are pioneering new battery technology, utilising common metals and even materials like cotton to create batteries that can be used in small electronics and EVs. Audi and Umicore research and testing has shown that 95% of rare metals can be recycled.[89] Start-ups are now trying to find innovative ways to both improve this figure and ensure recycling’s cost-effectiveness. Lastly, start-ups are also trying to commercialise systems to recover rare metals lost during production processes.[90] Proper sourcing and recycling will help to conserve finite resources while the search for better long-term solutions is ongoing. 

New types of batteries, cheaper raw materials as a result of better sourcing, different materials being used or the circular economy are all ways of successfully bringing down production costs. 

With many interesting and novel technologies being developed, the energy storage vertical is one of the most interesting ones to watch out for within the energy sector itself. 

Alternative Fuels – Hydrogen

Hydrogen is the most abundant element on Earth. It can be obtained through water electrolysis (splitting of water into hydrogen and oxygen via electric currents), fermentation of biomass feedstock, or through natural gas reforming.[91, 92] The resulting hydrogen can then be used to release energy on recombination with oxygen, with water as a byproduct. This makes hydrogen one of the cleanest energy sources available, when electrolysis is done with renewable electricity (termed as green hydrogen).  

Hydrogen fuel cells are seen as a viable alternative to electric batteries. Applications such as hydrogen vehicles are being developed in tandem with EVs, and research suggests that green hydrogen will bring life-cycle emissions of vehicles lower than that of EVs, because of the current environmental costs of lithium-ion battery production.[93] 

Nevertheless, the technology remains more of a niche than electric vehicles, due to limitations in infrastructure (hydrogen refuelling stations) and efficiency. However, innovative methods of electrolysis (e.g. photobiological, photoelectrochemical water splitting) and innovations in fuel cell technology could both supplement and supplant the dominance of batteries in electric powered transportation, especially in larger vehicles hampered by battery capacity. 

Alternative Fuels – Biofuels

Biofuels can be divided into three generations. The first generation of biofuels were made from food crops, which meant that it’s sustainability and ethicality was immediately called into question. The second generation of biofuels, which we are currently using, are made from damaged or waste grain, forestry waste or even household waste. The third generation of biofuels will be the ones that are fully synthetic, but those are a long way off from achieving commercial success. 

In ASEAN, we expect biofuels to grow in importance for several reasons. Firstly, growing certain crops for biofuels is a part of the rural development strategy for countries that retain a large agricultural base, such as Indonesia, Philippines and Thailand. As food production expands due to increased farm productivity, there is more waste grain and residues from harvests that can be used as feedstock for biofuel production.[94] This provides an additional source of rural income opportunities, aiding in the reduction of poverty for rural communities. In fact, growing non-food crops in rotation with existing crops can provide synergistic properties such as mutually fertilising the soil for each subsequent season and maximising land use during off-seasons.[95] This also applies to the forest plantations found all over Southeast Asia, and the communities formed around them. As such, there is incentive for several governments to get involved in promoting biofuel adoption. We are already seeing in the form of biofuel mandates, such as Malaysia’s attempt to support its palm oil industry. Singapore’s Economic Development Board (EDB) is also carrying out a study to determine if materials such as palm oil, sugarcane and plant biomass can be used to produce fuels, chemicals and polymers.[96] 

Secondly, biofuels present a solution for countries to reduce their global carbon emissions quickly, as they often require little modification before usage. According to research by the International Renewable Energy Agency (IRENA), biofuels could potentially sustain up to two-fifths of the region’s projected transport fuel requirements by 2050, achieving considerable carbon emissions reductions and contributing to the energy security of each country.[97] 

We are already seeing interesting movements made by start-ups in the area. Alpha Biofuels, a Singapore company, is converting used cooking oil into biodiesel, successfully using it in a bulk carrier.[98] The biggest challenge will be creating efficient fuels while balancing land use biofuel crop growth against other priorities. Hence, we can expect innovation to continue not just in the refining process and application of biofuels, but also in the agritech space to improve yield efficiencies of crops and hence residual biomass feedstock.

Grid Management

Increasing access to electricity and bringing communities on to the grid is one of the sustainable development goals. Aided by the decreasing capital costs of solar panels and turbines and small power grids, start-ups have married impact with business opportunities by providing electricity to rural households through pay-as-you-go or lease-to-own models. This is currently being done throughout Southeast Asia, in Myanmar, Indonesia, Philippines and Thailand, and has the added bonus of reducing usage of environmentally unfriendly sources such as kerosene and charcoal.

Looking Beyond

Evidently, there is still all to play for in the energy sector, and whichever companies can best balance safety and efficiency to come up with the best solutions can potentially see themselves becoming the Shell or Exxon of the electric era. The energy sector also parallels other sectors dealing with essential resources, such as water and air, where the challenge lies in Increasing accessibility to safe sources of essential resources at an affordable cost.

Trends and Developments II

There are several spaces that we have identified and are keeping an eye on. Below we provide a high-level overview of each particular industry, focusing on upcoming technology, as well as innovative business models.


According to the UN, the world population will be approximately 9 billion by 2050, of which almost 66% will be living in cities.[99] This places great strain on existing infrastructure, as well as the environment. It is imperative that governments take the necessary steps to mitigate these challenges now. Naturally, this also provides the private sector with the opportunity to step in with solutions. 

Smart Mobility

In sprawling urban jungles, getting from one place to another quickly is important for both life and work. This makes the development of efficient yet sustainable public and private transport options critical to the productivity of the country. 

With regards to public transport, we are seeing constant improvement on train and bus services. In Singapore, rail operators have implemented technology such as re-using energy from braking trains to power up other trains, and are looking at lighter trains and recyclable parts.[100] Efforts are also being undertaken by start-ups across ASEAN to provide cleaner public transport options. This include hardware options such as buses running entirely on biogas, or using AI & user apps to introduce dynamic routing & buspooling (e.g. Rushowl in Singapore, Bussr in Indonesia). The end goal we should be working towards is a rail system like Sweden’s, which runs entirely on renewable energy.  To continue pushing public transport (trains, buses, bicycles etc.) as a viable alternative to private transport, ASEAN governments need to continue their commitments to building the necessary infrastructure. 

We are seeing an increase in the availability of hybrid vehicles and EVs in ASEAN. Nissan recently announced in 2021 that Thailand would be its EV hub for the region, and startups across ASEAN have sprung up to produce their own EVs, electric bicycles, scooters etc. Similarly, infrastructure investments and government regulation will be key towards advancing the adoption of EVs. Thankfully, we have seen the Singaporean, Thai, Indonesian and Philippines governments commit to building this infrastructure. Singapore aims to install 60,000 charging points by 2030, and the Asian Development Bank (ADB) has signed a green loan to Energy Absolute in Thailand to finance a EV charging network.[101, 102] We are also seeing subsidies for electric vehicle ownership, including the reduction of road taxes on the basis of reduced carbon emissions, and stricter requirements on models that are allowed to be distributed or even driven within countries. 

We are also seeing the proliferation of tech-based mobility solutions that are disrupting traditional notions of private hire vehicles and private car ownership. This includes the now well-known model of ride-hailing (e.g. Grab, Uber, Gojek, Ola, Lyft, Didi etc.), as well as ride-sharing (e.g. Grabhitch).  We are also seeing the proliferation and expansion of car-sharing mobility startups such as BlueSG (Singapore), SoCar (South Korea) within Southeast Asia. Micro-mobility is also a plausible trend to look out for. While we have seen the rise and less than glamorous fall of bike-sharing start-ups such as Ofo, oBike and Mobike, the micro-mobility scene today is looking towards electric scooters as the next last-mile mobility solution.[103] With the operational and regulatory lessons learnt from bike-sharing, e-scooter sharing might be able to succeed where bike-sharing failed.[104] Lastly, the parking and navigation space is also seeing several start-ups attempt to use AI and blockchain technology to solve congestion, parking inefficiencies and other pain points. 

Smart Logistics

The pandemic has heightened demand for online purchases and highlighted the inefficiencies in the current processes and systems. There is room for AI and technology to bring about coordination, efficiency and optimization to the fragmented logistics network. By offering SaaS or in-house solutions, start-ups may potentially find success in a region where logistics and shipping continues to be a large industry. We are also seeing new fringe applications aimed at revolutionising last-mile logistics solutions, such as drone delivery. 

Smart Buildings

Being geographically positioned near the equator, tropical countries in Southeast Asia are some of the hottest all-year round. Additionally, Asian cities are some of the most densely populated, characterised by high-rise living and congestion. High population density, together with intense human activity and energy consumption synonymous with urban living environments has resulted in what is known today as the urban heat island (UHI) phenomenon. High temperatures in turn spur citizens to rely on air conditioning to create artificially cool indoors environments conducive for work, which consume large quantities of electricity from the grid, creating a large carbon footprint while venting hot air outdoors, raising the temperatures further. Heat stress is expected to cost APAC 62 million full-time jobs by 2030, or 3.1% of the workforce, according to the International Labour Organization, thus it is imperative that future urban planning and development aim to mitigate rising temperatures.[105] 

We should be looking towards constructing or converting existing buildings into green buildings. These are buildings that use innovative architectural designs or inventions to achieve sustainability. Countries assess green buildings via rating schemes, such as the Singapore Building Construction Authority (BCA)’s Green Mark rating scheme and their counterparts in Malaysia & Indonesia etc.[106] These are attuned to the regional context, focusing on passive: and active: technologies that can promote cooler buildings while reducing energy consumption.[107, 108]  

Examples of technologies include:[109]

  1. Design innovation led by modelling software to optimise shade and ventilation
  2. Architectural designs like overhangs, planters to block direct solar exposure, roof greening and facades
  3. Efficient cooling systems such as water cooling for data centers 
  4. Motion sensors and intelligent building control systems that regulate electricity use based on activity/outside temperature
  5. Solar windows and cool roofs, paints that reflect sunlight and prevent absorbing heat
  6. Sustainable construction materials with less embodied carbon

Governments are increasingly launching grants for green building technologies, and start-ups can take advantage of these to get their innovations ready for commercialization and further funding.  

Smart appliances are also continuously being developed, and continued innovation will serve to make them more energy efficient and lower costs, thus driving adoption. Homes are a main contributor to energy consumption as well, and establishing zero-energy homes will be an important goal for cities as well.

Trends and Developments III

There are several spaces that we have identified and are keeping an eye on. Below we provide a high-level overview of each particular industry, focusing on upcoming technology, as well as innovative business models.


Agriculture remains one of the most vital sectors of most ASEAN economies. Research done shows that agriculture (including farming, fishing and forestry) continues to account for 10.2% of ASEAN’s total GDP as of 2019, and remains a key contributor to employment both in developing countries such as Myanmar (almost 50%), Laos, Vietnam and Thailand, as well as countries that are rapidly pivoting to industry and service sectors such as Indonesia and the Philippines.[110] When considering the agriculture value chain as a whole, the value created is multiplied (2.9x in the Philippines), increasing agriculture’s importance to economies as a whole.[111] 

Furthermore, with the global population set to reach 10 billion by 2050, agricultural production needs to double in order to provide sufficient food for all. More efficient and sustainable agriculture will be integral in meeting these needs without infringing further on the environment. Simply scaling up will place unprecedented levels of strain, resulting in groundwater depletion, soil degradation, loss of biodiversity amongst other climate stresses. There is a need for fragmented supply chains to become more unified and efficient, for land to be used more efficiently and for alternative foods to be developed and adopted. 


We have already seen an agricultural revolution in the form of hardware improvements. Today, we are seeing the rise of precision farming, where softwares such as GPS, AI & data analytics, IoT and cloud computing are used alongside hardware (sensors, machines, drones etc.) to provide farmers with the tools to monitor, anticipate and tackle challenges. This allows for improvements in crop yields and stabilizing of harvest levels to ensure food security. 

There is much room for efficiency gains in Southeast Asia. Countries like Vietnam and Myanmar are still on the backfoot compared to the rest of the region, with inefficiencies caused by overirrigation, misuse of fertilisers and pesticides and a multitude of other problems. The key will be bringing in technology at a low enough cost to encourage adoption by more than 100 million rural smallholder farmers which collectively produce a significant portion of the food consumed and exported in Southeast Asia.[112] 

Smallholder farmers are constrained by several interconnected problems. Despite high internet penetration (66%) in SEA, smallholders lack access to information (weather reports, market prices, how to mitigate pests and diseases etc.), financial resources (e.g. loans) to make large capital purchases to upgrade, and markets to sell their goods to.[113] The vacant space has seen startups spring up to tackle smallholders’ pain points. As of April 2020, there were 134 smallholder-centric agritech startups. Some rely on proven business models such as peer-to-peer lending, crowdfunding, digital marketplaces etc. (including B2B marketplace and P2P lending platform Tanihub and crowdfunding platform Cropital), while others have found success with promising business models such as farmer advisories, mechanization platforms and marketing traceability (ethical, fair value branding).[114] Other innovative business models include Fefifo, which provides ‘Farmspace as a service’ to take the burden of large capital outlay off farmers starting out small. 

On the other hand, there has also been innovation specifically aimed at uniting the fragmented value chain. By connecting farmers, supermarkets, restaurants and export hubs, as well as relying on technology such as blockchain, real-time analysis and more efficient logistics, startups have seen success in improving the pricing mechanisms in agribusiness, reducing perishable food wastage, lowering costs for businesses while providing better returns for the otherwise-exploited farmers. 

Better Land Use

Food and fibre production currently use more than half of the world’s ice-free land.[115] Increasing production used to mean increasing land use, but in the face of growing land scarcity and opportunity cost, we have to learn how to make better use of existing space, while looking towards freeing up land for other purposes. 

As a relatively outdated sector, land use is prone to being disrupted by technology. While this can be achieved in part through more efficient farming, there are specific technologies being developed to maximise each square foot of land used for farming. For example, vertical farming technology produces 2.5 times more crops per hectare across various crop varieties on average.[116] While the leaders in vertical farming technology might not be in ASEAN (China, Japan, South Korea, US and Europe dominate), ASEAN countries like Singapore and Thailand are already beginning to implement vertical farming both in urban and rural farms, with home farm brands such as Sky Greens (SG)  and NoBitter (TH) rapidly scaling up in their respective home countries.[117]

Singapore’s ambitious 30% home-grown food by 2030 objective has led to it taking the lead in ASEAN, as it attempts to bolster its food security through greater self-sufficiency (10% as of today). This has come in the form of grants (Singapore Food Agency (SFA) 30X30 Express Grant), monetary support to adopt new technologies (Agriculture Productivity Fund (APF)), and innovation funding (Enterprise Singapore (ESG) has set aside S$55 million). Technologies include indoor LED lighting for multi-story vegetable farms and multi-storey recirculating aquaculture systems, which are 10-15x more efficient and less labor intensive. 

If successful, the Singaporean method presents opportunities for expansion to the rest of the ASEAN countries that are yet to explore such methods. 

Alternative Foods

This vertical encompasses a variety of applications of biotechnologies, including but not limited to plant-based meats, lab-grown products and new plant-based food production. It has seen huge investor interest in recent years – based on PwC analysis on Dealroom data, they take up a third of overall investment, with higher than average deal sizes.[118] 

In part, this heightened investor interest is due to the hype surrounding plant-based meats. These products retain the taste profile and nutritional value of actual meat, while using 87% less water, 96% less land, and producing 89% less greenhouse gases.[119] The combination of taste and sustainability has appealed to consumers, allowing companies, most notably Impossible Foods and Beyond Meat, to achieve commercial success. It is expected that the overall Asian plant-based meat market will grow to US$1.7 billion (a 25% increase) by 2026.[120] This echoes predictions surrounding global market growth not just for plant-based meats, but low-GHG proteins and alternative foods in general.[121] 

We expect demand for plant-based products and low-GHG proteins to increase across Asia because of a growing consciousness amongst an increasingly affluent population about the need to eat healthily (plant-based diets, less meats), as well as a historical familiarity with soy-based products and mock meat.[122] 

We also believe that both the Asian and global market will not be dominated by US or European players. We are already seeing Asian start-ups taking the market by storm, with upcoming products that cater specifically to local taste buds and traditional cuisines, such as Hong-Kong based Avant Meats’ cell-based fish maw and sea cucumber and Phuture Foods’ Halal and Buddhist-friendly pork alternatives. Startups like Thailand’s Let’s Plant Meat also offer plant-based meat products at half the cost of Impossible Foods’, raising doubts on the validity of a first-mover advantage in this vertical, especially in new markets. 

In Southeast Asia, the Singapore government has been positioning the island state as ASEAN’s hub for plant-based food production. There have been substantial efforts to promote alternative protein development by startups, including funding matching by the government and providing conducive, supportive environments for start-ups focusing on alternative food solutions. Accelerator programs such as Innovate 360, Big Idea Ventures and GROW, as well as regular regional roadshows, seminars and events held in Singapore are part of the burgeoning biotechnology/foodtech innovation ecosystem.[123] 

Temasek Holdings, the government’s investment arm, was an early backer of US alternative protein start-ups Impossible Foods and JUST Egg, and aims to replicate that success at home.[124] Already, Singapore is home to some of the region’s hottest prospects, including Shiok Meats (cell-based shrimp), Karana (jackfruit-based meat), Life3 Biotech (plant-based chicken and prawns, algae-based proteins) Hegg Foods (vegan eggs) and TurtleTree Labs (lab-grown diary).[125, 126, 127] 

Looking Forward

Agriculture has a history of undergoing revolutions as a result of technological disruption. This trend is set to continue as agriculture undergoes its third and fourth revolution. Although deal activity in ASEAN today focuses on downstream innovation (unifying the supply chain, increasing efficiency of traditional methods) rather than upstream innovation (plant foods, new types of farming), we expect these verticals to garner more attention in recent years as the technology stabilizes and the agritech ecosystem develops.


It would not be an exaggeration to say that achieving sustainability is the greatest hurdle facing the world today. Be that as it may, this is also our best opportunity to solve the problem before it spirals irreversibly out of control. In this report we have argued that achieving sustainability is our responsibility, and is one that does not require us to sacrifice other priorities. 

Many sectors that are critical for achieving sustainability are in dire need of (further) disruption. However, the need for significant capital outlay and government support in many sectors might not be compatible with traditional venture capital investment. Leaving capital intensive or underdeveloped sectors to other more suitable funding sources, venture investors should not shy away from the impact sector, as there are many unpolished gems to be discovered. 

Despite being limited in terms of opportunities that can be pursued, we have continued to keep an eye on a range of sectors and verticals, detailed above, regardless of their suitability for venture capital investments. There is value to this, as technology has historically shown that it is capable of turning concepts like feasibility, intensivity on their head quickly. By not writing off particular sectors or verticals and instead continuing to keep an eye on their developments, we ensure that Quest Ventures can be amongst the first to identify nascent opportunities. With that in mind, Quest Ventures takes a broad-based approach in analysing the core sectors that will make or break sustainability in ASEAN in the coming decades, a strategy that continues to serve us well. 


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State of Startup Ecosystem

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Mr Surendra Shenoy, Summer Analyst

Mr James Tan


Called a “burgeoning startup economy” by TechCrunch, and home to seven unicorns (before the merger of Gojek and Tokopedia), the highest in Southeast Asia, the startup landscape of Indonesia has been the subject of a growing number of conversations. Prominent startups have been putting the archipelago on the map with their traction and innovation, especially during the COVID-19 pandemic, and this report covers a high-level overview of the state of the Indonesian ecosystem halfway through 2021.

Indonesia’s immense size and market potential continues to make it an attractive market for start-ups and investors, which in turn has allowed it to develop strong entrepreneurship ecosystems in major cities. However, key factors challenging this position are (1) the unequal development and ‘access gaps’ between different tiered cities; (2) key talent shortages undermining the ability of local start-ups to perform to their maximum potential; and (3) complexity in starting and operating a business in Indonesia.

On the other hand, ongoing trends, such as talent development initiatives, are quelling these challenges, and Indonesia overall remains a top entrepreneurship ecosystem, particularly in the areas of e-commerce, FinTech, and EdTech.


Mr James Tan
Managing Partner
Quest Ventures

In recent years, Indonesia has taken the limelight for its pace of development across many sectors of its economy including technology.

An enormous population and growing income levels are two of many factors that have powered this growth, resulting in many unicorns and game-changing startups.

Challenges exist. From income inequality to unequal distribution of talent across the archipelago, Indonesia faces challenges typical of many emerging economies. Time will tell if the valuations that are placed on many startups justify the lofty expectations.

In the meantime, we believe that the Indonesian startup ecosystem is strong and, barring any systemic influences, will continue to grow in its influence across Southeast Asia.

Indonesia: The Perfect Market?

Size and Market

The largest and most obvious pull factor of the archipelago lies in its sheer size. Indonesia hosts Southeast Asia’s largest population and economy, with over 270 million residents and a nominal GDP of over USD 1.1 trillion.[1] The country’s demographics also make it an attractive market. With a median age of 29.7 years, and 60% of the country under the age of 40, its young population is also especially open and welcoming of new tech-adoption.[2] Furthermore, as much as 95% of Indonesia’s internet users consume their content primarily on mobile, and average daily mobile use exceeds 5 hours, amongst the highest in the world, making the country particularly attractive for mobile-first start-ups.[3]

Internet and mobile penetration rates have also seen an uptake in recent years, with the number of internet users jumping from 30 million to over 150 million in the last decade due to long-term trends, construction of new telecommunication infrastructure and improved internet connectivity.[4] Moreover, this growth is expected to continue, and Indonesia’s internet economy, currently estimated at USD 44 billion, is expected to see double digit growth and reach 124 billion by 2025, setting it as the largest and fastest-growing Internet economy in Southeast Asia.[5]

Investment Hub of Emerging Asia

Indonesia’s attractiveness as an entrepreneurship ecosystem has also been bolstered by the inflow of capital funding into the country, with over USD 5.7 billion being raised in 2020, equalling 70% of SEA’s capital share.[6] Indonesia’s tier one cities in particular have stood out to investors, with ecosystems like Jakarta attracting over USD 845 million in early-stage funding alone, the highest amongst all emerging ecosystems. In fact, Jakarta’s ecosystem itself was valued at an estimated USD 26.3 billion, positioning the city as the world’s most valuable emerging ecosystem.[7] Moreover, Indonesia is likely to see continued good capital inflow, given the prevailing geopolitical tensions and increased investment risks involving popular destinations like China, the U.S., India, etc.[8, 9]

Key Inherent Challenges

Disproportionate Development Across Cities

However, as hinted earlier, ecosystem development across its cities has been far from homogeneous. Outside of tier one cities, particularly Jakarta, entrepreneurs have limited access to capital, expertise, mentorship and other resources which are crucial ingredients in early-stage start-up success.[10] Moreover, even though cities like Yogyakarta, Bandung, Semarang and Surabaya have been recognised for their flourishing start-up ecosystems in their own right, only Jakarta has been ranked amongst the top 500 cities for start-ups.[11]

Furthermore, Indonesia’s unique geography, demographic diversity and relatively weak connectivity further exacerbates this problem of limited shared access to existing resources, and supports the continuation of an “access gap”. This “access gap” flows both ways; it not only limits in-roads for entrepreneurs in larger cities to their potential user bases in smaller ones, but also limits potential entrepreneurs in smaller cities who would be the most inclined to solve their local problems.[12]

Key Talent Shortages

Similarly, a challenge for entrepreneurs across Indonesia has been reliable access to crucial talent. The 2020 Talent in Asia study reported that over 50% of Indonesian employers face talent shortages, with the primary cause being an inability to find candidates with the right knowledge and experience.[13] Moreover, in the start-up space specifically, 90% of respondents believed that the skills gap was a major issue.[14] Structural issues like a relatively low tertiary education rate, as well as a documented ‘brain drain’ of qualified talent, has resulted in consistent shortage of talent, which in-turn has driven up the salaries and expectations of local talent.[15] Recent figures estimate that software engineers and other crucial start-up roles, such as digital marketers, often command salaries three to five times higher than the median wage in Southeast Asia.[16]

The inability of startups to sometimes afford required talent, especially early on in their development, has thus led to buried start-up ideas, early start-up deaths or underperformance. Even in later stages, rapid-scaling due to internal talent shortages has emerged as a serious challenge. Moreover, even when employers do hire talent, frequent complaints have risen of quick turnarounds, employee job-hopping, and moonlighting.[17] Furthermore, the lack of an ESOP culture, a crucial get round for most of these problems, has hampered employer’s abilities to attract and keep talent.[18]

Business Complexity

The last major challenge plaguing the Indonesian start-up ecosystem has been the complexity of setting up and running businesses in the country. The Global Business Complexity Index ranked Indonesia as the world’s most complex jurisdiction across their 77 analysed major countries.[19] Similarly, the World Bank’s ease of doing business index ranked Indonesia as 73rd across 190 global economies. The presence of neighbours with significantly better rankings, such as Singapore (2nd), Malaysia (12th) and Thailand (21st), further challenges Indonesia’s position as the regional business destination of choice.[20] Key issues that have been highlighted include difficulties in starting businesses, accounting & taxation, contract enforcement, trading across borders, and rigid employment regulations. A secondary concern has also been the government’s focus on local start-ups, with limited support for international start-ups entering Indonesia.

Major Trends to Look Out For

Strong Growth in Lagging Cities

Nonetheless, optimism remains high around the Indonesian ecosystem due to ongoing trends, which are countering some of the aforementioned key challenges. While current ecosystem development has been disproportionate across cities, growth in tier two and three cities is actually outpacing growth in tier-one cities, a trend that is likely to continue for the next decade.[21] Moreover, these markets are by no means sub-par or unattractive to start-ups and investors. For example, by some estimates, adoption rates for e-commerce, e-payments, and lending in tier two and three cities is expected to grow up to 46% YoY towards 2025, and some investors foresee these ecosystems hosting the next Indonesian unicorns.[22] As such, the large and untapped potential across these segments in Indonesia will likely push more and more ambitious investors to these areas, and existing entrepreneurs will rise to build strong ecosystems across the archipelago.

Talent Development Initiatives

Similarly, all over Indonesia, various stakeholders are also engaging in top-down and bottom-up initiatives to breed technopreneurs and talent. The Indonesian government has openly declared its interest and priority in developing the entrepreneurship ecosystem and has engaged in initiatives like the 1001 Digital Startup Movement, BEKRAF, and KIBAR to assist entrepreneurs in different parts of their journey.[23, 24] On the other hand, startups like Glints and Hacktiv8 are offering bootcamps, courses and programs to upskill Indonesians with in-demand skills at a fraction of the time and cost of traditional degrees.[25] Similarly, larger players like Gojek and Tokopedia are taking active steps to alleviate talent shortages and investing in developing reliable talent pipelines by building internal capabilities through initiatives like GoAcademy and Tokopedia Academy.

Lastly, efforts are also being made to attract foreign talent, the Indonesian diaspora or ‘sea turtles’ (referring to Indonesians who return after studying and working overseas) to Indonesia. The government has indicated interests in developing Indonesia’s human resources as its priority target for 2020-2024, and is proposing initiatives such as strengthening the Ministry of Manpower and Transmigration’s purview, increasing benefits and incentives for returning Indonesians in public roles or universities, and increasing scholarship opportunities for locals and foreigners with bonds to return or work in Indonesia.[26, 27]

The impact of a reverse brain drain on the Indonesian start-up ecosystem cannot be overstated. Currently, over 90% of Indonesian unicorns and start-ups with valuations exceeding USD 100 million have co-founders or top leaders who have studied or worked overseas for a period of time.[28] Similar trends were also seen in other entrepreneurship hubs during their initial boom, such as Israel in the 1980s, or China in the early 2000s.[29] ‘Sea turtles’ and the wider Indonesian diaspora bring a perfect mix of good local understanding and strong international exposure, which in turn allows for the rapid development and success of the ecosystem. The trend of an increasing number of ‘sea turtles’, diaspora members and foreign talent coming to Indonesia thus foreshadows strong prospects for the local ecosystem.

Notable Industries


E-commerce and FinTech are amongst the two largest and fastest growing sectors in Indonesia, which are expected to continue seeing higher growth and entrants due to the growing internet economy and large unbanked or underbanked population. E-commerce sales currently only accounts for approximately 5% of Indonesia’s total retail volume, but is expected to more than quadruple within the next five years according to estimates by McKinsey.[30] The market has a mix of early, growth and late-stage players, including unicorns like GoTo, Bukalapak and Shopee (under Sea Group), making space for tough competition.


As aforementioned, the mobile-centric and underbanked population has made FinTech a major market in Indonesia. Only 12% of SMEs have access to credit, and over 65% of the population is totally unbanked.[31] As such, investors have flocked to start-ups solving these problems and FinTech was the highest-invested single space by VCs in 2020.[32] Multiple solutions and sub-verticals currently exist, including P2P lending solutions, digital payments, earned wage access, personal finance management, alternative credit scoring, etc. However, as opposed to e-Commerce, the FinTech space has much fewer mature players, with a majority still in early stages, and the market appears to be highly fragmented with few dominant players. Consolidation is underway, further boosting the attractiveness of the industry, but the heavy involvement of the government and regulators also adds a layer of unpredictability.[33]


The COVID-19 pandemic has also accelerated adoption and normalisation of EdTech solutions, which also cover many sub-verticals ranging from online learning platforms to AR/VR, for user bases ranging from pre-school children to post-graduate students. The market currently has a mix of early, growth and late-stage players, of which a significant number grew massively and raised multiple funding rounds during the pandemic. Even outside the pandemic, long-standing trends such as unequal or substandard teaching resources across the country, and the aforementioned skills gap or talent shortage, make EdTech an attractive industry full of opportunities.[34]


Major prevailing trends are reducing some of the traditional challenges typically associated with the Indonesian ecosystem, such as strong growth within lagging cities countering ‘access gaps’ within these locations, or human resource development initiatives by various stakeholders alleviating talent shortages. However, some challenges such as Indonesia’s long-standing business complexity still remain, further exaggerated by the presence of business-friendly neighbours around it. 

Nonetheless, the overwhelming opportunities and potential in the Southeast Asian giant are making up for these shortcomings, and the ecosystem appears to be stronger than ever, particularly in comparison to other emerging markets. The COVID-19 pandemic has accelerated technology acceptance and adoption, and players from e-commerce, FinTech and EdTech have leveraged these circumstances to grow further, and look well-poised to continue doing so. Both investors and start-ups remain optimistic of growth in the future, with frequent talk of 10 more Indonesian unicorns in the next decade being floated as the new target, which for the most part, seems to be becoming more and more realistic with time.


  1. World Bank. (n.d.). GDP (current International $) – Indonesia. The World Bank.
  2. Statista. (2021, March 29). Median age SEA 2020 by country.
  3. App Annie. (2021). State of Mobile 2021.
  4. Google, Temasek, & Bain & Company. (2019). e-Conomy SEA 2019. Bain & Company.
  5. Google, Temasek, & Bain & Company. (2020). e-Conomy SEA 2020. Google.
  6. Lee, Y. (2021, March 26). Southeast Asia Tech Startups Ride Out 2020, Raising $8.2 Billion. Bloomberg.
  7. Startup Genome. (2020). Rankings 2020: Top 100 Emerging Ecosystems.
  8. Hu, Y. (2021, April 15). Southeast Asia venture funding totalled $8.2 billion in 2020, with Indonesia leading. The Low Down – Momentum Works.
  9.  Ballentine, C. (2021, July 28). China’s Crackdown Has Made Its Stocks Cheap. But Should You Buy? Bloomberg.
  10.  Failory. (2021, April 29). The Indonesian Startup Landscape in 2021.
  11. Ng, M. (n.d.). Indonesia Startup Ecosystem Report: An Overview | ACE – Action Community for Entrepreneurship. ACE. Retrieved July 30, 2021, from
  12. Failory. (2021, April 29). The Indonesian Startup Landscape in 2021.
  13. RGF International Recruitment. (2020, October 20). RGF Talent in Asia 2020 at a glance.
  14. Maulia, E. (2019, May 22). Southeast Asian “turtles” return home to hatch tech startups. Nikkei Asia.
  15. Global Business Guide Indonesia. (2014, March 17). Indonesia Brain Drain | GBG.
  16. Maulia, E. (2019, May 22). Southeast Asian “turtles” return home to hatch tech startups. Nikkei Asia.
  17. Greenhouse Team (2021, January 25). Startup Ecosystem in Indonesia: Ingredients, Challenges, Strategies. Greenhouse.
  18. Pratama, A. (2020, August 4). Tech in Asia – Connecting Asia’s startup ecosystem. Tech in Asia.
  19. Press Release. (2020, July 15). Indonesia ranked as world’s most complex place to do business – while US now seen as one of the easiest. TMF Group.
  20. World Bank Group. (2020). Doing Business 2020.
  21. Tjan, C. (2021, April 26). The land of unicorns: The rise of startups in Indonesia. TechNode Global.
  22. AJWC editor. (2021, June 8). The Land of Unicorns : The Rise of Startups in Indonesia. Alpha JWC Ventures.
  23. Ng, M. (n.d.). Indonesia Startup Ecosystem Report: An Overview | ACE – Action Community for Entrepreneurship. ACE. Retrieved July 30, 2021, from
  24. Umali, T. (2019, May 24). Indonesia’s 1001 Digital Startup Movement to boost digital economy. OpenGov Asia.
  25. Maulia, E. (2019, May 22). Southeast Asian “turtles” return home to hatch tech startups. Nikkei Asia.
  26. Stiaji, I. (2020, January 3). Merajut Diaspora Indonesia Guna Membangun Sumber Daya Manusia Indonesia Unggul. Lembaga Ilmu Pengetahuan Indonesia.–sumber-daya-manusia-indonesia-unggul/31784
  27. Setijadi, C. (2017, December). Harnessing the potential of the Indonesian diaspora. Singapore Management University.
  28. Maulia, E. (2019, May 22). Southeast Asian “turtles” return home to hatch tech startups. Nikkei Asia.
  29. Sun, W. (2013, April 25). The productivity of return migrants: the case of China’s “Sea Turtles.” IZA Journal of Development and Migration.
  30. McKinsey & Company. (2018, August). The digital archipelago: How online commerce is driving Indonesia’s economic development.
  31. Fintechnews Indonesia. (2020, December 3). Indonesia Fintech Report and Map 2020. Fintech Singapore.
  32. Greenhouse Team (2021, January 25). Startup Ecosystem in Indonesia: Ingredients, Challenges, Strategies. Greenhouse.
  33.  KPMG. (2017, September). Finance in Indonesia: Set for a new path?
  34. Huang, S. (2020, September 30). Indonesian edtech’s unexploited opportunities. Tech in Asia.

Digital Currency – Lessons from China

A close look at China’s lead in the digital currency race and the countries primed to follow China’s footsteps

Download full PDF (0.3 MB)
Download full PDF (0.3 MB)


Mr Stan Wong, Summer Associate

Mr James Tan


Digital Currency has been a hot topic in recent years, with its growth being driven by rapid advances in internet speeds, global connectivity and data storage capabilities. While many different types of digital currencies have emerged, this report will focus on a specific sub-type of digital currency, Central Bank Digital Currency (CBDC). CBDC refers to a digital form of fiat money – a currency which is established as money by a country’s government.

With many countries already looking at developing their own CBDC, China has recently emerged as the frontrunner to roll out its own national digital currency – the “Digital Yuan”. The focus of this report is, therefore, on the viability of CBDCs. This report will – (1) trace the development of the “Digital Yuan” in China; (2) examine the key takeaways from China’s digital currency – such as, the requirements for a successful digital currency as well as the potential risks of adopting a digital currency; and (3) highlight countries which are primed to start a digital currency.


Mr James Tan
Managing Partner
Quest Ventures

This forward looking report traces the development of China’s digital currency – Digital Yuan – and considers the implications of such a tool if the world’s second largest economy were to adopt – and embrace – it. While other countries are also at varying stages of development for their CBDCs, China’s early start provides valuable lessons. Concerns have surfaced in the areas of cyber security, privacy, legality and financial inclusion.

China, as the first mover in the CBDC world, has set the bar high in terms of successful development of a digital currency. Its success is attributable, in part, to (i) its careful recruitment of highly qualified individuals; (ii) its strategy in easing the transition from the use of physical currencies to digital  currencies; and (iii) its extensive pilot programme and thoughtful selection of commercial giants as participants in the programme. We believe that China’s digital currency development will be modelled after by countries intending to launch their own digital currencies.

Introduction to Digital Currency

What is digital currency?

Digital currency – otherwise called digital money, electronic money, electronic currency or cyber cash – is a term used to include the meta-group of sub-types of digital currency, including virtual currency, cryptocurrency, e-Cash and Central Bank Digital Currency (CBDC). It is a form of currency available only in digital or electronic form.

A key difference between digital currency and physical currency lies in their tangibility. Unlike banknotes and minted coins, digital currencies do not have a physical form – they are intangible and can only be owned and accessed using computers or mobile phones. This difference is instrumental in conferring digital currencies with numerous advantages unattainable by traditional payment methods. For instance, while the latter always involves banks or clearing houses, digital currency transactions can be made directly between transacting parties, rendering obsolete the need for intermediaries. This in turn facilitates instantaneous and more cost-efficient transactions.

Differences in tangibility aside, digital currency is intrinsically similar to standard fiat currency in that both may be used to purchase goods and services – although, the use of digital currency may be limited in certain contexts such as payment on gaming and gambling sites. In addition, just like physical currency, digital currency enables cross-border transactions as long as the transacting parties are connected to the same network required for transacting in the digital currency. It is therefore possible for Person A in Country A to make payment in digital currency to Person B in Country B.

How is digital currency being used around the world today?

Given the viability of digital currencies, it is no surprise that a myriad of different types of digital currencies have since emerged and thrived. Of the many different types of digital currencies which currently exist, a small handful have established themselves as the foremost digital currencies in use today. These include cryptocurrencies such as Bitcoin, Ethereum and Zcash.

CBDCs – otherwise called digital fiat currency or digital money – on the other hand, are not as widely used. CBDC is potentially a new form of digital central bank money or fiat money that can be distinguished from reserves or settlement balances held by commercial banks at central banks. There are, understandably, concerns associated with the use of CBDCs. However, interest in CBDCs has risen in recent years. In fact, the People’s Bank of China (PBoC) now leads the world in the development of national digital currencies – this year, screenshots emerged of a “Digital Yuan” interface being piloted at the Agricultural Bank of China (ABC), one of four state-owned banking giants. Moreover, in its 2019 White Paper, the PBoC noted that the “Digital Yuan” or Digital Currency Electronic Payment (DCEP) has potential to replace cash and make peer-to-peer transactions more secure and efficient.[1]

Other major economies such as Japan and the United Kingdom (UK) have also formed working groups to explore the potential use of CBDCs in the foreseeable future. Significantly, the “Digital Dollar” idea, which first appeared in the original form of the “Take Responsibility for Workers and Families Act” in the United States (US), has been re-introduced under the Automatic BOOST to Communities Act (ABC Act). Under the ABC Act, Congress would authorise the Federal Reserve to create “Digital Dollar Account Wallets” to allow US residents, citizens and businesses located in the country to access financial services.[2]

In this regard, the race to create the future of money is already on, with China currently leading the pack in the CBDC race. The focus of this report is, therefore, on the viability of CBDCs. This report will – (1) trace the development of the “Digital Yuan” in China; (2) examine the key takeaways from China’s digital currency – such as, the requirements for a successful digital currency as well as the potential risks of adopting a digital currency; and (3) highlight countries which are primed to start a digital currency.

The Development of the “Digital Yuan” in China

Why did China start planning for the “Digital Yuan”?

One reason why China wants to have its own digital currency is the ability for regulatory authorities to better track how money is used by its citizens and in turn, a revolutionisation of the ability of China’s regulatory authorities to scrutinise the nation’s payment and financial system. As noted by Xu Yuan, a senior researcher with Peking University’s Digital Finance Research Centre, the emergence of a digital currency will enable payment transactions to be made online, making all cash flow in society traceable. As more business activities are now conducted online such that cash flow information and credit data are stored on databases, the credit structure of the overall society becomes easier to determine. Crucially, the database can be checked in real time and can play an integral role in keeping checks against citizens who have committed money laundering, tax evasions or other related offences.[3]

Another equally, if not more, important reason for the development of the “Digital Yuan” is the rise of Bitcoin – China has itself acknowledged that the rise of cryptocurrencies like Bitcoin has spurred a call to action to really take control of the money supply and different currencies that are entering the modern world. As Lucy Gazararian – co-chair of the blockchain committee of the FinTech Association of Hong Kong – notes, the rise of Bitcoin is a real trigger because central banks soon realised that the technology underpinning cryptocurrencies could be modified for the fiat world. Central banks also appreciate that this is an exceptional new innovation that has the ability to upgrade payment infrastructure.[4]

What exactly is the “Digital Yuan” and how does it work?

The “Digital Yuan” is China’s version of a sovereign digital currency and will be used to stimulate everyday banking activities including payments, deposits and withdrawals from a digital wallet. It is set to be a part of the most liquid form of money supply that includes notes and coins in circulation in the society, known as M0, but in a digital form. It will be issued and backed by the PBoC. Once launched, consumers may download an electronic wallet application authorised by the PBoC which can be linked to a bank card to (i) facilitate payments or receipts of digital yuan using a mobile device with merchants or (ii) make transfers with an ATM machine or other users. The money from the linked bank account will then be converted into digital cash on a one-to-one basis. An alternative option which does not require a bank account to hold and facilitate transactions in the digital yuan also exists.

Significantly, unlike other existing online payment platforms such as Alibaba’s Alipay and Tencent’s WeChat Pay, the DCEP system allows transactions to be made even in the absence of internet connection. This function, termed “touch and touch”, enables users to simply touch their mobile devices together in order to make a transfer. This leaves no payment record with third parties or the banking system.

Tracing the development of the “Digital Yuan”

In recent years, the high penetration rate of smartphones, and therefore electronic payments, has resulted in a significant decrease in the use of physical cash. Coupled with the success of e-commerce platforms such as Alibaba, the PBoC began exploring the concept of a national virtual currency in 2014. After China’s State Council included blockchain technology in its 13th Five Year Plan in 2016, the PBoC established in 2017 the Digital Currency Research Institute, which is responsible for China’s digital currency development and testing, to further its efforts in the development of the “Digital Yuan”. In December 2019, Mu Changchun – Director of the Institute, noted that the new sovereign digital currency would be “a digital form of the yuan”. There would be no speculation on the value of the “Digital Yuan” and according to the Shanghai Securities News, it would not need the backing of a basket of currencies.

The coronavirus pandemic has arguably served as a catalyst for accelerating contactless payments, and in turn the effort to move to a digital currency, because of concerns that physical cash can transmit Covid-19. In this regard, as of April 2020, the PBoC confirmed that some state-owned banks are conducting internal trials of the digital currency in four Chinese cities – Shenzhen, Suzhou, Chengdu and Xiong’an – and is considering its usage during the 2022 Winter Olympics in Beijing. The PBoC has also begun selecting the first merchants for testing the DCEP. These include Starbucks, McDonald’s, and other major firms such as ride-hailing company Didi Chuxing, food delivery giant Meituan Dianping and streaming platform Bilibili. The choice behind these entities can be explained by the fact that their users make transactions worth several billion dollars daily. For example, Didi Chuxing has a client base of about 550 million while Meituan Dianping currently has almost 450 million customers and about 6 million companies using it to sell their products. Such volumes can significantly accelerate the popularity and subsequent adoption of the digital yuan.

The goal of China’s pilot programme is to test for the digital currency’s theoretical reliability, system stability, functional availability, process convenience, scenario applicability and risk management.[5] However, it is unclear how long the testing period of the digital yuan will last. Jianing Yu, president of Huobi University, also noted in a conversation with Cointelegraph that China may still be far from completing testing and that in any case, “these current tests are actually still in the research stage, not preparing for immediate launch”. Therefore, as of now, it remains unclear what China’s next step will be. It is also worth bearing in mind that user adoption of any currency is going to take time. However, this does not in any way detract from the fact that we now live in a digital economy and that, therefore, the adoption of a digital currency is only a matter of time. It also remains true that China now leads the world in the CBDC race.

Lessons Learnt from China’s Digital Currency Development

What are the requirements for a successful digital currency?

To successfully launch a digital currency, central banks need to be well-versed with the relevant technology and must have in place advanced technologies, a reliable team of professionals as well as secure and reliable infrastructure. This is not least because the entire economy of the country will be dependent on such a system and it is not impossible that hackers will attempt to penetrate the system in place. In this regard, countries which intend to introduce digital currencies have much to learn from China’s digital currency development. For a start, the PBoC has in place a specialist research team to discuss technical and regulatory issues in relation to the development of a state digital currency. Prominent members of the Digital Currency Research Institute include Mr Mu Changchun – Director of the Institute. Mr Mu’s financial background commands respect in the corporate world and places him in a good position to lead the Institute to launch the digital yuan. Shanghai Securities Daily has itself noted that Mr Mu’s appointment as Director brings hope that the Chinese national cryptocurrency will make an official appearance in the near future.

Further, China’s efforts at testing the reliability of its newly developed digital currency system certainly contributes a great deal to its success. As noted by Matthew Graham, CEO of Sino Global Capital, a private equity firm in Beijing, China has substantial research and development efforts and has placed the project high on its priority list.[6] Moreover, China’s choice of institutions for its digital currency trials is highly strategic. By including commercial giants such as Didi Chuxing and McDonald’s in its trial programme, data collected can better and more accurately reflect areas for improvement in the existing system. This will go a long way in fine-tuning the reliability of the DCEP system which will in turn ensure the success of the digital yuan. Countries seeking to launch a successful digital currency should consider adopting China’s approach towards trialling the digital currency system.

In addition, arguably, the biggest hurdle that any country will face in rolling out digital currencies is getting its citizens to use the very currency. As with all else, change takes time. However, the more necessary the change is, the lower the levels of inertia to change. In this regard, China’s choice of means of integration of the digital currency into the economy is one very important reason for its successful digital currency development – and is something that countries wishing to introduce a digital currency should seriously consider. Indeed, the Chinese authorities have chosen the easiest way to integrate the digital currency into the economy – implementation through the social and budgetary sphere. For instance, as of May 2020, officials working in Suzhou started receiving half of their transport subsidies not in traditional renminbi (RMB) but in digital yuan.[7] Crucially, in order to receive these subsidies, recipients are required to install a special application – an electronic wallet that can be linked to an existing bank account – on their smartphones. Coupled with the possibility of using this new digital currency for payment at popular chains like McDonald’s, Starbucks and Subway in China, the Chinese authorities are ingeniously easing the transition from traditional cash or payment methods to digital currency.

Potential risks of a digital currency

Whilst the introduction of a digital currency could bring a number of potential benefits to payment, clearing and settlement systems, it could also pose several risks and challenges. An initial exploration and experimentation conducted by the Bank for International Settlements (BIS) identified a number of legal, technical and operational issues that central banks and other relevant parties must consider. [8]

First, cyber-security is one of the most important operational challenges for central bank systems. Cyber-threats, such as malware and fraud are risks for nearly every payment, clearing and settlement system. They pose a particular challenge for a general purpose CBDC which is open to many participants and therefore many points of attack. The potential effect of fraud in the context of a digital currency system could be more significant because of the ease with which large sums may be transferred via electronic means.

Second, privacy issues are also another paramount concern. The use of central bank and commercial bank deposits usually provides some level of privacy (for individual banks and agents, respectively). In a similar vein, the use of cash provides anonymity to all users. In stark contrast, according an appropriate degree of privacy to users in a digital environment is a very real challenge. Ensuring sufficient privacy in a CBDC context entails careful and difficult public policy design choices for a central bank. It is therefore no surprise that critics of CBDC suggest that a digital currency could pose a threat to citizens’ privacy when deployed by authoritarian governments – a state-operated payments system would enable the government to track all of its citizens’ purchases.

Third, although not applicable to all countries, there may be legal considerations associated with the development of a digital currency. Indeed, not all central banks have the authority to issue digital currencies and expand account access. The issuance of such authority may require legislative changes and may therefore not be feasible, in the short term at least. Other pivotal, and fundamental, legal questions include whether a CBDC constitutes a legal tender – i.e. a legally recognised payment instrument to fulfil financial obligations – and whether existing laws pertaining to transfers of value and finality are applicable.

Fourth, concerns have also been raised that the introduction of a digital currency could spell bad news for financial inclusion. As Ola Nilsson, a specialist in consumer policy at the Swedish National Pensioners’ Organisation, explained to European CEO magazine, a cashless society may disadvantage those who live in rural areas, the disabled and the elderly.[9] He also noted that a completely cashless society may mean that older people will no longer be able to do things in everyday life that they have always managed before – this includes buying a ticket for the bus or train or even paying for a coffee at a cafe. However, Nilsson has also himself acknowledged the possibility of creating a digital currency that is accessible to all – this is especially feasible if the digital currency is developed with vulnerable groups in mind.

Fifth, central banks must also take account of AML/CFT concerns and requirements if they were to issue a digital currency. Issuing a digital currency which does not adequately comply with these and other supervisory and tax regimes is not advisable. To date, it is unclear how AML/CFT requirements can be implemented practically for anonymous forms of CBDC. Forms of CBDC that can be easily transferred across borders or used offshore are especially likely to present significant challenges in this respect. Therefore, as noted by the Bank for International Settlements, the reputational risk to the central bank from a general purpose CBDC must be considered.

Finally, more generally, the robustness of possible new technologies in ensuring a sound risk management framework is uncertain. Given that central bank services are essential to the smooth functioning of an economy, very robust requirements for reliability, scalability, throughput and resilience are integral. Central banks therefore typically have very rigorous operational requirements for their systems and services. The Bank for International Settlements rightly notes that some of the proposed technologies for issuing and managing CBDC (such as DLT) are still relatively untested, and even the private sector is in the early phase of developing and applying for DLT for commercial use. Many questions surrounding operational risk management and governance need to be answered before deployment can be envisioned.

Countries Primed to Start a Digital Currency


Few countries have embraced the drive towards a cashless society with as much enthusiasm as Sweden. Sweden’s Riksbank data shows that only one percent of the Swedish gross domestic product (GDP) existed in banknotes in 2018. Further, more than fifty percent of banks in Sweden do not have physical cash in their vaults. Payments also usually take place with credit, debit cards or mobile payment apps. For this reason, it does not come as a surprise that a study conducted by Niklas Arvidsson and Jonas Hedman, researches at the KTH Royal Institute of Technology and Copenhagen Business School respectively, found that Swedish retailers could stop accepting cash as early as 2023.[10] These render Sweden one of the least cash-dependent countries in the world.[11] It is therefore only appropriate that the Scandinavian country soon becomes one of the first nations to start a digital currency.

In fact, as of February 2020, Riksbank has been assessing e-krona, a new form of digital currency which aims to take the country one step closer to the creation of the world’s first central bank digital currency. This pilot programme will be in operation for one year, until February 2021. Riksbank notes that the e-krona could eventually be used for banking functions, such as payments, deposits and withdrawals, from a digital wallet.[12] It is clear then that Sweden is well suited to launch a digital currency and that, in this regard, China is hot on Sweden’s heels in the race to create the world’s first CBDC.

The Bahamas

The Bahamas’ digital currency pilot project went live in Exuma on 27 December 2019. Residents of the island were allowed to enrol in the Central Bank of The Bahamas’ “Project Sand Dollar” – they received mobile wallets the Bahamian government sees as facilitating the future of payments on the island chain. As noted by bankers, the “Sand Dollar” is a digital fiat currency – it is a digital version equivalent in every respect to the paper currency.[13] This is a major step toward the Bahamas’ long-term goal of launching a fully-fledged CBDC. John Rolle, the governor of the Central Bank of the Bahamas (CBOB), has also reportedly confirmed that the Bahamian digital dollar initiative will be introduced across all islands in the second half of 2020.[14] Once fully launched, residents can pay retailers through wallet-linked QR codes, with banks moving funds in digital form. The central bank believes this could ultimately cut currency printing costs and transaction fees while enhancing financial inclusion.

While the sand dollar faces restrictive limits from the government – for instance, businesses cannot hold more than B$1 million in their digital wallets and cannot transact more than one-eighth of their annual business through wallets in any given month – the central bank “will vary these limits over time as may be necessary”. It also remains the case that the Bahamas is increasingly ready and well-suited to start a digital currency of its own.


Digital currencies present many advantages and are also a means to prevent cryptocurrencies like Libra, a digital currency put forward by social media giant Facebook, from undermining central banks’ control over money creation. On this note, it is no longer a question of whether governments will introduce CBDCs, but rather when CBDCs will be introduced. For instance, the Bank of France has put out a call for applications from firms interested in experimenting with the use of a digital euro for interbank settlements, while the Dutch central bank has announced that it wants to play a “leading role” in the research and development of both its own CBDC and a digital euro.

Whilst a cashless society will in many ways prove to be a more convenient one, there are inevitably risks associated with a cashless society. Therefore, in developing CBDCs, central banks must engage in careful planning to ensure that the introduction of digital currencies strengthens rather than weakens the financial system. In this regard, China – the first mover in the CBDC world – has set the bar high in terms of successful development of a digital currency. Its success is attributable, in part, to – (i) its careful recruitment of highly qualified individuals; (ii) its strategy in easing the transition from the use of physical currencies to digital  currencies; and (iii) its extensive pilot programme and thoughtful selection of commercial giants as participants in the programme. China’s digital currency development will likely be modelled after by countries intending to launch their own digital currencies.

Finally, countries like Sweden and the Bahamas are already well-equipped and well-positioned to adopt a digital currency of their own. With China’s success in digital currency development, it is also likely that many other countries will gradually begin launching digital currencies of their own. Therefore, there is no reason to seriously doubt that digital currencies will be the future.


  1. CoinDesk 50: How the People’s Bank of China Became a CBDC Leader <>.
  2. ‘Digital Dollar’ Reintroduced by US Lawmakers in Latest Stimulus Bill <>.
  3. What is China’s cryptocurrency alternative sovereign digital currency and why is it not like bitcoin? <>.
  4. ‘An absolute necessity:’ Why this expert says China desperately needs a digital currency <>.
  5. Digital Yuan CBDC Momentum Grows as More Chinese Firms Get to Testing <>.
  6. People’s Bank of China kicks off digital currency trials <>.
  7. How National Digital Currencies Will Change Our Lives <>.
  8. Committee on Payments and Market Infrastructure (Central bank digital currencies) dated March 2018 <>.
  9. The risks (and benefits) of Sweden’s proposed e-krona <>.
  10. Sweden could stop using cash by 2023 <>.
  11. The risks (and benefits) of Sweden’s proposed e-krona <>.
  12. Sweden’s Central Bank Floats E-Krona As Digital Currency <>.
  13. Project Sand Dollar: A Bahamas Payments System Modernisation Initiative <>.
  14. Bahamas Digital Dollar to Roll Out Across All Islands in H2 2020, Governor Says <>.

CLMV – Opportunities

Delving into the CLMV Start-Ups’ Realm of Possibilities

Download full PDF (432 KB)


Mr Jonathan Lau, YLP Analyst

Mr James Tan


The CLMV countries, namely Cambodia, Laos, Myanmar and Vietnam, have traditionally been overshadowed by its more buoyant ASEAN neighbours. However, the pandemic-induced economic doldrums now pose a giant hurdle in ASEAN’s endeavour toward becoming the fourth largest economy in the world by 2050. This is a rallying call-to-action for CLMV, whose growth is a key factor in that goal.

Startups, the seeds from which major corporations sprout, are the linchpin of economic revitalisation and a burgeoning investor hub. With a relatively raw entrepreneurial scene, CLMV has immense potential for growth and should strive to proliferate strong SMEs and local industries within the next few decades.

This report shall thus focus on the startup ecosystems of CLMV. This report will – (1) unpack outstanding features of the CLMV startup community; (2) examine the respective growth obstacles; and (3) highlight promising sectors that CLMV can dive deeper into.


Mr James Tan
Managing Partner
Quest Ventures

Cambodia, Laos, Myanmar and Vietnam, commonly known as CLMV, is an eclectic grouping of long histories and rich cultures. With a sizable combined population of 175.7 million, the market in CLMV is challenging and exciting.

The technology startup scene in these countries has blossomed over the decade. In preceding years, our research and networks on the ground show the rapid growth in the amount of funding, number of startups created, and overall development of the ecosystem.

Even with COVID-19 as an important consideration, we remain bullish on the potential of CLMV. Barring major shifts in political direction, we expect growth in technology startups in CLMV to continue unabated.



Cambodia has had a turbulent history. 40 years on, Cambodia is still reeling from the effects of the Khmer Rouge regime, responsible for the mass killings of millions. Despite its past which has left a significant number of its population in poverty, the country has been striving to escape this state. Its poverty rate has in fact more than halved from 2004 to 2018, with the percentage of citizens under the national poverty line decreasing significantly from 47.8% in 2007[1] to 12.9% in 2018[2]. The economy has primarily been driven by industries such as Agriculture and Garments[3]. Tourism is another leading source of income for the nation as many tourists flock to the country for its magnificent Angkor Wat, contributing 12.1% to the nation’s GDP in 2019[4].

However, the negative impact of COVID-19 on its core sectors has once again highlighted the importance for the country to focus less on traditional sectors that rely heavily on manual labour or external derived demand[5]. Instead, they need to shift their priorities to the digital economy which is often better able to weather heavy storms, and which is largely driven by young budding entrepreneurs in the community.

Startup Community and Ecosystem

1. Co-working Spaces

More than 23 co-working spaces and innovation labs have been established in Cambodia since 2011[6] – a considerable number considering the early stage of the startup ecosystem in the country. In fact, these spaces cater not just to startups, but also to bigger names in the tech community. SmallWorld Realty, a partnership between SmallWorld Venture and Raintree, is one of the newest spaces launched in the country[7]. Its tenants include Microsoft and Grab, thus bringing together opportunities for large collaborations between tech companies and startups. As startup founders continue to grow their business and build their network while working at these collaborative spaces, the startup ecosystem in Cambodia is sure to continue growing and shows no signs of slowing down.

2. Mentorship and Training

Cambodia has a considerable number of incubators and accelerator programmes although its startup ecosystem is still in a rather early stage of growth. The economy is slowly transforming from one heavily dependent on physical labour to one geared towards building skills and knowledge[8], tapping on the youthfulness and vibrancy of its population.

One such accelerator programme available to budding entrepreneurs include the BIO Accelerator Program, launched by the Cambodia Investor Club Association. It provides several months of intense training and mentorship for SMEs chosen to be part of their holistic programme. Entrepreneurs who undergo this programme learn to develop their businesses in a sustainable manner in order to achieve financial independence. SHE Investments has also delivered similar programmes, namely the SHE Incubator and Accelerator. What differentiates them is their specific focus towards women entrepreneurs whom they found are often unable to grow past the micro stage of business[9]. Hence, they aim to help women obtain the same resources and attain the same status as men in this developing economy.

Additionally, a major milestone for the startup community was the launch of the Techo Startup Centre, an incubation centre that aims to further the development of Cambodia’s digital economy[10]. Being government-funded, this signalled the government’s recognition for such innovative efforts and its willingness to dedicate resources to further the development of early businesses. Its location within the Royal University of Phnom Penh also increases its proximity to youths, allowing the community to harness the benefits of its young population.

3. Funding and Investments

Cambodia’s business environment has been known for its openness to foreign companies and investors. The country has designated Special Economic Zones which provide tax benefits on imports and exports, and also permits full foreign ownership of most companies[11]. Although its investment law is already touted to be friendlier than its neighbours’, the country is in the midst of revising its investment law in order to increase its competitiveness and attractiveness among foreign investors[12]. With fewer restrictions and greater protection for investors as compared to other countries, investors will be more incentivised to consider investing in startups in Cambodia.

Its open business environment has evidently reaped benefits, with the country’s investment value increasing from USD 2.9 billion in 2012 to USD 9.4 billion in 2019[13]. The number of publicly-disclosed startup investments has also risen over the years, doubling to more than 10 between the years of 2015 and 2018[14]. This is a vast improvement as startups in Cambodia generally find it difficult to receive seed funding, let alone larger funds[15]. A greater diversity of funding sources has attributed to this rise in investments.

The increase in funding in the last few years has originated from both public and private sources. In the private sector, the USD 5 million Smart Axiata Digital Innovation Fund was launched in 2017 to provide more funding options for local startups[16]. Additionally, Octane, a local venture capital firm backed by Worldbridge Group, closed its first investment fund in 2019 with a total of USD 55 million aimed at tech investments in Cambodia[17]. In the public sector, the government launched a USD 5 million annual fund at the 2019 Cambodia Outlook Conference which aims for “Digital Transformation toward Industry 4.0”[18]. The increase in financial support for local tech startups has thus shifted the country’s focus away from traditional businesses and business models towards those in the digital economy. As the number of funding opportunities increase over the years, startups will be able to gain greater access to capital which will in turn propel further growth and development of the local startup ecosystem.


1. Poor Governance

Cambodia has been criticised for not being a true democracy due to the absence of a credible opposition. Kem Sokha, the former leader of the Cambodia National Rescue Party (CNRP), was arrested in 2017 for treason, and the CNRP was dissolved[19]. This enabled Hun Sen’s party to win all parliamentary seats in the 2018 elections with a one party rule. However, no evidence has supposedly been found against Kem Sokha for the last two years, strengthening the theory that he was wrongly accused[20]. Beyond the conjectured corruption involved are dated political ideologies that may hinder the country from advancing together with global trends. The absence of an effective opposition questions the ability of the ruling party to accept foreign trends and practices, thus suppressing the introduction of new developments and perspectives. This may also instil fear in the locals to introduce new ideas to the community that may not be very welcomed by the government as they may risk being criminalised. These considerations may cause Cambodia to strive towards economic and political progress without any effective advancements, affecting all realms in the community including the startup ecosystem. The lack of a strong governmental structure and concerns of corruption may also in turn deteriorate trade relations and hinder foreign investors from entering the country, as already seen by the European Union’s withdrawal of the Everything But Arms’ trade scheme due to concerns of human rights violations[21].

2. Startups’ Limited Access to Capital and Professional Services

One common problem that startups in Cambodia face is their inadequate access to capital and professional services. While strides have been made to promote and boost the local startup scene, these fundamental resources are required by the startups when developing their business.

The poor access to capital is a problem not only faced by startups, but by businesses in general. With high interest rates, undesirable loan terms, and high collateral requirements, local businesses find it difficult to receive capital financing. This has been highlighted as a problem by the Cambodian government under the Cambodia Industrial Development Policy 2015-2025[22], reinforcing the need to improve the country’s banking system in order to support local businesses and further economic growth in the country. While a new fund dedicated to capital financing for SMEs was set up in 2020 by the Rural Development Bank[23], it specifically targets SMEs in the agricultural sector which has traditionally been the backbone of the Cambodian economy. As a result, SMEs in other rising sectors are still left behind.

SMEs have also had limited access to professional services, which are the key to establishing their businesses within the country’s regulatory framework. Over 60% of founders have struggled to find sufficient information related to legal and tax advice24[24], thus posing an obstacle to their awareness of the latest updates or actions that they are required to take. Several firms have noted the importance of improving startups’ access to professional services. In 2019, the first professional service alliance in the country was established, with a focus on the tech community which consists of many startups[25]. This marked a huge milestone for the startup community which will be able to receive more guidance and advice. To ensure that the startup community is able to continuously receive such crucial support, the alliance can consider bringing more professional services firms on board to expand the capacity that the fast-growing startup scene requires.

Rising Sectors

1. Fintech

Cambodia’s population is becoming increasingly tech-savvy, yet 78% of them remain unbanked and a mere 13% are acquainted with mobile payments as of 2019[26]. As few established foreign players have noticed this under-served market[27], startups can capitalise on this opportunity to meet the needs of the local population. These startups can provide mobile payment solutions and even address the very issue of the limited access to capital that many startups are facing today. Several startups, such as Morakot Technology and Clik have already entered the Fintech sector, carving a name and reputation for themselves. As new Fintech startups are sprouting quickly, founders that aim to address existing problems in the Fintech sector need to take quick action and launch their business soon in order to ride this wave.

2. Agritech

Agriculture made up 20.71% of Cambodia’s GDP[28] and employed 32.3% of the population in 2019[29]. As one of the key drivers of the country’s economy, it is understandable why it has been receiving a considerable amount of attention and resources from the government. Apart from the specific funding provided to Agriculture companies, the Ministry of Agriculture, Forestry and Fisheries has soft-launched a mobile application for the sector, tying it in with e-commerce to match farmers with consumers[30]. There is evidently still a gap in the Agriculture sector in terms of streamlining processes and there remains a lot of untapped potential in terms of the mechanisation of agriculture. Nevertheless, farmers increasingly understand the importance of moving away from traditional manual processes in order to improve productivity[31]. Agritech thus plays an important role in transforming the sector that has supported the country tremendously for it to remain as a driving force for the Cambodian economy.


Cambodia’s open business environment is definitely a strong pull factor for foreign investors and business owners, but changes in its complex political scene may affect foreigners’ perceptions of the country’s long-term stability. The government’s focus has appeared to be on traditional industries, such as Agriculture, Manufacturing, Garments, and Construction. While technology can play a significant role in digitising these industries and transforming them, it will be difficult for startups to enter these industries predominantly occupied by large players unless they are offered more opportunities to obtain the resources needed to compete effectively with these players. Although some of these efforts are targeted towards specific industries, it is heartening to know that there have been more initiatives from both the private sector and the government in the form of accelerators and funding.

Nevertheless, the startup ecosystem, while making significant progress over the years, may be at too early a stage for many foreign companies and angel investors to confidently enter and provide the resources it requires. It still needs greater support from the local community first before more foreign investors and companies are willing to step in and complement local efforts with their own.



A landlocked country with a small population of 7.2 million, Laos is often overshadowed by its neighbours, yet it has had comparable economic growth despite being one of the poorest countries in Southeast Asia. Having been given a status upgrade by the World Bank and transiting from a low income to a lower-middle income economy[32], Laos’ real GDP has been steadily rising[33].

Its small domestic market has raised investors’ doubts on whether the market is large enough to support sustainable growth[34]. To mitigate them, Laos has increasingly engaged in international trade, namely through its entrance into the World Trade Organization (WTO) in 2013. This has allowed the landlocked country to gain access to more trade partners and negotiate for more advantageous trade terms[35], introducing the closed economy to a trove of resources and opportunities. Yet at the same time, this may also expose the country to instability in the international economy that it was previously rather shielded from, especially if it becomes increasingly dependent on foreign consumption and investments. Nevertheless, it is undeniable that Laos has much to gain from greater international trade, and in particular, the startup ecosystem which has benefited both small and large countries all around the world.

Startup Community and Ecosystem

1. Co-working Spaces

Laos has progressively seen a stronger startup support system in its capital city, Vientiane, through the increased number of co-working spaces to facilitate interactions between startups. Modelled closely after other reputable co-working spaces in the world, Tohlao set up a co-working space in Vientiane in 2016, followed closely by Toong in 2019[36]. These spaces provide a conducive environment for intra and inter-party communication between startups, as well as invaluable opportunities for growth. Despite being a relatively new concept to the community[37], it has seen considerable success and support from local businesses.

2. Mentorship and Training

To tackle the lack of education and skills among the Laotian population, appropriate guidance needs to be provided as even startups with the most extensive resources will be unable to flourish without relevant expertise. While sufficient funding is indeed an enabling factor for businesses, mentorship plays a pivotal role in the long-term development of the business.

As part of Tohlao’s efforts to strengthen the local startup community and promote entrepreneurship, Startup Weekend[38], a competition for startups to hear from successful businessmen and develop a business plan, was organised. The winning teams will then be given the opportunity to participate in Tohlao’s startup incubation programme[39], which has birthed successful startups such as Book Delivery, Bizgital and LOCA. Similar programmes will definitely aid the growth of businesses in Laos, where there is still a weak presence of strong incubators and accelerators catered to small companies.

The importance of training and developing future generations of skilled workers has also been recognised. Such training has been particularly catered to the technology sector in order to enable strong growth in the digital economy. One notable training programme is the AC STEM Lab[40], supported by the United States Embassy and multinational technology companies including Facebook. While increasing the pool of skilled labour in Laos, such programmes also attract large conglomerates to its undervalued resources and diverse opportunities.

3. Funding and Investments

The limited investments in Laos has been attributed to the rather nascent stage of the startup scene in the country, where startup founders have little experience and resources. Angel investors thus often overlook the country in exchange for economic hubs in neighbouring countries, at the detriment of the startups in Laos.

Nevertheless, investors are starting to recognise the growth potential of the small country. In 2016, the Mekong Angel Investors Network (MAIN) created a new chapter in Laos, led by the Australian government and comprising investors from regions including Europe and Australia[41]. Although this signals positive change to the startup scene, more investment opportunities need to be created in Laos in order to retain and attract investors who will otherwise take off for more attractive deals in its neighbouring countries. Potential startups in Laos need to tap on their strengths which, unlike many startups in other countries, may not lie in the technology sector, at least not for now.

Potential Challenges

1. Lack of Sizeable Talent Pool

Laos’ small population has, from the start, restricted its talent pool of knowledgeable and skilled workers. This is further dampened by the poor financial literacy and financial inclusion among its citizens. The unbanked population in Laos makes up more than 60% of its total population[42], as they mainly engage in informal financial services. As a result, they are largely unaware of the functioning of the financial markets and the proper processes needed to secure funding for their business.

The language barrier also poses an issue for local startups to secure foreign funding, whose founders may be unable to eloquently present their business plan to overseas investors in English[43] – the dominant language of businesses[44]. This thus reduces their ability to facilitate communications and build relationships with foreign investors whose primary means of communication could be in English. Consequently, there needs to be greater investments in human capital by the local government in order to attract long-term foreign investors to the country.

2. Underdeveloped Technological Infrastructure

The underdeveloped technological infrastructure is exceptionally evident in two areas: (1) internet usage and (2) financial technology (Fintech) solutions.

The internet penetration rate in Laos is one of the lowest in ASEAN – a mere 39% in 2019[45]. This low take-up rate has hindered businesses from harnessing technology to maximise efficiency, and has reduced their ability to raise awareness of their business ideas through social media and networks. A stronger technological infrastructure is needed to support businesses through their conceptualisation and operational phases, and help them compete with similar companies in the global arena.

Fintech advancements in Laos are also scanty, signalling the lack of exploration into the field by individuals and small businesses. The financial services sector in the country is still in its infancy stage, with advancements mainly led by financial institutions. The state-owned commercial bank, Banque pour le Commerce Exterieur Lao (BCEL), partnered with CyberSource in 2013 to offer a secure online payment gateway for merchants and customers[46]. But such developments are few and far between, and may be deemed insufficient to keep Laos up with the pace of global technology advances, contributing to its large unbanked population as well.

Rising Sectors

1. Edtech

Edtech is one sector poised for growth, and whose growth has been accelerated in this COVID-19 landscape. Laos’ neighbouring countries, including Vietnam and Thailand, have implemented several of such solutions including Topica and OpenDurian even before this pandemic. As the adult literacy rate in Laos remains the lowest among the CLMV countries at 58.3%[47], there definitely remains a gap in the education market that startups have the ability to fill although Laos’ technological infrastructure and uptake needs to increase tremendously.

The need for localisation and customisation of this sector raises the barrier to entry to foreign companies, who may also overlook Laos’ underserved market in favour of other larger markets. This represents a good opportunity for local startups as education solutions need to be tailored to local needs. Such needs are best understood by the locals, rather than foreign companies that may not have a good grasp of the market unless they have local staff on the ground. Locals who are looking to set up a business can definitely consider delving into this space with the lack of competition in Cambodia.

2. Agritech

Agriculture is still one of the main drivers of the Laotian economy although it is gradually contributing less to the economy over the years, making up 15.29% of its GDP in 2019[48]. Due to the unpredictability of the weather and other natural variables in the region, Agritech can mitigate the impacts of these variables and help farmers improve their productivity. The use of drones is a cost-efficient way to monitor the condition of crops over vast areas of land, yet this has hardly been implemented in Laos due to low uptake and regulatory restrictions[49]. Farmers in the country make up a large underserved group that startups can definitely target and aid in the process. Should startups be able to roll out solutions that are able to bypass these regulations and raise greater awareness of their benefits, they will definitely be able to reap the potential of the shift from traditional agricultural methods to digitalised ones.


Laos’ small domestic market may be seen as an impediment to growth in the eyes of foreign investors, but its size should not be the ultimate obstacle to its growth. Laos can learn from the successes of small, developed nations like Singapore – whose population is even smaller – in terms of harnessing the full potential of its population through greater dedication of financial and physical resources to its human capital.

In order to further its pursuit for economic growth, Laos needs to contribute more towards startups who may have brilliant solutions to its long-standing problems and which are scalable in nature. Currently, the infrastructure and resources required to create a robust startup ecosystem in Laos are still lacking. There are few available incubators and accelerators that would otherwise immensely benefit the locals in terms of the capital and mentorship they require. Moreover, only 39% of the Laotian population had subscription to internet services as of 2019[50]. A larger proportion of the population needs to have regular access to the internet in order for companies to reach out to them with new technological solutions. Only when these issues are addressed can the startup ecosystem truly flourish.



As the largest country in mainland Southeast Asia, Myanmar is a country known for its long history and rich culture. The country stands to benefit from its large young population where 55% of its population is aged under 30[51], thus granting them access to a large talent pool who can enact various changes in the future and bring about stability to its social structure.

The country has experienced positive GDP growth every year for the past 30 years ever since its liberalisation[52], and it is expected to remain positive at 1.8% in spite of the pandemic’s effect on the global economy[53]. Myanmar’s economy has traditionally been centred around Agriculture, which hires 48.85% of its working population[54] and provides a stable contribution to the country’s GDP[55], although this number is now on a decreasing trend. Its Industrials sector, consisting of manufacturing, mining and hydropower, is another key source of revenue for the country as it harnesses the benefits of its natural endowment.

Startup Community and Ecosystem

While the startup ecosystem is still in its early stages, it has made significant headway in generating acceptance of innovation and entrepreneurship within the community. Digitalisation has played a great role in expediting this progress, with the SIM penetration rate in Myanmar multiplying from 10% in 2013[56] to 105% in 2019[57]. Greater digital connectivity has enabled startups to connect with a larger target audience and expand their reach, contributing to the digital economy in return[58].

1. Co-working Spaces

The first co-working space established in Yangon was Phandeeyar[59]. Since its establishment, the importance of such cost-efficient spaces for freelancers and startups has been recognised. This has led to more co-working spaces being set up over the years to meet the demand for flexible work arrangements and locations. Another similar space is Seedspace Yangon, an entrepreneurship hub opened in 2019 which offers co-working spaces and boosts collaboration among startups and with external partners[60].

2. Mentorship and Training

Many incubators and accelerators have been established in the local community in order to support startups in their early phases. Incubators, such as Impact Hub Yangon and Kanaung Hub, organise workshops for entrepreneurs in order to realise their ideas. Accelerators, such as Phandeeyar Accelerator[61], help startups at a slightly later stage of development by organising various programmes and competitions to provide them with resources to further their growth. The GSMA Ecosystem Accelerator Innovation Fund also provides grants and equity-free funding to the startups selected for its annual programme[62]. Such programmes provide tangible benefits to startups who lack the resources and expertise to grow their innovative ideas, and are particularly important for the emerging economy.

Several facilities in Myanmar also dedicate themselves to the training and development of the population’s skills in order to equip locals, especially youths, with the necessary knowledge and mindsets to launch a successful business. One example is the Myanmar Young Entrepreneurs Association (MYEA) which aims to empower youths to pursue entrepreneurship[63]. The Myanmar Women Entrepreneurs Association (MWEA), which promotes women entrepreneurship and gender inclusivity, recently established the Women’s Entrepreneurship Development Center to further encourage women’s pursuit of entrepreneurship through their ability to balance work and family[64]. It is commendable to note that organisations are putting in immense effort and resources to enhance the entrepreneurial ecosystem in the country while pursuing sustainable development goals at the same time. Some of these initiatives have been set up by foreign companies as part of their corporate social responsibility programme. For example, the Samsung Tech Institute launched by Samsung Myanmar in 2016 provides vocational training to high school students in various technology fields, exposing them to more career options and linking them up with networks of successful entrepreneurs.

3. Funding and Investments

The amount of private investments in Myanmar has been expanding, in the form of private equity, venture capital, and angel investors. The number of private equity deals has been steadily increasing for the past five years, from just three deals in 2015 to 15 deals in 2019, although the size of the deals has largely varied especially in 2016 and 2018 which received mega-deals[65].

Several companies have led these private investments in Myanmar. Delta Capital Myanmar has been at the forefront of the scene since its establishment in 2013 with USD 120 million of assets under management, making it the largest asset manager in the country[66]. Its second fund has had a large focus on economic, social and governance (ESG) investments[67], taking advantage of the increasing popularity of impact investing in Southeast Asia[68]. Venture capital firms have also been reaping the benefits of investments in early-stage companies and startups. Seed Myanmar and EME Asia are two such companies that have concentrated their portfolio solely on Myanmar startups, as they believe in the startups’ deep knowledge of the challenging local market and ability to leverage their networks.

Angel investors make up another group of private investors that has contributed to the accelerating growth of the economy by investing in seed stages of startups. These investments are often made through angel investment networks such as the MYEA Angel Network, or the ASEAN Angel Alliance. Myanmar is in a strong position to benefit from this group of investors as angel investors have begun eyeing the Southeast Asian region for growth opportunities[69].


1. Slow Acceptance of International Trade

Myanmar’s slow acceptance of international trade has largely been attributed to its large domestic market, the main source of its current economic growth. Its exports as a percentage of its GDP, at just 30.4% in 2019[70], is among the lower percentages in ASEAN, including landlocked Laos which arguably has less access to international economies due to its geographical positioning.

Trade is a factor crucial for economies to thrive and will prove to be beneficial in the long run. Given its strategic location, Myanmar should harness its geographical advantage to become a key exporting hub in the region. As the regulations surrounding exports become more relaxed and Special Economic Zones (SEZs) are established, there is greater incentive for both trade and investments. These developments signal that the importance of trade is gradually being recognised in Myanmar, with new bilateral projects and agreements being established regularly. The liberalisation of Myanmar’s economy is quickening, and will soon achieve rapid growth should it be able to sustain its existing momentum and should local companies be able to gain greater traction in foreign markets.

2. Political Instability

Politics in Myanmar has long been rife with corruption, control, and power. Being poorly ranked at 130 out of 180 countries on the 2019 Corruption Perceptions Index by Transparency International[71], Myanmar’s relatively high levels of corruption could pose an obstacle towards attracting foreign direct investments (FDI) to the country, as investors question the legitimacy and transparency of the bureaucracy.

Though significant political headway was finally made in 2015 after half a century, the NLD has seen its support dwindle due to its poor relations with minority groups[72]. While initially revered as a public icon, Aung San Suu Kyi has been criticised for her dealings with the minority ethnic groups in the country. Internal clashes have intensified instead of ameliorating, even requiring interference from the International Court of Justice[73]. Fighting in the Shan and Kachin states, as well as the Rohingya crisis in the Rakhine state, have displaced minority groups and disrupted internal peace – a factor crucial to stimulating the country’s tourism industry. It is likely that these conflicts will have an impact on other aspects of the economy too, including the inflow of FDI. For Myanmar to sustain strong economic support from the international community, it is imperative for it to continue working towards political stability through collaboration agreements between the NLD and the Tatmadaw, and with minority ethnic groups.

Rising Sectors

1. Healthcare

The ongoing pandemic has reinforced the need for reliable healthcare services. Myanmar’s health worker density of 1.49 health workers per 1,000 people[74] is well below the World Health Organization’s recommendation of 2.3 health workers per 1,000 people[75], thus necessitating more resources to be allocated to the sector in order to compensate for its low healthcare coverage.

Several large pharmaceutical companies, including DKSH Group, have already entered into partnerships with the government to embark on programmes that aim to increase access to high-quality healthcare among the local population[76]. Likewise, there have been startups who are developing solutions to back-end issues in the healthcare sector such as poor custody of patients’ medical records and personal data. Klenic Software Co. is one startup that has aimed to protect such information through digital solutions and Software as a Service (SaaS) technology[77], adding value to the support network. With a growing need for a strong healthcare system, startups can capture the opportunity and bridge the gap between the existing healthcare infrastructure and those not covered by the healthcare network.

2. Financial Services

Myanmar’s low financial inclusion has made Financial Services a rising sector. Currently, more than 70% of Myanmar’s population remains unbanked[78], a far cry from the much lower 31% of unbanked global population recorded in 2018[79]. At the same time, the country has had a high smartphone penetration rate of 80%, signalling the potential to gain the population’s acceptance of such under-explored services through the digital realm.

Several companies have tried to bridge this gap in Myanmar, including Wave Money, a joint venture between Telenor, Yoma Bank, and First Myanmar Investments, which allows for quick and secure electronic funds transfer across the country[80]. Myanmar’s Central Bank has also piloted MMQR, which enables the use of QR code payments at local businesses and banks, bringing it a step closer to digitalising payments and becoming a cashless society[81]. Nevertheless, the outreach by existing providers needs to be greater – a gap which can be further narrowed by startups.


With greater liberalisation of the economy and advancements in the political scene, Myanmar is now making its way to become an attractive destination for investors. The nascent startup scene in Myanmar is gaining a lot of attention not just within the domestic economy, but also among the international community. Currently, the economy has a greater focus on the development of early-stage businesses, and the community has benefited from startups who have developed solutions to solve local problems which they have personally experienced. As such early-stage startups grow and prove profitable, investors will be more willing to dedicate capital and resources to later-stage developments in the economy, enabling the ecosystem to flourish as a whole.



Vietnam has achieved immense success over the past three decades, experiencing rapid economic growth and establishing strong relationships with other countries. The introduction of the Doi Moi Policy in 1986 during the country’s economic crisis shifted them from being a communist economy to a “socialist-oriented market economy”[82]. Consequently, their private sector has become a large contributing factor to their economy, and the country’s GDP is projected to grow 2.8% this year in spite of the ongoing pandemic, ranking it the fifth in the world in terms of speed of growth[83].

Its strong growth can be attributed to its healthy relationships with large global economies as it strives towards achieving an open economy. The many foreign agreements signed by Vietnam have enabled its admission into the ASEAN Free Trade Area, World Trade Organization, and the recent EU-Vietnam Free Trade Agreement[84]. Such agreements have allowed the country to enjoy tax benefits, thus promoting the implementation of pro-business regulations and policies in order to attract foreign investment and facilitate trade.

Startup Community and Ecosystem

As one of Southeast Asia’s fastest growing economies, the startup ecosystem has been a great contributor to its dynamic nature. The country has been constantly improving its ranking on the Global Innovation Index, achieving 42nd place out of 129 countries in 2019 and exceeding expectations for its “Lower-middle Income” group[85].

1. Co-working Spaces

Vietnam is increasingly being dotted with startup facilities, especially startup hubs and co-working spaces. They are mostly found in Hanoi and Ho Chi Minh City in order to cover ground in both the North and South of the country. Familiar names in the field include WeWork, Dreamplex, and Toong. UPGen is also another local co-working space that has thrived over the past few years, opening its first workspace in 2016 and 17 more in the following years. In fact, it caters its space to both startups and corporations as it often dedicates around half of each space to an anchor tenant, who will then occupy a greater space as it grows larger over the years[86].

The growth of co-working spaces has been phenomenal, with the sector growing 55% annually from 2013 to 2018, pushing Vietnam into the top 50 global rankings in 2019 for coworking growth[87]. Such a business model has gained significant traction among the Vietnamese, where its youthful population has a strong entrepreneurial mindset and thirst for success. These facilities catered especially to startups and SMEs will provide them with greater flexibility and a conducive environment to exchange innovative ideas.

2. Mentorship and Training

Mentorship to startups in Vietnam have mainly come in the form of accelerators and conferences. These involve different types of exposure, ranging from seminars to hands-on workshops and networking sessions. Techfest Vietnam is a prominent conference organised for the startup community which attracts thousands of attendees, enabling startups to expand their network and outreach[88].

A tremendous amount of support has been provided by the government in terms of building accelerators and forming partnerships with innovation hubs worldwide to encourage and grow entrepreneurship. One fresh example is Grab Ventures Ignite, Grab’s newly launched accelerator programme under their “Grab for Good” development plan, which is partnering with Vietnam’s National Innovation Center among other prestigious names[89]. Saigon Innovation Hub, a government-backed agency, has also facilitated a partnership with Quest Ventures and Enterprise Singapore as part of the Global Innovation Alliance (GIA) network which increases awareness of both countries’ startup ecosystems through exchanges and market access programmes[90]. Such cross-border collaborations will definitely spur startups to explore new frontiers and boost innovation within the ecosystem.

3. Funding and Investments

With many initiatives from both the public and private sectors, Vietnam’s startup ecosystem is certainly experiencing rapid growth and attracting various types of investors. These include private equity firms and angel investors. In the case of angel investors, their investments are made via networks such as the Vietnam Angel Investor Network (iAngel) and Vietnam Angel Network (VAN), or perhaps even through the angel investment reality show Shark Tank Vietnam.

Private equity plays a pivotal role in advancing the innovation ecosystem in Vietnam. With a mix of domestic and foreign players respectively making up 36% and 64% of private equity investments[91]. In Vietnam, between 2017 and 2019, private equity firms had reaped USD 1.8 billion from 139 deals across the country[92]. They are now on par with Indonesia in terms of deal value and their growth is projected to accelerate in the years to come. Key players in private equity include Mekong Capital and Vietnam Investments Group.

There has also been a strong presence by venture capital firms in particular. IDG Ventures Vietnam (IDGVV) spearheaded the development of venture capital in Vietnam in 2004, with its 35 portfolio companies today including notable investments like VNG, Webtretho, and Vietnamworks[93]. Ever since, Vietnam has seen the entry of multiple funds from all over the world, especially in recent years. Silicon Valley-based venture capital fund 500 Startups began its Vietnam chapter in 2016 and was oversubscribed with a fund size of USD 14 million and 42 portfolio companies as of May 2019[94]. Regional venture capital firms such as Quest Ventures, Cento Ventures, and Monk’s Hill Ventures have also been actively involved in investing in early-stage companies in Vietnam.


1. Slow Regulatory Reforms

Vietnam’s economy is fast-growing, yet its regulatory reforms seem to be lagging behind and are still unable to keep up with those of developed countries. Vietnam’s ranking in the Ease of Doing Business under the World Bank’s Doing Business Report has somewhat stagnated for the past few years, hovering around 68th place in 2017 and dropping to 70th place in 2019[95]. Its current economic prosperity is mostly attributed to past economic reforms such as the Doi Moi policy, and current reforms need to work in tandem to support this boom. New regulations need to be consistent and transparent to the masses[96]. It is imperative to continue providing assistance and greater protection for investors and taxpayers in order to entice them to local businesses[97].

2. Poor Enforcement of Intellectual Property (IP) Rights

The enforcement of IP rights is crucial for an economy to continue developing and attracting investors. While more than 300 businesses in Vietnam have made their first moves in legalising softwares, thousands continue to stick with piracy softwares[98] – a red flag for poor enforcement and abuse of rights despite existing regulations[99]. Without strong protection of IP rights, businesses may be deterred from conducting research and development as their new solutions can easily be copied by competitors. This in turn results in a vicious cycle where innovation is hindered, causing the economy’s growth to slow down and plateau. Fortunately, this has been recognised as a problem and the government has released a national Intellectual Property Strategy till 2030 as it works towards sustainable growth and development[100]. Government agencies need to be proactive when enforcing IP rights and also aim to build respect and awareness of the importance of such rights within the community[101].

Rising Sectors

1. Fintech

The Fintech sector in Vietnam is rapidly growing, with Vietnam’s growing middle class contributing to an increase in internet usage and demand for such services. Vietnam’s Fintech Startup Map 2019 shows the many companies in each Fintech segment, of which Payments and Peer-to-peer lending are the two largest segments[102].

However, a whopping 69% of its population remains unbanked[103]. Despite the many Fintech companies in Vietnam aiming to bridge this gap, there is evidently a still a need for more companies to serve the local population in the financial services field. The sector has been receiving strong support from investors, increasing its share of Southeast Asia’s total Fintech investments from 0.4% in 2018 to 36% in 2019[104]. With the strong support from investors and with the government working towards building a cashless society[105], businesses who aim to venture into this sector are thus poised for growth.

2. E-commerce

With the rising smartphone and internet penetration rates in Vietnam, e-commerce is becoming an increasingly common mode of transaction among the local population. The Vietnamese e-commerce market amounted to USD 5 billion in 2019 and is projected to hit a staggering USD 23 billion in 2025, with a compound annual growth rate of 7.1% for its revenue[106]. This has put it as one of the fastest-growing internet economies in Southeast Asia alongside Indonesia[107], presenting a significant opportunity for online marketplaces and local merchants. While international companies such as Shopee and Lazada are large players in the Vietnamese market, local platforms including Thegioididong and Tiki are faring strongly as well by improving their value propositions to customers[108]. The government has also laid out an e-commerce development plan for the nation, focusing on the sector’s growth while also keeping sustainability in sight[109]. Companies that are able to incorporate these goals in their business while keeping costs low and remaining competitive will eventually emerge out top.


Vietnam is on an upward trajectory, showing no signs of faltering. Their startup ecosystem is at a relatively advanced stage as compared to Cambodia, Laos, and Myanmar, and the entrepreneurial mindset is being ingrained in a larger proportion of its population. Vietnam is constantly ahead of its neighbours, and its growth is even expected to overtake several developed economies in the region too.

With its strong human capital and governmental support, more local and foreign investors view it as a vibrant hub and emerging market that is worth exploring. Certainly, failures are inevitable along the way and businesses need time to harvest the fruits of their labour. However, opportunities await investors who are willing to invest in patient capital and who believe in the country’s long-term prospects.


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Impactful Successes in Southeast Asia

Understanding the Successes and Potential of Impact Investing in Southeast Asia

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Download full PDF (0.6 MB)


INSEAD Analysts
Ms Arushi Mehta
Mr Ethan Zhang
Mr Sanya Goyal
Ms Paula van Brakel

Quest Ventures Analysts
Ms Elizabeth Tan
Ms Michelle Quek

Mr James Tan, Singapore


This study is done as part of the INSEAD MBA Private Equity course and in cooperation with Quest Ventures, a VC fund that invests in technology startups that have scalability and replicability in the Digital Economy. It focuses on backing Southeast Asia and Emerging Asia’s startups in the post-seed to Series A stages in Southeast Asia and Emerging Asia. Main Purpose of the Project: Quest Ventures is launching a new sustainable impact fund, which actively invests in early stage, high growth and impact-driven startups in Emerging Asia (comprising Southeast, South and Central Asia). Through this project, we hope to assist Quest Ventures in raising further interest in its impact fund (targeted at $30mm) by providing a research-based study on the attractiveness of impact investing in Southeast Asia. We are looking for companies that have demonstrated track records of achieving dual sustained success of financial and social or environmental returns in the region.


Mr James Tan
Managing Partner
Quest Ventures

This impact research by INSEAD is an informative look at the nascent impact investment landscape in Southeast Asia. In collaboration with Quest Ventures sustainable impact team, the report evaluated investments in the region, their performance and most importantly, their impact.

This collaboration between the analysts of INSEAD, a top business school in Europe, and Quest Ventures, a top venture fund in Asia was, by all accounts, enjoyed by the analysts as they tapped into one another’s experience and perspective. We look forward to more joint collaborations.

Problem analysis

Given that impact investing in Southeast Asia is still a relatively nascent and niche space, there is limited data and publicly available information. Despite this we managed to conduct a research into the following:

  • Which companies have successfully achieved strong financial returns, while remaining authentic to their impact intent?
  • Which countries and sectors are these success cases concentrated in?
  • What are key success factors of such firms?

Methodology and Approach

In our analysis, we have used a combination of approaches entailing both primary and secondary resources. We have conducted market, investing landscape and specific enterprise research to identify a few key success stories in the region. In order to do so, we primarily relied on well-known databases and other publicly available information. However, to substantially and meaningfully address the third issue of drivers of success for these enterprises, we reached out to 12 such companies and spoke to the founders of one.

Key Findings

Impact investing is becoming hot in the past years, and investors only recently started explicitly focussing on impact and financial returns. This is also why the number of impact businesses in Southeast Asia that received Series C+ funding or had a successful exit are still few. Most of the demonstrated successes so far are in Indonesia. Although sectors like Agri are big in Indonesia, it is remarkable that amongst the companies that received round C+ funding or did a successful exit, nearly all are in the tech space (fintech, health-tech or ed-tech).

The examples and particularly the deep dive into the CXA Group case study show how important the value proposition with a sound business model, the right partners and an excellent and driven team are. This does not sound surprising, since these are key success factors in any starting business. However, in similar businesses in other regions like the USA or India, where the space is more mature, companies and founders do not need to struggle as much to hit all criteria to the same extent as in Southeast Asia.

There is an emerging trend towards investing in education and healthcare as the middle class in the SEA countries expands and demands better basic services like education and healthcare. The ICT or tech component is underlying most of these ventures as access to internet and smartphone technology grows in the region.

Impacting Investing in Southeast Asia: An Introduction

The below is a summary of relevant insights of Southeast Asia’s impact investing landscape based on the extensive research done by the Global Impact Investing Network1.

Impact investing relatively new, growing market in SEA

SEA is a diverse region, consisting of 11 countries at different stages of economic development. Although the economic growth in SEA has been strong in recent years and shows great potential in the post-pandemic future, the imbalanced development among the countries faces a wide range of socio-economic challenges. Thus, such an imbalance creates a huge potential for impact investing in the years to come.

Despite its current relatively small size, the SEA’s impact investing ecosystem has developed significantly in the past decade. Since 2007, Private Impact Investors (PIIs) have injected more than USD 904 million through 225 direct deals, while Development Financial Institutions (DFIs) have deployed USD 11.3 billion with 289 deals. Just as the different economic stages, the entrepreneurial activities among the countries vary at a distinct maturity level so that the impact investing remains highly fragmented. Each country faces context-specific challenges.

The challenges can be further decomposed at the level of political freedom of the relevant country. Looser control, such as in Cambodia, leads to more PII investments. On the contrary, tighter control, such as in Malaysia, requires much more creative investment strategies and creates higher barriers for PII to enter and thereby invest. To bypass restrictions and have a stable operating environment, many social investors and enterprises choose Singapore as their home-base.

Large differences between countries – Indonesia ‘longest’ track-record

As the previous reasoning points out, the various stages in the countries brew divergent sectors to focus on. Indonesia has the highest GDP (PPP) in this region and a large and young population. The key sectors in Indonesia currently heavily skew to agriculture and financial services, with a promising future for workforce development, fisheries, education, and healthcare. DFI has traditionally been the major source for Indonesia. DFI activity has both the highest number of deals and the deployed amount in microfinance, commercial banks, and the energy sector.

Because of the long track record of impact investing and the more mature intermediate infrastructure, supply-side opportunities have emerged in Indonesia, which has the only impact-focused angel network in the SEA region. The network strives to fill the funding gap in the country and sets a good example for others to follow.

Early stage investments seem underfunded due to challenges

Like many other investment opportunities, impact investing in SEA faces problems as well. For instance, the seed funding investment does not seem to be widely available for social enterprises. The difficulty can be largely divided into 3 perspectives:

1) Supply-side: poor corporate governance, high cost of deal sourcing and due diligence, and the lack of sufficient local investors, all create a harsh environment to get funding

2) Demand-side: Many social entrepreneurs still see their effort as a charity and rely on grant capital, instead of focusing on organic financial sustainability. Furthermore, the new market does not provide enough network opportunities to connect entrepreneurs and investors. And, many early-stage enterprises cannot even pay for support services such as an incubator

3) Ecosystem: Fund managers currently lack local knowledge to make necessary judgements and, as a result, forbid themselves to invest continuously in the region. Additionally, most of the VCs investing in the region don’t have local offices making it even more difficult to understand the local culture and landscape. Lastly, most of the governments here are outside the rank of “top 100 on the Ease of Doing Business rankings”. These facts work together to disincentivize many investors.

The market is looking for more evidence of ‘double bottom line’ success

Quest Ventures believes that there is immense potential at the intersection of financial stability and social or environmental impact. However, it remains challenging to create more interest in this space from investors and push for more capital. Quest Ventures has asked for our support in a study that underlines the attractiveness of the impact space. The main goal of the study is to attract more investment interest and capital in early stage impact startups by showing successful investments are possible in terms of both financial returns as well as social or environmental impact returns (‘double bottom line’).

GIIN and Quest Ventures also signal that there is a lack of demonstrated success cases: “Although several exits have been disclosed since 2017, the industry needs more examples of success”.

Defining Success: The Double Bottom Line

Looking for the holy grail: good social AND financial returns

“Impact investments are investments made with the intention to generate positive, measurable social and environmental impact alongside a financial return.”

Website of the Global Impact Investing Network (GIIN)

It sounds like a dream. However, there is more and more evidence that impact and financial returns can be mutually reinforcing, for example shown by the importance of focus on ESGs for corporations. On top of that, the trend in the current world is increased attention for these aspects. But what is a measurable social and environmental impact and what is a good financial return?

Defining impact: broad definition using SDGs, just ‘jobs’ not enough

A complication is that the space of social and environmental impact is hard to define, because of the definition of what this impact is and what it is not. Many agree that measurement of this impact is one of the key factors, which can be very challenging. Greenstone, a provider of non-financial reporting solutions, recently conducted an extensive research on social and environmental impact reporting. They conclude that the application of qualitative techniques would be a safe starting point for many organizations2. In this early phase, organizations should not limit themselves to specific techniques and methods, but rather an individual customized approach should be applied to different projects, programs, investments and activities. It is then important to understand the differences and relationships between outputs, outcomes and impacts of activities for businesses: e.g. number of people trained is an output, number of jobs created an outcome, improvements in community well-being and impact (Figure 1).

Source: Private Equity & Venture Capital Benchmarks: Southeast Asia3

Another difficulty with the definition of impact is, as Claudia Zeisberger, Senior Affiliate Professor of Entrepreneurship and Family Enterprise and Academic Director, Global Private Equity Initiative at INSEAD, puts it, “As a private equity investor in an emerging market, by definition you have impact.” So how to differentiate between ‘regular’ and ‘impact’ investing in these regions? Elizabeth Tan, Venture Partner for Sustainable Impact at Quest Ventures, says that it is important to weigh the intentionality and expertise of any founding team. “We have a hands-on approach in helping our startups go to market and in this case, to scale impact. When considering the latter, we look at which segment their product or service targets and if positive impact is woven in the underlying fundamentals of the business model. The entire process is screened with this lens at every stage.” Quest Ventures measures impact on a case-by-case basis, relating it to the 17 SDGs of the United Nations, because many of the more sophisticated metrics that may exist are difficult to standardize and apply across early stage startups, which may need a more subjective and customized lens to assess impact. What is important is that the founders have a strong intention and drive to make a positive impact. We will use this broad definition of impact with a case-by-case assessment, not just on output but towards the impact, and the input (steering direction). The impact explicitly must go beyond the mass of companies, so just broad ‘job creation’ is not enough.

Defining financial success: growth and successive investments

Many impact investing funds have target returns close to average returns of non-impact funds in the same region. The logic: the positive impact and image will cost effort but will also reinforce financial returns. In the years 2011-15, median return of venture and private equity capital in Southeast Asia varied between 10-30% in the region (Figure 2). According to Bridgestone and their experience, most venture investors seek a 30% IRR on their successful investments4.

Title: Examples of social enterprises with successful series C funding or exit through
M&A | Source: Crunchbase16

However, there is often lack of data to enable measuring successes in terms of return, particularly for early stage investments and over the typical 5-10-year time span. Therefore, we will focus on successful growth of the investments. Growing and being able to attract successive investments is an indicator of the success of a company. If a company can get at least round C funding or exit successfully via M&A/ IPO within 10 years of the early-stage investment, the investment was likely successful for the investors, the business and the magnitude of their impact.

Recent Trends in Countries and Sectors

Microfinance receives most impact capital, growing interest in ICT & Agriculture

The SEA impact start-up landscape is varied as the definition of ‘impact’ itself is quite broad. However, there are some clear observable trends in the space. As mentioned previously, there are two major categories of investors – PIIs and DFIs. The former category includes a range of investors funnelling private capital into impact start-ups, while the latter are government backed financial institutions that provide capital to start-ups to promote development. The top two sectors of investment for both investor types in the region have been financial services and clean energy1.

The financial services sector has received the most impact capital, accounting for roughly 60% of all private capital deployed. Microfinance institutions account for over 80% of the capital deployed in financial services, while some capital has been allocated to insurance and commercial banking for SMEs1. Most of the start-ups in this space either operate in the micro-finance space or work with the rural and poorer regions in their country to provide access to basic financial services. For example, FinAccel is a fintech that provides access to retail credit and unsecured lending across South East Asia.

It is interesting to note the divergence in the sector preference between private and public investing after financial services and clean energy. The private sector prefers Information and Communications Technology (ICT) and Agriculture. For example, ImpactTerra based out of Myanmar is a venture that exists at the intersection of agriculture, ICT and financial services. It is a platform for farmers which offers real-time, personalised information about local crop prices, weather-based advice like flood or drought warnings, and pest risks. The platform also collects data on farmers, such as their location and details about crops, which helps financial service providers deliver financial products that meet their needs and correspond to their specific risks. This enables these farmers to get the capital they need to improve or expand their farms at accessible rates. Another example is EcoZen, an agritech startup based in Kerala, India but targeting the SEA market. It aims to improve farm-to-fork movement of perishable goods by providing solar-based cold rooms at the farm level (The Independent, 2018)

Alternatively, the public sector prefers to invest in manufacturing and infrastructure. This is understandable as both manufacturing and infrastructure are CAPEX-heavy sectors where investment periods might be considerably longer.

While social impact ventures are growing across SEA, we looked at shifting trends in two major countries in the region: Vietnam and Indonesia.

Vietnam taking off, recent trend towards health-tech and ed-tech

Traditionally, private money went into financial services and health care. There are multiple examples of health tech platforms like MediTank which provides a data management platform for medical practitioners to classify and store medical data and Vicare which is a listing and discovery platform for health care facilities, health care service providers as well as testing facilities in Vietnam14.

However, there has been a recent boom of education/ ed-tech platforms. Vietnam has 17 million K-12 students, making it a massive market for ed-tech. Investors are noticing the potential in the country’s e-learning market and a growth of 50% is expected annually. Some examples of ed-tech platforms to watch for are Edmicro, Everest Education, ELSA speak, and Tesse10.

Indonesia further developing, expanding agri-& fintech to also health-& edtech

In a country where agriculture contributes to almost 14% of its GDP growth, it is not surprising that impact ventures and funding have been focused on agriculture/ agri-tech. An example is Vasham, which assists smallholder farms with financing, technical expertise and income security, has created a vertically integrated agribusiness model that can be replicated by smallholder farmers3.

There is no dearth of fintechs in SEA and Indonesia is no exception. There is a boom of fintechs aiming to provide everything from basic banking services to the majority of the population to more complicated lending products to support employment. Along with FinAccel, mentioned earlier, Akulaku which is an e-commerce platform with a specific focus on card-less instalment shopping on products like car loans, bill payment, top-ups, travel and other leisure packages. Cashlez offers a mobile POS sales system, which allows SMEs and smaller vendors to accept card-based transactions (including Visa and Mastercard) on card readers which are connected to their smartphones12.

However, like Vietnam there is an increased preference for health-tech and ed-tech in Indonesia. As these economies develop and the population has access to more resources, the demand for better health care and education is increasing exponentially. It is therefore not surprising that back in October 2018, Indonesia’s Minister of Communication and Information Rudiantara mentioned that both health-tech and ed-tech verticals are set to become the country’s next unicorns11.

Some well-known names in the health-tech space are HaloDoc, AloDokter, PesanLab and Homecare24. In the ed-tech space, enterprises like Ruangguru, PT Zenius, and HarukaEdu have gained substantial recognition14.

However, even as the impact venture activities in the SEA grow, Singapore remains the hub for start-up and funding activity for the region. It is the market of choice for most ventures looking to expand and a lot of VC funding in the neighbouring countries is managed through Singapore.

To summarize, there is an emerging trend towards investing in education and healthcare as the middle class in the SEA countries expands and demands better basic services like education and healthcare. The ICT or tech component is underlying most of these ventures as access to internet and smartphone technology grows in the region.

Successes Stories in SEA

Number of success stories still limited, mainly because space still nascent

Although there has been growth in impact investing firms in Southeast Asia, the market is still largely very nascent and fragmented. The growth of this space in SE Asia is evinced by a rising demand from early-stage (typically Seed and Series A) impact enterprises across the region. In spite of this trend of growth, impact ventures in the region still remain grossly underinvested in and lack adequate visibility. Particular challenges that lead to these are:

  • Lack of adequate demonstrated success in the region: While there are several cases of enterprises that successfully raise multiple rounds of funding, and even manage to raise Series B funds, there are very few demonstrated success stories of firms that have managed to either exit successfully or raise funds Series C and beyond. Part of the reason for this is simply that it is a young space and most of the start-ups have been around for less than a decade. Companies making it up to round C+ have been around for 7.3 years on average (based on our sample). In order to bolster investments in impact enterprises in the region, more data is required and perhaps it may be more relevant to look at evidence on returns and impact performance.
  • High risk perception: Traditionally, impact initiatives and strong financial returns have not been considered to go hand-in-hand. This is because most social enterprise ventures rely on grants and this prevents them from focusing on independent financial sustainability. Further, because social entrepreneurship is so nascent in the region, there is a high-risk perception associated with it.
  • Lack of incentive to invest: The sparse data on returns of social enterprises coupled with the fact that the cost of conducting due diligence on these early stage ventures requiring relatively small investments is very high, dissuades investments in the space.

Yet, in spite of these challenges, a few key sectors in the region have managed to successfully expand (i.e., raise Series C or more) and exit (M&A, etc.). We have identified three such sectors (Healthcare & Wellness, Fintech and Financial Services, Ed-tech & IT) in a sample study of the top three countries (Indonesia, Singapore, Vietnam) with an actively growing portfolio of for-profit social enterprises in SE Asia.

Companies making it up to round C+: 7 examples of success stories

PT Ruma (now Mapan) – fintech in Indonesia

Headquartered out of Jakarta, Indonesia and founded in 2009, PT Ruma is a leading seller of mobile minutes, community-based lending and savings networks in rural areas of Indonesia. At the moment, it has over 3 million members and about 115 branch offices in Java and Bali. Its objective is to enable low-income communities to access products that they couldn’t previously afford by building upon technology that leverages the bonds within these communities.

It is one of the few firms in Southeast Asia that has been able to successfully exit via acquisition by Gojek in December 2017. Prior to its acquisition, Mapan had successfully raised a Series B round of funding from a.o. Patamar Capital. According to Beau Seil, partner at Patamar Capital, the deal is their most successful one. “There is now a chance for Gojek to become the most impactful company in SEA, but the question is do they have that mindset.”

It had several key reasons for its successes, which eventually enabled it to become a strong acquisition target:

  • Backed by strong investors like Omidyar Network and Patamar Capital
  • Measurable and tangible track record of financial and social returns
  • Unique product and niche positioning within region / country of operation
  • Strong team; culture for innovation and commitment to mission
  • Proof of synergies and past collaboration with acquirer – Gojek

Ruangguru – Ed-tech in Indonesia

Ruangguru is a leading education-technology start-up headquartered out of Jakarta, Indonesia. Founded in 2014, by Adams Belva Syah Devara and Iman Usman, the company offers online video subscriptions, a marketplace for private-tutoring, on-demand tutoring services, online mock exams and corporate learning. It has grown to serve more than 15 million students and actively manages more than 300K teachers. The firm raised $150mm in its Series C fundraising effort and has expanded into the Vietnamese market in 2019 through its platform called Kien Guru. The firm’s focus is to expand its products and services in the Southeast Asian region and it further plans on providing artificial intelligence-driven personalized teaching. This Uber-like model for online learning in Southeast Asia has immense potential and Ruangguru, if it continues on its projected trajectory, is well-poised for successful exits whether through acquisitions or an IPO.

Alodokter – health-tech in Indonesia

Alodokter is fully integrated healthcare ecosystem, where patients can connect with doctors, handle their medical records, schedule appointments, access content and maintain their lifestyle. Headquarter in Jakarta, Indonesia, the firm is looking to address the problem of access to quality and unbiased information pertaining to healthcare providers, medical services and doctors. Alodokter is in both English and Bahasa and is backed by Softbank Ventures Korea. It has up to 16mm users and has expanded its service to Thailand under the name Again, with an Uber-like model for the healthcare ecosystem, Alodokter’s biggest challenge was obtaining buy-in from consumers for a combination of artificial-intelligence driven chatbot and real-doctor interaction. It has raised a total of $45.1mm in funds so far with Series C being $33mm. Again, given its focused growth, strong leadership and impact-driven approach, it is another venture that may be well-suited for an exit in the near term.

FinAccel (Kredivo) – fintech in Indonesia

FinAccel is a financial technology company that is disrupting the financial services landscape by providing meaningful and relevant products in retail credit. It is currently focusing on disruption in the unsecured lending space for the underbanked in Southeast Asia through its credit app – Kredivo. FinAccel successfully raised $90mm in Series C funding for Kredivo only 3.5 years into its existence. Further, as of 201916, Kredivo had acquired over a million customers in Indonesia and was noted to be growing at a staggering 300% YoY. FinAccel has already evaluated more than 3 million applications and granted approximately 30 million loans. For further expansion and to promote financial inclusion, FinAccel is also working on low-interest education and healthcare loans. It is projected to expand its users to at least 10 million and gain strong footholds in other Southeast Asian markets like the Philippines, Thailand and Vietnam. With its fundraising success, broad product portfolio and proof of business model, it can be expected that FinAccel has the potential to be a rewarding investment as it may see future exit opportunities.

Akulaku – fintech in Indonesia, Malaysia, Philippines and Vietnam

Akulaku is a financial services provider for the urban working class in the South East Asian market. Although headquartered in Indonesia, Akulaku also operates in Malaysia, Philippines and Vietnam. It is a multinational e-commerce platform that offers online services such as card-less instalment shopping, cash loans, bill payments, etc. It has disbursed around $850mm in loans and has an employee strength of nearly 2,500. So far, it has raised about $220mm in funds, out of which $100mm was raised via Series D in early 2019. Backed by giants like Alibaba, Alukaku has already begun to invest in local banks (PT Bank Yudha Bhakti TbK) in Indonesia and help them digitize7. Through integrating its platform and technology with local banks, not only is Alukaku’s survival guaranteed in the face of increasing competition in the fintech landscape, but also its ability to thrive is practically made certain. It would be unsurprising to see the young enterprise IPO in the near future.

CXA Group – health- and insurtech in Singapore

CXA Group is on its way to become Asia’s leading Insurtech start-up. A one-stop shop, it enables employers to provide employees to proactively manage their health through a self-service platform with access to an increasing range of health, wellness and wealth offerings personalized to the individual’s own health data. By eliminating middlemen such as brokers, etc., CXA allows more efficient use of employer-provided insurance policies, wherein employees can directly draw down on the existing policies provided by their employers and the funds can be accessed via the platform’s e-wallet to make transactions efficient and effective. It serves more than 500 enterprises: servicing around 800K employees in Southeast Asia, Hong Kong and China. The company’s mission is to go global with capturing all of Asia and then expand to North America and Europe as well. It has already acquired two brokerages and raised about $58mm in financing. It is amidst raising a bridge round before raising Series C early next year. They are backed by powerful investors like Gojek’s early investor Openspace Ventures, HSBC, etc. The firm is well-positioned for a successful exit via either an IPO or trade sell in the future.

Pharmacity – health in Vietnam

Pharmacity is Vietnam’s largest pharmacy retail chain and is dedicated to improving the quality of healthcare for each customer. As of March 2020, it has more than 280 stores in the 6 major cities of Vietnam; and the company aims to achieve 1,000 stores across the country by the end of 20218. Pharmacity has witnessed a growth of 127% in sales in 2019 vis-à-vis 2018. For 2020, prior to the COVID-19 crisis, the company had set a revenue target of around $130mm. Backed by private equity firms like Mekong Capital, Pharmacity has succeeded in raising $31.8mm for Series C funds.

In the next chapter we will deep dive in one of the success cases – CXA group.

Successes so far mainly Tech in Indonesia – with clear market need

Although sectors like Agri are big in Indonesia, it is remarkable that amongst the companies that received round C+ funding or did a successful exit, nearly all are in the tech space (fintech, health-tech or ed-tech). According to Beau Seil, Partner at Patamar Capital, this may be due to the scalability. The problem with more traditional vertical integrated companies, like Big Tree Farms, is that they are much slower to grow. These businesses take much longer to scale, and the scale is not anywhere near the same as a tech-company like PT Ruma, reaching thousands of people rather than millions.

Crucial with all businesses seems addressing a true market, that can actually pay for the product or service, not just an idealistic viewpoint like the original underpinning of how many impact companies have started in the past. The philosophy is that by not just focusing on the very low-income population, the businesses are much more sustainable, and the eventual developmental impact is likely higher. These are great business ideas within the area of social impact.


CXA Group is a transforming healthcare and health insurance in SEA

CXA Group is a unique venture that stands at the intersection of healthtech, insurtech, fintech and social impact. It attempts to lower the rising cost of healthcare in SEA by eliminating the traditional one-size-fits-all benefits structure of employer covered insurance. It is digitizing the benefits and wellness value chain and connecting all the players in the wellness ecosystem like health check- ups, screening, clinics, insurance reimbursement, maintenance of medical records, etc. on one platform and eliminating the need for insurance middlemen/ brokers that drive up health costs.

Founded in 2013, CXA Group has grown from just three Fortune 500 clients to having over 500 clients and 350,000 enterprise clients. It can be safely said that CXA is a start-up that has moved into the scale-up stage.

As CXA Group gets ready for its next round of funding, we had an opportunity to speak with founder and CEO, Rosaline Chow Koo who helped us understand the unique challenges a firm like hers faces in this region.

Key challenges around funding, sufficient talent and geographical expansion

Like any start-up, CXA Group faced several challenges in all spheres of the business, be it fundraising, recruiting top talent, expanding, regulation, repeated product iterations and even more recently the consequences of the COVID-19 crisis.

Funding: After investing a very sizable amount from her own savings to start CXA Group, Rosaline admits that fund raising was quite challenging especially for a novice like her. She laughed about how she spent time googling term sheets to understand what to expect. The fact that she had made a massive personal investment ~$10mm to start the firm made it impossible in her mind to let the venture go belly-up. During a very painful 9-month period in 2017-2018, CXA Group came very close to this scenario with funds that would last only 2 more weeks. Thankfully, HSBC stepped in as both clients and investors. While she is more comfortable with fundraising now than her first round, she refuses to pigeon-hole herself in any one specific category or sector, in order to maximize her access to available investors and funds.

“Knowing that product is all you have, and you know that it will work, then you keep going and see it through!”

– Rosaline Chow Koo, Founder & CEO

Talent Resources: Having lived and worked in Iowa, New York, and Los Angeles, Rosaline mentioned that it is generally easier to acquire and retain talent in the U.S. versus in Southeast Asia. Most students are awarded for compliance and risk averse behaviour, making start-ups an unfavourable employment opportunity. However, she did acknowledge that this is changing and the landscape for start-ups is becoming more positive.

Geographic Expansion: Rosaline has a laser sharp focus and wants to capture the Southeast Asia market completely before moving to the rest of Asia and then Europe and North America. However, with a limited team and constrained time she wonders how she will achieve this expansion without overextending herself. Additionally, HSBC now a major client and investor wants her to expand her platform in the UK, Mexico, India and France which puts further pressure on her limited resources. At the same time, she is already exploring opportunities in Thailand, the Philippines, Indonesia and India, while already having presence in Singapore, Hong Kong and China.

Regulation: Trying to simplify healthcare, insurance and banking may sound like a pipe dream but that is exactly what Rosaline is attempting to do with CXA Group. However, there is no denying the fact that all three industries come with heavy regulation that vary significantly based on the country of operation.

Competition and Internal Resistance: At the same time when CXA Group was struggling with funding in 2017, insurance companies had started to build out their own claim-apps. In addition, one of the brokerage firms acquired by CXA had a 68-year old founder, who was extremely resistant to any automation and change. As a result, receipts were being lost and data-entry was a manual process and did not reconcile. Individuals were not being reimbursed for their claims and CXA lost some clients.

Product: As CXA Group transitions from the start-up to a scale-up, the challenge has shifted from that of survival to solving the pertinent question of how to streamline and create a modular product across the different enterprise clients and geographies. The product is already at version 3.0 and CXA Group is now building the product to seamlessly integrate payments, connecting with clinics, testing and screening, disease management – in essence the whole insurtech ecosystem. They anticipate having a completed product by the end of 2020.

Exit opportunities: While she is not actively thinking about an exit yet, Rosaline does wonder where she and CXA will be in the next 10 years. She believes that CXA has the potential to be a unicorn but sees an IPO as a potential exit down the line.

Key success factors: value proposition, partners and team

In the face of insurmountable challenges, Rosaline leads CXA Group to its success. Driving this success are a number of factors that come together to harmonize and balance each other. In addition to its strong value proposition, CXA Group not only found the right partners, but also benefited from a natural competitive advantage of being a first mover. Lastly, and perhaps most importantly, Rosaline created a team and culture that worked together for the success of the business.

Strong value proposition: CXA Group has identified a gap in the market and significantly lowers the cost of insurance for its enterprise clients. By eliminating middlemen and brokers, and further directly connecting the entire ecosystem through a single point, i.e., the CXA product, the firm is able to cut down costs from the traditional 30-35% of fee to only $2. Further, through automation and leveraging technology, the company has successfully reduced the insurance reimbursement window from 90 days to just 7 days. Moreover, the CXA product enables enterprises to tailor healthcare insurance to the wallet and needs of each individual by making available an ever- widening bouquet of options and having each individual choose directly.

Competitive advantage: CXA Group has a clear first mover advantage in Southeast Asia. There is currently no direct competitor for the firm, and it is precisely this unique positioning that Rosaline seeks to leverage and capture value from. In addition, since Fintech, healthcare and insurtech are all very highly regulated industries, the barrier to entry is relatively high. As such, CXA Group has the luxury to be somewhat protected from the threat of imitators and other competitors.

Right partners: Although CXA Group struggled severely for a period of 9 months with respect to fundraising, it did form strategic partnerships and find a fit with their investors. One of their investors is Openspace Ventures, an early backer of Gojek and they have been of immense assistance with respect to technology and building out the micro services for the Group. Additionally, banks like HSBC, serve as both investors and clients and are willing to sign long contracts (~11 years for $25mm). Such strategic alliances enable CXA Group to not only have a strong foundation as an enterprise through providing the firm with access to resources that go beyond the pure funds, but also enable it to traverse the scale-up phase relatively smoothly. CXA Group is currently closing out a bridge financing before raising Series C early next year.

Team and people: Rosaline is a visionary and knows the importance of streamlining leadership at CXA Group. She has a diversified C-suite with a 50-50 gender balance. CXA’s CTO came from Lazada and had scaled up 8 different start-ups before. The Head of HR had worked with Rosaline at 3 different companies before. Similarly, 75 of the firm’s current employees had all worked with Rosaline at Mercer previously and chose to move with her. Over time, CXA Group evolved its hiring-firing to match the dynamic environment of the firm. For instance, individuals who had performed terrifically during the early start-up phase of the Group were either re-staffed or let go. The individualistic workstyle and inability to work with / report to others was non-conducive to the scale-up and growth phase at the firm, which required increasing collaboration.

“If you don’t have the right people, you’re dead. If you do, it’s magic.”

– Rosaline Chow Koo, Founder & CEO

Key Lessons from Growth Successes in SEA

Social and financial impact not seen as trade-off anymore

The underpinning of companies and investors in the impact space is moving from a purely ‘we want to change the world’ towards sustainable and financially attractive business models. Social impact investing is becoming hot in the past years, and investors only recently started explicitly looking for tremendous impact and financial returns. Both should be evaluated, both have their own risks, but impact and financial returns should not be treated as a trade-off. Successes of that are only just starting to show.

Successes so far mainly Tech in Indonesia – with a clear market need

The number of impact businesses in Southeast Asia that received round C+ funding or did a successful exit is still small, but likely many more will follow in the near future. The companies making it up to round C+ have been around for ~7 years on average, based on our sample.

Most of the demonstrated successes so far are in Indonesia. Although sectors like Agri are big in Indonesia, it is remarkable that amongst the companies that received round C+ funding or did a successful exit, nearly all are in the tech space (fintech, health-tech or ed-tech). Crucial with all businesses seems addressing a true market, that can actually pay for the product or service.

Scalability is at the core of sustainability and attractiveness to investors. The digital-based and relatively light capital expenditure enables tech ventures to scale up rapidly in SEA. Business models with such characteristics are easier to achieve financial soundness.

Key success factors sound business model, right partners and team

The examples, and particularly the deep dive in CXA group, show the importance of the value proposition itself with a sound business model, the right partners and an excellent and driven team. This does not sound surprising, since these are key success factors in any starting business.

However, this may not be the case for social enterprises in the US or India. In both countries, the impact market is relatively more mature, and founders do not need to struggle as much to hit all three of the above criteria at the same time. While further investigation into this early hypothesis is required, it seems to be the case that social enterprises in more mature markets have an easier time to raise funding and therefore may get away with less. On the other hand, this would mean that there is still much more potential for successes in Southeast Asia.

In broader research for this report, it is apparent that the elite background of the founders and leadership team allows them to access precious entrepreneur resources such as early funding, government connection, and media coverage. Objectively, the access creates better M&A and exit opportunities for the ventures, thus ensuring continuous funding over different development stages.

Market opportunities looking forward likely in health- and ed-tech

There is an emerging trend towards investing in education and healthcare as the middle class in the SEA countries expands and demands better basic services like education and healthcare. The ICT or tech component is underlying most of these ventures as access to internet and smartphone technology grows in the region.


  1. The Landscape for Impact Investing in Southeast Asia, GIIN, August 2018
  2. Whitepaper ‘Beyond Sustainability Reporting’ by Greenstone, June 2018
  3. Market in Focus: Private Equity & Venture Capital in Southeast Asia, Preqin, September 2019
  4. Risk, Return and VC IRR Benchmarks, article by Bridgestone VC, February 2019
  5. Who are the top EdTech startups in 2019, Tech Collective, January 2019
  6. Kredivo’s parent firm FinAccel raises $90M…, TechCrunch, December 2019
  7. Fintech Akulaku buys stake into a bank, Fintechnews Singapore, March 2019
  8. Vietnam’s Pharmacity raises $31.8 million in a Series C funding round, Vietnam Insider, February 2020
  9. Why the next wave of Vietnamese startups won’t be clones, TechInAsia, April 2019
  10. Vietnam’s emerging edtech startups, TechCollectiveSEA, December 2019
  11. Indonesia’s healthtech sector anticipates its first unicorn,, August 2019
  12. 10 of the Top Fintech Startups in Indonesia for 2019, FinTechNews Singapore, April 2019
  13. StartUp News Asia, Quarterly Archives, Q2 2019
  14. HealthTech Startups in Vietnam, Tracxn Explore
  15. EdTech Startups in Indonesia, Tracxn Explore
  16. Crunchbase, consulted in March and April 2020

Impact Investing Framework for Early Stage Venture Capital

An approach for emerging Asia

Download full PDF (2 MB)
Download full PDF (2 MB)


Ms Khor Qianyi, Senior Analyst
Mr Zhou Yang, YLP Analyst

Mr James Tan


Impact investing is an area that is quickly gaining traction all over the world, with more than 450 investors allocating US$1.3 trillion to impact investing worldwide1. Seeking the dual goals of profit as well as social impact, it is a market based approach to resolving critical problems faced by communities worldwide – from access to education to poverty alleviation. By leveraging the power of the market, impact investments achieve outcomes that would have been enormously costly if attempted by traditional methods of philanthropy. Take d.light design for example, a startup that only had a solar lantern prototype when the Acumen Fund first invested in them, which has to date brought lighting to over 100 million people2.

While there have been many frameworks already crafted to guide the process, it is tenuous to apply existing frameworks directly to early stage investing due to the diversity of portfolio as well as limitations on quantitative data available. Moreover, there are many iterations of different frameworks, so impact measurement and reporting remains fragmented across different organisations. This report seeks to survey existing methods available and piece relevant metrics to guide impact investing in the different phases of early stage venture capital.


Mr James Tan
Managing Partner
Quest Ventures

With more than US$1.3 trillion allocated to impact investing worldwide, the world is seeing an influx of capital that is increasingly comfortable with measuring successes and returns not by financial metrics alone but by a combination of that and other factors. The dual goals of profit and social impact are now broadly termed the double bottom line. While the financial element – profit – has clear measurement guidelines such as the IFRS or GAAP, the social impact element does not. In fact, many impact measurement frameworks are available and the world has not settled on a definitive one to use. To the detriment of meaningful projects, this means that when they fund raise across the globe, their definition of social impact success has to be explained ad nauseum.

This report aims to change that.

We fundamentally believe that if the measurement of success is correct, then the inputs will be correctly deployed. Conversely, if the measurement of success is wrong, then the inputs will be wrong. When outcomes are measured in lives and the betterment of lives, then getting the measurements correct could not be more important.

We are therefore “open sourcing” our investment measurement framework with this publication and welcome inputs from all interested parties to refine this. We are excited that we now have a measurement framework tailored to emerging Asia based on our experience in this region. We look forward to its implementation and continued refinement in many investments from here on now.

Overview of the Impact Measurement Process

The three main reasons to measure impact are firstly to guide investment decisions, secondly to determine and monitor how impactful the investments actually are and lastly to report to stakeholders in the impact fund. Different methods are used to serve each of these purposes at different phases of impact measurement. In the report “Measuring the “impact” in impact investing”, Ivy So & Alina Staskevicius of Harvard Business School accurately divided the process into 4 phases. Starting with Estimating Impact, followed by Planning Impact and Monitoring Impact, then finally Evaluating Impact3.

Impact Measurement Cycle. Source: Harvard Business School
Impact Measurement Cycle. Source: Harvard Business School


Firstly, estimating impact involves performing a thorough due diligence on the startup that the fund is investing in. The due diligence process is similar to traditional investing, but with an additional responsibility of analysing the potential impact of the investment. For early stage investing, there will not be an abundance of quantitative data that can be provided in the due diligence process so other objective standards have to be referenced. One standard that we have found to be useful is the Nesta Standards of Evidence4, which will be analysed in further detail in a later part of the report. This is the phase of impact measurement that will guide investment decisions.

Secondly, planning impact involves devising specific metrics for data gathering. This will depend on the portfolio of the fund, and its investment thesis. Once again for early stage investing there will not be much data initially, so this process is rarely used to guide investment decisions. However for startups that the fund has made an investment in, this phase will be relevant in monitoring its progress towards its impact goals, as well as in reporting to key stakeholders. While there are many different metrics available, we have found the IRIS catalogue of metrics by Global Impact Investment Network (GIIN)5 particularly useful in determining the areas of impact to monitor at a portfolio level. The IRIS standards provide a wide range of metrics, of which the most relevant ones to individual funds can be picked to form its own metrics. For example, a fund that specifically targets impact in the bottom of the pyramid sector can choose relevant metrics as such.

Thirdly, monitoring impact will involve data collection based on the metrics that were determined in the previous phase. Data collection would involve enforcing periodic impact reporting based on a template as provided by the fund. This phase is important for the fund to keep track of the progress of its investments, to ensure that its portfolio is in line with its initial mission. This data would also be useful in impact reporting to key stakeholders in the fund, and to justify the investment decisions that were made.

Lastly, evaluating impact involves a deeper analysis of the data collected. The purpose of this phase is to evaluate whether there has been real impact from the investment, taking into account factors including whether the impact outcomes would have been achieved with or without the investment into the startup.

These four phases will be further discussed in section 5.

Importance of measuring impact

Impact measurement and management (IMM) is an integral part of impact investing. If an impact fund has no protocol to track the impact of investments made then it is akin to a traditional fund not tracking their profit/loss. IMM allows impact investors to keep track of the progress towards its impact objectives. Consistent management of impact tracking directly shows what kind of investments work and what does not. Over time it allows the fund manager greater ability to discern the investments with better impact value6, and this is particularly important for early stage investing, when fund managers have to make decisions even when quantitative data is scarce.

Another purpose of IMM is to allow clear reporting of the progress of the fund. Investors into impact funds usually have their own impact targets as well, and when clear reporting standards are observed, it builds trust with investors. If this is communicated effectively, through yearly reports or other forms of outreach, it demonstrates the competency of the Impact Fund, which would naturally come in handy during the next capital raise phase.

Survey of existing frameworks

IRIS by Global Impact Investing Network (GIIN)

The IRIS catalogue of metrics provides a wide range of metrics which can be used to quantify the level of impact achieved in environmental and social factors. It originated from the GIIN, and is largely built upon existing industry accepted metrics, compiled together for fund managers to access7. It aims to increase the consistency of impact reporting methods, and to bolster the credibility of the impact investing sector as a whole.

In general, such methods involving assigning metrics and scoring the investee based on it can be referred to as Mission alignment methods8. Such methods track how the execution of a project measures against its mission goals over a period of time. They are relevant in the planning impact and monitoring impact phase of the impact process.

The IRIS framework is the closest we have towards a widely accepted standard for impact investing. According to a study published by GIIN in 2020, 65% of impact investors surveyed use the IRIS metrics in the impact measurement process9. One reason for its widespread adoption is that the diversity of metrics catalogued allows it to be adapted and used by a wide variety of funds with different impact objectives. A curated set of metrics also allows the impact fund to view, at a portfolio level its progress towards impact goals. It also allows the early stage investor to compare the growth of its portfolio companies using standardised yardsticks. For instance, a fund makes an investment of USD 500,000 into two different companies, and receives their impact report after a period of 1 year. One company reports that it created 100 jobs, while the other reports that it played a role in supporting 300 jobs. Due to different understanding of the terminology, it is difficult to compare the results of the 2 companies. It is also imprecise to add the 2 values together to gauge overall portfolio performance. This is where the IRIS metrics come into relevance, with its catalogue of metrics with standardised accounting methods.

Logical Framework Approach (LFA)

The logical framework approach is a general project management framework that is widely adopted internationally. It covers all phases of the project cycle, from design to implementation and monitoring and finally to evaluation, which makes it useful for impact measurement and management.

Logical Framework Matrix. Source: Sustainable Sanitation and Water Management Toolbox
Logical Framework Matrix. Source: Sustainable Sanitation and Water Management Toolbox


The Logical framework is able to communicate the essential elements of a complex project clearly and in simple terms for anyone to pick up10. Usage of such a framework by early stage startups is extremely beneficial in the growth stage. While using the LFA gives companies an efficient tool to clarify their goals and track progress, the measurables and outcomes are often unique to each startup, and cannot be collated with the results from other portfolio companies to give a portfolio level measurement of impact.

Thus while the LFA is a viable tool to track impact at the company level, additional frameworks are required to support such data in order to provide a portfolio overview of impact performance.

Nesta Standards of Evidence

The Nesta Standards of Evidence is a rough framework developed to gauge the levels of confidence in the evidence of an impact initiative, on a scale from 1 to 5. It was modified from the standards used in Greater London Authority’s Project Oracle11 to better fit the demands of venture capital.

The Nesta Standards of Evidence12
The Nesta Standards of Evidence12


In general the Nesta framework supports the strengthening of evidence to allow investors to be more certain that the intended impact outcome of investment is achieved. As a company moves up along the levels, more extensive data collection as well as external validation is expected. When a company reaches level 5, there is sufficient evidence that the business model is able to deliver strong impact at multiple locations – this means that it has achieved impact scalability, a key signal that venture capitalists look for13.

The Nesta Standards is useful for early stage venture capital in two phases: the estimating impact phase, as well as planning impact phase. Before committing an investment into a company that claims significant impact value, the investor can assess the evidence based on the Nesta scale to ascertain the strength of its claims. For a company to which an investor has already committed capital, the Nesta standards can guide the next steps in scaling impact planning.

However, at higher levels on the Nesta scale, more complex testing requiring external specialist assessment would be required. This is costly, and in many early stage startups not financially viable. Investors should consider whether to fund such assessments based on their priorities and cheque sizes.

Phase 1: Estimating Impact

Phase 1 of the impact investing process is where thorough due diligence is done on the potential investee to assess profitability and impact. As for the profit dimension we are looking for companies that are able to provide strong potential of generating risk adjusted market rate returns. We do not consider at all companies that have no promise of that, firstly to be responsible to our investors and secondly we do not intend to support ineffective business models that could bring more harm than good to the markets we want to grow. As for the impact dimension, we have found the Logical Framework Approach and the Nesta Standards of evidence particularly relevant, and have designed a simple matrix that draws on both frameworks to aid in decision making.

Graph of standards of evidence against potential impact. Source: Nesta Standards of Evidence
Graph of standards of evidence against potential impact. Source: Nesta Standards of Evidence


Companies that fall under the Impact Stars group have achieved a relatively high score on the Nesta scale, at 3-4. Based on their logframe, they have also demonstrated a potential to deliver high levels of impact in their respective areas. These are the prime targets of many venture capitalists, as they boast both high potential impact as well as the evidence to achieve it. However, few early stage startups will have the bandwidth to provide such robust standards of evidence, and we expect deals coming in from group A to be relatively scarce.

Safe bets on the other hand, while able to provide robust evidence for its impact, does not have an impact plan that can reasonably scale. We will still consider investments in this group, as they do have some degree of impact but we will have to look deeper into how closely linked it is to the fund thesis. The ability to administer such standards of evidence is also reflective of the financial ability of the company, which is a positive indicator for the profit dimension of the investment.

We expect most deals to fall under the Potential Impact Stars group where the company has fulfilled at least a level 1 on the Nesta scale, but provides an ambitious and realistic business plan with enormous impact upside. As with all early stage investments, it is understandable that there is not much quantitative evidence of either impact or profitability, which is why we are open to companies which have only achieved level 1 or 2 on the Nesta Scale. An example of a company that falls under this group would be a company with pioneering business models that have the potential to deliver sector level change. Due to the unprecedented nature of their business model, they usually have difficulty gathering evidence of their impact at the early stage. The company could be the first movers in a market with inadequate regulatory frameworks, consumers that are suspicious of the intentions and value of their product and a lack of industry specific talent. As the company ventures down this path, its efforts to de-risk the business pave the way for many future companies to follow, and while its own impact may be limited, the eventual scale of their impact brought about by future companies can be monumental. A prominent firm that has achieved this would be Grameen Bank with their pioneering microfinance model. These kinds of businesses are identified by Omidyar Network as “Market Innovators”14, and due to its high-risk nature, is where a huge funding gap lies. However we do expect them to move up the Nesta scale at an appropriate timeframe with the aid of our investment.

Common deals consist of companies with no significant impact plan, as well as weak evidence to prove they can achieve what little they have planned. We generally do not pursue investments in this group, save in exceptional situations where we are confident that the company is able to generate significant levels of profit.

Phase 2: Planning Impact

In the planning impact phase, the fund needs to devise the metrics which will guide the data gathering process for the firms. In this phase, it is important to ensure that the reporting criteria is not unnecessarily tedious, which would exhaust significant time and manpower resources and could prove to be a distraction from running the business. The fund also has to work on the appropriate reporting period, which can differ from startup to startup depending on the stage that the startup is at. There are two main frameworks which come into play in this phase – the Logframe and the IRIS metrics. It is important to note the distinction in the purposes served by the two frameworks – while Logframe is more applicable to planning impact at a company level, the IRIS metrics are more suited to providing a portfolio level overview of the fund performance.

Portfolio Level Planning – Usage of the IRIS Metrics

As the IRIS catalogue provides a comprehensive list of industry appropriate metrics, it is very helpful in guiding fund managers to come up with their own fund specific set of metrics, modified to suit the investment thesis of the fund. As our fund seeks to address problems faced by the Base of Pyramid in Southeast Asia, we have curated a set of metrics that we have found to provide the most accurate picture of our progress towards our goals. Our selection of cross-sector metrics, or metrics which can be applicable to any industry, is listed below. A mixture of IRIS metrics and Quest designed metrics are included, with metric IDs starting with “Q” denoting a Quest designed metric. The sector specific metrics covering education, healthcare, housing, agriculture, environment and financial services can be found in Annex A. These sectors are selected as we consider them most relevant to our impact mission – solving the problems faced by the Base Of Pyramid population in Southeast Asia. It is our hope that they can serve as a guide for funds with similar goals.

Cross-Sector IRIS Metrics adopted by Quest
Cross-Sector IRIS Metrics adopted by Quest


Company Level Planning – Logical Framework Approach

We rely on the Logical Framework Approach to plan impact in a more nuanced manner, at the individual company level. The company is expected to plan out their own logframe (Figure 2), and cover their impact plan at different levels, from the overarching goal, to the immediate purpose, then to the outputs required for the purpose and subsequently the activities required to produce the outputs. This allows the fund to have a more complete picture of the impact objectives, as a list of metrics may not be able to fully capture the level of real impact that is being delivered by the portfolio companies.

Specifically, at the planning impact phase we are looking at the second column “Indicators of Achievement”.

Logical Framework Approach
Logical Framework Approach


Phase 3: Monitoring Impact

Monitoring impact is a tricky task – we need a clear and standardised reporting framework which ensures accountability to our investors as well as guide us in future investments. Yet at the same time, excessive reliance on a checklist metric system can result in an overly narrow perspective on the performance of the company. To overcome this dilemma, we adopt two tiers of monitoring, one at the company level, another at the Portfolio level. At the company level we use the Logical Framework Approach to arrive at a more in-depth monitoring of the challenges and successes of each company, while at the portfolio level we use the IRIS metrics to provide a standardised overview of the performance of our portfolio.

Portfolio Level Monitoring

The metrics that decide the focus of monitoring has been curated in the previous phase, planning impact, and this phase will involve the collection of data based on those metrics. Typically this is done by providing the portfolio companies with a reporting template based on the metrics. While the cross-sector metrics (Table 1) are applicable across industries, the rest of the metrics are industry specific. Companies are only required to fill in a report on the industries relevant to their company.

In general, very early stage startups can take years to have a significant impact, so the timeline for reporting has to be adjusted as appropriate to the company. This is particularly so for our potential impact stars, which endeavour to bring brand new business models to the market.

As the reporting metrics are standardised, the individual reports can be simply added up to form the Portfolio level report, which can then be analysed to provide an overview of impact performance.

Company Level Monitoring

At the company level, we continue to monitor the impact progress of the company towards the goals, outcomes, and its indicators of achievement as outlined in the Logframe. This provides us with a more precise outlook on the company, covering areas which are unable to be captured by a general checklist. At this phase, it is also important to carefully analyse the sources and means of verification as outlined in the third column of the logframe.

Impact Monitoring Framework
Impact Monitoring Framework


Phase 4: Evaluating Impact

In this final phase of the impact investing process, we attempt to evaluate whether our investment has made a real change – whether the impact would have been achieved without our investment. Such evaluations involve experimental or quasi-experimental methods, which provide stronger justification of evidence of impact, and at the same time moves the company up on the Nesta Scale.

Experimental methods involve the use of Randomised Control Trials (RCTs), whereby a randomised control group, insulated from the effects of our investment is used as a counterfactual to assess the real impact of our investment. Other methods which utilise different counterfactuals are considered quasi-experimental, and are generally used when isolating the conditions for a randomised control group is not feasible, too costly or unethical, such as when random groups of people are denied access to healthcare15.

Both experimental and quasi-experimental methods are costly and manpower intensive – with experimental methods being the costlier of the two. It can seem hard to justify the relevance of this final phase in the impact investing process, especially for early stage startups which forms the focus of our thesis, but we maintain the stance that this phase is necessary, and will be beneficial to the fund in the long run.

Such methods build up our evidence of impact, bringing us higher up on the Nesta Scale, which is the evidence framework that we use to guide our companies’ impact assessment. Due to the high rigor of the experimental and quasi-experimental methods, it allows both ourselves, as well as our investors a greater level of confidence in the good work that we are doing. This would also serve us well in securing future funding to expand our impact.

That being said, investing in early stage startups can sometimes require up to years to see a degree of impact that justifies such a costly evaluation by external assessors. There is no need to rush to this phase, and the company should be allowed space to grow before we arrive here.


This framework has been crafted based on extensive research on existing Impact Measurement and Management (IMM) frameworks, as well as drawing on 9 years of experience in growing along with the startups we invest in. We are grateful for the resources provided by the Harvard Business School, the Global Impact Investing Network, the Omidyar Network as well the Acumen Fund from which we gleaned valuable insights that shaped the development of this framework. This framework is by no means a definitive rulebook for early stage impact investing, but we do hope that it demystifies the whole process, and lowered the barrier to entry for future early stage impact investors.


  1. PRI, Impact investing market map. Retrieved May 13, 2019, from
  2. D.light, About Us. Retrieved February 14, 2020, from
  3. Ivy So & Alina Staskevicius, Measuring the “impact” in impact investing, Harvard Business School, 2015.
  4. Nesta, Standards of Evidence for Impact Investing, 2012
  5. IRIS+ System | Standards, Retrieved from
  6. GIIN, A guide for impact investment fund managers. Retrieved from
  7. IRIS, Getting started with IRIS, 2013.
  8. I. Soh, A. Staskevicius, Measuring the “Impact” in Impact Investing, Harvard Business School, 2015.
  9. Rachel Bass et al., State of Impact Measurement and Management, GIIN, 2020.
  10. World Bank, The Logframe Handbook, 2013
  11. Investment & Performance Board, Project Oracle, 2013. Retrieved from
  12. R. Puttick, J. Ludlow, Standards of Evidence: An approach that balances the need for evidence with innovation, Nesta, 2013
  13. R. Puttick, J. Ludlow, Standards of Evidence for Impact Investing, Nesta, 2012
  14. M. Bannick & P. Goldman, Priming the Pump: The Case for a Sector Based Approach to Impact Investing, Omidyar Network, 2012.
  15. Ivy So & Alina Staskevicius, Measuring the “impact” in impact investing, Harvard Business School, 2015.


1. Sector Specific Metrics (Education)

2. Sector Specific Metrics (Healthcare)

3. Sector Specific Metrics (Housing)

4. Sector Specific Metrics (Agriculture)

5. Sector Specific Metrics (Environment)

6. Sector Specific Metrics (Financial Services)

7. Sector Specific Metrics (Energy)


Singapore Insurance Innovation and Digital Benchmark

The insurance industry and its digital transformation

Download full PDF (6 MB)
Download full PDF (6 MB)


Goh Jun Wei, YLP Analyst
Khor Qianyi, Senior Analyst

Professor Paris de l’Etraz, Madrid
Mr James Tan, Singapore
Ms Jenell Lau, Tokyo


The 2018 Applied Innovation Institute Singapore Insurance Innovation and Digital Benchmark is Singapore’s first benchmark to measure a company’s ability to cope with disruptive innovation. In our first release, we examine and benchmark 25 insurers with consumer insurance products that operate in Singapore.


Professor Paris de l’Etraz, PhD
Chairman of the Board
Applied Innovation Institute

Welcome to the inaugural edition of the Applied Innovation Institute Singapore Insurance Innovation and Digital Benchmark, a ranking that combines more than 80 data points to benchmark a company’s progress towards key industry innovation goals against its peers. This ranking allows us to develop a more coherent understanding of the insurance industry in Singapore, and allow us to develop key quantitative benchmarks towards innovation in leading corporates around the world. Taking on a retail-first perspective, we explore the progress of insurers in Singapore in developing consumer focused innovations.

As one of the world’s leading FinTech and InsurTech hubs, Singapore is the perfect place for insurers around the world to develop their innovation initiatives. A small and connected nation, it is an incredible test-bed for the development of new insurance technologies and models. From the blockchain to peer-to-peer insurance, risk-management platforms to big-data driven products, Singapore startups have done them all.

Here at the Applied Innovation Institute, we pride ourselves on bringing together global leaders in industries, government, and academic organizations to help each transform to address competition, disruption and innovation through education, consulting and partnerships.

In a world where disruption is the only constant, we believe that it is even more important for corporates to understand the incredible challenges that lie in their strategy roadmaps. With the average lifespan of an S&P company dropping from 67 years in the 1920s to 15 years today, we cannot emphasize the importance of developing an innovation model that works not just to boost your bottomline, but places you at the forefront of disruption.


Mr James Tan
Managing Partner
Quest Ventures

The 2018 Applied Innovation Institute Singapore Insurance Innovation and Digital Benchmark is Singapore’s first benchmark to measure a company’s ability to cope with disruptive innovation. In our first release, we examine and benchmark 25 insurers with consumer insurance products that operate in Singapore.

In this benchmark, we look primarily at a company’s ability to cope with impending innovations such as direct-to-consumer (DTC) sales, data-driven risk-underwriting, mobile awareness and presence, and a service-first understanding of consumers. We then separate these criteria into three categories: online, social and innovation. The weightage of these categories in our comprehensive score are as follows:

This weightage allows us to develop a proxy for understanding an insurer’s ability to cope with disruptive innovations. An insurer that better understands the importance of its web presence, social media presence and innovation efforts will be able to better understand and compete with the hundreds of startups in the region.

To produce the ranking, more than 80 data points were recorded in 2017 and analyzed to develop a more coherent understanding of innovation in corporations. Here at Quest Ventures, we work with startups extensively and have applied the same standards that we use to evaluate startups in this benchmark. This allows us to develop an objective quantification of innovativeness in corporates.

In our benchmark, we also weighted the online experience of insurers relatively heavily as we believe that the distribution model of insurers is likely to undergo a fundamental shift in the next few years. We believe that a strong DTC insurer must have a comprehensive online platform that is reaching users well. This means a DTC insurer must perform well in all traditional ecommerce metrics.

By analyzing these metrics, we are able to provide a coherent understanding of an insurer’s ability to develop its web properties into quality DTC sales channels. We measure the quality of an insurer’s website and the value of various digital acquisition funnels to derive our online ranking. NTUC Income, for example, performed exceptionally well in this metric. It ranked on the first page of Google Singapore’s non-personalized search results in 7 of 7 relevant categories.

During our research, we realized that the majority of insurers were severely lacking in social media. Some were non-existent on social media. The act of localizing social media profiles by global insurers is rare. We found this to be extremely troubling, especially considering the recent shifts in distribution trends.

Many insurers have also abandoned active engagement social media platforms. In our research, only 9 out of 25 insurers have a Twitter account, and only 2 of the 9 Twitter accounts are active. Active engagement on social media platforms are exceptionally important as alternative sales and support channels. These channels are opportunities waiting to be exploited by insurers.

Our social media ranking is primarily the product of engagement rates. We recognize the importance of engaging one’s audience and believe that relative rates suggest more about an insurer’s social media performance than absolute numbers.

At Quest Ventures, we firmly believe that the future of insurance is mobile. A recent AXA Digital Lab study showed that 44% of all millennials are comfortable purchasing insurance directly through their mobile phones. What it doesn’t illustrate is the fact that this number will continue to grow as users continue to familiarize themselves with mobile insurance purchases. This sentiment was echoed in a recent survey conducted by Forrester. The fact remains that users who research insurers and insurance plans online are more likely to purchase insurance online. It is only logical, by extension, that users who research insurers and insurance plans on their mobile phones are also more likely to purchase insurance through their phones. With mobile phones becoming the preferred computing device, insurers need to be prepared with a comprehensive mobile strategy.

Some of the most innovative solutions we have seen from insurers combine sales and claims channels into a feature-packed application. Other insurers have also leveraged on the data collected by smartphones to incentivize policyholders to live healthier and safer lives, reducing underwriting risk and allowing insurers to better tailor their insurance products.

One of the most pressing concerns for insurers is the rapid development of new insurers with alternative business models. Unfortunately, few of the insurers in our benchmark have successfully captured the extensive potential for disruption by these startups. Our analysis indicates that companies typically figure out innovation over time, but they falter greatly in the face of disruption. With thousands of startups around the world hot on the heels of incumbent insurers, understanding disruption today is more than just an insurance policy for insurers.

NTUC Income: Overall First in the 2018 Applied Innovation Institute Singapore Insurance Innovation and Digital Benchmark

Mr Peter Tay
Chief Operating Officer
NTUC Income

We are delighted to be ranked first on the Applied Innovation Institute Innovation and Digital Benchmark. It is a testament to our strength as Singapore’s leading digital insurer and we are heartened by the recognition particularly with our lead position in innovation and online. Our impetus for innovation and digitalization has always been customer-centricity as we strive to offer our customers choices when they engage with us.

We understand that customers are accustomed to quick gratifications from online transactions that are often supported by a seamless user experience. As such, we are constantly challenging ourselves to ideate insurance propositions that play to the way customers access, engage and use information digitally these days.

To sharpen our offerings and engagements with our customers, we have also made calculated decisions to embark on and leverage specific customer engagement strategies and channels.

With an agile mindset, we are set to tweak our digital strategies and tactics to enhance customers’ experience with us constantly. We look forward to re-imagine our collective future via insurance.


NTUC Income

Key Innovation(s)

Direct to Consumer, Online eClaims Processing, ‘Drive Master’ Application, ‘Orange Health’ Application, ‘Accident Reporting’ Application, and ‘Orange Travel’ Application


Our Perspective

NTUC Income is one of Singapore’s largest home-grown insurers and for an incumbent, a surprisingly innovative and nimble player in the market. In Singapore, it runs an equity-free accelerator program, the ‘Income Future Starter’ to identify breakthrough founders and work with disruptive startups. Income runs a dedicated Digital Transformation Office, a key pillar of Income’s Goal 2020 roadmap to bring innovation as a digital insurer, and make insurance simpler and more accessible.

We were particularly impressed with Income’s online eClaims platform. While it has not been deployed for all insurance products and does not accommodate all types of claims, existing deployments — e.g. Income’s online travel insurance claims platform — were well executed. Income has recognized the importance of digitalization and is leading insurers in developing a comprehensive online presence. Income has a strong search presence, placing them on the first page of Google Singapore’s non-personalized search results in 7 of 7 relevant categories.

Our research shows that Income has the most number of frequently updated mobile apps on the Apple Application Store – 4 – compared to other regional players. With direct purchase of general insurance available through its website and mobile apps, Income has clearly made a push for the mobile-friendly millennial generation.

Income has also made a relatively large push in the InsurTech space, combining big data and behavioral science to reduce underwriting risk and improve the user experience. ‘Drive Master,’ for example, awards drivers for safe driving behavior. ‘Orange Health’ actively rewards healthy living, and Income’s ‘Accident Reporting’ application was the only accident reporting application among regional insurers.

Income also leads regional insurers in social media engagement. With a dedicated ‘Travel Made Different’ blog and relevant content on its Instagram accounts, Income is generating quality engagement. However, Income can benefit more from active social media engagement to further drive DTC purchases. While it owns a Twitter account, it has not been managed since October 2015. Like the majority of other insurers, it also lacks a Snapchat account, a key engagement platform for millennials.


Key Innovation(s)

Direct to Consumer, ‘MyAXA’ Application, ‘AXA Drive’ Application, and ‘My AXA Health’ Application


Our Perspective

AXA is the leader amongst global insurers in our benchmark, and it isn’t surprising why. With numerous AXA Labs scattered across Asia, a startup studio (Kamet) which allows AXA to build autonomous startups, a corporate venture capital arm (AXA Strategic Ventures) that has invested in some of the most innovative InsurTech startups, and AXA Partners & AXA Digital Partnerships to engage startups and culture engineer, AXA has a comprehensive winning innovation strategy.

AXA’s suite of well-developed and well- thought-out applications, has helped AXA develop a strong online presence. This is further reinforced by AXA’s online search presence, where AXA is placed on the first page of Google Singapore’s non-personalized search results in 6 of 6 relevant categories.

Our research shows that AXA has a comprehensive suite of mobile applications that furthers its innovation ambitions. The ‘MyAXA App’, for example, allows users to file claims on mobile, view policies and make travel insurance purchases. While there is substantial room for improvement, with users complaining of poor performance and insufficient policy information, it is clear that AXA is actively attempting to address user concerns. Of the 6 negative reviews on the app, AXA has responded to 5 of them requesting for a follow up. The ‘AXA Drive’ App, for example, collects driver data and changes user behavior while reducing underwriting risk. The ‘My AXA Health’ Application allows users to locate nearby specialist clinics and even allows users to live chat with doctors through an integration with MyDoc.

AXA is leading insurers in Singapore when it comes to social media engagement. It actively manages its Facebook, Instagram and Youtube platforms. However, like most other insurers, AXA can benefit more from active social media engagement to further drive DTC purchases. As AXA’s Twitter account was not localized for Singapore, we were not able to factor that into our benchmark. This is because we strongly believe that localization of active engagement platforms allow companies to better tailor their user engagement strategy. AXA, like all of the other insurers in our benchmark, also lacks a Snapchat account, which is key to engaging millennials.


Key Innovation(s)

Direct to Consumer, Online eClaims, ‘Aviva EzSnap’ Application, and ‘Aviva LMS’ Application


Our Perspective

Aviva has been investing heavily in innovation, committing £100m to exceptional start-ups by 2020. Aviva has numerous innovation labs (Digital Garages) scattered across the globe, accelerator partnerships to identify breakthrough founders, and a corporate venture capital arm (Aviva Ventures), Aviva has committed itself to innovation in today’s increasingly disruptive economy.

Aviva has made an incredible effort in its push for millennials with a well established web presence. With a suite of well-developed and well-thought-out applications, coupled with a digital-first and service-first approach, Aviva allows users to make purchases and manage their policies directly online. Aviva also has a strong search presence, placing them on the first page of Google Singapore’s non- personalized search results in 6 of 6 relevant categories.

Through the ‘Aviva EzSnap’ and ‘Aviva LMS’ applications, advisors are able to provide a better experience for their clients. Though improving the client-advisor experience is commendable, Aviva can benefit from further developing Direct to Consumer (DTC) support. Its mobile eClaims functionality (ClaimConnect) is restricted only to corporate customers. Further, while Aviva had a mobile travel insurance application, it is not a native application. Aviva has also yet to introduce innovations such as the Aviva ‘Safe Drive’ Application into Singapore. We believe that by developing better mobile applications, Aviva has the potential to provide a more seamless customer experience, reducing customer friction and improving customer satisfaction.

While Aviva has created engaging content through the money Banter online blog, it can better leverage its content to engage its customers. Aviva can benefit more from further developing its social presence. While Aviva maintains a Facebook page, it does not have an Instagram account. Aviva is also completely absent in active engagement through Twitter and Snapchat. Again, platforms such as Twitter and Snapchat are key to engaging millennials; active engagement platforms are essential to a DTC insurer.


Key Innovation(s)

Direct to Consumer, ‘AIA Healthcare’ Application, ‘AIA Vitality’ Application, ‘AIA eCare’ Application, and LifeMatters Campaign


Our Perspective

AIA has made an incredible effort in its push for millennials with a well established web presence. With a well-developed a suite of well-thought-out applications with a digital-first and service-first approach, AIA allows users to make purchases and manage their policies directly online. AIA also has a relatively strong search presence, placing on the first page of Google Singapore’s non-personalized search results in 2 of 4 relevant categories.

Through the ‘AIA Healthcare’ application, AIA allows users to access their policy information directly through their mobile phone. However, AIA is still in the process of digitizing their systems. For example, to change one’s email address in the ‘AIA Healthcare’ application, a user still needs to download a form, print it out, fill it up and send it back to AIA. Clearly, AIA is still in the process of updating their systems. That being said, they have made substantial strides compared to other insurers. ‘AIA Vitality,’ for example, rewards customers for living healthier lives. This could potentially reduce underwriting risk and allow AIA to collect valuable customer data to deliver new and customized products in the future.

Like the majority of other insurers, AIA also has room for improvement in the social space. While AIA actively manages and updates its Facebook and Instagram accounts, its Youtube account is rarely updated. We also believe that AIA can benefit more from active social media engagement to further drive DTC purchases. Platforms such as Twitter and Snapchat are key to engaging millennials.


Key Innovation(s)

Direct to Consumer Model, Online eClaims Processing (TiqConnect), and ‘sMiles by Etiqa Insurance’ App


Our Perspective

Etiqa has made an extraordinary effort in its push for millennials with a well established online DTC platform. While Etiqa has developed a suite of well-thought-out applications with a digital-first and service-first approach, its web presence still has more room for improvement compared to other DTC startups. While Etiqa appeared in page 1 of Google Singapore’s non-personalized search results for 4 out of 6 relevant categories, its keyword search rank does not place it in the top half of the page. We are concerned that Etiqa’s push into DTC insurance is hampered by its less than ideal acquisition channels.

Through the ‘Etiqa TiqConnect’ service, Etiqa is one of the few insurers in Singapore that provides a comprehensive eClaims service. With settlement of general insurance claims, such as travel insurance claims, in less than a day, Etiqa is leading the charge in Singapore for rapid online eClaims. Etiqa’s push for millennials continues in the mobile space. The sMiles by Etiqa Insurance’ application attempts to change driver behavior for the better and collects crucial data to reduce underwriting risk on Etiqa’s end. However, we found it to be slightly concerning that Etiqa has yet to develop mobile applications that aids its DTC insurance push. Further, apps such as the ‘Etiqa Auto Assist’ application that provides drivers on-demand help have yet to be made available to Singaporean drivers.

Like the majority of other insurers, Etiqa also has room for improvement in the social space. While Etiqa actively manages and updates its Facebook and Instagram accounts, Etiqa’s Youtube account is rarely updated. We also believe that Etiqa can benefit more from active social media engagement to further drive DTC purchases. Platforms such as Twitter and Snapchat are key to engaging millennials.


Key Innovation(s)

Direct to Consumer Model, Online eClaims Processing, ‘AIG On the Go’ Application, and ‘AIG Assistance’ Application


Our Perspective

AIG’s has developed a comprehensive online DTC portal and claims platform. With a clean, easily navigable and localized website, AIG has clearly recognized the importance of developing a coherent web presence. However, AIG’s SEO efforts have room for improvement. AIG only ranked in the first page of Google Singapore’s non-personalized search results for 2 of 5 relevant categories.

That being said, AIG has made a commendable effort in the mobile space. The ‘AIG On the Go’ application induces drivers to drive safer and reduces underwriting risk. The trove of data collected will also assist AIG in the development of more personalized insurance products in the future. The ‘AIG Assistance’ application, for example, provides up to date risk indicators about countries around the world and emergency support available in other nations, improving the customer experience. AIG has a number of relatively innovative applications that couldn’t be used in Singapore though. For example, the ‘Rapid Rater’ was not available in Singapore and could not be factored into our benchmark.

While AIG has a relatively strong social media presence in the US, we were not able to take into account AIG’s other social media accounts as they were not tailored for Singapore. For example, AIG’s Twitter account only responds between 9AM and 5PM eastern standard time. Like most other insurers, AIG does not have a Snapchat account. For global insurers, it is important to note that engagement strategies should be localized to specific geographies. Locally targeted social media accounts would better add value to customers and provide a more coherent engagement experience.

FWD Singapore

Key Innovation(s)

Direct to Consumer Model, Online eClaims Processing


Our Perspective

FWD’s strength is its strong web presence. As one of the only few regional insurers with a comprehensive online eClaims service, FWD is leading the race when it comes to online DTC insurance. Its easily navigable website and user friendly interface coupled with its strong SEO efforts and commendable ad displays have made it one of the best, if not the best online DTC insurer in Singapore. FWD has a relatively strong search presence, placing it on the first page of Google Singapore’s non- personalized search results in 5 of 5 relevant categories.

Unfortunately, despite its strong online presence, FWD has room for improvement in the mobile space in Singapore. Key innovations such as the ‘FWD Max’ Application which changes consumer health behavior and the ‘FWD Drivamatics’ Application which collects driver data to better quantify risk have yet to be introduced in the Singapore market. As such, we were not able to include these innovations in our Innovation and Digital Benchmark.

FWD also has room for improvement in social media engagement. Without consistent posts across its social media platforms, FWD risks not engaging the millennial market — any DTC insurer’s primary target market. Interestingly, FWD does not have an Instagram account for the Singapore market despite running accounts for other markets in East Asia. FWD, like the majority of other insurers, does not have a Snapchat account as well. FWD, especially as it is a DTC insurer, can benefit substantially from active social media engagement to further drive purchases.

Tokio Marine

Key Innovation(s)

Direct to Consumer Model, Online eClaims Processing, and ‘TM iSwift’ Application


Our Perspective

By building a comprehensive suite of web applications that allows policyholders to purchase and manage their insurance, Tokio Marine has done a commendable job at digitizing traditional insurance processes. However, Tokio Marine has room for improvement on its customer acquisition channels. For example, in our research, Tokio Marine only ranked on the first page of Google Singapore’s non-personalized search results in 1 of 7 relevant categories. With the impending shift in traditional distribution channels for insurers, insurance companies need to build a more comprehensive online presence to better attract leads.

Tokio Marine has made a decent mobile push to engage with its policyholders and build better sales processes for its agents. The ‘TM iSwift’ app, for example, provides easy mobile claims for users and allows policyholders to locate nearby clinics; such a service-first mindset improves the customer experience.

However, Tokio Marine has yet to develop a DTC sales channel on a native mobile application. We cannot emphasize how important it is for an insurer to have a dedicated mobile sales channel. We believe that there is tremendous opportunity for Tokio Marine in the mobile space.

Like the majority of other insurers, more could be achieved by Tokio Marine in the social space. While Tokio Marine updates its Facebook page relatively frequently, it does not manage a Youtube channel or Instagram account that is targeted at Singapore. Localization is key when it comes to social media engagement today. That being said, we commend Tokio Marine’s commitment to Twitter. Active engagement platforms are key to engaging and relating with customers and are essential to a DTC insurer.


Key Innovation(s)

Online eClaims Processing and Manulife Move Application


Our Perspective

Manulife Singapore’s lack of a push into the online DTC space is perplexing when Manulife Malaysia launched its online purchasing platform last fall. That being said, Manulife is one of the few insurers that offers an online claims process. While not the most comprehensive, it is certainly commendable when insurers take steps to digitize their processes. We were also relatively concerned by Manulife’s poor search presence. Manulife did not rank on the first page of Google’s non- personalized search results in 3 of 3 relevant categories.

We were particularly impressed with Manulife’s ‘Move App’ that was available on the iOS Application Store. The Manulife ‘Move’ program rewards customers for living healthier. It leverages on the data collected by connected devices to reduce underwriting risk and improve policyholder behavior. Manulife has also built out a mobile CRM for its agents. However, Manulife has yet to build out a DTC sales channel on a native mobile application. We cannot emphasize how important it is for an insurer to have a dedicated mobile sales channel in a mobile-driven age. We believe that there is tremendous opportunity for Manulife in the mobile space.

Like the majority of other insurers, Manulife has room for improvement in the social space. While Manulife is doing an incredible job on Instagram2 Youtube and Facebook, posting and engaging with users actively, Manulife does not have an account on any active engagement platform. Manulife would benefit greatly by building out a presence on Twitter and Snapchat. Active engagement platforms are key to engaging and relating with customers and are essential to a DTC insurer.

Sompo Japan

Key Innovation(s)

Direct to Consumer, Online eClaims Processing, and Sompo ‘Drive’ Application


Our Perspective

Sompo has made an extraordinary effort in its push for millennials with a well established online DTC platform. While Sompo has developed a suite of well-thought-out applications with a digital-first and service-first approach, Sompo’s web presence was hampered by poor search optimization. Sompo did not rank on the first page of Google Singapore’s non-personalized search results in 6 of 6 relevant categories. We are concerned that Sompo’s push into DTC insurance is hampered by its less than ideal acquisition channels.

Sompo is one of the only few insurers in Singapore that provides comprehensive eClaims service across multiple product lines. The Sompo ‘Drive’ application attempts to change driver behavior for the better and collects crucial data to reduce underwriting risk on Sompo’s end. However, Sompo’s DTC purchase experience has substantial room for improvement. Unfortunately, other Sompo innovations such as the Sompo ‘HealthCare’ app, which connects users to doctors directly through the application, have yet to make their way to Singapore shores.

Like the majority of other insurers, Sompo also has room for improvement in the social space.

Sompo actively manages and updates its Facebook account, generating quality engagement for its policyholders and prospective customers. However, Sompo is relatively weak at other social media platforms. Sompo’s Youtube account is rarely updated. Sompo doesn’t have an Instagram account either. Sompo would also benefit greatly by building out a presence on Twitter and Snapchat. Platforms such as Twitter and Snapchat are key to engaging millennials. Active engagement platforms are essential to a DTC insurer.

1 We recognize that FWD has since launched international health and home insurance in early 2018. We look forward to factoring FWD’s foray into new insurance categories into our benchmark the following year.
2 While Manulife has an Instagram account, it was dormant in 2017. As such, Manulife’s Instagram efforts was not factored into its social score. We look forward to factoring Manulife’s Instagram efforts into our benchmark the following year.

Private Aviation in Southeast Asia

Are the opportunities worth the challenges?

Download full PDF (0.4 MB)
Download full PDF (0.4 MB)


Mr Chang Jun Hua, Analyst

Mr James Tan, Singapore


There are many reasons which drive the demand for private jet ownership and charter. Some see it as a status of wealth, while others appreciate the flexibility private aviation services provide for their holiday itineraries or business schedules. Private jets also provide access to a far larger number of airports which are unable to accommodate larger commercial airliners – bringing passengers closer and faster to their destination. Neither do passengers have to risk getting stuck in long security lines or flight delays. Increasingly, private jets are also used to serve as private offices in the sky which raise productivity. For instance, NEXA Advisors’ most recent study on business aviation and the world’s top performing companies concluded that companies using business jets were likely to outperform non-users on revenue growth, innovation, employee satisfaction and market share1. With a variety of reasons justifying the consumption of private aviation services, coupled with rising global wealth, demand is likely to only rise.


Mr James Tan
Managing Partner
Quest Ventures

This horizon scanning report on aviation by Quest Ventures on the opportunities in Southeast Asia’s private aviation is the result of cross sectional research and analyses done on the vibrant private aviation sector. Our evaluation concludes that Asia’s large population and wealth is in a good position to tackle flexibility issues and empower efficient private travel. However, regulations hamper. Unless political will aligns with consumer demand, not much would change.

A new era for the private aviation industry will likely arrive once ASEAN governments commit to liberalising their airspace and airports, building and upgrading airport facilities and having a regional agency coordinating air traffic and setting implementable safety standards.

Until such conditions present themselves, new entrants would have to work within the operational constraints which perpetuates inefficiency. They would also have to compete against experienced operators and brokers who have eased such inefficiencies by establishing strong working relationships with various stakeholders around the region.

Market Trends and Insights

According to Wealth-X, the typical global jet owner is 63.6 years old, with an average net worth of US$1.66 billion. They spend about 1.0% of their net worth on private aircraft, with an average value of US$16.4 million per plane2. Operating it, however, would set you back another US$700,000 to US$4 million3. Those who have decided that plane ownership is out of their price range, but still want to enjoy its benefits may then opt to charter a plane. According to Singapore jet charter service provider, Paramount Business Jets, Light Jets4 start at US$2,200 per hour. Mid-Size Jets start at US$2,800 per hour. Super Mid-Size Jets start at US$3,800 per hour, and Large Cabin Jets start at US$4,500 per hour5. Brad Stwewart, CEO of XOJets, a private jet charter company, says that his clients spend several hundred thousand dollars on consumption of private aviation services each year – with net worths around US$30 million to US$40 million6.

While these figures may seem outlandish, new business models which allow for jet-sharing may just make private jet travel accessible to ordinary High Net Worth Individuals7 (HNWIs). As such, while it is unlikely that ordinary HNWIs may purchase their own plane or frequently charter entire private jets, we will include the growth of HNWIs in our analysis of overall future demand for private aviation services.

Growing Wealth

It is generally thought that a global increase in population of HNWIs and Ultra High Net Worth Individuals8 (UHNWIs) will generate growing demand for private jet orders and on-demand private jet charter9.


According to a Cap Gemini SA report, although growth has been modest, global HNWI wealth has continued to hit new record highs, with Asia Pacific overtaking North America as the top wealth market in the world10.

Global HNWI wealth is projected to nearly triple in size from 2006-2025 to surpass US$100 trillion by 2025, with China and Japan leading the pack – both registered double-digit increases in both the HNWI and UHNWI populations.

As such, Asia Pacific (APAC), and by cautious extension, Southeast Asia (SEA) is likely to remain a strong market, with the APAC region accounting for two-fifths of the world’s HNWI wealth over the next decade11.


Excluding Latin America which has faced disappointing growth, global UHNWI wealth has grown more than the other wealth segments over the last few years. The ranks of Asian UHNWIs are set to expand by 66% over the next decade, compared with 27% growth in Europe12.

However, the results of The Wealth Report Attitudes Survey13 conducted by Knight Franks, which was based on responses from almost 900 of the world’s leading private bankers and wealth managers provide an important caveat.

The survey revealed that only 15% of UHNWIs use private aviation for the majority of their business and personal flights. Latin Americans were the biggest users, with 40% opting to go private. In Asia, just 9% of UHNWIs routinely travel on non-commercial flights.


A 71% surge in the number of Asian billionaires14 over the next decade will take the total to 832, nearly neck and neck with the US, where the population by then will be 840. Europe is forecast to be home to around 569 billionaires in 2025.

New Innovations

Hardy Sohanpal of international charter operator Global Jet Concept, believes that private jet numbers are likely to rise as the desire to travel efficiently with maximum privacy becomes more of a priority for corporations and private individuals.

Sohanpal adds that, “The introduction of new apps and charter models that are competing to become the Uber of the airways is also likely to attract those who shuttle frequently between cities travelling first or business class.”15

That is exactly what founder of JetSmarter, a digital/mobile private jet marketplace, Sergey Petrossov plans to do. Talking about the common underutilization of jets which have to fly routes empty to reposition itself, Petrossov explains that “those empty seats and flights can be offered to travelers for less than the typical price of chartering a jet and for a fee that may be at least in the same ballpark as the cost of a first class ticket.”16

JetSmarter, which allows members to book individual seats on private jets would also make flying on a private jet far more affordable. For example, it costs US$12,000 to charter a small 4 seater from New Jersey to Miami on a weekday, according to PrivateFly. A JetSmarter member would pay US$2,000 to book a seat, and other members can hitch a ride at no charge. Membership costs US$15,000 for the first year.

However, such business models are currently unavailable within SEA.

Despite the finding that just 9% of Asian billionaires travel by air privately, the expected increase in wealth across Asia and SEA is still an indicator that demand for private aviation services will only rise. With business models like jet-sharing drastically reducing the cost of private air travel and making it more accessible to the ‘merely rich’, demand is only set to grow. However, the question remains as to whether Asia, and consequently SEA, is able to keep up with the forecasted rise in demand.

The SEA Aviation Environment

To accommodate the forecasted increase in demand for private aviation services, there has to be appropriate increase in the capability and capacity of the aviation operating environment. Yet, surmounting challenges remain as we survey the existing conditions of SEA’s aviation environment.

Poor Regional Airspace Navigation Coordination

The US has the Federal Aviation Authority (FAA), which issues and enforces aviation safety regulations, operates air traffic management and air navigation facilities, as well as research and development for safer and more efficient systems17.

The European Union (EU) has the European Aviation Safety Agency (EASA), which develops common safety and environmental rules, monitors the implementation of standards and provides the necessary expertise, training and research for Member States18, while Eurocontrol coordinates the region’s air traffic control19.

Unlike the more developed US and European market, the Association of Southeast Asian Nations (ASEAN) has no regional regulatory body overseeing aviation safety or coordinating air traffic control20. This results in air traffic within the region not operating as efficiently and safely as it can be.

Poor state of Air-Traffic-Control Technology

Some traffic controllers in Asia still rely on information radioed in from pilots and other airports, manually entering the information and calculating aircraft spacing. This takes more time and occupies more mental capacity.

Even if countries like Singapore, Malaysia, Thailand and Indonesia modernize their air traffic management systems, connecting all these systems across Asia presents a further challenge. Countries are at different stages of development and governments have no incentive to cooperate21.

According to the Wall Street Journal, Asia has become one of the world’s most-trafficked areas for planes, and is set to become even busier, thereby further challenging local airlines, airports and air-traffic controllers to keep the skies safe.

Poor Airport Infrastructure

A PwC report22 on the state of Asia’s airport infrastructure found that most major Asian hubs are already operating above their planned capacity whilst even secondary hubs are starting to experience capacity strains. This has resulted in a rapid escalation of delays since 2010.

With the exception of airport passenger queues and security checks, private jets would not be exempt from long queues for take-offs, circling above the runway prior to landing, and an increasing scarcity for take-off and landing slots.

The WSJ reports that nations such as Indonesia and the Philippines have not invested enough in airport facilities to keep up with the demand, especially in second-tier cities. Some runways, adapted from old military airfields, are too short or are badly designed for good drainage, and some lack modern landing navigation systems or proper runway lights23.

Shortage of Aviation Professionals

There is an expected shortage of qualified and experienced aviation professionals (pilots, mechanics and engineers) in the future, which would likely drive up labour costs and reduce operational flexibility.

Boeing, one of the largest aircraft manufacturers in the world, projects that the Asia-Pacific region will need 216,000 new pilots in the next 20 years, more than in any other part of the world, accounting for 40 percent of the global demand24.

Business Models

Private Jet-Buying Market

Market Insights

Jet orders are forecasted to be a US$248b industry from 2016-2025, with Asia-Pacific taking 10% of total orders25.

While the US (12,717), Mexico (950) and Brazil (786) are the top three nations by some margin when it comes to fleet size, JETNET’s figures show numbers are rising fast in Asia. Hong Kong (+535%), Taiwan (+367%), China (+347%) and Macau (+300%) all feature in the top 10 list of locations where growth has been fastest over the past 10 years. China, with 277 jets, now claims eighth position in overall ownership levels26.

Richard Koe, Managing Director of industry analyst, WINGX, has also remarked that it would not be unusual for firms with a turnover of US$50m to have its own plane, further validating the demand for private jet orders. He adds that the Chinese market is set to see strong growth as the government begins to recognize the importance of business jets as a competitive tool to support corporations pursuing regional trade opportunities.

Demand for private jets in SEA is growing as indicated by Dassault Falcon senior vice-president of international sales Jean-Michel Jacobs, who sees rising demand in SEA compensating for China’s economic slowdown. “We have a lot of inquiries and deals in process… about twice as much activity as we had two years ago,” he told The Straits Times in 201627.

Private Jet Charter Market

Market Insights

On-demand jet charter, which allows use with no commitment and a pay-as-you use structure, remains the most popular option for clients in the industry28.

Typical jet charter clients tend to be casino operators, Fortune 500 companies and MNCs. As demand rises, clients would typically want to ensure operators have international-level qualifications: IBAC’s IS-BAO stage I,II,III, Wyvern Wingman, ARGUS Gold or Platinum or the Flight Safety Foundation’s (FSF) BARS audit29.

Jet charter demand in Asia tends to spike during public holidays (Chinese New Year and Western holidays), World Economic Forums (G8, G20, ASEAN meetings), ASEAN meetings and major sporting events (Super Bowl, World Cup, Olympics). It then tends to slow during the summer where charter demand shifts to Europe and the US30.

As touched on previously, infrastructure status, airspace limitations, and regulations remain the biggest challenges when operating a charter throughout the region. Many landing and takeoff slots are tightly regulated with long application processes. Further compounding operating conditions are unfriendly cabotage31 rules, aircraft overnight parking restrictions and long lead times for permit requests.

Hong Kong, Macau and Singapore are the most charter-friendly locations in the Asia-Pacific region as they are known for their free-market, efficient-regulation and respect of liberties. Despite a chronic shortage of parking space and take-off slots, Hong Kong remains the most convenient, efficient and preferred destination for charter clients due to its central location in APAC32.

For a glimpse of the application process, the extensive list of documents to operate a single charter flight in APAC can be found in Annex B. Aviation governing bodies in each country can also change the rules and requirements without prior notice at any time. This can affect not only the local charter market, but any foreign-registered aircraft chartering a jet into the particular country.

Traditional Jet Charter Operators and Brokers

Charter operators charter out their own or a partner network’s fleet to clients, while brokers are intermediaries who reach out to a network of operators, get a quote, mark it up, and sell it to clients. Operators usually carry out brokerage services as well.

The most common business models of traditional jet charter operators are on-demand charter, jet cards and memberships.

Luxaviation Asia (Singapore based, SEA operations)33

Began charter operations out of Singapore in 2014, catering to the whole of SEA. Operates more than 260 aircraft according to the most stringent safety standards. Provides brokerage services around the world, aircraft management, flight solutions and support34. Quotes only available upon request.

Asia Jet (Hong Kong based, international operations)35

Full service company which offers on-demand aircraft charter, Jet Card membership, consultancy and aircraft management services. Both the Black Card and Corporate Card offer access to the entire Asia Jet and global network fleet. Instant quotes available on site. A test search for a round-trip flight from Singapore’s Changi International Airport to Vietnam’s Tan Son Nhat International Airport begins at US$31,850 for a turboprop, and US$46,850 for a heavy jet.

Javajet (Jakarta based, Asia operations)36

Specialises in private jet charter in Asia. Quotes only available upon request.

Fractional Operators

Fractional operators buy private jets and then sell shares of the jets to several owners. Each shareholder then receives the right to fly the jet for a fixed number of hours.

Executive Jets Asia (Singapore based, Asia operations)37

Offers 6 shares per jet with one share costing US$800,000 for the Hawker 700 or US$1.2m for the Hawker 800. Each share entitles the owner to 70 hours of free usage of the aircraft, with an additional nominal fee of US$100,000 per year, from the first year onwards. Jet will be sold at the end of 5 years, with equal sharing in the sales proceeds.

NetJets Inc (US and Europe)38

A subsidiary of Berkshire Hathaway, NetJets was the first ever private jet charter company to come up with the fractional ownership model. The smallest share you can purchase is 1/16 interest, which gives you 50 hours of flight time a year for a cost of approximately US$550,000 with additional monthly management fees of US$9,600. The largest share possible is ½ interest, or 400 hours of flight time at an approximate cost of US$4.4 million with monthly management fees of US$60,000. Occupied hourly fees which covers fuel, maintenance, catering costs US$1,950 an hour. NetJets owners sign up for a two-year, two-and-a-half-year or three-year commitment, depending on the size of the aircraft, and NetJets has a guaranteed buy-back option after that commitment is up39.

NetJets also offer a pre-paid Marquis Jet Card which allows clients to buy 25 hours of flight time. A single year starts at US$119,000 for a light jet, excluding taxes and additional surcharges.

Jet Charter/Sharing Mobile Apps

According to JetSmarter CEO Petrossov, the average private plane has less than 30 percent load factor40 during trips, while 35 percent of trips are completely empty41. Jet Charter or Jet Sharing apps seeks to eliminate this inefficiency by providing a mobile platform which matches this excess capacity to demand. It also seeks to bypass traditional charter brokers by letting customers book a flight directly from plane owners/operators through the app. As a result, prices tend to be lower, making private aviation more accessible to a wider market.

APAC apps

JetSteals (India based, India, Dubai, New York operations)42

India-based mobile app is the first online marketplace for private jet and helicopter empty legs. Book a trip and finish the transaction online. Allows booking of individual seats. Traction appears slow, there was only a single sold-out listing on the site when this author visited on 9 June 2017.

Super First Class (China based, China operations)

No website available from Google search. Empty legs booking app which only functions in Chinese. Allows users to not only book individual seats and finish payment online but also request customized charter services by submitting an online order. However, government payment limitations only allow clients to pay 20,000 RMB or less via UnionPay and 50,000 RMB or less via Alipay or WeChat (two popular e-payment platforms in China)43.

International apps

Victor (London-based, international operations)44

On-demand private jet charter that allows you to compare, book, and manage jet charters. Unique selling point is that it discloses operator and aircraft details, which allows for transparency and complete financial protection. Nothing stops the user to bypass the app and go directly to the operator to ask for a competitive quote. From a consumer’s standpoint, the app serves as a good directory to all available options. Could open regional HQ in Hong Kong.

JetSmarter (US based, routes mainly between US, London, Dubai, opening up routes this year to India, HK, China, Brazil, Mexico)45

First started in 2012, JetSmarter is currently valued at US$1.5 billion after closing its US$105 million Series C round in December 201646. Investors include rapper Jay Z and the Saudi Royal family. Has four services, normal private charter, shared charter, JetDeals, which are spontaneous last-minute, one-way flights, and JetShuttle, which offers shared, scheduled flights between major cities. Currently charges members an annual fee of US$11,500 plus a one-time initiation fee of US$3,50047.

However, there are some limitations to fully “uberizing” the private jet market. Real-time on-demand jet charter or sharing would be tough as the majority of so-called charter fleets in Asia-Pacific are owner aircraft. This means that charters would still be subject to “owner’s approval”, which could potentially cause the upset of deals at the very last minute. There is also a challenge to provide accurate real-time availability, quotes and confirmations without a seamless integration and agreement between all players in the market.

Jet sharing apps also currently do not provide the experience of knowing the strengths and weaknesses of each operator – something experienced brokers can provide.

Status and Operational Challenges of major SEA countries

Operational challenges and regulation restrictions affecting the jet-charter industry in selected ASEAN countries.


As of 2016, Indonesia has 53 business jets with 16 being chartered out commercially.

The average lead time to receive landing and overflight permits is 3 days.

Infrastructure and Safety Issues

Airports have not kept up with the rise in passenger traffic – Soekarno-Hatta International Airport, designed for 22 million, is expected to receive 61 million by the end of 2017. While this stress might be alleviated by the expected completion of a new terminal and third runway48,49, other airports around the country are likely to remain operating way above designed capacity.

According to a 2015 PwC report50, Indonesia’s airport sector is expected to invest US$1.9 billion in 2017, and US$3 billion by 2025, growing at a rate of 5.8% per year. However, as the investment level required is beyond state-owned operators, Angkasa Pura I and II, government support for foreign or domestic private investors would have to be present to facilitate this growth. Provided investments continue pouring in, progress can be made for the expansion and redevelopment of airports in addition to refurbishment of air traffic control assets and ground handling51.

Private jets operating between popular airports would hence have to contend with such congestion and unexpected delays.

Unfriendly regulations52

The largest challenge remains the legal decree passed by the Indonesian Government in October 2015. Strict overfly cabotage rules prevent any private jet charter operator from conducting flights within Indonesia unless they are domestically registered53. Consequently, there has been increased demand for local charter solutions at higher prices.

In 2007, audits conducted by the International Civil Aviation Organization (ICAO) detected 121 loopholes in the Indonesian air safety oversight system54, leading the US and EU to ban all Indonesian aircraft entering their respective airspaces. The situation has since improved, with the EU lifting the ban for a handful of operators (Garuda, Mandala, PremiAir, Airfast, Air Asia, Citilink, Lion Air, Ekspres Transportasi Antarbenua, Batik Air55), and the FAA lifted the ban for all Indonesian operators in 2016.

In general, government regulations, poor airport infrastructure and a bad reputation for safety hinders Indonesia from being a global player in every aspect of the private jet aviation industry.


As of 2016, Malaysia has 49 business jets, with 8 used for business jet charters. The only Malaysian-registered jet run by Berjaya Air. The average lead time to receive a permit is 72 hours.

Grey market charters56 are more prevalent and unofficially tolerated in Malaysia57. The result is legitimate charter operators finding it tough to compete with the ad-hoc availability and friendlier prices from private jet owners, thereby depressing charter business opportunities.


As of 2016, Singapore has 65 business jets, with 11 used for chartering. The mid-size, large, and long-range categories make up over 91% of this fleet, suggesting a need to fly mostly long distance. Average landing permit lead time is 7 working days while overflight permit lead time is 2 working days.

Generally charter friendly. All business jets based in Singapore are foreign registered, as the local aviation registry, the Civil Aviation Authority Singapore (CAAS), caters more to commercial aviation58.


As of 2016, the Philippines has only 4 jets available for commercial charter. The average permit lead time is 3-5 days.

Landing and overflight permits are mandatory for all charter operations in the Philippines.

The Philippines government has plans to ban general aviation (non-scheduled, non-airliner aircraft) from the Manila Airport. All landing permit requests must come with a local business contact, with applicants having to provide an abstract of charter agreement, purpose of operations, type of aircraft, relationship of passengers and more.

Helicopter charter within Philippines’ thousands of small islands are an increasingly viable market amidst tight regulations imposed on private jet charters59.

In general, cumbersome administrative requirements and airport bans present friction for the private jet charter economy.


As of 2016, Thailand has 37 business jets with 18 available for charter. Thailand had 727 UHNWIs and 24 billionaires in 2015. The average permit lead time is 3-5 days for landing permit and 2-3 days for an overfly permit.

“A 2015 International Civil Aviation Organization (ICAO) ruling putting the Thai registry under close scrutiny due to safety concerns has affected the local commercial charter operators. No new routes are being approved or aircraft are being allowed to fly to certain international destinations during this period, as local charter operators are put into the same category as low cost airline carriers.”

Foreign registered aircraft being chartered into Thailand requires a long lead time as the Civil Aviation Authority of Thailand (CAAT) will not issue landing permits without arrival or departure slot approvals and parking approvals. Chiang Mai International Airport and Phuket International Airport will not allow overnight parking, although pick up and drop off is permitted, while Don Mueang International Airport has a maximum parking time of 48 hours.

In general, unfriendly rules, regulations, and long lead times for permits prevent smooth and flexible operations by private jet charter operators. Scarcity of experienced business jet pilots is also an issue.

Future Outlook

Although current challenges remain large, it has been said that Asia’s large population and wealth is in a good position to tackle flexibility issues and empower efficient private travel60. This author, however, takes a more skeptical position that unless political will aligns with consumer demand, not much would change.

While organizations including ASEAN and APEC working with the International Civil Aviation Organization (ICAO), the International Business Aviation Council (IBAC) and the Asian Business Aviation Association (AsBAA) continuously raise the importance of improving transportation regulations in an effort to implement efficient solutions, success so far has been largely muted.

In the words of Jeffrey C. Lowe, Managing Director of Asian Sky Group, “The charter market in the Asia-Pacific region has yet to reach the size and scope necessary to provide cross benefits and industry wide stimulus. Like the business aircraft market itself in the region, charter is in its infancy and has yet to mature. This is also the case in terms of the charter products available i.e. membership programs and charter tools such as mobile applications. For example, most apps in the region do not provide live fleet updates or have the ability to confirm the flight and pay online, but rather are reduced to a messaging service where the user must “request a call back”.61

Before one attempts to jump in on the opportunity to provide better private charter services or introduce comprehensive jet-sharing solutions in Asia or SEA, one would have to seriously consider the challenging operational conditions that currently plague the region. Any player seeking to capture a slice of the SEA private aviation market would require deep knowledge and extensive networks to navigate and work with the multiple stakeholders involved. Having to contend and coordinate between multiple clients, private jet owners, airspace and safety regulators, governments, airport services, aircrew, competitors and even the weather itself exposes one to an incredibly huge amount of uncertainty and risk.

A new era for the private aviation industry will likely arrive once ASEAN governments commit to liberalising their airspace and airports, building and upgrading airport facilities and having a regional agency coordinating air traffic and setting implementable safety standards.

Until such conditions present themselves, new entrants would have to work within the operational constraints which perpetuates inefficiency. They would also have to compete against experienced operators and brokers who have eased such inefficiencies by establishing strong working relationships with various stakeholders around the region.

Annex A

Light Jet

Typical Flight – 800 to 1,500 miles

These aircraft have interiors comparable in size, comfort, and luxury to those of stretch limousines. They are quite economical for regional and medium-length flights, typically having a range of around 1500 miles nonstop. Light jets may seat 6 passengers comfortably and 8 or 9 at maximum capacity. External baggage space may be small, making it difficult to bring skis or large golf bags. However, you will certainly enjoy the flight as light jets are typically outfitted with excellent in-flight entertainment centers, a mini-galley, and luxurious leather and hardwood interiors.

Mid-Size Jet

Typical Flight – 1,500 to 3,000 statute miles

The term refers both to the jet’s cabin and its exterior and engines. With a larger cabin comes grander, roomier seating and more space to move around. Interior features are similar to light jets, but have more layout options, such as spacious divans, and provide stand-up space. At least 8 passengers can be seated on midsize jets, and some can even accommodate 12 or 14. Most all come with a private lavatory behind a solid door. Midsize jets also offer greater capabilities, including a wider range – on average 2100 miles or about 4 to 5 hours. Some even offer nonstop coast-to-coast flight possibilities.

Super Mid-Size Jet

Typical Flight – 1,500 to 3,700 statute miles

These aircraft provide features on a level between standard midsize and larger jets. Seating capacity is on the high end of typical midsize jets (10 to 18), but with even roomier stand-up cabins, many luxury amenities seen in heavy jets, and often a full galley. Some luxury options include a private lavatory with dressing area, spacious internal/external luggage compartments, and advanced entertainment and information centers. Super-midsize jets operate with the efficiency of midsize aircraft and the greater range and speed of heavy jets, making them suitable for coast-to-coast or international flights with a small to moderate size party.

Large Cabin Heavy Jet

Typical Flight – 2,000 to 5,000 statute miles

Known as the kings of private jet aircraft, heavy jets have got it all – the biggest interiors, most luxurious amenities, and longest nonstop range. They can carry anywhere from 8 to 20 passengers and as much luggage as you could possibly need. Interiors can be arranged to accommodate practically any configuration, from full galleys to private offices and bedrooms – not to mention plenty of regular seating in spacious comfort. Full-size lavatories with dressing rooms are standard, and service is best-managed by the inclusion of a flight attendant in the regular crew. These aircraft can be employed for coast-to-coast or intercontinental flights ranging from 6 to 12 hours nonstop.



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  31. Cabotage, “formally defined as “air transport of passengers and goods within the same national territory.”Aircraft Owners and Pilots Association Definition
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  40. Load factor is a measure of how well an airline is utilizing its capacity and is used to assess how efficiently an airline operator is filling seats in return for fares.
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Market Analysis: Video Gaming

Battling for customers

Download full PDF (0.5 MB)
Download full PDF (0.5 MB)


Mr Aaron Lim, Analyst

Mr James Tan, Beijing


Estimated to total US$86 billion in 2016 and growing at an annual rate of 6.7%1, the global video gaming market is not only large but growing rapidly. These figures hint at the attractiveness of investing in the space, and investors who succeed in identifying the next big thing will reap tremendous profits. However, the video gaming ecosystem is extremely complex and not all areas are favorable. In order to identify segments with the most potential for venture investment, this report delineates the video gaming value chain, and analyzes its segments across three criteria: 1) competition, 2) market, and 3) exit opportunities. Segments with fewer competitors are preferred to segments with more competitors; large and growing markets are preferred to small and stagnant ones; segments with more exits are preferred to segments with fewer exits. Through the analysis, two segments: 1) cloud gaming, and 2) game monetization have been selected.


Mr James Tan
Managing Partner
Quest Ventures

This market analysis report on gaming by Quest Ventures is a timely look at the ecosystem of video gaming. It looks at emerging technologies and where consumer preferences are likely to head, the key players in specific segments and the market opportunities that they are tapping into.

Estimated to total US$86 billion in 2016 and still projected to grow at a quick clip, the global video gaming market is attractive to investors. This is a complex market and navigating it and determining where to play our bets remain both a science and an art. On the one hand, statistics point towards strong emergence of handhelds and mobile gaming. On the other hand, we believe that communal gaming – esports – will bring on a different level of experience and demand on producers.

Cloud gaming

The market for cloud gaming services is growing quickly and estimated to increase fivefold in users to reach US$460 million revenue by 2015. With no market leader and fewer than ten competitors in the market, there is potential for new ventures to establish themselves. In addition, the recent acquisition of Gaikai by Sony, and establishment of Shinra Technologies by Square Enix signals industry confidence in cloud technology. However, past examples have highlighted the shortcomings of a B2C approach due to the high cost of Internet bandwidth. With Internet prices unlikely to fall soon and uncertain consumer demand, venture capital firms should instead concentrate on cloud gaming startups with B2B plays.

Game monetization

Although gaming specific numbers are unavailable, global revenues from mobile in-app advertising and payments approximated US$15 billion in 2013. With games accounting for 66% of total app revenues2, the market for game monetization software appears to be extremely large. However, the space is very crowded and competitors include both gaming specialists and app monetization generalists. Nevertheless, unlike other apps where traditional methods are appropriate, games have unique requirements that generalists do not offer. Furthermore, even though there are many competitors in the space, current solutions are generally targeted at developed economies. Emerging markets with large gaming populations that have bad access to first world payment solutions are thus underserved. Hence, investing in game monetization startups focused on emerging markets has potential.

Gaming Value Chain

The video gaming value chain consists of five distinct layers:

  1. gaming experiences
  2. distribution channels
  3. publishers
  4. enabling technologies and
  5. game developers.

On one end of the spectrum, high capital costs of producing gaming experiences increases barriers of entry and entrenches current incumbents. As a result, gaming experiences represent the most consolidated layer. On the other end of the spectrum, free development tools allow almost any individual to become a game developer. Hence, due to the low barriers of entry, game developers represent the most fragmented layer.

Gaming Experiences



There are only major three console players in the market namely: 1) Microsoft, 2) Sony and 3) Nintendo. They cater to different categories of consumers with Nintendo targeting casual gamers with the Wii priced at $99, while Microsoft and Sony both target the hardcore crowd with the Xbox One and PS4 priced similarly at around $500. These three players dominate the marketplace, and although there were attempts by other console makers such as Ouya to enter the fray, such alternative consoles failed. Some reasons cited for the failures lie with the poor selection of games, developer support and limited capabilities3.


Although consoles were banned in China until Jan 2014, grey market sales numbered at least 1.2 million units yearly from 2002 to 20094 from the three major players. This is low in comparison to US sales, which constituted about 20 million in 20085. The recent lifting of the console ban might boost sales, but with Chinese consumers accustomed to playing PC games and the growth in mobile, consoles might have a hard time finding a space in the already crowded gaming market. Global unit sales of fourth-generation consoles (Xbox One and PS4) is estimated to be around 18 million units in 20146. At a price of approximately $400 per unit, consoles sales were around $7 billion in 2014.

Exit opportunities

Ouya recently announced a partnership with Xiaomi to bring their games into China7. However, this deal does not appear to involve the console itself, but rather Ouya’s software which might be installed on Xiaomi’s new TV setup box. There have been no recent exits for console startups. Thus opportunities seem scarce, but this might be because there have not been many new console startups.

Notable companies



Sony with their PSP systems – $240 and Nintendo with their DS systems – $120 onwards dominate the handheld market. Similar to the console market, Sony targets hardcore gamers while Nintendo targets the casuals. In addition, Nvidia recently launched a new video gaming handheld – the Nvidia Shield Tablet & Portable that is priced at $199. It was well-received with critics praising the new handheld as well-built and powerful8. Sales figures have not been released, hence it is still too premature to determine the reception among consumers. There are also more niche players in this space such as the GCWZero9 which was crowdfunded, and iReadyGo a Chinese handheld can also be used as a phone and costs RMB200010.


Dedicated gaming handhelds are undoubtedly facing pressure from smartphones, and sales have plunged as a result11. Chinese companies have tried to innovate in this area by combining the two features. There have been flops in the past, notably Nokia’s N-gage gaming phone12. However, with technological improvements and Chinese appetite for mobile gaming there might be some potential in this area. Quarterly sales of Nintendo’s 3DS in 2014 numbered around 2m, suggesting that yearly sales volume is around $1 billion.

Exit opportunities

Exit opportunities are not very clear.

Notable companies

Cloud gaming


There is much more competition here than in the previous two categories. In this sector, there is no clear market leader and a variety of business models that range from B2C (Onlive, Gaikai) to B2B (Playcast, G-cluster). On one hand, B2C companies operate on a subscription model, with users paying a subscription to access and play games. The value proposition offered to consumers is that they can rely on the cloud to provide processing power instead of owning the hardware themselves. On the other hand, B2B companies partner with entertainment providers such as TV networks to offer games to their viewers, either on-demand or on a subscription basis. Firms compete on technological prowess (i.e. latency) and game selections. Chinese startups are also active in this scene, with companies like Cybercloud and Gloud already active in the marketplace.


It appears that B2C business models do not work very well due to the lack of infrastructure and high cost of bandwidth for end consumers. Onlive faced challenges initially due to their focus on consumers13. “The company had deployed thousands of servers that were sitting unused, and only ever had 1,600 concurrent users of the service worldwide.”14 This suggests that there is not much consumer need for such cloud gaming products. B2B business models do appear to work better. Gaikai focused on partnerships with companies, getting their services and games onto existing distribution channels, instead of directly marketing to consumers or relying on a proprietary service platform.15 According to Sega’s managing director, the market for cloud gaming services is estimated to be around $460 million in 2015.16 In addition, user installed base is expected to increase fivefold to nearly 150 million in 2015.17

Exit opportunities

There seems to be potential in exits for cloud gaming companies. Sony recently acquired Gaikai for $380 million in 201218. Shortly after the acquisition, Gaikai services started appearing on the Playstation systems as Playstation Now, allowing users to stream old PS games on newer systems19. This suggests that cloud gaming companies make good tech acquisition targets, and with the video gaming industry trying to diversify product offerings, it might be a good time to invest.

Notable companies

Virtual Reality


Competition in the virtual reality (VR) space is pretty stiff with both large and small companies in the fray. The most famous company is Oculus20, whose main product is the Rift – a VR headset that costs $350. Cheaper alternatives also exist such as the Carl Zeiss’s VR One21 that costs $99. However, technical capabilities differ greatly between the two with the Rift using an internal display while consumers can use their own smartphones as a screen with the VR One. Although the majority of the population is familiar with VR headsets, there are many different types of VR products. Leap Motion and Nimble VR both developed a product that allows users to “bring their hands into the virtual world”. Virtuix developed a full-body machine that allows users to use their whole body to “step into the virtual world”. In China, ANTVR22 was recently successfully backed on Kickstarter, raising $260,000.


The market for VR is extremely nascent, with no consumer VR headsets in the marketplace right now. Samsung’s Gear VR which is developed in partnership with Oculus seems poised to be the first consumer-grade VR headset to be launched in Fall 201423. Although reception among critics have been positive, real consumer need for such headsets still has not been established. In addition, Leap Motion only secured approximately 500,000 units in first year sales at a price point of $80, having predicted sales of 5m units24. Results suggest that there is low consumer need in the area, with first year sales volume of Leap Motion at only around $40 million.

Exit opportunities

Although Oculus was acquired by Facebook for $2bn, this is the exception rather than the norm, with no other VR companies being publically acquired in recent years.

Notable companies

Gaming portals


The gaming portals space is crowded with many different sites that serve a variety of HTML5 and Flash games to their users. These sites generally do not develop their own games, but instead share ad revenue with game developers in order to acquire content. Monetization for both developers and the platform also comes in the form of selling virtual goods and microtransactions. Some sites including Kongregate, Gameforge and 17173 offer social elements like leaderboards and badges to get their gamers to spend more time on the platform. Although many portals serve games directly on the web or mobile, others like QQ Games require gamers to first download a general QQ client before they can play. In addition, some sites like Kongregate offer sponsorships to developers for their games, as long as the developers include a link back to the gaming platform site25. Chinese platforms and American platforms differ significantly in terms of site layout and focus. On the one hand, Chinese portals seem to act more like distribution channels, mostly requiring gamers to download specific game clients, with home pages reflecting such a focus. On the other hand, American portals focus on immediately getting users to start playing games, as can be seen from their home pages. In addition, in China, many large Internet companies are in the space and it might be difficult for a startup to enter the market.


The market for gaming platforms seem positive, and recent statistics from Gamestop’s annual report show that Kongregate has 3 million monthly unique visitors26. The report also mentions that the majority of the site’s revenue comes from microtransactions. Gameforge also reports high number of users and the same trend in microtransactions driving revenues27. Information for other platforms were difficult to acquire, but the longevity of gaming platforms (since the 1990s) suggests that there is demand for these services among consumers. Kongregate revenues were estimated to be around $4-10 million in 201028 and Miniclip’s is estimated to be around $30 million in 201029, suggesting that the total yearly revenue from this market might be around 100s of millions. With the lack of offerings and quality in the casual browser game portal in the Chinese market30 and the potential latent demand, we should further investigate this category.

Exit opportunities

Kongregate was acquired by Gamestop in 201031, Ijji was acquired by Aeria Games in 201032. This suggests that are opportunities to be acquired by companies who are in the game industry, but want to diversify their revenue streams.

Notable companies



The PC space is relatively fragmented with many different companies competing for market share. However, it is important to note that specialty gaming PC companies do not generally manufacture their own parts, but source components from hardware manufacturers like AMD or Intel. Value is created by configuring component parts to optimize performance in games (e.g. overclocking). Competition is stiff, and companies in China produce both gaming desktops and notebooks.


PC gaming is still the dominant money maker in the Chinese gaming market, attributing for $8.7 billion in revenues in 2013 as compared to $1.8 billion from mobile games33. With such high demand for PC games, there is undeniably demand for the hardware that supports these games. A study by JPR estimated the worldwide PC gaming hardware market to be about $21.5 billion, with enthusiast and performance PCs accounting for 70% of market share.34

Exit opportunities

Voodoo, an American gaming PC company was acquired by HP in 200635. Recently, in November 2014, Ngame closed a $10m Series A, led by Fortune Capital. These show that there might be opportunities for gaming PC startups to raise additional VC funding or to be acquired by larger PC manufacturing firms.

Distribution Channels



The competition for digital distribution of games occurs on a global scale and across 4 verticals: PC, console, handhelds and mobile. For online PC games, firms like Steam (Valve) and Origin (EA) dominate. These companies offer both English and Chinese versions of their sites, although the sites are not fully translated36,37. In China, large gaming companies such as Sina, Netease do not have an online distribution arm offering their consumers options to directly download PC games. Instead, they either redirect to the relevant gaming websites or to other distributors like Steam for downloaded PC games38. This lack of interest could be attributed to the fact that most popular English client games might not have Chinese versions. Furthermore, locally developed Chinese games generally do not distribute through stores such as Steam or Origin. In addition, extremely popular locally published games such as World of Warcraft (Blizzard Activision & Netease JV) also have different distribution strategies. For console games, online distribution is often vertically integrated. Console and handheld manufacturers offer their gamers the option to directly download games via the Sony Playstation Store, Nintendo eShop and Xbox Live. For mobile games, digital distribution is mostly conducted through app stores with Google, Baidu, Tencent and Apple all in the space.


Digital distribution has been gaining traction quickly as Internet penetration improves globally. In the US and EU, aggregate digital distribution has been growing at a 33% CAGR, while in China CAGR is projected to be 10% over the next 3 years.39 In addition, a report by DFC Intelligence states that digital PC sales represent 92% of all PC game sales worldwide. The market for digital distribution seems to be burgeoning and overtaking physical sales extremely quickly. Research by NPD Group estimates the global market for digital distribution to be around $7 billion in 201340. However, the lack of content in China suggests that foreign business models of distribution companies might not work.

Exit opportunities

In 2013 Linden Lab acquired Desura for an undisclosed amount in a bid to diversify41. In addition, online distribution startups might be attractive to large Chinese Internet companies due to their lack of digital distribution capabilities.



Competition in the offline distribution occurs across a variety of retailers, both specialty and non-specialty.


Offline distribution is contracting, and a large shift to digital distribution is occurring. Even distribution of console games which has traditionally occurred offline is moving online42. Hence, the market for offline distribution appears to be in decline with the NPD Group expecting double digit declines YoY for physical games43.

Exit opportunities

Exit opportunities are unclear.




In China, there is substantial competition for mobile publishing with both large Internet companies like Tencent and independent houses like CMGE (San Guo Zhi), Yodo1 (Cut the Rope), iDreamSky (Fruit Ninja), Chukong (Where’s My Water) competing for market share. All companies with the exception of CMGE are full-service publishing platforms that help Western developers localize, monetize and distribute their games in China. CMGE on the other hand concentrates on locally developed mobile games. Tencent (Candy Crush Saga) is also a mobile gaming publisher, partnering with King to bring Candy Crush to China exclusively through its Weixin/ QQ platforms. Other publishers who do not have vertically integrated distribution channels work with a variety of partners to distribute the mobile games that they publish.


As the appetite for mobile games in China increases, so does the number of foreign developers wanting to tap into the market. However, it appears that the market is already saturated with many players that court both local and foreign mobile game developers. Furthermore, hit game developers already have established relationships with mobile publishers in China. As publishing is a B2B business, startups wanting to offer such services have to tap existing relationships in order to succeed. In addition, knowledge and partnerships with various distributors are important in order to succeed as a publisher. These reasons seem to suggest that it would be difficult for a new player to enter the mobile publishing business. One possible way to circumvent existing relationships is for publishers to identify relatively unknown developers that have games with potential and publish them, entering at an earlier stage of the process and taking on more risk. A positive example would be iDreamSky, whose revenues grew from $3.1 million in 2012 to $40.7 million in 2013. The explosive increase suggests that there is still a lot of potential for growth in this segment.

Exit opportunities

In 2013, Yodo1 raised $5m in Series A round led by Singtel Innov844.



The competition for PC publishing in China is high with many large companies in the fray. Foreign companies usually operate via joint ventures (JV) with Chinese publishers to bring their games into the region. One notable example is the NetEase and Activision Blizzard JV, which allowed NetEase to gain substantial revenues through the World of Warcraft franchise45. Regulations make entering the Chinese market with a regular (i.e. non-web) PC game extremely difficult, and developers have go through a stringent approval process46. Rampant piracy results in Western games often being localized through unofficial language add-ons47.


As a result of piracy and regulations, we see that most foreign PC game developers who enter the market are MMORPGs that combat piracy through subscription or freemium models. As a benchmark, Perfect World’s online game operating revenues were $401 million in 2012. However, this number includes both the publishing and development arm.

Exit opportunities

Exit opportunities are unclear.



In the past, console game publishing was vertically integrated with the console manufacturer. However, manufacturers such as Microsoft have recently introduced self-publishing programs to empower developers to create more content for consoles48. This has spawned independent publishers such as Devolver Digital who might not provide financing to developers but instead help developers navigate the publishing process49. In China, console game publishing is extremely nascent, with authorities only recently lifting the 14 year ban on consoles in September 2014. Hence, there are few competitors in the market50. With the launch of Xbox One in China, Perfect World, Snail Games and Tencent are a few of the publishers working with foreign console game developers to bring their games to the region.


The market for console game publishers seem attractive. Although official sales numbers have been low so far, there is a booming console grey market in China with an estimated 2-3 million units sold at retail prices in 200951. Furthermore, there are few local developers of console games as a result of the ban. Thus, it appears that there is a huge need for publishing and localization services in order for foreign developers to tap into this market. However, there are both business and regulatory risks in the console industry. Firstly, gamers are unaccustomed to playing console games52. Secondly, there are regulations surrounding the type of content that console games can have53. Although there are both business risks and regulatory risks, the potential of the market combined with developers’ need and lack of competition makes this an attractive sector to investigate.

Exit opportunities

There have been no exits in the past. However, there is potential to be acquired by gaming companies looking to move into adjacent industries, or even for IPOs in a similar vein to iDreamSky.

Enabling Technologies – Software & Middleware

Game development


There is a lot of competition in game development software and middleware. This segment can be broken down into: 1) full-suite game engines and 2) specialized game engine modules. On one hand, full-suite game engines such as Unity combine different modules (physics, artificial intelligence, audio, etc.) into one platform, and provides developers with a comprehensive solution. On the other hand, specialized game engines such as the Havok physics engine provide developers with a single function that can be combined with engines from other providers. Besides differences in functionality, game engines also span a spectrum of platforms and genres. Niche game engines such as RPGMaker and Arcade Game Studio provide solutions for developers intending to create games in those genres. Platform specific engines such as XNA for the Xbox, provides developers an environment for creating platform specific games. Pricing models for game engines include one-time fee, subscription, licensing and free. Firms offer both open source (Cocos 2d-x), licensed (Unreal Engine), one time fee (Unity), and free (XNA) solutions to game developers.


The market for game engines consists of both established and independent game developers creating games for various platforms. In recent years, development tools have become more accessible to independent developers as gaming companies attempt to expand the games available on their platforms. The availability of such tools lowers barriers of entry into game development, which is a potential reason behind the increasing number of developers54. The low barriers and growing popularity of mobile games appear to suggest sustainable demand for niche gaming engines that cater to the mobile development crowd. However, although there seems to be demand for engines, the presence of established players in the market combined with the difficulties a startup will face in creating a proprietary engine makes this segment a difficult one to enter. Exact revenues of game engine companies are unavailable. However, Unity Technologies, with 45% market share, announced that revenues grew 130% year on year55.

Exit opportunities

Game engine companies have been acquired by companies in the same industry but adjacent verticals. One example is the acquisition of Corona a 2d mobile game engine developer in 2014 by Fuse Powered a mobile payments firm for an undisclosed sum. In the same year, Bitsquid, an interactive engine was acquired by Autodesk for an undisclosed sum.

Game monetization


Although game monetization may occur across a variety of methods, one-time payments are relatively straightforward to implement – developers/ publishers charge a single fee to provide gamers access to their games. This section will instead focus on middleware that aid freemium games in monetization. There are two main ways to monetize a freemium game: 1) in-game ads, and 2) in-game payments. Both types of firms generally operate on a revenue-sharing basis with game developers.

The space for in game advertisements is very fragmented with no dominant player. These companies generally do not cater only to games. Instead, they offer solutions for products with ad inventory to sell/ manage. Companies such as Vungle and Beachfront specialize in newer formats such as video ads, while mature formats such as interstitials and static banner ads are offered by companies such as Fusepowered and Playhaven. Bigger companies like Airpush offer multiple ad formats. Ad monetization companies mostly compete via proprietary algorithms that aim to optimize revenue from inventory. Mo9 is a unique Chinese business that allows players to pay after consumption of virtual goods.

In game payments are generally controlled by the distribution channels. For example, Apple and Google both offer in-app payment SDKs that developers must use when integrating in-app payments for apps that are distributed in their app stores. These SDKs are secure ways for consumers to make payments using specified methods. For 3rd-party app stores without payment restrictions, developers have the option of integrating solutions from companies such as Fortumo and OKPay. These companies offer payment solutions such as carrier billing or bank transfers that might not be offered by Google or Apple’s payment SDKs.


Likewise, the market for mobile monetization can be broken down into two categories: 1) in-game ads and 2) in-game payments. A report by IDC and App Annie estimates the revenue generated by in-app ads to be around $8 billion in 201356, and in-app payments in iOS App Store to be around $7.7 billion (author’s estimate)57. With games accounting for 66% of total app revenues58, the market for game monetization software appears to be large. As freemium models gain traction, revenues from both categories might grow further in the near future. However, rates differ across regions, with India estimated to experience the highest growth at 8.7x from 2013 to 2017. The popularity of ad formats also differs across developers, with newer formats gaining popularity in 2014.

Exit opportunities

There appears to be opportunities in exits for game monetization companies with Science Inc. a holding company acquired Playhaven a in-app advertising company in September 2014 for an undisclosed amount. Yahoo acquired Flurry for $240 million in 2014.

Video Game Analytics


Competition in video game analysis is high with both: 1) video gaming analytics specialists and 2) analytics generalists. On one hand, specialists such as Ninja Metrics and Unity focus more on user analytics and often provide such capabilities out of the box. On the other hand, generalists such as Google Analytics and Mixpanel require more configuration for video gaming applications. These companies generally operate on a subscription basis, and charge according to the amount of data being processed by the software, usually calculated via MAUs (Monthly Active Users).


The size of the video gaming analytics software market is uncertain and there is a lack of research in the space. However, since there are approximately 200m video gamers in the USA59, and DeltaDNA charges $1,800/month for analyzing 500k MAUs, a conservative estimate for the global video gaming analytics market would be below $500 million.

Exit opportunities

Exit opportunities are unclear for specialist companies. However, for generalist companies there appears to be interest in the market. Generalist company, Flurry was recently acquired in June 2014 by Yahoo for $240 million.

Game Developers



Competition in mobile game development is extremely stiff, with both established companies and independent developers in the space. Both production values and genres of games vary widely. Likewise, cost for mobile game development range from tens of thousands to millions of dollars60. In addition, although business and monetization models differ widely, there has been a shift to freemium models. A study by IDC and App Annie showing that freemium business models receive the most revenue followed by in-app advertising models61.


Mobile has undoubtedly boomed in recent years, and is projected to double in revenue from $17.5 billion in 2013 to reach $35.4 billion by 201762. However, despite the growth, it is important to note that successes are rare with 92% of all Chinese mobile games losing money63. Investing in mobile game developers are thus a risky affair, but with potential for huge payoffs.

Exit opportunities

Successful developers with breakout games might go on to be acquired by larger companies. For example, in 2012, $210 million acquisition of Funzio by Gree, $325 million acquisition of Playcrab by Ourpalm. Recent years have also seen successful mobile game developer IPOs, including: 1) King – maker of Candy Crush Saga, 2) Forgame – maker of 风云天下, 3) Ourpalm – maker of 3D Ultimate Racing.


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