Gabriel is an Operating partner of Seedplus, is a Singapore-focused VC, he has participated as a mentor with Startupbootcamp FinTech since 2015. He recently joined us for our TIA online pitch session, during the pitch session had some great views on FinTech and the local ecosystem, so we asked him to elaborate…
Singapore and the Existing Ecosystem
FinTech is one of the pillars of our investment thesis at SeedPlus, a seed-stage venture fund. Our investors and partners are supportive given the scale of the opportunity, but all the same, there is a perception that across all fields of applied technology, financial technology is one of the slower-moving for startups.
To a large extent, this stems from the higher stakes: Direct fiscal impact is certain to yield a measure of caution both from users and their regulatory representatives! The Monetary Authority of Singapore’s new sandbox guidelines is thus a refreshing take on the regulatory side, since established financial institutions can now let real end users be a part of proof-of-concept startup partnerships and have a pre-approved regulatory blessing.
Singapore already plays a role as a natural base of operations for growing companies – both as a first international expansion for startups in the region looking beyond their initial market, and as entry point for overseas companies looking to expand to Southeast Asia – and the new regulations will make the FinTech ecosystem even more appealing for FinTech startup ideas in regulated domains.
Our Viewpoint and Role
On the nascent end of Southeast Asian markets, we’re proponents of nuance: Access to financial services (“being banked”) is not a binary quality – there is a gradient of financial inclusion starting from the first mobile wallet. Once this cornerstone is put in place the opportunities are plentiful: money transfers, personal finance education, credit scoring, insurance, and wealth management form roughly ordered stepping stones.
Emerging or established markets notwithstanding, I and my partners subscribe to the oft-repeated words of Marc Andreessen: that “software is eating the world”. We’re putting that to practice, since a sizeable part of our fund is earmarked for companies that use technology to dislodge the status quo in existing businesses. Financial services are at the top of the list, and when you combine that with the regional applicability of solutions – either immediately and exponentially, or incrementally as the relevant financial infrastructure spreads – we are certainly eager to participate in the ecosystem.
Where The Two Meet
Looking at the current state, then, I can distinguish three trends in the FinTech startups I meet:
First, there are those that share our viewpoint on enabling the lesser-banked and are building ahead of the curve, waiting for the number of market participants in the region to grow along with them. The opportunity to start trying them out in a more mature ecosystem already in the present is a great advantage, and basing the company in Singapore allows for market validation in a supportive regulatory environment.
Second, we commonly see transplants of a model which has done well overseas – in some ways, looking at what works in other markets that are experimenting at the cutting edge of FinTech. Headquartering in Singapore, they usually have some advantage in getting regulatory approval and mindshare with local and regional financial institutions, and execution and expansion quickly becomes the name of the game. While the opportunity is large, as a product manager I confess I am more interested in direct innovation!
Third, there are direct applications of the world-eating adage. Whether through advances in machine learning, new mobile technology or good old-fashioned footwork, they’re making some part of the running of existing financial institutions like banks, wealth managers and insurers more automatic, user-friendly, precise or cost-efficient. Given that the MAS sandbox requires the sponsorship of an existing financial institution, these startups are possibly the best-placed to take advantage of the regulatory flexibility.
Ultimately, given my background at the interface between technology and end user, at SeedPlus I’m excited about companies that differentiate on the user experience. Financial services have a reputation of being jargon-filled, heavy on forms and generally obtuse, so it is incredibly satisfying to see already see companies make money management approachable, and looking at the opportunities ahead I am excited, if not elated!