Asia’s Private Equity News Source avcj.com November 01 2016 Volume 29 Number 41
EDITOR’S VIEWPOINT Australia’s Future Fund makes innovation an investment priority Page 3
NEWS Actis, BlueRun, CDH, China Everbright, Crescent, Gopher, IDG, IFC, Ironbridge, Jungle, Mayfield, Mirae, Motilal Oswal, Multiples, NewQuest, Northstar, Platinum, STIC, Sequoia, Simmons, Walden, Warburg Pincus Page 4
INDUSTRY Q&A Shoreline’s Xiaolin Zhang Behind the blocks on distressed debt opportunities in China GPs should look further than finance for blockchain opportunities Page 6 Page 11
FUNDS DEAL OF THE WEEK
Blume goes bigger Internet advocates India VC firm upsizes to $60m for Fund II Page 10 PE buys marketing platform for lawyers Page 10 Private Equity & Venture Forum
7 December,Taiwan Shangri-La’s Far Eastern2016 Plaza Hotel, Taipei
BOOK GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY NOW! AND SAVE Snapshot of confirmed speakers include: US$200 KEYNOTE (until 4 NOV only) Chih-Kung Lee Minister of Economic Affairs REPUBLIC OF CHINA
David Chen Dennis Chiang CY Huang Vice Chairman Head of Merchant President CHINA DEVELOPMENT Banking Division FCC PARTNERS INDUSTRIAL BANK TAISHIN INTERNATIONAL BANK
Jamie Lin Charles Pan Jonathan Zhu Founding Partner, Chief Strategy Officer Managing Director APPWORKS VENTURES; MIGME BAIN CAPITAL Chairman, TAIWAN INTERNET AND E-COMMERCE ASSOCIATION
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260 25 50+ 8 8 180 Participants Speakers LPs Countries Exclusive Panel Companies Discussions
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7 December,Taiwan Shangri-La’s Far Eastern2016 Plaza Hotel, Taipei Managing Editor Tim Burroughs (852) 2158 9661 Associate Editor An eye on the Winnie Liu (852) 2158 9663 Staff Writer Holden Mann (852) 2158 9646 Justin Niessner (852) 2158 9678
Design future Edith Leung, Mansfield Hor BOOK Rana Tang
Events GLOBAL PERSPECTIVE, LOCAL OPPORTUNITY NOW! FUTURE FUND IS AUSTRALIA’S LARGEST sovereign fund that wants to follow the same AND George Sengulovski, SAVE institutional investor and Atlassian is the path is check size. One solution is to target Jessie Chan, Jonathon Cohen, Snapshot of confirmed speakers include: country’s biggest start-up success story. The late-stage rounds for established start-ups that Sarah Doyle, US$200 former got exposure to the latter in 2010 – five would probably be public by now were it not Amelie Poon, Fiona Keung, KEYNOTE (until 4 NOV only) years before the company went public – but not for the largesse of hedge funds, sovereign funds Jovial Chung, through an Australian venture capital firm. Future and mutual funds seeking some private markets Chih-Kung Lee Marketing Fund’s portfolio GP was Accel Partners, which alpha. This is what took Saudi Arabia’s Public Agrina Sandri, Priscilla Chu, Minister of Economic Affairs initially invested $60 million in Atlassian, made a Investment Fund into Uber and Singapore’s GIC Yasna Mostofi REPUBLIC OF CHINA partial exit before the IPO, and now holds a stake Private into Flipkart and Xiaomi. in the company worth more than $600 million. Investing through a fund-of-funds is another Research Helen Lee, Herbert Yum, The sovereign wealth fund’s other venture option, and it may be particularly attractive Kaho Mak, Tim Wong, David Chen Dennis Chiang CY Huang capital relationships have delivered early access to emerging Asian LPs that want exposure to Vice Chairman Head of Merchant President to the likes of Uber, Didi Chuxing, Pinterest, the world’s leading VC firms but don’t have Sales CHINA DEVELOPMENT Banking Division FCC PARTNERS Airbnb and Snapchat. These are the highlights the local knowledge or networks to secure it. Anil Nathani, INDUSTRIAL BANK TAISHIN INTERNATIONAL of an early-stage portfolio worth more than Beyond that lies the separate account, which Darryl Mag, Debbie Koo, BANK Nathan Ho, Samuel Lau, A$2 billion through fund-of-funds, direct fund offers more customization and – depending on Gavin Lam, Pauline Chen investments and co-investments, Future Fund the arrangement – places a higher degree of Jamie Lin Charles Pan Jonathan Zhu CIO Raphael Arndt said earlier this year. discretion in the hands of the LP. Subscriptions Founding Partner, Chief Strategy Officer Managing Director Jade Chan, Karina Ting APPWORKS VENTURES; MIGME BAIN CAPITAL As of June, the group had total assets of What Future Fund is said to have fashioned Sally Yip Chairman, TAIWAN INTERNET A$122.8 billion, of which 10.4% was in private to channel its exposure to IVFA and other small AND E-COMMERCE equity. And of that A$12.8 billion, just under half to mid-cap managers in Asia might be termed a Publishing Director ASSOCIATION was deployed in venture capital and growth separate account-plus. It created a pool of capital, Allen Lee equity strategies. Thanks to this approach, it is appointed a manager, and then proceeded to For the latest programme and full speaker line-up, please visit avcjtaiwan.com almost certainly one of the most progressive populate the pool. The manager offers ideas but sovereign wealth funds globally in terms of Future Fund conducts its own assessments and 260 25 50+ 8 8 180 addressing innovation. signs off on any decisions. Flexibility is the key: Hong Kong Headquarter Participants Speakers LPs Countries Exclusive Panel Companies Suite 1602-6 Discussions Writing in Future Fund’s annual report, Steve a mid-market GP may sit alongside a Chinese Grand Millennium Plaza Byrom, head of private equity, said that the asset VC firm set up by ex-employees of a leading 181 Queen’s Road class (and VC and growth equity in particular) domestic internet company, a single LP structure Central Hong Kong T. (852) 2158 9700 has never been more important because it for early-stage deals in India, and a handful of F. (852) 2158 9701 offers access to an innovation cycle largely co-investments. E. [email protected] uncorrelated to the challenging global economic There is no guarantee that more sovereign URL. avcj.com Simultaneous translation is available and market environment. “We believe we are wealth funds will embrace venture capital Beijing Representative Office in the midst of a multi-wave innovation cycle wholeheartedly and enduringly – some won’t Registration enquiries: Sponsorship enquiries: No.1-2-(2)-B-A554, 1st Building, driven by empowering the consumer, cloud be able to handle the risks, particularly where No.66 Nanshatan, Sarah Keung T: +852 2158 9765 Darryl Mag T: +852 2158 9639 Chaoyang District, Beijing, Enquiry computing, big data, machine learning and emerging markets are concerned, and others will E: [email protected] E: [email protected] People’s Republic of China mobile connectivity,” he added. flee as soon as they begin to feel the effects of T. (86) 10 5869 6203 Venture capital in China and India are now a down cycle. But for those that want exposure F. (86) 10 5869 6205 E. [email protected] Lead Sponsor Asia Series Sponsor on Future Fund’s agenda, as are growth equity to new business models, capable of disruption strategies in both countries – especially where that extends into other private equity strategies,
they offer access to areas that are seen as proxies customization will increasingly be the name of The Publisher reserves all rights herein. to the emerging middle class. The group’s first the game. Reproduction in whole or in part is permitted only with the written consent of foray into India has already been reported: it AVCJ Group Limited. ISSN 1817-1648 Copyright © 2016 backed the most recent fund raised by India Co-Sponsors Value Fund Advisors (IVFA), a GP with a track record in consumer and media, infrastructure Tim Burroughs A Mergermarket Group company services and healthcare. Managing Editor The challenge for Future Fund and any Asian Venture Capital Journal
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ZTO Express raises $1.4b in Council for Social Security Fund (NSSF). The ASIA PACIFIC capital will be channeled into 10-13 funds on CEL US IPO platform. IFC proposes backing Actis’ PE-backed Chinese logistics operator ZTO Express has raised $1.4 billion in its New York Credit card management energy fund Stock Exchange IPO after pricing its shares The International Finance Corporation (IFC), the above the indicative range. The company sold app raises $84m investment arm of the World Bank, has proposed 72.1 million American Depository Shares (ADS) U51.com, a Chinese credit card management a $100 million investment in Actis Capital’s latest at $19.50 apiece, above the indicative range of mobile app, has secured $84 million in an emerging markets energy fund. The vehicle will $16.50-18.50. A further 10.82 million shares could extended Series C round from Chinese asset invest in energy generation and distribution be added to the offering if underwriters fully manager Harvest Global Investments and assets in emerging markets in Asia, Africa and exercise the overallotment option. department store operator Intime Retail Group. Latin America. It has a target size of $2 billion. The extension brings U51’s overall Series C round to $394 million. AUSTRALASIA Sequoia to invest $52m in Gopher Ironbridge-owned Bravura Sequoia Capital China has agreed to invest files for IPO RMB348 million ($51.7 million) in Gopher Asset Australia-based financial services administrator Management, the alternative asset management Bravura Solutions is looking to raise A$148 million unit of China’s Noah Holdings. The commitment ($113 million) through a domestic IPO – three is expected to help Gopher extend its product years after PE owner Ironbridge Capital privatized capabilities domestically and internationally. the business. The company will sell 78.9 million It is the largest US IPO by any company so new shares and 23.2 million existing shares for far this year; the largest US float by a Chinese IDG, Walden lead round for A$1.45 apiece. Ironbridge will sell 16.1 million company since Alibaba Group in 2014; and the shares, reducing its stake to 47.2% from 86.7%. fourth-largest offering on record by a PE-backed AI start-up Chinese company on a US exchange. IDG Capital Partners and Walden International Crescent sells stake in Following the IPO, Warburg Pincus’ 6.1% have led a $65 million Series B funding round stake in ZTO was diluted to 1.5%, while Sequoia for US and China-based artificial intelligence (AI) ClearView Wealth Capital went from 5.6% to 1.4%. Gopher China and robotics company Rokid. The capital will be Crescent Capital Partners has agreed to sell S.O. Project – which is ultimately controlled by used to develop the company’s home robotics a 14.9% stake in Australian financial services Gopher Capital, with Sequoia providing advisory offerings and improve customer experience in provider ClearView Wealth to Sony Life services – dropped from 1.6% to 0.4%. China and the US, where a product roll-out is Insurance for approximately A$145 million ($111 Founded in Shanghai in 2002, the company planned for the first quarter of 2017. million). The private equity currently holds a covers 96% of China’s cities with a range of 52.9% interest in ClearView, having headed a services targeting the e-commerce and printing JD Finance leads $30m consortium that submitted a takeover offer for industries. It claims the fastest growth rate the business in July 2012. among the five largest Chinese express delivery round for Microseer companies as of the end of 2015, with parcel JD Finance, the financial subsidiary of Chinese volumes growing at a compound annual rate of online retailer JD.com, has led a $30 million Series GREATER CHINA 80.3% from 2011 to 2015. B round for Microseer, a Shanghai-based human resources and IT outsourcing services start-up. CDH realizes $806m Existing investors including IDG Capital Partners, renminbi-denominated tranches - with more China Growth Capital, Shanghai Jinye Equity through WH partial exit than $500 million in aggregate commitments. Investment Partners and CICC Private Equity also CDH Investments has made another partial exit The two vehicles, which were both took part in the round. from Chinese pork producer WH Group, selling oversubscribed, will make seed to Series A round an approximately 6.83% stake for HK$6.25 billion investments in local start-ups. The firm has also ($806 million). One billion shares were placed at promoted investment directors Wei Cao and NORTH ASIA a price of HK$6.25 apiece, reducing the private Jiajie Wu to managing director level. equity firm’s holding to 12.94% from 19.77%. This STIC raises $530m for follows a HK$9.25 billion partial exit in August. CEL to receive mandate special sits fund from NSSF BlueRun closes $500m STIC Investments has raised $530 million China Everbright (CEL), the Hong Kong-listed for a special situations fund that will target early-stage fund multi-platform asset manager backed by state- restructuring opportunities involving South BlueRun Ventures has closed its latest China- owned China Everbright Group, is set to receive Korean conglomerates. The STIC Special Situation focused fund - comprising US dollar and a separate account mandate from the National Fund launched in May 2015 and closed earlier in
4 avcj.com | November 01 2016 | Volume 29 | Number 41 NEWS
October, with Korea’s National Pension Service Northstar offers $238m for NewQuest, Kotak invest in (NPS) coming in as the anchor investor. Innovalues Paragon companies Lintec buys Mactac from Northstar Group has offered to buy Singapore- NewQuest Capital Partners has joined a $21 listed Innovalues, a components manufacturer for million investment in construction firm Capacit’e Platinum Equity the automotive and industrials sectors, in a deal Infraprojects and engineering components Japanese adhesives producer Lintec Corporation that values the business at approximately S$331.4 manufacturer Maini Precision Products, both of has agreed to buy US-headquartered labels million ($238 million). which are portfolio companies of India’s Paragon manufacturer Mactac from Platinum Equity The PE firm has launched a scheme of Partners. The GP is acquiring shares from existing for $375 million. The PE firm acquired Mactac arrangement whereby shareholders in Innovalues investors. Its partner in the deal is Infina Finance for $170 million in 2014 from listed packaging will receive S$1.01 per share in cash or one share Private, which is owned by Kotak Mahindra Bank business Bemis. The company’s European in the Precision Solutions Group - parent of the and the Kotak family. operation was sold to Avery Dennison in August. acquisition vehicle - plus S$0.61 per share in cash. Existing Innovalues shareholders can account MOPE invests $15m in Acushnet lowers IPO price, for no more than 20% of Precision Solutions. The offer represents an 18.1% premium to Innovalues’ Ganesh Grains gains on debut September 30 closing price. Motilal Oswal Private Equity (MOPE) has invested Acushnet Holdings, which owns the Titleist and INR1 billion ($15 million) in Indian packaged FootJoy golf brands, saw its shares jump 5.9% cereals producer Ganesh Grains. The company in the first day of trading in New York following will use the capital to increase brand awareness, a smaller-than-expected $328.7 million IPO. The expand its distribution network and build out its company sold 19.33 million shares at $17 apiece, production capacity. below the indicative range of $21-24. PE investors include Mirae Asset Private Equity; Woori- Mayfield, IIFL invest $7.5m Blackstone Korea Opportunity Private Equity Fund, and Neoplux Private Equity. in Box8 US early-stage investor Mayfield and IIFL Wealth PFG commits $15m to Yello Management have invested INR500 million ($7.5 million) of Series B funding in Indian quick service Mobile unit Goh Leng Tse, chairman of Innovalues, and restaurant (QSR) chain and food delivery start-up Yello Digital Marketing (YDM), the digital three other directors have agreed to vote their Box8. The capital will go towards technology marketing unit of South Korean mobile internet combined 39% shareholding in favor of the improvements and geographic expansion. company Yello Mobile, has received $15 million Northstar offer. Should shareholders support the in funding from Partners For Growth (PFG), the transaction, Innovalues would be de-listed. PE arm of SVB Financial Group. The capital will The company produces precision machine SOUTHEAST ASIA be used to purchase additional shares in the parts and components for vehicles, printers, company’s 18 affiliates – which have more than mechanical devices, sub-assembly products, and Simmons invests in 1,400 employees and over 5,000 clients – and water treatment systems. It has manufacturing consolidate control within the group facilities in China, Thailand and Malaysia. China Malaysia’s Leap Energy is the company’s biggest geographical market, Simmons Private Equity (SPE), an energy-focused accounting for 59% of revenue, ahead of the investor based in the US, has acquired Malaysian SOUTH ASIA US at 18%. Four fifths of total sales are to the oil company Leap Energy as part of a plan to automotive sector. establish a global upstream consulting group. The Multiples invests $110m in investment will support SPE’s broader portfolio with operational expertise in mature field Arvind deal will see Ostro invest an initial INR490 million production optimization and predictive analytics Multiples Alternative Asset Management has ($7.3 million) for a 49% stake in Prathamesh for conventional and unconventional reservoirs. agreed to invest INR7.4 billion ($110 million) in Solarfarms, a vehicle set up by Suzlon to develop Arvind Fashions, the branded apparel distribution a 50 megawatt project in Telangana. Jungle leads Series A for arm of listed Indian textile manufacturer Arvind. Thailand’s Pomelo It will take a 10% stake in Arvind Fashions, which Ather raises $31m for will use the capital to support future growth Jungle Ventures has led an $11 million Series initiatives. electric motorcycles A round of funding for Thailand-based online Indian motorcycle giant Hero MotoCorp will fashion retailer Pomelo. Existing investors, Actis platform to buy solar invest about INR2 billion ($31 million) in domestic including 500 Startups and Fenox Venture VC-backed electric vehicle (EV) start-up Ather Capital, also participated in the round. The Series asset Energy. It follows a $12 million investment last A follows a commitment earlier this year from Ostro Energy, an Indian renewable energy year by Tiger Global Management. Hero will take Indian venture debt firm InnoVen Capital and a platform backed by Actis Capital, has agreed to a 26-30% stake in the company in an effort to $1.6 million pre-Series A round in 2014 also led buy a solar project owned by Suzlon Energy. The enhance its existing EV development program. by Jungle.
Number 41 | Volume 29 | November 01 2016 | avcj.com 5 COVER STORY [email protected] Ethereal frontiers As blockchain segments mature in Asia, private equity and venture capital investors will benefit from a range of new entry points. Pitfalls related to the technology’s obscure nature, however, will persist
TWO RECENT PE INVESTMENTS INDICATE revolutionize the exchange of assets. increases in complexity with each transaction. that Asia’s blockchain space may be on the Information has always been intangible, and “Often when people say they’re building a cusp of a new development phase driven by a therefore well suited to this style of networked blockchain, they really just mean they’re building migration of talent and ideas from West to East: a medium, but stores of measurable value – like a secure database that makes use of many of $5 million Series A round for Coins led by Quona bills of lading for cargo shipments or documents the characteristics that bitcoin has proven to Capital, and a $60 million commitment to Circle relating to property titles – have become work,” explains Leonhard Weese, mentor at from a group of international investors including digitized only relatively recently. The dawn of SuperCharger Fintech Accelerator and president China Everbright. blockchain accordingly offers a means of re- of the Bitcoin Association of Hong Kong. The companies have different target markets writing rules on the distribution of wealth while Since its inception, blockchain has only – Coins is focused on the Philippines while Circle simultaneously intersecting political, financial attracted about $1.5 billion of investment. At wants to boost its presence in China – but their and industrial structures in ways yet to be first, activity focused on digital currency mining, fundamental attractiveness is rooted in their US clarified. wallets and exchanges, with VC funding for credentials. Expertise in blockchain is hard to Any technology with this level of vaguely bitcoin start-ups topping out at just over $200 come by globally, and Asia is understood to be alluring disruption potential deserves a good million in early 2015, according to CB Insights. behind the curve in knowhow development. creation myth, and blockchain certainly This surge of interest precipitated a dramatic The funding for Coins and Circle suggests that delivers. The system was first developed as a drop-off to $25 million of investment by mid- the region’s increasingly crowded ecosystem of 2015, which has been interpreted as an inflection blockchain-supported financial services start-ups point in the industry’s natural hype curve. is ripe for diversification. “Most of what you “I think that we are on the slope of This influx of Western leadership is setting the enlightenment,” says Jeremy Liew, a partner at stage for an expanded range of business models read in the news about Lightspeed Venture Partners, which has backed that fall under the Asian blockchain umbrella. In blockchain is just China’s largest bitcoin exchange, BTCC. “The the US and Europe, blockchain start-up activity initial peak of inflated expectations was driven already stretches beyond financial services, financial institutions by the expectation that the primary use-case but the technology’s initial boom in Asia has for bitcoin was to reinvent payments in the remained anchored in banking and payments. playing around with developed world, and for trading, and that this The rationale is that by building up a competitive the technology, but would happen fast. This has largely proven out to environment of similar companies, some will be wrong.” eventually sprout branches into other sectors. they don’t have any The second phase of investment has been “A year ago, blockchain wasn’t something the characterized by a shift toward non-bitcoin young, hungry entrepreneurs were after in Asia, hope of bringing that financial applications of blockchain technology, but now you’re starting to see the talent here,” to the market” – Kevin Loaec which either tap into the original bitcoin system says Scott Likens, PwC’s emerging technology or exploit a separately programmed protocol. lead in Hong Kong. “Because of the draw of These investments have been led by corporates financial centers like Singapore and Hong Kong, ledger for bitcoin transactions, and as such, and financial institutions aiming to improve fintech is going to lead the way on investments, was mysteriously invented in 2008 by Sathoshi online and mobile transactions in fiat currencies. but the VCs see industries that are not financial Nakamoto, the pseudonym for one or a number The fastest growth area, however, has services as quicker and less regulated with of programmers who remain unknown. been the use of blockchain as a system for fewer companies at play. There are hundreds This esoteric backdrop fueled a culture of recording adjacent non-monetary transactions. of blockchain start-ups around payments and libertarian thinking and idealism among early Chainsmiths, an Ireland-based blockchain currency, so it becomes a more difficult question adopters who were eager to avoid repeating consultancy that already services half its client of where to put your money.” the economic missteps that led to the global base outside of the financial sector, ties this financial crisis. It also set up the proliferation of evolution in part to the shortcomings of banks Bitcoin beginning one of the more misunderstood technologies to versus industrial players when it comes to The ongoing emergence of blockchain attract institutional funding. commercializing prototypes. technology is commonly promoted as The core interest of blockchain is not so much “Most of what you read in the news about representing an opportunity similar to that of its free-to-use, dis-intermediated computational blockchain is just financial institutions playing the internet in the mid-1990s. As the internet resources as its emphasis on cryptography. The around with the technology, but they don’t have allowed for the secure, free and instantaneous technology validates transfers by authenticating any hope of bringing that to the market,” says exchange of data, so does blockchain promise to a chain of timestamped units of data that Kevin Loaec, managing director at Chainsmiths.
6 avcj.com | November 01 2016 | Volume 29 | Number 41 COVER STORY [email protected]
“It’s very hard to bring innovation to finance and remittances cannot be as easily dismissed by problems. For example, Chainsmiths’ Loaec because there’s so much regulation. That has bureaucracy-wary investors. cites a common investment thesis related to always been the case, and blockchain isn’t going “Blockchain has very diverse applications, using a blockchain to streamline electricity to change that.” but if we make another investment in the payments – a concept that does nothing to solve technology, it’s definitely going to have some the underlying problem of customers illegally Non-financial applications connection with fintech,” says James Pan, a tampering with their meters. Early signs from the West that the future of the member of China Everbright’s management “Blockchain can be applied to all industries technology is in non-financial industries also decision committee. “Blockchain is not the but most of the use-cases don’t work,” he says. include the diversification of specialist VCs such only technology for coming up with payment “Probably 95% of all the people that talk to us as US-based Blockchain Capital, which backed solutions – which is the clear trend – but based shouldn’t be on a blockchain because they don’t BTCC alongside Lightspeed but now counts a on our due diligence so far, it’s the most reliable.” have the right approach to the technology. third of its portfolio outside of banking services. The performance standard of this type of Most of the time, the problem is about physical For example, the firm has invested in Wave, an database is difficult to overstate. The most robust elements in the real world and has nothing to do Israeli company that uses blockchain to allow blockchain is the original bitcoin system, which is with blockchain.” cargo vessels to send highly sensitive inventory said to have up to eight times more computing Due diligence should otherwise focus titles across a decentralized network. power than the world’s top 500 supercomputers on confirming the expertise of the targeted technical team, especially in light of the supply- demand imbalance for top-notch blockchain Bitcoin and blockchain venture capital funding talent. For China Everbright, the decisive factor 250 in its decision to back Circle was the company’s status as the New York Department of Financial 200 Supervision’s first “BitLicense” recipient and the only digital currency play to receive an e-money 150 issuer license in the UK. “The technology is new and unfamiliar, so 100 US$ million investors don’t usually have much experience in the space. This makes it more difficult to assess a 50 team’s credibility and whether their product has 0 any real value,” says Josh Stark, head of operations 2013 2014 2015 2016 at Canada-based blockchain consultancy Ledger Bitcoin start-ups Blockchain start-ups Labs. “Investors need to have a clear thesis on Source: CB Insights where they believe the technology and market is heading. That’s true of any investment, but in this space, credible answers that get beyond the “We see a lot of interesting start-up activity combined. In the context of Asia’s large hype are much harder to come by.” around reimagining the bitcoin blockchain as an population trends, this resource is increasingly Both the financial and non-financial immutable record,” says Bart Stephens, managing seen as an indispensable settlement solution. service angles in blockchain are relatively well partner at Blockchain Capital. “Many people “Asia is a very exciting and robust market, understood by PE investors with experience tend to think of the blockchain industry as part and we’re bullish on the developing economies developing enterprise software for clients. The of fintech, but we really see it as an evolution in and their adoption of blockchain technology,” value proposition at the cryptocurrency end computer science that will impact and alter not Blockchain Capital’s Stephens adds. “There of the spectrum, however, is less immediately just financial services but government services, are about three billion consumers with a recognizable. In this area, it is harder to plot the healthcare, legal services, international trade, smartphone in their pocket who can essentially future evolutions of the market, how bitcoin will shipping and logistics. We see a lot of our future leapfrog the paper, plastic and physical perform as a currency, what trends will redirect activity in those areas.” branch-based products you see in the West into its exchange platforms and in which countries. Although Asia has not yet followed this lead, bleeding-edge financial services that are ultra- Investors may overcome this lack of visibility it is expected to catch up quickly on the back of secure and ultra-cheap.” through exposure to wallets, which monitor a number of technocratic drivers. Digital transfers digital currency transactions across different of any kind in Asia remain subject to foreign Finding value geographies in real time. Keeping company burn exchange and border-control complications that As investment targets in this space multiply, rates low is also essential to ensuring there will have already been resolved in the US and Europe. one of the key challenges for GPs is identifying be enough dry powder available to react when Countries in the region must also contend viable use-cases. One rule of thumb is to focus the inevitable black swan event starts moving with a much broader range of technological on monopolies such as insurance or taxation the market. competency in cross-border trading, adding on controlled goods. This is because businesses “Bitcoin companies are like surfers. You can’t appeal to the simplifying architecture of in these fields are dependent on a single point make a wave – you have to wait for it to come,” blockchain. of failure and become more secure when a says Lightspeed’s Liew. “But when it comes, you The primary driver of Asia’s potential, decentralized network diffuses the trust and risk. can make sure that you’re pointed in the right however, remains its massive and fast-growing Another point of consideration is to avoid direction, well positioned, and you can paddle consumer markets. As such, the scaling upside of business plans that are attempting to apply hard. And if you get it just right, you can catch a blockchain business models related to payments the technology as a solution for non-technical really great ride.”
Number 41 | Volume 29 | November 01 2016 | avcj.com 7 29TH ANNUAL The 29th Annual WEEKS AVCJ Private Equity & Venture 2TO GO Forum is the largest and REGISTER most influentialgathering of NOW! private equity and venture professionals in Asia.
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