Backs to the Wall – How Small Businesses in Singapore will be Impacted by an Emerging Financial Crisis

Already, signs of this rise are visible. Demand has been on the uptick even before the pandemic struck, according to Funding Societies, a P2P financing platform founded in 2015.

January 2020 was Funding Societies’ best month for loan disbursals, according to senior commercial director Vikas Jain. February saw a slowdown due to the Chinese New Year, but March brought a 50% spike month-on-month in financing requests.

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“April has shown a slight reduction compared to March, perhaps due to the various government schemes (grants and loans) being announced across the three markets (Singapore, Malaysia, and Indonesia) that we operate in,” Jain added.

With supply chains affected by the widespread disruption of business and consumer activity, Funding Societies has seen more working capital requests compared to invoice financing.

Validus Capital, another five-year-old P2P lending platform, also saw an increase in its pipeline of credit-approved unsecured loans in recent months. The platform claimed it recorded a 50% spike in disbursement compared to the same period last year.

Finaxar, a four-year-old lending infrastructure startup, also saw a 2X-3X demand spike in the last month, according to co-founder Tan Sian Wee. “It was building up from February onwards,” he said. “In March, you could see demand come in; in April, when the circuit breaker was announced, there was a jump.”

Whether the alternative financiers can fulfil the rise in demand is a different matter. In these pandemic times, they could end up deciding which SMEs are able not just to survive the downturn, but also gear up for the future.

Short on cash

As Covid-19 shut down the country, the Singaporean government moved quickly to ensure SMEs had access to the cash they needed for survival. It increased its risk share of loans to SMEs from 80% to 90%. The central bank, the Monetary Authority of Singapore (MAS), is providing money to banks at an interest rate of 0.1% per annum. Enterprise Singapore initiative for SME loans are funded through banks and financial institutions.

Local banks have also taken steps in this direction, going on a lending spree. As of 30 March, SMEs made up between 10-15% of the local banks’ loan books. That’s set to increase drastically. For example, even with the government’s 75% subsidy for wages of local and permanent resident employees, SMEs still need to come up with the rest.

OCBC Bank expects to disburse S$1 billion (US$700 million) in government-assisted loans to SMEs, which is more than what it lent during the 2008 global financial crisis. The United Overseas Bank (UOB) allocated S$3 billion (US$2.11 billion) to SMEs, offering loans up to S$550,000 (US$387,000) with no collateral required. DBS, the biggest local bank, has availed $3.2 billion (US$2.25 billion) for SMEs under the government relief programmes.

However, bank loans are subject to credit scores. Only those SMEs with a good credit rating can avail larger loans, in line with the risk that banks are taking on. Even if banks are extremely generous, the loans will have to be on their balance sheets. Which means there will not be enough credit to go around.

How Indonesians Sell Produce Online

For the switch to B2C, Tanihub had to quickly restructure its warehouses. The frequently ordered items needed to be placed so that pickers can reach them immediately. Tanihub has six warehouses in several cities and they were initially laid out to handle some 100-150 bulk orders a day, which can take a longer time to pack. Now, they were peaking at 2,000 to 3,000 of individual orders a day.

By buying directly from farmers and introducing a higher level of transparency into the system, Tanihub can keep prices more stable.

Right now, it sells 5kg of medium-grade rice for IDR 57,000 (US$3.8)— IDR 11,400 (US$0.76) per kg—on its platform, with free shipping for orders above IDR 100,000 (US$6.70). The market price in Jakarta for the same grade is currently at IDR 13,900 (US$0.93) per kg.

Adapting to circumstance

Adapting to circumstance

Some innovations Tanihub has introduced in its supply chain have helped it get there:

Farmers like to work with Tanihub because it’s one destination that buys the whole range of products—from grade A to F—from them at a fair price. Indonesian farmers don’t use the best seeds and don’t have the best fertilisers or techniques, according to Wineka. This results in varying quality: some apples may have a different colour; the skin of an avocado could have a mark; an egg might not be the right size. In the conventional system, a buyer would give the farmer a fixed, usually low, price for the entire harvest, no matter what quality. Tanihub sorts the harvest by grade and pays the farmer accordingly. A Grade-A apple fetches more, but Tanihub also buys the lesser apples and sells those to food processing companies.
Like Sayurbox, Tanihub also organises its own logistics because it’s more reliable and provides transparency in the whole chain. Tanihub has six warehouses near the cities it services, and several packing facilities near its farms. Farmers let Tanihub know a few days ahead of the harvest how much to expect; and Tanihub informs them when there’s a demand surge or lull for certain products from its clients.

A lasting change

Venture-capital backing also means startups like Tanihub and Sayurbox can afford to resist the heavy price fluctuations, while simultaneously offering farmers and customers a better deal.

“For some commodities where Sayurbox has secured good supply sources, they are able to pay farmers higher prices and sell at a slightly lower price than comparable modern markets, and make better margins too,” says an early investor in the firm who asked to remain anonymous.

Profitability, however, will only come at scale, the investor adds. Which is why harnessing the Covid-19 opportunity just right is so important for these companies. Never have the costs of customer acquisition been this low.

Tanihub secured US$17 million in venture capital amid the pandemic. Sayurbox hasn’t disclosed funding, but it’s reportedly backed by Indonesia’s largest e-commerce platform, Tokopedia.

Both companies are experimenting to reach new buyers. Tanihub is learning to harness the B2C space, while Sayurbox is currently trying to capture resellers. The latter is offering a model in which one person can buy in bulk to supply to a group of people in a neighbourhood.

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“Earlier in the year, the Ministry of Agriculture assured there’s enough supply of rice and other staples to last through August, but in the last few days the President warned that provinces are seeing deficits.”


The price rollercoaster started around January and February. The skyrocketing garlic price, for example, was because there were delays in shipments from China, from where the bulk of the import comes. Indonesia imports 95% of its garlic, which doesn’t grow well in tropical climates.

Even domestic products are impacted, although to a lesser degree. The average price of rice across Indonesia during the first week of April rose to IDR 11,900 (US$0.79) per kg, a 1.28% increase from December 2019, according to research by the Centre for Indonesian Policy Studies (CIPS).

In provinces that have imposed partial lockdowns, which includes Jakarta, rice prices are even higher—averaging IDR 13,500 (US$0.90) per kg in traditional markets.

The problem isn’t bad harvests—they were good and are expected to remain reasonably good this year, says Felippa Amanta, a food security expert at CIPS. It’s an accumulation of little things. The pandemic is throwing more sand into the already creaky machinery of food distribution.

There are fewer people working in facilities like storages or slaughterhouses; there are fewer surveyors inspecting goods arriving at the ports, which causes jams and delays.

In theory, food distribution should go ahead without disruption, says Amanta, because it is exempt of all work and travel restrictions. However, regional travel restrictions do make logistics unpredictable. Some cities introduced curfews, which means trucks have to wait overnight before they can offload.

“We don’t have figures, just anecdotes,” says Amanta. “We’re hearing that truck drivers are simply afraid of going around, and some local communities aren’t allowing food distribution coming into the region because they are afraid.”

This has meant there are also fewer trucks on the road than before the pandemic.

Closer to the source

Sayurbox hasn’t faced these logistical challenges, says Hernis. Its trucks are registered with authorities and drivers carry documentation as proof that they’re transporting food.

Agritech startups like Sayurbox attempt to reduce some of the friction in the supply chain by building relationships with farmers and linking them directly with the end-buyer. In Sayurbox’s case, these are individual customers in the Greater Jakarta area. The startup chose to focus on this demographic first.

Five-year-old Tanihub, another agritech company from a similar cohort, chose to focus on enterprise clients: food processing firms, resellers, hotels, and caterers. The company is present in several cities.

Tanihub’s model was initially more adapted to bulk orders, says Pamitra Wineka, its president and co-founder. But the startup was affected by the pandemic. After movement restrictions set in, its B2B arm saw less and less activity because businesses, especially in the hotel and restaurant sector, were winding down. Tanihub’s B2C arm simultaneously saw more demand.

B2C was never Tanihub’s strength, says Wineka. The firm introduced it mostly for branding, so that there’d be a reason for people to know Tanihub.

Explore the Limits of Teleportation, Whats the Future of Transportation?

“We continue with diversification of our revenue base during this tough period, with a more rigorous and market-friendly approach to further expand our digital and ancillary businesses such as [AirAsia’s in-flight many brand] Santan, Teleport, and BigPay,” he said.

In 2019, Teleport also managed to achieve profitability after a full year of operations, making it the leading digital business of AirAsia. During Covid, while over 96% of AirAsia flights were grounded, Teleport has stepped up its services and tapped into the food delivery and e-commerce space.

It’s not to say that the company hasn’t met its own share of Covid conflicts.

While AirAsia has managed to retain all of its staff, they have been taking pay cuts ranging between 15% and 75%, depending on seniority. The co-founders Kamarudin and Tony Fernandes are not taking any salary at all.

It’s a problem across the board

In March, local airline Malindo Air said it would cut up to 50% of its employees’ pay in addition to reducing their number of working days by up to 15 days a month. Meanwhile, national carrier Malaysia Airlines is reducing senior management’s salaries by 10% and waiving allowances for all of its 13,000 employees.

But unlike its competitors, AirAsia has been ramping up its non-airline businesses from before the pandemic. Thereby reducing its dependency on the core business in the long run.

It has invested heavily in technology in the past few years, starting with transferring all of its non-airline businesses to RedBeat Ventures in December 2018. AirAsia also reshuffled its leadership to facilitate a digital transformation in August 2019 and launched a US$60 million tech fund in partnership with Silicon Valley-based 500 Startups.

Its foresight of banking on tech seems to have given it an advantage over its peers.

British budget carrier Virgin Atlantic—whose founder Richard Brandson is apparently a dear friend of AirAsia’s Fernandes—is reportedly seeking a buyer as it fails to lobby for a government bailout.

Singapore Airlines, which owns Scoot—the budget carrier that competes directly with AirAsia—had to turn to the city-state’s investment fund Temasek Holdings to raise US$6.2 billion funding to keep its operations afloat. It got US$13 billion instead.

Although it sits on a RM2.6 billion (US$600 million) cash reserve, AirAsia is still mulling a government loan to lend a helping hand to its business. The reason? AirAsia’s long-haul unit, AirAsia X, is bleeding out the company—it’s listed as an airline on the brink of bankruptcy.

But AirAsia still has a few tricks up its sleeve. Starting with its ability to Teleport.

Hot iron struck

In 2019, the first full year of its operations, Teleport generated US$114 million of revenue at a growth rate of 125% year on year. It actually beat its initial target of RM400 million (US$92.8 million). It also claims that it is profitable.

The logistics arm also contributed about 4% of AirAsia Group’s total revenue. And despite the impact of Covid-19 in China, Korea, and Southeast Asia, the business grew over 30% year on year for the first quarter of 2020, between January and March.

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The flat shipping costs are to encourage higher average order values since the platform has no minimum order value, the core member mentioned above said. This has worked in Udaan’s favour, with the average order value currently hovering between Rs 5,000-6,000 (~US$66-79.4), according to one former and one current executive.

“After it becomes more robust, we can change it again,” the core member said.

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The biggest issue with managing logistics, however, is that Udaan needs to handle returns. This is a huge problem for the company, which sees a 40-50% return rate across categories, according to employees both current and former.

While several buyers we spoke to said the flat fee was attractive, Udaan’s processing of returns meant it was not worth the bargain. “They don’t approve returns easily; out of 100 items, if 10% is spoiled, we need to dump it and absorb the losses,” said the Delhi-based buyer, who used the platform to procure groceries and vegetables. He has been waiting for a Rs 1,350 (~US$17) refund for the last four months and has instead switched over to one of Udaan’s rivals, Ninjacart.

A buyer who wants to return a product has to raise a request on the Udaan app, with clear pictures of the product in the original packaging and the damaged goods post unwrapping, said Sonu Shrivastava, a computer parts retailer. Shrivastava has been on Udaan since 2016 and his only grouse is the returns and customer service. Shrivastava paid 10% of the cost of an order in advance and is still waiting for a refund.

On the other hand, suppliers bear the cost of returns and non-delivery. One month before the lockdown, Udaan informed suppliers that packaging delays or cancellations will now cost them Rs 50 (US$0.7), Gupta said. Suppliers are also expected to take 360-degree videos of shipments before they are picked up if they wish to contest potential returns. This isn’t par for the B2B course. “Sellers have to take 360-degree videos to say it’s not my fault it was returned,” the formal zonal manager quoted earlier said. “Their logic was that it happens with Amazon and Flipkart, but B2B doesn’t work like that.”

With both sellers and buyers on the platform feeling hard done by, Udaan’s early gains are in serious danger of coming undone.

Charting a new course

Even Udaan’s most ambitious bet, providing credit to buyers and sellers, hasn’t panned out the way it hoped. Udaan was granted a non-banking finance company (NBFC) licence in 2019, which allows it to offer small loans—from Rs 10,000-2 lakh (US$130-2,650). The loan size is increased based on a buyer’s purchasing history and frequency of transactions, a former executive at the company’s credit unit said. While buyers are charged an interest rate of 3.25%, sellers don’t pay interest at all.

Lending to small retailers, though, means that defaulting is a serious concern. Udaan doesn’t ink any formal agreement to hand out credit. Instead, executives visit stores, clicking pictures of the shop and tracking the buyers on the app, two former employees said.

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Commissions, though, make sense for Udaan. For an order of Rs 5 lakh (US$6,619), Udaan could pocket up to Rs 50,000 (US$661) simply to facilitate the transaction. This is apart from the flat fee it charges for logistics, interest on lending, and value-added services like banner ads. Amazon, for instance, charges a 16.5% commission in its business-to-consumer (B2C) mobile accessories category, though it should be noted that margins are higher in B2C.

The stages of a scaling sprint

The stages of a scaling sprint

The high commissions took a toll on Udaan’s retailers and suppliers, a former zonal manager in the clothing category said. Seller interest in the category dropped by almost half, the former manager added. In a Facebook group titled ‘All India Udaan Sellers’, several members stated that the commission was not brought up with them beforehand.

In an earlier story on Udaan, We spoke to a seller who was charged a 6% commission by the company. He said he planned to mark up his products by 6% to make up for this. That is precisely what has happened as Udaan rolled commissions out across its platform—sellers passed the commission on to buyers. For buyers, it’s a double whammy, as they also pay the platform’s logistics fees.

Sharma, who has been on Udaan for two-and-a-half years, says he stopped buying mobile accessories after this change. “Sellers increased their rates to sell on Udaan. 80% of the retailers dropped out from the category after that. I can’t buy anymore, 10% is very high,” he says.

The commissions also led to an uneven marketplace, with each seller choosing to price the product differently. In other B2B firms like ShoeKonnect and Paytm’s* B2B arm, sellers must get their updated pricing approved by the platforms’ business development managers, a Delhi-based seller of Udaan said. Not so with Udaan. Not only can prices be changed on a daily basis by sellers, there is no minimum order mandated on the platform.

The logic of logistics

Udaan’s other great monetisation hope was logistics. The company’s logistics arm, Udaan Express, delivers 60-70% of all orders across 800 cities, four former and current executives said. The remaining orders are outsourced to third-party logistics providers like Delhivery and Ecom Express.

The company also currently has 25-30 warehouses pan-India, three former and current employees said. Owning warehouses and handling inventory means that Udaan is further from Chinese B2B giant Alibaba, and closer to e-commerce leader Amazon. This isn’t great for profit margins, as evidenced by the fact that asset-light Alibaba has higher profit margins than Amazon. In fact, for the year ended March 2019, expenditure on logistics and cash collection (for credit) was Udaan’s single-largest expense at Rs 254 crore (US$33.6 million).

Udaan, though, believes that owning a logistics play improves the experience it offers. Not only does it make for a smoother supply chain, it also allows for economies of scale thanks to warehouses as pickup is streamlined.

Udaan implemented a flat logistics fee for each category—around Rs 100 (US$1.3) for clothing and Rs 30 (US$0.40) for fresh produce, said one Delhi-based buyer.

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He did have his doubts over this conservative approach though. Especially in 2016, when competition peaked with players like Rocket Internet-backed Zen Rooms and OYO prowling the region. “I was thinking something was wrong,” he said. “We hadn’t figured out how to do business in Jakarta, let alone the rest of Indonesia or Southeast Asia.”

Still, RedDoorz stayed true to its ethos, refining its business model. Today its business is comprised of a combination of revenue-share models to suit different types of hotel owners and operators. That is typically full-lease, with revenue-share options including a split of gross revenue, or specific sharing of revenue once it passes a minimum threshold.

Saberwal said he keeps just 70% of the business model “set” because flexibility of the remainder is “what makes the difference.”

RedDoorz- The Unknown Hotel Giant To OYO?

RedDoorz- The Unknown Hotel Giant To OYO

“The market isn’t a one-size fits all, that’s what makes it defensible and sticky,” he said. “Owners are different, owner psyche is different and customers are different. I can’t make a business on the dead bodies of my suppliers.”

With this degree of optionality baked into its model, the company began expanding to Singapore, Vietnam and the Philippines.

Today, RedDoorz is up there with the market leaders. The company claims to have more than 1,500 hotels on its platform, ahead of rival Singapore and Philippines-based Zen Rooms—which claims “over 1,000”—and on par with OYO, which also says it has over 1,500.

RedDoorz has focused on Indonesia, which has been its primary market since its inception. The country is the most attractive in Southeast Asia for internet companies, which are drawn by its 260-million population, and that makes for plenty of competition.

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Just weeks after RedDoorz announced its Series C funding round, OYO one-upped it by stating that it would invest $100 million into the country. That’s part of a wider strategy to deploy $200 million in Southeast Asia over the next two years, another hostile announcement.

The ‘my number is bigger than yours’ tactic is increasingly common for SoftBank-backed companies. This year has seen Grab and Gojek embark on a game of one-upmanship waged through press releases announcing funding rounds and new investors. This peaked with SoftBank increasing Grab’s Series H round to $6.5 billion by pumping in an additional $2 billion. There have also been country-specific pledges. SoftBank has promised to invest $2 billion into infrastructure in Indonesia via Grab, while Grab itself announced that it will deploy $500 million to bolster its business in Vietnam.

But OYO isn’t the only competitor to worry about. Zen Rooms, also founded in 2015, is another. Zen Rooms ran into financial trouble last year after a funding round from an undisclosed Chinese investor fell through at the last minute, a source with knowledge of events told us. Consequently, the company downsized its business in Thailand—having already exited several markets outside Southeast Asia. It eventually found a saviour in Yanolja, a South Korean hospitality company valued at $1 billion.

Initially, Yanolja invested $15 million into Zen Rooms in July 2018 in exchange for an undisclosed “strategic non-controlling stake” with the option to buy 100% of the business. Just this month—October 2019—it followed up with a second undisclosed investment.

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According to market research firm IDC, the PSG grant is most helpful to micro-SMEs—businesses with fewer than 10 employees and annual revenues under S$1 million (US$710,000). “These are typically family-run shops in the heartlands that have difficulty in digitally mechanising their products and services for sale, and automating parts of their business process,” said Sandra Ng, group vice president heading IDC’s Asia/Pacific Practice Group.

In 2016, Singapore also launched a S$4.5 billion (US$3.17 billion ) Industry Transformation Programme, which has roadmaps to help each industry be more competitive and utilise digital solutions. The government has also formulated Industry Digital Plans, which provide SMEs with step-by-step guides on evolving digitally. They also have training programs to enhance employees’ digital skills.

The resistance

The resistance

Despite the significant incentives provided by the government, Singapore’s SMEs have long resisted digitisation as it still involves time and monetary investment from them, said Ecosystm’s Gupta. “The need to retrain and upskill their teams is also a perceived roadblock to the uptake,” he added.

Just throwing money at it might not always be the answer, as some digital solutions require scale before the economics make sense. The F&B owner quoted earlier recounted a seminar he attended, where a speaker demonstrated automated cooking solutions. However, the solutions only made sense for large restaurant groups. “Not everyone has the volumes to invest in it,” the owner said.

Covid solutions

Recognising the changed environment, the IMDA set aside S$10 million (US$7.05 million) to help businesses move from paper invoices to digital ones

Digital solutions also require buy-in from not just the senior management, but also the staff using them on a daily basis. With the median age of Singapore’s resident labour force being 44, there is a significant chunk of the economically active population that is older and less likely to be receptive to changes in their routine.

The pandemic and the ensuing economic slowdown, though, has turned everything on its head. Digitisation is not so much a choice as an imperative. SMEs, after all, are among the most vulnerable during slowdowns, as many live paycheck to paycheck, said IDC’s Ng. “Most non-essential SMEs will feel the brunt of this shutdown as their costs continue to pile while zero revenues come in [assuming they do not have a digital presence],” she added.

The move to digital is also unlikely to be a one-off blip, said Ecosystm’s Gupta. As consumers get used to interacting with businesses online and via apps, the trend is likely to continue even after the restrictions are lifted. From a talent standpoint as well, employers that lag behind their counterparts in the uptake of digital technology will find themselves at a disadvantage in the future, he added.

“It’s unfortunate that you have a forced situation,” said Sean Liao, founder and CEO of Imaginato, a technology development partner for web and mobile platforms. “People had time, they could have been investing in transformation, investing in connectivity outside of brick and mortar.”

Now, with companies forced to make remote working a reality, and customers no longer coming in via the traditional avenues, digital solutions are beginning to catch on among SMEs.

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The Singapore government can’t be blamed for this institutional inertia. It has been pushing companies to board the digital bus for years. The government has introduced various policies and grants, such as the Productivity and Innovation Credit Scheme (PIC), SME Go Digital, and the Productivity Solutions Grant (PSG). However, the bulk of SMEs have resisted modernising for various reasons, like costs and integration issues.

Launching off to the ISM event in Amsterdam

The current pandemic could be the watershed moment that sees small business owners finally make the jump online. The impact of Covid-19 on the Singaporean economy is already looking serious, with a 2.2% year-on-year contraction in the first quarter of the year ending December 2020 alone.

The Infocomm Media Development Authority of Singapore (IMDA) has worked with the Information Technology industry to provide remote working solutions for companies. The government has offered free trial periods of between 1-6 months for these digital solutions.

Now, with the need for digitisation greater than ever on account of the pandemic, the government is stepping up its efforts. Government agencies have stepped up their outreach efforts to SMEs, publishing pieces evangelising digitisation in leading dailies. In March, the Singaporean government increased its portion of funding for digital solutions under PSG from 70% to 80% of the costs until December 31, 2020. This means the companies only have to pay 20% of the cost to procure these solutions.

The scope of the grant has also expanded, covering tools for online collaboration as well as accounting, enterprise resource planning, and HR software.

For some companies, it might still be too little too late. But others that were already in the midst of digital transformation could emerge better positioned for opportunities both during and after the pandemic.

Policy push

Policy push

The most popular Singapore government policy in its digital push was the Productivity and Innovation Credit Scheme (PIC). Introduced by the Inland Revenue Authority of Singapore in 2010, it allowed companies to claim 400% tax deductions or a 60% cash payout for a variety of things, ranging from procuring IT or automation equipment to training employees and acquiring and licensing intellectual property rights.

While some companies were able to improve their productivity by procuring automated machinery and equipment under the scheme, loopholes in the programme led to widespread fraud. Companies misused the scheme by marking up prices of equipment to take advantage of grants, a food and beverage company owner told us, on condition of anonymity.

In 2016, more than S$5.8 billion (US$4.1 billion) was given out in tax savings, cash payouts and bonuses to over 143,000 companies under PIC. In 2017, more than S$332 million (US$234.1 million) was recovered in taxes and penalties from non-compliant taxpayers, including fraudulent PIC claims.

The scheme was finally phased out in 2018. In its place came an initiative specifically targeting SMEs—SME Go Digital. This sought to pre-approve solutions eligible for the Productivity Solutions Grant (PSG), which was also implemented in 2018. This sought to plug the holes in PIC, where companies were given more say in which solutions they procured.


How Deep Tech is Perceived in the Funding Space And What Kinds of Rewards it Gives Back to Investees

Vickers’ other exits include real estate investment firm Cambridge Industrial Trust, which went public in Singapore in 2005. It subsequently sold to a joint venture between the National Australia Bank and Oxley Capital in 2008. That sale saw Vickers make a 26X return with an internal rate of return (IRR) of about 190%.

But it was in 2009 that the firm began to morph into the deep-tech-focussed entity it is today. This happened after Tan realised the hard science knowhow abundant in his team. Out of a team of 23, eight have a doctorate in hard sciences. Tan himself has a bachelors, a masters of philosophy and a PhD in engineering—the latter two from the University of Cambridge.

Mediocre fund performance

Mediocre fund performance

Towards the end of March, a full-page story on Vickers’ US$200 million fundraise appeared in Singapore’s Business Times newspaper. Along with it, there was a table of its funds’ performance, taken from the firm’s website.

It is unusual for a global venture firm to display its fund multiples and IRR like this, says a venture funding consultant who asked not to be named. But while Vickers’ transparency could be applauded, the contents of the table didn’t make for particularly good reading.

Armed with this expertise, Tan realised Vickers was better than most at understanding whether a technology would work, as compared to evaluating consumer-focussed companies.

After Vickers’ pivot to deep tech, Tan realised that the firm’s projected returns moved from single-digit multiples to double-digits. “Our write-off rate used to be about 21% and now it’s about 9%,” he told us in an interview.

More IPOs

Vickers might also have another exit up its sleeve that could materialise by end of the year, says Tan. However, it is also dependent on public market sentiments as the unidentified company plans to go public in China.

While financial data platform Preqin declined to share specific fund performance details with us, others are decidedly unimpressed. The co-founder of a regional VC firm says that the performance of Vickers’ second and third funds was “horrible”.

The firm debuted with a US$9 million fund. According to investment data reviewed by us, the fund has a distribution to paid-in capital (DPI) of 214.6%. In other words, it returned 2.1X of the first fund to its limited partners over the fund’s 15-year existence.

Fund II, which was closed in 2006 at US$32.7 million, has only generated a DPI of 104.3% as of September 30, 2019. For Fund III, which was closed in 2009 at US$62.5 million, the DPI was 16.9%.

“For a fund that is 11 years old, it should’ve been shut down and be done with already because a normal fund life is about 10 years,” says a regional venture capitalist who requested anonymity because he didn’t want to discuss a fellow investor publicly. “Second, this fund has only returned 16.9% of money to LPs—that’s quite a disaster.”