Entrepreneur and investor Tim Marbach bullish about South-East Asia's prospects
Despite some challenges, Malaysia remains his preferred base of operations
GERMAN national Tim Marbach (pic) moved to Malaysia in January with a mission to invest in promising startups and play a role in the nation’s burgeoning market.
Fast-forward to August and he is still waiting for his corporate visa to be finalised, and also waiting for Multimedia Super Corridor (MSC Malaysia) status to be granted to Asia Venture Group (AVG), which he established to start and invest in digital business models in South-East Asia.
“Yeah, things could move a little faster. I can’t really start doing business here yet, and I would love to invest more as well,” he replies with a good-natured chuckle after seeing the pained look on this writer’s face during an interview with Digital News Asia (DNA).
Despite delays with official paperwork, Marbach’s enthusiasm for Malaysia and the region remains undiminished.
Back in Germany, Marbach was involved in a startup called kaufDa, a promotion search site that helps users look for the best sales and mobile coupon based on their location, which he cofounded in 2008 with Thomas Frieling and Christian Gaiser.
“It was a great journey; in two and a half years we grew to a staff of 200 with the headquarters in Berlin and offices around Europe,” he says.
He successfully exited after European media giant Axel Springer acquired a 74.9% equity interest in the business, with TechCrunch reporting the figure to be worth US$40 million.
Marbach stayed with the company another year before leaving in March of 2012 and began thinking about the next chapter in his life.
“I was bored with Europe, and wanted to move abroad. There is a lot of movement happening in emerging markets and I was really excited about the possibilities,” he says.
In his view, there is so much happening in the developing world in contrast to his home nation of Germany and the wider region of Europe, which Marbach says “is the same as 15 years ago and will be the same 12 years from now.”
“I wanted to be in a space where things are moving, actually happening. Europe to me is like a big fat old dog that has had the happiest days of its life and now just wants to enjoy retirement,” he adds.
After some research into developing markets around the world, Marbach’s shortlist had three options: Russia, Brazil and South-East Asia.
“Russia is too cold and Brazil too dangerous. So I hopped on a plane to South-East Asia to check things out, spent two weeks in Malaysia, loved it and decided that this would be my next destination,” he says.
Why South-East, why Malaysia?
“Why do people keep asking me that?” says Marbach, when the question of why he chose Malaysia, out of all the countries in South-East Asia, arose.
As a newcomer to the region, Marbach can be forgiven for not being aware of regional rivalries and Malaysia’s oft-lamented complex about consistently losing out to Singapore when it comes to preferred destination status.
But in his view, he picked the best spot in the region, citing the great weather, business opportunities and environment, along with quality of life.
“It is also underpenetrated in terms of good entrepreneurs who are seriously looking into the most exciting and untapped opportunities. That was what struck me the most and I thought ‘I have to come here. I have to build a great regional business in the region’,” he says.
“The cost structure is much better here compared with Singapore, and the value for money one gets as an entrepreneur when it comes to things like talent is just amazing,” he adds.
Though Marbach has yet to reach the point where he could wholeheartedly recommend Malaysia as the go-to destination to everyone.
“If a startup founder who hasn’t exited yet asked me where they should go to in South-East Asia, I’m not sure if I can recommend Malaysia as it is actually more expensive than Singapore or Thailand,” he says.
“The cost is in terms of time. Getting things done here is so much more time-consuming, which is such a pity because it is still a great place to set up a digital company.
“Malaysia still has the business infrastructure which is more favourable to entrepreneurs than Thailand and is pretty much 90% where Singapore is.
“Singapore is great but because of where it sits on the development spectrum, it’s difficult to go regional as the solution may not translate well to other markets. Also for a regional-centric business, it's tricky if you are based in a high-cost country but make your revenue in lower-cost markets,” he adds.
It’s been six months since Marbach moved to Kuala Lumpur, and when asked what new thoughts he has about his new home, he says that he’s realised that Malaysia is a place people are fascinated about and would love to set up in.
“But I get the feeling that the general notion is that you want locals to start their companies entirely on their own and have preferential status. It’s not quite how things work in the global arena; I think there is a need to open up to everyone -- to encourage successful companies even if the founders are foreign,” he says.
He also admits that the country could possibly benefit from a louder tooting of its own horn.
“Malaysia certainly needs to look at making itself more visible to foreigners. Friends I have who operate in the Internet space usually end up heading to Singapore or Thailand and I think it’s such a pity because Malaysia can do so much better in that regard,” he says.
“Places like Malaysia and Thailand are more exciting for building a cross-regional business. I really think there’s a lot of potential and opportunity; otherwise I wouldn’t be here,” he adds.
Investments and opportunities
Marbach’s first commitment in South-East Asia came in the form of AVG’s US$500,000 investment into Malaysian startup iMoney, a financial comparison site with regional ambitions.
“I saw the fire in his eyes,” he says of iMoney cofounder and chief executive officer Ching Wei Lee.
His enthusiasm for iMoney’s prospects is obvious, and he says that it is one of the many billion-dollar opportunities in the online space.
“These services for local consumers don’t exist yet, before, no one was connecting financial institutions with customers online,” he says.
Marbach points to the product segment of home loans, as an example, saying that in South-East Asia alone, the home loans market is worth about US$100 billion.
“Is that a market opportunity or isn’t it? That’s why I’m so bullish on iMoney. The basic pillars of the Internet have not been created yet in this region. Over the next 10 years, there will be quite a lot of smart people making a lot of money in South-East Asia,” he says.
In line with AVG’s philosophy, Marbach also plays a very hands-on role in helping and guiding his investee company and in the last six months, the team has grown from five to 50 people, with a new office in Bangkok.
“We’re moving really fast and it’s such a big market opportunity that we can only beat ourselves. We’re bringing together smart local talent and experienced international guys to combine the best of both worlds and forge a really strong team to move forward. It’s all very exciting,” he adds.
In his observation, business -to-business (B2B) deals in this region are completed a lot faster here compared with Europe. The reason, he believes, is twofold: The first being that in Asia, in general, younger people are in decision-making roles.
“A vice-president is just over 30 years here compared with the mid-40s and above range in Europe. That translates to an increased willingness to experiment and try new things; they are not that conservative and open to new things,” he notes.
The second reason – for iMoney’s case – is that the financial institutions themselves, faced with rising user acquisition costs, can really see how sites such as iMoney can help them gain new customers at a lower cost.
Marbach’s AVG has also made two additional investments in the region, the first being DoctorPage, a Singapore-based startup which provides a platform enabling patients to search and book appointments with their preferred healthcare providers in a few simple clicks.
The other is e-commerce startup WearYouWant, that has a platform aimed at offering fashion shops, brands and designers an online presence. Support for partners comes in the form of a suite of inventory management, order processing and promotion services.
And once his paperwork has been sorted out, more investments in promising startups within Malaysia can be expected.
“Sometimes I feel like I took a ride in a time machine to get here and I went back 15 years to the point where there is still an opportunity to create these pillars. It’s a chance to remake history,” muses Marbach.
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