Venture accelerator The Co-Foundry gets into fintech
By Karamjit Singh May 21, 2015
- Invites startups from the region to apply to its unique bespoke model
- In winner takes all game, urgency needed in expanding overseas
THE fintech (financial services technology) space in South-East Asia seems to be the flavour of the month, with the latest such programme being launched by The Co-Foundry (TCF), a two-year-old accelerator based in Singapore.
Sorry, make that a ‘venture accelerator.’
If you think that is just a sexy term to stand out from the rest, then you don’t know Michael Yap, the founder of TCF. A successful entrepreneur who ran financial-based startup Comex Genesys out of Malaysia from 2000 to 2005, which had customers in 30 countries and a few hundred staff, he sold the company for an undisclosed amount to a listed company.
Rather than sit back and enjoy his well-earned riches, he joined US multinational Oracle Corp, heading its Singapore operations while having an Asia Pacific role as well.
A year later in 2006, he found himself roped in to become deputy chief executive officer of the Media Development Authority (MDA) of Singapore. He was, in essence, the chief regulator for all media and telco companies.
It was a role he held until 2013, when the next move for the man who was behind Singapore’s now famed Block 71 startup epicentre was clear:
“I wanted to get back into the startup space, but this time as an investor and a builder,” Yap (pic) tells Digital News Asia (DNA) in an informal chat in Kuala Lumpur recently.
The accelerator model was the obvious path to take, but he did not believe the fixed intake, standard 90-120 day accelerator model works best for startups because of the different levels they may be at.
As a result, he has created a programme with three features that he believes differentiates it from the typical accelerator: A ‘3x3’ programme; a reliance on full-time subject matter experts on hand instead of mentors; and the way it funds the startups. Hence Yap calling his model a venture accelerator.
For the past two years, TCF has run its 3x3 programme where startups spend 100 days in each of three phases: Grounding, Proving and finally Production. Each phase will have the startups working on three functions or modules simultaneously: Product Building; Market Building; and Company Building.
While this is the optimal path, TCF is not fixated on timeline. If a company needs more time in a particular module or phase, it will be given that.
This change on the fly can be done because the startups will have the entire programme customised to their unique needs – the bespoke aspect. Plus this is not a program with a specific intake date and fixed graduation date.
Thus, it does not throw any carefully laid-out schedule off-track if a startup needs more or less time to go through the phases.
This flexibility is important for startups as Yap notes that success and failure can be caused by issues such as founders wanting to quit or leave; of a big competitor coming into the market; when the first idea does not pan out as envisioned; or difficulty in recruiting the right talent, etc.
“All of these are chasms that they will come across along their journey … and they will fall,” he says, pointing out that it takes an average of between 12 and 18 months for companies to exit his venture accelerator.
But when they fall, Yap and his team of six full-time subject matter experts would be there to support them and cushion the fall.
“A lot of accelerators say they have full-time dedicated support but we have six such people with skill sets ranging from engineering, talent recruitment and growth hacking, to events management and marketing.” And then there is Yap himself.
These resources are a big differentiator for Yap, who says that the mindset at TCF is that they are cofounders of the startups they take in.
“There is a process to the madness and we work hand-in-hand with you, pushing you hard, hoping you do not break, and hammering away at you until we get it right,” he says, drawing an analogy of a swordsmith crafting a sword, putting it through the heat, and hammering away until it hardens and hopefully does not break.
The analogy has a strong appeal to him, to the extent that he was thinking of getting his team the leather aprons worn by swordsmiths. He has not … yet.
Compare this with other accelerators which, as Yap points out, mostly do not have full-time resources available but rely on a pool of mentors and investment managers.
He feels that most mentors, “to be honest, are actually not very helpful to startups.” He feels their experience is in different industries and cannot be useful.
“Very few people understand the world of startups and few mentors have the right mentality themselves to be able to help startups,” he contends.
And finally, there is the funding. “We fund the companies appropriately as they go through our programme at the pre-seed and seed level until the exit point, at which time they hopefully get institutional funding of S$1 million or more.”
He declines to reveal how many TCF startups have received institutional funding, however.
Fintech call for TCF-PnP programme
It is into such an environment that Yap is welcoming fintech startups from around the region to apply. And strengthening the appeal of his venture accelerator are the partners he has brought on board, aside from the “deep partnership we have with Plug and Play International (PnP),” he says.
These are venture capitalist firm Blue Hill Asset Management, and Oanda, a global foreign exchange leader. Both will be providing financial industry mentorship.
Once in the TCF programme, startups can look forward to using PnP’s space in Silicon Valley and TCF’s Singapore facilities to work out from.
“We will also allow them to be based in China and the Philippines if they feel that will help them,” says Yap, adding that TCF has facilities and support teams in those countries as well.
Startups can look at funding of up to S$200,000 (US$150,000) at the pre-seed stage and up to S$1 million (about US$750,000) at the seed stage.
Yap was in Malaysia for a few days to re-establish his network, create partnerships, and invite Malaysian fintech startups to apply for his programme.
Part of the reason for re-establishing his network is to be able to help Singapore startups come into the Malaysian market, and vice versa.
“It sounds easy for a Malaysian startup to enter the Singapore market and the other way around, but the real issue here is speed,” he says.
Yap feels that startups tend to spend too much time in their base countries trying to establish the business model and processes before deciding the time is right to venture out.
“I think it is important to facilitate them to venture out faster, and a venture accelerator like ours can help here,” he says.
With time-to-market ever critical, especially when competitors can copy a model they see is working, he feels there is a great need for urgency when planning overseas expansion.
“In this world, it is a ‘winner take all’ game. Imagine if MyTeksi was one year later in expanding out from its Malaysian market?”
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