- The wave of digital transformation is drawing corporates to tech startups
- The corporate and startup have to share the same values in terms of doing business
THE panel discussing corporates investing in startups, particularly tech startups, were unanimous is agreeing that such investments are slowly increasing.
The panel, held at Wild Digital, comprised IFC Venture Capital head for Southeast Asia and Asia Internet investments Pravan Malhotra; Tencent Corporate Strategy and Investment senior director Grace Xia; Rakuten Ventures managing partner SaeMin Ahn; MaGIC CEO Ashran Ghazi (moderator); Axiata Digital CEO Mohd Khairil Abdullah and OPT SEA chief investment officer Soonhee Kim
Axiata's Khairil started the ball rolling by saying that as a big corporation, they have to change the traditional investment culture and it is the role of corporates to enhance the opportunities for startups to grow.
“Investing in a startup means that we, as a telecommunications company, expose the assets that we have to them. We are venture builders and there has to be a synergy between the corporate and startup.”
For Rakuten Ventures' Ahn, commitment and resources from both parties are important.
He says that if a startup wants to pitch to an older corporate, then it has to think of the risk and look at how to participate in a strategic way.
“By creating the same perspective for both the corporate and startup, the same values will be shared and this will help to sustain both sides’ position in the market.”
When asked about the strategy corporates have to adopt in order for these ventures to work, Kim feels that it would be difficult at the beginning, but the corporation has mobilise its staff to maximize the resources they have and support startups by giving them access to assets.
The momentum of investment between a corporation and startup has to be right, says Pravan.
He agrees that investing in a tech company is easier today because of the trend in digital transformation.
“The success rate of investing in both tech and non-tech companies will be the same. However, due to changes in the digital ecosystem, it is easier for a tech company to grow.”
The corporate and startup will then have to work together to overcome any obstacles they may face. Xia says that after getting financial support from a corporate, startups have to work with the corporate to create similar goals.
“We as investors want to leverage on knowledge that we have to support their businesses and it is important to have win-win situation in order to sustain a balance.”
All of the panellists agree that startups have to focus on carrying their positions in the market rather than only “receiving” investments from corporates.
“If the company becomes sustainable, it will be great for them. But, this refers back to the fundamentals of the corporation,” Ahn says.
“It will be challenging for them if they want to focus on both at the same time. They have to save their position in the market first in order to survive,” concludes Khairil.
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