The southeast Asian region has become another innovation hub in the world. With a valuation of US$340 billion in 2020, the region attracts many venture capital firms and startups to innovate the local economies. Rachel Lau, managing partner at RHL Ventures, a Malaysian private investment firm that focuses on growth capital investments in Southeast Asia and the US, shares her insights on the latest innovation trends, brought by major startups in Southeast Asia.
Lau will join also Lululemon Taiwan GM Gulshan Kumar and Giant's special assistant to CEO, Marcel Yang as the speakers at the Asia Venturing Roundtable III: Innovating Traditional Industries – Golden Opportunities in Asia, Sep 14, 8-9:30 am Taipei-SG-HK time. The event will be moderated by Richard Dasher, director of US-Asia Tech Management Center, Stanford University.
Q: Please give a brief introduction to RHL Ventures and your background.
A: My background has always been with ventures capital. I have done this for 15 years, previously in Hong Kong, New York, and Australia. In 2017 I came back to Malaysia to start our joint venture with my partners. Essentially, we mostly invested in series A and series B startups in Southeast Asia. We have exited 30 companies by now. We've just closed two funds, one is Southeast Asia Venture Fund, the other is a Venture Debt, which is more stage agnostic.
We started off with some family capitals, but are mostly with institutional capitals at this point. The last two funds have been government-backed, or sovereign funded.
We predominantly invest in Indonesia, Vietnam, Malaysia, and Singapore. Thailand and the Philippines are by chance.
Q: RHL invests in SMEs in Southeast Asia. Are there specific investment themes?
A: We don't have a specific sector focus but do quite a bit in the food tech space. Previously we did a lot related to consumers space. Now since the COVID, we are quite keen on food security, especially last year the food supply chain broke down. Our investments in the food space include alternative protein, food procurement, healthy snack, low GI food, substitutes, etc. Then we also invest in healthcare, as the Southeast Asian population ages, we need the right products to fit the needs of the aging population. As we are more educated, we are now keener on making sure everybody is healthier.
Q: On your website, you said your investment philosophy is different from traditional venture capital. Can you explain that?
A: We are very hands-on in approach. We look at the thesis [to verify] if it is the right product for the right market, and the financials and the sustainability of the margins, as opposed to traditional VCs. In the past, we were told, if we invest in 100 companies, and two become unicorns, you are returning with 10X, which would be great. We are not aiming for 4 unicorns, but we are aiming for sustainable growth of our portfolio companies. Sustainability is a big focus for us. How do we ensure sustainable growth like 2X or 3X? How do we make sure we make a contribution to society? We are very management-focused, and prioritize value-added. If it is an agriculture company, we make sure if we can give the right promise. Can we get the crops to be sold at the right market, without being exploited by the middlemen? If it is a restaurant or hotel business, is it offering the right products at the right prices? We also ensure we get 3X or 5X in return on every dollar we invest. So, it is a little different there.
Q: As you will be the speaker at Asia Venturing roundtable III to talk about innovating the traditional industry, could you share some examples of such in your portfolio of startups?
A: It is a very broad question. For example, Naluri, one of our portfolio companies, is taking health in an innovative approach. As COVID results in lockdowns, for people who have mental health issues, typically they would go to a psychologist. We realized that we need to give the services to more people and to make the service virtually available. Naluri is an app, but it serves corporate clients' employees. Corporates are now taking care of employee health a bit more, so many of them signed up for the service. And for GLife, it is a food procurement business. During COVID, the supply chain broke down, so what we do is to make sure farmers can provide produce to the restaurants and hotels in a more sustainable manner. And we make sure the price is essentially right, not just relying on the middlemen. We also invest in Alami, which is a Sharia financing P2P lending app. What is interesting about it is that we all know Sharia financing is interest-free. In order to ensure users get profit, there is an innovative profit-sharing model in Sharia financing. Alami is from Indonesia, and we also brought it to Malaysia. As a series A startup company, the company also bought a bank. You see, the situation has been reversed. Startups have become more aggressive. It used to be startups chasing banks, now it is banks chasing startups. They innovate how banks do their mandate and credit assessments and deal with different groups of borrowers. They are very different as opposed to traditional models of banking.
Q: Any new trends in traditional industries that you have spotted lately? Or any traditional industry that has a lot of unmet needs?
I think there is a necessity for Halal food. Vegan is the latest trend. In general, from a planet-friendly and sustainable angle, the trend of healthy food is very strong, and we have focused on that quite a bit. As the global population will soon hit 10 billion, we certainly need to find a way to make sure food gets cheaper and healthier. That is probably the biggest trend we are seeing right now.
Bio of Rachel Lau
Rachel Lau serves on the board for Caring Pharmacy, Privasia Technologies (KLSE: PRIVA), GNC Holdings (NYSE: GNC), and as president of the Malaysian Gymnastics Federation. She was named as 50 People who are Redefining the Way We Live by Business Times Singapore in 2018, and was selected as Milken Institute Young Leaders Circle. Rachel graduated from Australian National University with a Bachelor of Commerce with Distinction and received a Master of Law from the University of Sydney.
(Editor's note: Asia Venturing is a series of monthly roundtables with roadmaps to the future focusing on the hype v.s. the reality of Asia's supply chain-boosted innovation ecosystem, jointly powered by DIGITIMES and Anchor Taiwan. We bring together leading industry luminaries, corporate strategists, experienced investors, and entrepreneurs to expand your network and redefine the possibilities of cross-border opportunities. The replay of the latest session can be seen on DIGITIMES or Anchor Taiwan)