RM50mil funds to support ventures that leverage on digital innovation
JUST a month ago, Green Packet Bhd made headlines when it announced its partnership with China’s tencent Cloud. On that very day, Green Packet launched KipleX, a co-creation innovation lab and early-stage venture capital for start-ups.As a start, Green Packet said it would allocate RM50mil for KipleX to support early start-ups that leverage on digital innovation to improve the everyday lives of Malaysians.
Little has been said about KipleX since, but the recent appointment of its chief executive officer Andrew Tan does signify the ignition of the KipleX engine. Tan has an impressive portfolio. His most recent experience was as an associate partner at global consultancy firm McKinsey & Company. While in McKinsey, he was one of the leaders who helped build and shape Leap by McKinsey. Leap’s offering focuses on helping established organisations imagine, build and scale new businesses.
As part of Leap, he had the opportunity to partner with some of the largest corporations and conglomerates in the region to build new digital companies in the telco, media and financial sectors. Tan was offered his role at McKinsey & Company when the consultancy firm acquired VLT Labs, the venture he co-founded and led. At VLT Labs, Tan played an instrumental role in helping numerous start-ups launch and scale in south-East Asia. Additionally, Tan guided innovation labs and business units within large corporations to build and launch digital businesses.
Eye on start-ups and venture building
As CEO of KipleX, Tan is tasked to create a future growth engine to ensure that Green Packet continues to stay at the forefront of innovation while reinventing itself and growing the value of its ecosystem. KipleX will accomplish this through:
> Investing in start-ups that are tapping into new behaviours and trends to revolutionise industries through the use of frontier technologies.
> Venture building whereby Green Packet takes a long-term view with partners to build the next generation of companies shaping the future.
“KipleX is currently a small outfit but things are moving very fast for us,” says Tan, adding that KipleX is expected to expand to a 20- to 30-person team in six to 12 months’ time.
“We are about to make our first investment soon in a start-up that operates in the electric vehicle (EV) space.”
With that, the start-up industry can expect a new vibrancy as KipleX scouts for prospective start- ups to fund and help accelerate their growth.
KipleX is primarily on the look- out for start-ups with game-changing solutions and frontier technologies that cater to new behaviours and trends, especially in the fintech, proptech and mobility space.
To this, Tan notes that although there are a lot more start-up awareness, the quality of domestic start-ups on a whole has only marginally improved over the years.
“There is probably a lot more infrastructure available now compared to 10 years ago to support start-ups. People are now more aware of domestic start-ups.
“There is also a lot of hype around start-ups these days but going from launch to growth is still very hard and it will probably be this way forever but what is really still elusive is the frequency of meaningful exits, which is sorely needed to propel the start-up eco- system to the next level,” he says.
The start-ups funded by KipleX will leverage on and plug into Green Packet’s ecosystem to create value for the ecosystem and at the same time accelerate the growth of the start-ups.
Green Packet Bhd is an international technology company that is making inroads in the financial and property technology space via its Kiple suite of services as well as a full ensemble of cloud and smart mobility solutions.
The company has also expressed its interest in a digital banking licence, having participated in Bank Negara’s e-Know Your Customer (eKYC) fintech regulatory sandbox.
By being part of the Green Packet ecosystem, start-ups will be able to experience an acceleration in growth by leveraging on Green Packet’s technologies, customer base, expertise, experience and corporate know-how.
“KipleX is not just funding start- ups. We are bringing these start- ups into the ecosystem and hopefully accelerate their growth,” says Tan.
At present, KipleX’s allocated investment fund size of RM50mil is expected to be utilised over the next two to three years. On average, each cheque size will range from RM500,000 to RM1mil.
Being a corporate venture capi- tal, KipleX can take a longer term view and be more strategic in its investment compared to a regular venture capital.
In terms of challenges in the start-up scene, Tan notes that frequent meaningful exits are still sorely missing in this part of the world.
these exits are important to a start-up ecosystem because it affects multiple elements from creating inspiration for aspiring entrepreneurs to infusing more capital into the ecosystem by founders with the exits.
More importantly, these founders become the best mentors to the next batch of entrepreneurs essentially kick-starting a cycle and putting it into overdrive.
“There’s been some exits in Malaysia and in the region, but they are not as sizable or as frequent compared to other parts of the world.
“This is where KipleX hopes to play an active role – whether it is direct acquisition of start-ups by Green Packet that KipleX first invests in, connecting them to our partners to facilitate acquisitions where there is common alignment of interest, or by accelerating the start-up growth via leveraging our ecosystem.”
Besides investing in start-ups, KipleX also looks to launch start- ups/digital ventures itself and together with partners.
Tan has done this previously at VLT Labs and McKinsey, and he firmly believes that more organisa- tions will have to build and scale whole new business at speed to catapult themselves into different sectors and markets to thrive in an ever uncertain future.
“Incumbents are well placed to do so if they can appropriately lev- erage their current assets, capabili- ties and reach,” he says.
Fintech, proptech and mobility
Some of the areas that KipleX is keen on exploring are financial technology (fintech), property tech- nology (proptech) and mobility.
Early this year, Andreessen Horowitz, a well-known silicon Valley venture capital, wrote that “every company will be a fintech company.”
This view was already held by Green Packet three to four years ago when it started to venture into the fintech space as it sees a future where every layer in the financial service stack becomes an infrastructure “as a service”.
Within this construct, there will be many fintech start-ups that will be a good fit in Green Packet’s eco- system that KipleX will be keen to invest in.
Meanwhile, KipleX is currently in talks with several large property developers to understand the industry’s needs and pain points to explore opportunities to develop new solutions.
“Proptech is a good space to be in because it is a sector that is a laggard when it comes to digital adoption, though real estate is probably still the largest asset class in the world. there are a lot of things in the property sector that have not been digitised, so we see a lot of opportunities there,” says Tan.
As KipleX ventures into early stage start-ups, the first criterion that KipleX will study is the background, experience and complementing skillsets of the founders and founding team.
“We like a team that has one or two founders, or better yet one that also has a small founding team in addition to co-founders that complement each other’s skillset and they have all the necessary basic building block to launch and grow the business to get at least initial traction.
“Then, our next criterion is the opportunity area that the start-up is going after. this entails the size of the opportunity, if it is growing, how urgent and frequent. Related to this is what is the unfair advantage the start-up brings, why they are the right people to go after this opportunity. Essentially, whether there is a founder-idea fit.
“The final two criteria will be to see if the start-up has established a solution and the traction that they have,” says Tan.