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Fundnel aims to better facilitate dealflows in Asia through new partnership with Australian incubator ThincLab

Fundnel aims to facilitate dealflows in Asia through new partnership with Australian incubator ThincLab

Outside of Australia, Singapore-based crowdfunding platform Fundnel has been actively building its networks in markets including India and Indonesia

Earlier this month, Singapore-based equity crowdfunding platform Fundnel made headway into Australia’s burgeoning tech ecosystem by partnering with University of Adelaide-backed incubator ThincLab.

The newly-minted deal will allow ThincLab’s incubatees to not only fundraise through Fundnel’s platform, but also leverage on its strategic location as financial hub to reach into the rest of Southeast Asia. ThincLab is located in South Australia but also has nodes in China, France, Vietnam, and Germany.

On the other hand, Southeast Asia-based companies will also gain access to Australia through Fundnel. Currently, there are two Singapore-based companies that will use Fundnel’s network to expand into Australia — with about four more in the pipeline.

Australia’s east coast cities of Sydney and Melbourne have fairly developed startup environments — with Sydney ranked 17 globally in this year’s Startup Genome report — but less is known about South Australia’s technology sector.

The truth is, while Adelaide may not figure prominently on the startup map, it is strong in other large, enterprise-sized industries, which Fundnel sees as untapped opportunities for new businesses.

“South Australia is one of the centres for defence tech. They have in excess of over US$100 billion worth of contracts including submarines and other defence tech. So those are some of the other opportunities that Fundnel hopes to tap into as part of its globalisation and international efforts in time to come,” says Steven Fang, Managing Partner of Fundnel Australia, in a media session.

Also Read: Singapore’s equity platform Fundnel clears major MAS regulatory hurdle

Fang also adds that South Australia has a robust pool of engineering talent and is also strong in the agritech sector — it produces 80 per cent of the wine coming out of Australia. A lot of the country’s fresh produce, including pharmaceutical grade natural products and milk, are also produced in South Australia.

Additionally, by having a physical presence in Australia, Fundnel will be able to tap into a range of funding mechanisms and a sizeable of investors in the country. Fang describes these investors as “highly structured” with “quite a number” involved in later-stage funding.

“We know who they are and they are structured into superannuation venture private equity and angels … Currently there are AUD 2 trillion (US$1.6 trillion) sitting in superannuation, and they are always looking for good opportunities to invest in,” he says.

Beyond Australia

Outside of Australia, Fundnel has been actively building its networks in markets including India — where it has partnered with Anthill Ventures — and Indonesia.

Justin Chow, CMO and Co-Founder of Fundnel, says Indian companies make up 12 per cent of the total number of companies that go through the platform’s screening process. He does not disclose successfully-funded Indian companies but says that Fundnel is in the process of evaluating two.

But while India has a large startup ecosystem with a vibrant VC funding market, the bulk of Fundnel’s fundraising companies actually comes from Indonesia.

“That is a point of interest for us because of the immense liquidity that the Indonesian market brings. This liquidity is driven by family and super family offices and this gives us access to informal pools of capital that may not have previously tapped on or relied upon,” says Chow.

There are currently five successful funded deals out of Indonesia. These include travel marketplace Travelio, which received US$2 million in convertible bonds; and jobs marketplace KerjaDulu, which received US$300,000 in equity.

Also Read: Fundraising and Term Sheet 101

There are also deals outside of Fundnel’s primary markets. Hong Kong-based tutor app Snapask raised US$2.16 million in equity on the platform.

The injection of Australian investors could potentially boost the ticket size and the number of successful deals on the platform. These investors could also plug the later stage funding gap in Southeast Asia.

Mitigating risks

Early-stage companies run a high risk of imploding. In order to allay investors’ fears, Fundnel typically looks at startups that have graduated from an incubator programme.

“The risks associated with early stage companies investments is always higher … that is why working with university-backed incubators like ThincLab help, because that system builds better startups, helps de-risk investors’ risks and concern, because at the end of its funnel you get better quality companies in that short period of time,” says Fang.

There are three screening phrases which all startups have to go through at Fundnel.

The first is the quantitative process. Fundnel captures 130 data points per company. These data points variate between each market to factor in their nuances. For example, the market risk factors in India are different to that of Singapore.

Chow adds that Fundnel provides two sets of benchmarks. One from third party sources, and the other from its own internal sources. These are defined by the companies’ sector, geography or stage of their funding cycle.

“For example, the weighted average score of companies coming through the benchmark for the F&B sector could be 0.5, based on existing fundraising history from companies that have fundraised with us for Singapore,” says Chow.

“That same benchmark might score a 0.3 for India only because the quality of companies that have come in could have been lesser from frontier markets,” he adds.

Then there is the qualitative approach. This involves speaking to the company’s founders, collecting internal documents to crosscheck figures — such as revenue — provided by the company.

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This process is further enhanced by the third approach — an investor-led process. Fundnel relies on the lead investors to perform due diligence and do checks on its behalf.

ThincLab currently has about 30 incubatees. Fang says the Fundnel team will meet half of them and systematically narrow down the eligible ones through its screening process.

“The role we play is one of a facilitator and key capital raising component in each of the company’s lifecycle of fundraising,” says Chow.

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Image Credit: Fundnel

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