“Best time to start a business – so much talent, so much that is broken, technology tailwinds happening”, says Amit Anand
Amit Anand, co-founder and managing partner of Singapore-based global tech fund Jungle Ventures, which made two “beautiful” exits in travel from GoVoyagin (to Rakuten) and Travelmob (to HomeAway), believes more such exits are possible post-Covid-19.
“I see more consolidation, more M&A (mergers & acquisitions). There will be a significant increase in inbound investments in M&A as strong companies will seek to grow stronger,” he said.
Crises such as these are fertile ground for disruption, he observed, saying Jungle Ventures, which closed its newest round of US$240 million in the middle of last year, came out of his own failure as an entrepreneur. “I launched an animation startup in 2006 and that got crushed by the global financial crisis, and from that I decided to launch Jungle Ventures.
“The new businesses that are getting started now – this is the best time to start a business. There’s so much talent out there, so much that is broken, we have technology tailwinds happening.”
About 25% of its portfolio are typically in travel and hospitality. Its interests currently include RedDoorz (branded budget accommodation), Sweet Escape (travel and photography platform) and CatchThatBus (digital bus ticketing in Singapore and Malaysia).
Put it down to good luck or good timing, Jungle Ventures ran a Founders Summit in December, the key message of which was to tell its founders to prepare for a crisis in 2020. “We didn’t quite expect this crisis,” he laughed, “but there were already a lot of signs – the macro-economics weren’t that good, and we focused our discussions around startups who had come out of crisis and what they did. So when this happened, some of our founders said, ‘I know exactly what to do’.”
Of course, no one expected a crisis as deep and wide as this but Anand said he’s been impressed by the entrepreneurs in his stable. “The good thing is more than 75% our portfolio companies are stacked up in capital for at least 18 months to 24 months. It will take a lot of hard work to rebuild but these entrepreneurs, they have such high levels of resilience. They don’t complain, they don’t ask, when is this going to go away, instead they just speak about what they are building – for example, RedDoorz with its Hygiene Pass.
“They are first generation entrepreneurs, first time building a business through some good times and now they are being tested.
“They are certainly doing a lot better than when I did in my early days. Mind you, there’s a lot more information, more infrastructural and government support. They don’t have to take it in isolation but of course, this is also bigger magnitude, so not taking anything away from them.”
Asked what traits they had in common, and if it was related to age and experience, Anand said it was less to do with age. “One common trait is learning agility – take Amit (Saberwal, CEO and co-founder of RedDoorz). He adapts very quickly, same with the other founders. There’s a bias to action and it shows up on a consistent basis.
“Companies that have built a very collective culture vs founder-focused also find it easier to move through a crisis – let’s take the hit together, let’s protect the baby. That’s a strong team culture. The businesses that are seen as equal to the leaders – they will face challenges.”
Anand said that Singapore-based startups are also better off than counterparts in other markets due to the level of government support. “Singapore has been quick to react, and has been very fair. They are of course looking after the bigger assets but they are also not letting go of the smaller businesses. Of course, there is a balance, there is the higher cost of building a business in Singapore.”
There’s no denying though there will be a fair amount of casualties. “The team that shows resilience and determination will be the ones that get through this.”
Thankfully, some recovery is being seen by RedDoorz. “They are significantly insulated and are seeing occupancy rates go up. Their customers are the budget travellers, local businesses, and domestic tourists. That’s going to come back first.”
CatchThatBus, the digital bus ticketing company, will have to do what airlines are doing around health and safety. “Thankfully, they are cash flow positive.”
“Sweet Escape might take a longer time to come back but having said that, a significant part of their business comes from domestic tourism, people who are celebrating birthdays, anniversaries, weddings and baby shoots. Maybe there will be a baby boom post Covid-19,” he laughed.
Anand reckons the younger segment of customers will lead the way in travel recovery. “They are less fearful. During our company meeting last week, right after Singapore announced its easing of restrictions, it was the 20-something who were most excited and raring to go out. We, older ones, were more cautious. I have an elderly parent and I want to be responsible.”
Investors too have to be responsible at this time, said Anand.
“We have to be direct with the entrepreneurs, even if you tell them you don’t have capital. Make it very clear, make it very early. You have to be very decisive. Don’r dilly dally. Don’t be over-optimistic or over-cautious. Taking a call is more important than taking the right call. Things are so fluid. This is a moment of chaos, confusion, doubt – you have to be decisive.”
As for decisions it’s taking around future investments, Anand said it would continue to be selective. “We will continue to look at travel, fintech and software but I am very interested in anything to do with the future of work. What’s the next generation model of co-working spaces? We just had one of our portfolio companies of 90 people who decided they don’t want an office anymore. I think we will see a leapfrogging in the future of work, and this will have a cascading effect on many sectors – lifestyle, real estate.”
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