There are dozens of funds and incubation programs in Southeast Asia that are ready to help fledgling startups notch fresh funding and turn their ideas into the next big thing. Singapore-headquartered Accelerating Asia has precisely that mission embedded in its core.
With 65% of the firm’s investments aimed at addressing the United Nations’ Sustainable Development Goals, Accelerating Asia is at the heart of a community comprised of 48 founders from 28 startups across nine countries.
Amra Naidoo, co-founder of Accelerating Asia, wants to take that even further. She envisions Accelerating Asia becoming an impact investor in full.
KrASIA recently interviewed Naidoo to learn about how VC investment trends have shifted since the onset of the pandemic, as well as Accelerating Asia’s ambitious goal to transition fully to impact investing.
The following interview was edited for brevity and clarity.
KrASIA (Kr): Since 2018, Accelerating Asia has been making impact investments in sectors such as agritech, e-commerce, waste management, and education in Southeast Asia’s emerging markets. What are the key qualities you look for in startups?
Amra Naidoo (AN): We’re an accelerator and venture capital fund. Impact is something that we love to invest in, especially if something is commercially viable and scalable and impactful. By nature, a business creates social impact.
We have a number of criteria that we look at from the accelerator side. But we wouldn’t go out and say that we’re specifically looking for impact startups, because in many of the markets that we’re working in, entrepreneurs don’t even think of their work as social impact. And they don’t even know about the whole social impact world. So if we go out and say that, it might exclude a lot of entrepreneurs who are doing great work but just don’t identify with that. We try and keep it as broad as possible.
Kr: Which investors are active in those areas? Is Accelerating Asia partnering with other investors?
AN: We work with quite a number of different investors—VC funds, in particular—because the stage we work at is what we call pre-Series A. So it’s important for us to have good relationships with a lot of venture funds. Ideally, they will invest in the startups that we work with after we’re done with them.
The two most recent cohorts we’ve had included participation from Golden Gate, Sequoia, and Cocoon Capital. Quite a lot of big funds come in and interact with our startups at a very early point in the program. Outside of that, we’ve partnered with all the major angel networks around the region.
Kr: In your observation, how has the pandemic influenced VC investment trends?
AN: It presents an opportunity to investors in two ways. One is that startups and founders are being creative with the things they do and pivoting their business model to create new things and adapt their industries to the changes. The second thing is that VCs are becoming more cash-conservative.
If you’re an early-stage investor, now is the time to invest. Because startups and founders [that are still around] are much more resilient, they’re much more nimble. If something doesn’t work out, they’re able to pivot quickly and try something else. Compared to later-stage startups and even big companies, it takes a longer time to move the ship in changing situations.
If you have a medtech solution or edtech solution, now’s the time to really get a foothold. If you have a solution that is going to enable digitization of different industries, now’s the time to spend, to get your customers on board and try to get those customers to stick with your platform.
But then there are industries that have been really hurt, so spending right now may not be the right thing [for them] to do.
One of our startups, IZY.ai from Cohort Two, is in the hospitality industry, and we were really worried about them. But it was interesting because they ended up helping hotels to digitize.
Kr: Do you have a response to the notion that social missions cannot compromise financial returns? What does it take for a business to have synergy between its finances and social mission?
AN: Yeah, it’s funny. If someone could tell me the secret to that, I would love to hear it.
I’ve been working in the social impact space for more than ten years. It’s constantly an uphill battle to convince people that you can have a fundamentally good business. The assumption that business is bad is where the problem lies.
Our mission statement is that we believe entrepreneurs are one of humanity’s greatest catalysts for positive change, because we really believe that people are solving big problems in their area and are going to make a difference.
Kr: Will Accelerating Asia consider becoming a 100% impact investor?
AN: Yes, we are definitely working toward that. It’s the difference between what we say outwardly and how we market ourselves, versus what we are as a business. I don’t think there should be any differentiation between a social entrepreneur and an entrepreneur. We are hoping our portfolio would strive towards a sustainable development goal. But a sustainable development goal is just one framework. If we are looking across our entire portfolio, they are all impact businesses. But if we are looking at the sustainable development goals, 65 percent of them are connected to that.
You’re contributing back to your community. You’re not harming people. And that’s the kind of business that we want to support. We’re striving for 100% of them to be connected to a Sustainable Development Goal. In a way, we want to show that you can be a good business that’s creating impact that’s scalable, commercially viable, and sustainable, without necessarily identifying yourself as a social impact company.
Kr: What will be the future goal of Accelerating Asia?
AN: We’re getting B Corp certification [which indicates a balance between purpose and profit].
The second thing is that we’re currently launching two new products to better support our startup ecosystem. The first is Amplify, which is a six-week pre-accelerator program for startups that are at pre-seed stage. This focuses on getting them to a stage where they could probably be considered for the core program.
The second program is Angel 360, which we partnered with most major angel networks in the region to launch. It is an eight-week “Angel Investing 101” program. Angel investors are so important to the startup ecosystem. If we can encourage more people to become angel investors or more angel investors to understand what they’re getting into, it will benefit everyone.