A year ago, in the aftermath of one of the top startup accelerator programs in the region closing down, I published an article about the need to reinvent the startup accelerator model in Southeast Asia.
It seemed to hit a nerve.
The article was republished across various media, and parts were later used in a Singapore Business Review piece about the ‘death’ of these programs in Singapore. *Disclaimer, I also had some unique insights having worked at one of these accelerators for two years*
The old model of corporate startup accelerator programs are flawed and what we witnessed was closure due to non-alignment with core business objectives of the parent company. Fundamentally, a misalignment between the goals of the corporate backer and the participating startups eventually led to defunding and closure.
But, the solution is in theory was very simple.
What if there was an independent startup accelerator program? Interests could be better aligned between the accelerator managers and the startup founders, with both seeking the advancement of the startup in return for future equity cash-out returns.
Together with my amazing co-founder Amra Naidoo, we decided to build it.
The main challenge is dealing with the mismatch between the short-to-medium operational capital needed by the accelerator (rent, salaries, marketing, etc.), with the fairly lengthy time needed to liquid equity stakes in startups (3 years, 5 years; 10 years+). Amra and I knew that we’d have to find a way to bridge this gap and finance the operations of the accelerator program independent of the equity we took in the startups.
I’m happy to say that we’ve been able to build a successful model around this and Accelerating Asia just launched our first batch of 10 startups from around Asia.
Here’s how we did it:
Between these three sources of capital we can fully fund the accelerator operations and our equity positions in the startups are “icing on the cake”. Of course, we hope that in the long-term said cake is 99% icing, with many high-value exits (making us and our investors lots of money).
Speaking of investment in the startups... without a corporate backer we didn’t have a source for that capital either!
So in addition to building a startup accelerator from scratch and an innovation consultancy we also had to build a venture-capital business.
Luckily for us, the Monetary Authority of Singapore recently passed new guidelines making it easier to set up smaller funds in Singapore - good timing on that one!
Meet Accelerating Asia Ventures - an MAS-licensed Venture Capital Financial Manager.
Without giving away too much of our secret sauce, here are just some of the things uniquely offered to our Limited Partners (LPs):
And, our LPs also get perks such as:
Our LPs are a mix of Angel investors, family offices and institutional investors. Over the years our amazing network of advisors, mentors and investors have always been keen to work with us in growing the companies we believe in wherever they can - this fund makes it possible to participate financially too.
[If this fund sounds like something you’d like to be a part of (and you’re an accredited investor) then just shoot me an email and we can arrange a time to chat. #alwaysbepitching]
Getting back to the crux of this article, it really is a great time to reflect on what we’ve been able to achieve so far, while recognizing that the journey has only just begun. So if you thought that was a lot, here’s what’s in store for the rest of 2019:
Lastly, I want to thank the many people who helped us get to this point. The list is way too long to list here, but you know who you are:
I hope that in another year or so from now I can write another blog titled “Holy Sh!t, It’s Still Working!”, and that in the meantime we can make a dent in the universe by empowering startups who are positively changing the world.
Accelerating Asia invests in startups with scalable technology solutions and revenue generating business models that combine purpose with profit.
In making an investment decision, investors must rely on their own examination of startups and the terms of the investment including the merits and risks involved. Prospective investors should not construe this content as legal, tax, investment, financial or accounting advice.
