Singapore VCs teach beauty and fashion entrepreneurs how to take on the world
At the first FaB meetup in Singapore recently, a panel of venture capitalists and investors revealed their tips for aspiring beauty and fashion entrepreneurs. We report on their discussion that covered topics from breaking into the Southeast Asian market to methods for approaching investors.
The Fashion & Beauty Tech Community (FaB) is a community of entrepreneurs and investors looking to create new value through technology in the beauty and fashion worlds. Headquartered in San Francisco, FaB has chapters in 15 cities across the globe. Their meetup event in Singapore on May 28 this year was their first initiative in Southeast Asia.
The Singapore event was hosted in the Design Orchard retail space, which recently opened in January and showcases local designer fashion brands as well as incubator spaces for aspiring creatives.
Themed “VCs Building Fashion and Beauty Companies”, FaB’s Singapore meetup included a panel discussion with an entrepreneur cum angel investor and three venture capitalists. Attending the event were some 50 participants, including about 30 business owners in related industries and half of whom were said to be looking for funding.
Panel moderator Debra Langley, venture partner at Start Today Ventures, talked about how the value chains within the fashion industry have changed dramatically over the past five years through the introduction of artificial intelligence (AI) and augmented reality (AR). Instead, the current established model doesn’t rely on yesterday’s systems of wholesale and distribution. She also told of how Southeast Asia sees more diverse brand options today, with the orientation towards designer brands starting to fade away.
In fact, compared to 2015 when online store platforms such as Shopee, Lazada, and Qoo10 gained attention for targeting a wide demographic, a slew of original startups with clearer targets and brand policies are now popping up one after another. These startups are proliferating with support from venture capitalists.
Arnaud Bonzom, who co-founded the company Map of the Money, which connects entrepreneurs and investors in Southeast Asia, said this growth is due to more accelerators and venture capitalists “actively supporting entrepreneurs from an early stage. This has had a profound effect on the industry’s whole eco-system.”
In addition, Singapore’s government has promoted policies to make the city an entrepreneurial hub of Southeast Asia. Along with providing tax incentives to investors and venture capitalists who support startups, the government also actively supports incubator facilities.
Tammy Siew, an investment analyst at Sequoia Capital, talked about her firm’s open-to-the-public “Surge” program that supports Southeast Asian startups in their initial stages with investments of US$1.5 million per company. In 2018, Sequoia selected 17 entrepreneurs from Southeast Asia and India and is now funding and mentoring them. These initiatives to take on entrepreneurs at an early stage are accelerating.
But while everyone has their eye on the relatively new market of Southeast Asia, what will make or break startups will be their ability to expand within the region and quickly stabilize. Melissa Ho, a Wavemaker Partners associate, revealed that “our platform Shopee currently has a presence in seven countries within the Asia region. However, what has led us to success has been the setting up of local subsidiaries in each country at an early stage and the quick establishing of roots there.”
The potential of skilful localization
For consumer goods, simply bringing over brands from the West isn’t going to work due to differences in environment and ethnicity, said Siew from Sequoia Capital. “Currently, the businesses gaining attention offer personalized goods that match the needs of our market here in Asia.”
Kelvin Leung, a senior analyst at VC firm Openspace Venture which specializes in Southeast Asian tech companies receiving series A and B funding, added: “What it is to be a brand is changing. Consumers are not thinking they need to fork out to get something good; they’re looking for something that is both reasonably priced and good quality. At our company, we’re looking at brands that have been localized to match the purchasing power and needs of the market here.”
Venture capitalists based in Singapore aren’t just looking to unearth entrepreneurial talents within their own country. They’re searching for possibilities elsewhere in Southeast Asia as well as in the rest of Asia and the world too. Entrepreneurs from outside the region, including those from Japan, and who want to start and expand a business in Southeast Asia have plenty of chances to find funding in Singapore.
Why and when funding is necessary
Although entrepreneurs in Asia welcome the venture capitalists’ fast-growing enthusiasm and speculation, they still find themselves inexperienced in areas such as clarifying their company’s vision, creating a mid- to long-term business strategy and pitching their ideas to venture capitalists. This was reflected in the question and answer session when participants asked about how to approach VCs and whether there were templates to follow.
The advice from Map of the Money’s Bonzom was to ask why funds were necessary in the first place. It means relooking your objectives: Do you want to enlarge your business? Is your goal to speed up to raise profits? Where do you want to be in five to ten years? By clarifying these aspects, entrepreneurs can start to see when funding is necessary.
On the other hand, Ho from Wavemaker Partners said there isn’t any correct business plan format for entrepreneurs. What’s important is how well they can confidently tell a coherent story about the capital being offered.
FaB Singapore event organizer Yeeli Lee, who herself has launched a beauty product startup, is looking forward to the FaB community’s continued role in connecting markets. “It’s great to be able to get a global perspective and connect the characteristics of different countries. For example, Japan and China are hubs for innovative technologies and products, the US has excellent marketing capabilities, and Southeast Asia has expertise in developing business here in this unique marketplace. We can play a big role in this community while being true to what FaB founder Odile Roujol encourages as the ‘pay forward’ and ‘give back’ culture.”
The second FaB Singapore meetup event is scheduled for September.
Text: Denyse Yeo
Original text (Japanese): Chiharu Kuwajima
