SingTel – BT
SingTel launches $200m venture fund for start-ups
IN a shot in the arm for the local IT start-up scene, SingTel has launched a $200 million incubation fund to invest in budding infocomm companies.
The telecom giant has set up a subsidiary called Innov8 to scout for start-ups with potential.
Innov8 CEO Yvonne Kwek told BT the venture company will focus on firms with technologies relevant to SingTel’s business. This covers applications on front-end to back-end networking technology.
Mrs Kwek acknowledged that the pool of back-end technology start-ups is small, and said SingTel is interested in technologies that will augment existing infrastructure. For example, technologies to help maximise coverage and spectral efficiency would be attractive, she said.
With Innov8, SingTel hopes to bring its parent company’s clout to the table. Mrs Kwek touted the company’s ability to rope in ‘subject matter experts’ from SingTel’s pool of engineers, as well as an eventual audience of SingTel’s 350 million customers globally for IT projects that get to see the light of day.
Innov8 will invest in start-ups for a stake in their business but won’t take controlling interest, she said.
Running on a team of eight, the venture fund intends to work with government agencies and tertiary institutions to harvest talent, but intends to look beyond our shores as well.
Its $200 million fund will be reviewed regularly, but has been set for a period of three years, Mrs Kwek said.
Jeffrey Paine, managing partner at local venture investment firm Battle Ventures, said the fund has a large sum, even spread out for a global search. ‘SingTel has to look globally for new innovations,’ he said, adding that its face as a Singaporean entity is likely to be perceived as attractive to the global market.
As for the pool of mentors SingTel will bring, Mr Paine said any mentorship, however slight, will help entrepreneurs get off the ground. He said Innov8 looks to be a strong force on the venture scene because it brings to start-ups SingTel’s large amount of capital plus the company’s brand name and industry connections in the mobile sector.
Gwendolyn Tan, a partner at venture company Thymos Capital, said the injection of more funding into the industry is exciting for start-ups, but it doesn’t necessarily mean more start-ups will win funding.
‘It’s a flawed argument to say more money means more people will get funded. A company must have a winning project, regardless,’ she said.
SingTel’s search for innovative projects may indicate Innov8 will focus on later-stage start-ups that have already produced something to show for their efforts, Ms Tan reckons.
Its large pool of funding could indicate it will participate in Series A funding, otherwise known as a company’s first significant round of venture funding, she said. In Singapore, this sum is usually between $300,000 and $1 million.
Alvin Yap, founder of Singapore games outfit Nexgen Studio, said the fund’s size is attractive, but start- ups should also consider the amount of equity SingTel intends to take in them. He pointed to existing ‘bite-size funds’ doled out by the Media Development Authority (MDA), saying the government agency doesn’t take a stake in recipient companies. ‘If I had a start-up, I’d explore the fund,’ he added.
Speaking at a SingTel forum yesterday, Deputy Prime Minister and Minister for Defence Teo Chee Hean said the infocomm industry is a key driver of economic growth through productivity improvements.
Using the government- initiated TradeXchange programme as an example, Mr Teo said the neutral electronic platform for the shipping industry has led to annual efficiency savings of some $1 million. By the end of 2012, 100 companies are expected to participate in B2B transactions over the platform, he said.
SingTel’s push to acquire applications and services talent via Innov8 underscores the telco’s cloud aspirations.
Business group executive VP Bill Chang says SingTel’s cloud services arm, while making up ‘a few percentage points’ of SingTel’s overall billion-dollar infocomm business, is growing fast and has amassed a base of 100,000 seats spread out over 1,000 companies. The aim is to grow its cloud business at a compound annual rate of about 50 per cent, he said.