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That we live in
an ever more digitized world is immediately apparent if you are a citizen of
Western Europe, North America or East Asia/Australasia. Accessing social media,
communications and retail shopping – increasingly on a smartphone – are
commonplace today. But what is less obvious to consumers is the underlying
technology that powers this ubiquitous, always on world of discourse, commerce
and communication that is being adopted virtually everywhere. Technology is
rapidly changing how we do just about everything.
Klaus Schwab at
the World Economic Forum (WEF) a year ago spoke of a ‘Fourth Industrial
Revolution’, one based on what he described as cyber-physical systems. While
the majority of his predictions are still to scale up, one that has already
arrived is underlying the core of the digital economy: the new technology that
is powering digital currencies and
online payments and is changing how banking and other players in the
financial services industry (FSI) interact with their customers.
At its most
basic, banking historically provided the essential service as an intermediary for
the exchange of cash for goods or services. This remained essentially unchanged
from Renaissance Italy, where modern banking emerged, to the end of the 20th
century. The tools bankers used progressed to double entry bookkeeping to
essentially the same ledger process powered by mainframe computers. Over the
centuries the controls also remained unchanged: with few exceptions, government
issued the currency and the banks its distribution.
Cash is now on
the decline in many economies; large denomination banknotes are being removed
from circulation as being a societal risk in that they enable criminals and tax
evaders to easily hide their crimes. Direct electronic payments can now replace
most transactions from paying for a taxi fare in Kenya with a simple sms phone
service via M-Pesa,
to ewallets that are replacing plastic credit cards. Depending
on the country, the amount of cash in circulation as a percentage of total
monetary value averages about 8% globally and has been declining. In
Sweden it is now so low (1.5%) the Riksbank is
seriously studying the replacement of cash completely with emoney.
behind both the fourth industrial revolution and the revolution in currency and
payments is the widespread adoption of the new technology that is both agile
and that can affordably scale: this is hyper-scale Cloud
computing: services that scale to thousands of servers that can provide unique
security advantages in addition to agility and economy.
The FSI sector: banks, insurance companies and
securities market makers are being profoundly affected by what is now seamless machine
to machine communication, enabling the full automation of double entry bookkeeping,
reducing costs for all parties in the transaction.
This brief paper
will examine how the FSI sector may become more robust and how regulators may
approach these fundamental changes, today, tomorrow and in the future.
The Financial Industry today.
The move away
from cash is not driven by the incumbent banks or financial institutions as
much as it is being pushed forward by software engineers, start-ups and
entrepreneurs, including the established technology giants. It is also being
abetted by governments that are keen to close loopholes for money laundering,
corruption and terrorist finance. The removal of the €500 note in 2016 (nicknamed the ‘Bin Laden’) is a
direct consequence of this policy as is the replacement of high value notes in
India and Venezuela in late 2016. Only Switzerland and Singapore have high
value notes today. The former US Secretary of the Treasury, Larry
Summers, has even called for the US$100 bill to be eliminated. Moreover with interest rates at
historic lows, many banks now charge for large cash deposits to reflect the
real cost of handling cash (as well as asking where it came from). Cash is no
longer King for banks, but a liability.
This has fueled
the move to mobile money from Beijing to Johannesburg, where it
has effectively brought banking to over 15 million South Africans for the
The World Bank reports that while just 1 percent of adults globally use only a
mobile money account, in Sub-Saharan Africa, this rises to 12 percent or 64
million adults, with 45 percent of them having only a mobile money account. In
Nigeria, the new national identify card has electronic payments functionality
built in to the EMV chip. Thus
technology is driving financial inclusion around the world through lowering the
barriers to gain access to low cost payment services, a key issue in addressing
inequality and development. This is also recognised by APEC as a driver of the
Start-ups, banks and telecom companies are all
competing in an increasingly crowded market for online and mobile financial
services, so how is a potential customer to choose? When banks first started
their journey to empower customers, it was not altruistic: cost containment was
the driving issue. Although having been introduced as long as 50 years ago, the
ATM remains central to the banking industry and adoption is still growing in
many countries, with a projection for over 3.5 million units installed worldwide
by 2020. Depending on the bank’s location, the cost of ATM vs a counter service
transaction is approximately 90% lower. ATM’s remain central to a cash economy,
but the installed base is decreasing in Europe in line with the decrease in
cash as the prime means of transaction and the rapid uptake in Europe of online
banking for other services.
The next round of automation was phone banking
followed in the late 1990’s by the first recognisable online banking service enabled
by the internet. The first true internet enabled banking (videotext in the 1980’s
never really took off) was not embraced until the widespread availability of the
World Wide Web (www) and the internet browser. This was launched in 1995 by
Wells Fargo bank in the US which enabled customers to interact with their
accounts for information via its website.
At the end of 1999 penetration was less than 0.4% of
households in the U.S. but by 2004, some 33 million U.S. households (31%) were
using some form of online banking. In the UK online banking grew from 63% to
70% of internet users between 2011 and 2012.
Rajesh Kumar, Professor at the Institute of
Management Technology Dubai, UAE, referenced a report that a typical branch
teller transaction in the US costs the bank US$4.25, dropping to $2.40 through
a phone call centre and then plunging to only US$0.20 for the same transaction
online. He has further postulated that a mobile transaction will be less than
half that again at US$0.08.
This is a decrease in cost almost comparable to Moore’s Law for computing. This
is an important observation as it is access today to new technology, in
particular the collection of services under Cloud computing, that will enable both
FinTech companies and FSI’s to drive down costs even lower.
Paradoxically it is both a faster internet in more
developed economies and weaker broadband infrastructure in lesser ones which has
led to mobile becoming a far more practical option to carry out tasks and
duties in developing economies.
This in turn leads to what will be one of the
key differentiators in a crowded bank/FinTech market in the near future: lowering
the cost of transactions to as close to zero as possible.
The Financial Industry of tomorrow.
If we take the closing
sentence above as the starting point, and if we further take tomorrow as
January 1 2017, we have to ask is this practical and what does it mean for the
FSI sector? Temenos is a Swiss company that is a major supplier of core banking
systems worldwide. John
Schlesinger, Chief Enterprise Architect at Temenos, stated “The advantages of Cloud computing in terms of cost
and customer experience look more compelling than ever.” In a recent paper
written by David Arnott, CEO Temenos, customers were asked questions regarding
benefits and barriers in adopting cloud services. The major benefits cited were
lower overall IT costs (58 percent); ability to shift to new technology (50
percent) and to add new business functionality more quickly (34 percent).
Before we get
into details, as banking has at its core the provision of services for both
citizens and the financing of the exchange of goods and services, in other
words trade, let’s look at that first. A U.S.
International Trade Commission study showed that cross-border data flows and
the business trends that they enable generate enormous value globally:
- More globally
connected Economies increase their gross domestic product (GDP) growth by up to
40 percent more than less connected Economies.
and communications technology (ICT) usage enables growth, particularly in
emerging economies, by giving new and small businesses ready access to global
service delivery platforms.
trade barriers faced by digitally intensive firms would markedly increase GDP,
wages, sales and employment. Embracing cross-border data flows reduces physical
trade barriers and reduces the impact of geographical isolation from major
As the French
economist Thomas Piketty has recently observed, protectionism does not produce
wealth, and free trade and economic openness are ultimately in everyone’s
Anyone who has
used an Over the Top (OTT) service, so called as they layer on an internet
connection, is already experiencing
close to zero cost for their voice phone calls and SMS. Software and hardware
companies are increasingly morphing into technology service companies and are making the world’s
best technology available to consumers at close to zero marginal cost; many supported
by advertising. Free voice messaging apps like Skype, WhatsApp or Allo enables people
to communicate and collaborate in ways – and at price points – never possible
before. Online search
saves the average consumer many hours each year to find products and services.
GPS enabled mapping saves even more in time: congestion, fuel and pollution are
all reduced in guiding people to where they need to go. Online marketplace
platforms like Alibaba.com, Global Sources, Amazon and eBay mean micro
enterprises and individuals can access global markets instantly.
An increasing majority of these instances host their
data and it is processed in a Cloud infrastructure, where the owner of the
service has outsourced the hardware and often the software and storage for
their service. A Cloud enabled infrastructure using managed data centres that
may scale on demand and therefore reduce the cost per transaction. Distance is no longer a barrier nor is the
cost of communication which has dropped virtually to zero due to packet
switched technology, the same technology that powers the Cloud.
But not all
Cloud offerings are delivered equally. Although the basic attributes may be
created and hosted on smaller data centres, the Cloud efficiencies really come
to the fore in hyper scale deployments: literally thousands of servers in a
single geographic cluster. This is well suited to the financial industry which
needs such scale to drive down transaction costs. The only limitation to this
is really regulation: regulators that do not open to the hypercloud will create
a disadvantage to their national banks in being unable to scale to increase their
agility to modernise ageing legacy infrastructure and to embrace change and
reduce costs. This disadvantage will, over time, both limit the
services available to customers in the country and competitiveness.
There will certainly be some classes of data that
regulators want stored locally (although over time I believe this will be
minimal), so hybrid options are okay for now. Current policy focus needs to be
on data classification and management rather than on large scale data
localization if the cost and scale benefits of the Cloud are truly to be
realized. It is clear then that for banks to be competitive tomorrow
they need to transform today. The
technology for this is available now, in particular as the blockchain provides
an immutable ledger of transactions. As proven with widespread adoption of packet switch technology,
costs have dropped dramatically and by logical extension this may extend to ultra-low
payments transaction costs; what next?
The Financial Industry of the (near) future.
If payments are
the low hanging fruit that may be enabled today by Cloud computing and rolled
out as services tomorrow – that is in 2017 – what of the next five years? In 2015 there were just fewer than five
billion unique mobile subscribers, according to the GSMA, compared with the
global population of 7.4 billion. Forecasts predict 5.6 billion unique mobile
subscribers globally by 2020 – which is likely to be more than the number of
people with electricity at home (5.3 billion), regular bank accounts (4.5
billion), or running water (3.5 billion).
majority of new subscriber additions will come from developing markets, with
GSMA Intelligence putting this proportion as high as 93%. According to the
International Telecommunications Union (ITU) data shows that while 84 percent
of the world's people live in an area where mobile-broadband services are
offered, only 47 percent are actually using the Internet right now. So
there is a gap to be closed to bring these people into the online world.
A report by the World
Bank Development Research Group and the Better Than Cash Alliance outlined how
the digitisation of payments, transfers, and remittances contributes to the G20
goals of broad-based economic growth, financial inclusion, and women’s economic
is the poorest that pay the highest costs for sending money across borders. Recent
research including the GSMA’s ‘Driving a
Price Revolution: Mobile Money in International Remittances’ that looks at the
impact of mobile money on reducing the cost of international remittance and ‘ A
Cloud for Good’ from Microsoft
examines how technology may address this. The average cost of sending US $200
was 2.7 percent, compared to six percent when using global money transfer
operators (MTO’s). Entrepreneurs are aiming for sub 1% costs. So there is a
clear case to encourage inclusiveness for the unbanked into at least the
payments and remittance system as a precursor to full financial inclusiveness,
which is a key Millennium Development Goal (MDG) of the UN.
By lowering the
costs of transactions through automation in the Cloud for mobile devices, banks
can compete with the FinTech payment providers. Also by transforming their
legacy systems to be Cloud based they may gain business from dominant MTO’s (as
well as competitors): their ‘Uber’ moment may be fast approaching.
New ways of financial
transaction accounting are being explored using blockchain technology that is
the concept of a decentralised, independently verifiable, and immutable ledger.
It can be a distributed database or even a decentralised hosting provider, but
for blockchain to reach mass adoption, there are also technical challenges that
need to be addressed, such as scalability and private key management., both of
which may be addressed by taking advantage of hyperscale Cloud computing.
We are headed
towards an era not just of ubiquitous connectivity, but of smartphones heading toward
$US 50 a unit, which is affordable for all except the very lowest income
segment of society. One way to address this gap may be the supervised distribution
to developing countries of the many smartphones that today come off typical 2
year contracts in the advanced countries. These may be voice printed via an app
to end users to prevent resale, with approved charities administering distribution
and not subject to import duties. Given recent trends this segment will rise in
the not too distant future to be connected. It is not inconceivable that
connectivity and access may be a basic human right in the near future; such is
the network effect on economic well-being.
connectivity and hardware combined with rapid advances in software leading to
practical uses of artificial intelligence, we are well on the way to what Ray
Kurzweil has described in ‘The Singularity is Near’: beyond the cyber-physical
to the virtual merging of man and machine.
This may be enabled through a vision of the Platform, People & Process, whereby the platform
is the Cloud that enables people to access the processes that they want to use,
which in turn will drive growth.
But what about the regulator?
Banks are a
sector of society that has been regulated for decades, and for good reason:
they are the bedrock of trust in all institutions and have failed spectacularly
in the past, some most recently as 10 years ago: banking is still a fragile
institution in many countries. How can this be improved?
usually has a dual function: to maintain the stability of the country’s
financial system and to regulate banks and deposit taking institutions. Whilst
both are linked, it is the regulation of banks and how they use the Cloud that
The degree of
regulation varies by each country; however a commonality is that the regulators
must be able to examine the records of those regulated. With respect to new
technology, since its inception in the United States, online
banking has been federally governed by the Electronic Funds Transfer
Act of 1978 which somewhat
presciently included ‘remote banking’ programs.
banks have guidelines for bank technology outsourcing, which has been common
for decades and includes contract IT services, data centre hosting, credit card
processing (often abroad) and software. Indeed an examination of software
agreements since the inception of mainframe computing clearly states that the
developer is the owner and the bank merely licenses the software for use. The
majority of such guidelines therefore implicitly have the approval for Cloud
computing services to be utilised by banks, but they may need to be clarified
in an update in some countries. Forward looking regulators have indeed already
Draft guidelines have been submitted by industry associations to central banks
in several counties for consideration.
One often cited reason that regulators have been
slow to approve Cloud outsourcing for banks is that sensitive information may
not be sent or stored outside their jurisdiction. At issue really in the
definition of what is ‘sensitive’, is it personally identifiable information?
If so then the answer is to protect it via data classification and strong encryption. If
it is because no bank data may leave the national borders, then they are
This really does not make much sense: if enacted it would
bring the global financial system to a grinding halt as trillions of dollars
are transacted across borders everyday over the bank-owned SWIFT messaging
system. The encryption used by SWIFT as well as the hardware is virtually identical
to that of the major Cloud service providers: if it’s good enough for SWIFT and
in compliance with the same standards and certifications, then there is no logical
reason that the Cloud should not be used by the financial industry in any
The future of the financial
system lies in the ability to reduce the cost of transactions as low as
possible with full data redundancy and security, which I have written about
elsewhere. The technology that will
enable this will be a hybrid of on premise (for core banking services) and
outsourcing, via the Cloud for all non-core banking services.
addition to the agility and economic benefits in the Cloud, there may also be a
closer integration of compliance and security with enhanced visibility for
regulators. Security and risk management is a given requirement, but how do you
address the elements that make this up?
One example is that the
Cloud may enable the regulator to also check for bank compliance in virtually real
time, in fact this is being done today in stock trading compliance for insider
trading/fraud detection using the Cloud. This may also reduce a bank’s
compliance costs. In anticipation of this, the New York Federal Reserve has
increased its technical oversight of banks, building on draft federal
guidelines which will come into effect March 1 2017.
Cloud platforms also may
act as “system containers”, providing a new kind of defence in depth (the Cloud
is not only a programmable infrastructure, but a reacting infrastructure: it
allows for monitoring, logging and alerting of “interesting” events, enhancing
From the FSI sector
view, it is clear that they want to deliver competitive quality services, without
any compromise as to data security, confidentiality, integrity and high
availability. At the same time they need to reduce costs to improve the balance
sheet to compete with each other and the FinTech start-ups.
The best way to do this is to adopt the same technology as what the
FinTech start-ups are using: The hyper Cloud. It is available right now and is
well on the way to being the basis for all enterprise computing. Forward
looking institutions will work towards the same goal – utilizing the hyper Cloud to benefit their customers
and the competitiveness of their national economies.
© 2017 APP.
 Strategies of Banks and Other Financial
Institutions: Theories and CasesBy Dr. Rajesh Kumar http://www.imtdubai.ac.ae/drbrajeshkumar/
 ‘Capital in the 21st Century’, Thomas
Piketty Page 523 (English edition) Harvard University Press
 The UK, Singapore, Australia and
Hong Kong, to name but a few
 See Cloud Computing: why security is
not the issue – its data classification. M Mudd 2016
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Venture Capital (VC) has played a significant role in driving innovation and economic growth by providing essential financing for startups and early-stage enterprises. With rising interest rates and complicated loan approval processes, many entrepreneurs are turning to VC financing opportunities to bridge the gap between funding sources for innovation and traditional, lower-cost forms of finance available to existing businesses.
To attract private equity funds and entice entrepreneurs with high-return ideas, the VC industry must offer a satisfactory return on capital, provide appealing returns for its members, and demonstrate promising upside potential. However, consistently outperforming investments in inherently risky business operations remains a significant challenge
Despite not being long-term ventures, the goal of VC investments is to provide financial support to a company’s balance sheet and infrastructure until it achieves a certain size and level of credibility that makes it attractive for acquisition by a corporation or provides the opportunity for liquidity in the institutional public equity markets.
Due to the saturation of the startup market and ongoing inflation concerns, many investors are opting for a more conservative approach. Venture capitalists today are adopting a more cautious, long-term strategy, departing from the previously prevalent aggressive, short-term investment approach.
Venture Capitalists Measure When Funding a Startup
Kei Furukawa, a Partner in Investment & Business Development at the UTokyo Innovation Platform Co (UTokyoIPC), presents the Innovative Platform as the entity in charge of enhancing the University of Tokyo (UTokyo)’s innovation ecosystem. It is tasked with ensuring returns on its investments as a funding corporation as well as disseminating academic research outcomes from the world-leading university in Japan to society as a whole.
“UTokyo IPC aims to accelerate innovation on a global scale that leveraged the University of Tokyo through three key activities: supporting entrepreneurs, facilitating corporate innovation, and investing in startups,” Kei reveals.
The company’s primary activity is Venture Capital (VC), which consists of meaningful investments and the exiting of those portfolios. A concurrent objective is to apply UTokyo’s research, intellectual assets and other resources to businesses.
While the ultimate goal is to make investments, Kei shared that they also conduct extensive research and academic work, that can be commercialised.
The company has invested in around 60 companies or portfolios that are primarily focused on various fields including biotech (drug discovery, medical devices, agriculture), robotics, aerospace, IT and AI (mainly enterprise solutions).
“It is pertinent that our company was established as a result of a political decision, indicating that the government is currently experiencing a period of uncertainty,” Kei explains. “Ministry of Economy, Trade and Industry (METI), and the Ministry of Education, Culture, Sports, Science and Technology (MEXT)made a joint decision to increase funding for startups emerging from universities, to explore ways to transform research into viable business ventures. This decision ultimately led to the creation of our company.”
Typically, national universities in Japan are not permitted to invest in companies, but an exception was made in this case. As a result, the VC firm is deeply invested in the growth of startups and takes a deep interest in their success.
Kei explained that the national budget was used to establish our funds. It is noteworthy that the funds comprise public and private sources, with a government disbursement allowing it to undertake investments with significantly greater risk.
He acknowledges that the company employs a matrix to evaluate the success of its investments. However, due to their focus on early-stage deep tech investments, it can be extremely challenging to conduct such measurements, particularly at an early stage. Nonetheless, his team closely monitors the progress of each investment and ensures that the milestones established for both business and technology are met.
The company operates an incubation and accelerator programme called “1st Round” (https://www.1stround.jp/) that serves as a bridge between academia and business. It is a programme co-hosted by 13 Top national and private universities from Japan. To participate in the initiative, start-ups are not required to be incorporated but must do so if chosen. If already incorporated, they must be under 3 years, and must not be funded by a VC at application timing.
He notes that they have numerous corporate sponsors, consisting of major Japanese corporations of a wide spectrum of industry fields. They strongly encourage partnerships between the startups and the sponsoring companies to conduct proof of concept (POC) projects together. This safe and close-knit community has resulted in many successful ventures between companies and startups.
The venture capitalist arm has a follow-on investment strategy aimed at providing support to the companies they invest in, particularly during challenging times. They take a hands-on approach by having members sit or observe boards meeting of portfolio companies to offer guidance and mentorship for business development, HR support (has own recruitment platform “Deep tech Dive” (https://www.utokyo-ipc.co.jp/dive/), and public relations. Also since their fund terms are 15 years, relatively longer than other VC funds, which helps deep tech startups to firmly bring technology to the market.
The VC strongly believes in the value of persistence and is committed to not giving up on its investments. They are determined to work tirelessly until the very end to revitalise the company, a trait they consider critical of a successful investor.
As a university subsidiary, they do not limit themselves to any particular investment areas and remain open to various types of startups. While there may be some sectors that are more attractive to non-tech venture capital, they generally favour startups that may be complex to comprehend but possess the potential to bring about transformative changes in the world.
They take a long-term investment approach and have transitioned from short-term rapid investment to supporting social impact and sustainability, particularly in healthcare startups. However, they also must balance this with the need for financial returns.
When making investments, financial returns are undoubtedly important, but they are not the sole factor that should be taken into account. The overall impact of the investment, including its social, environmental and ethical implications, should also be carefully considered.
Startups have several options for obtaining capital, such as crowdfunding, venture loans, and revenue-based finance. Each strategy has its own advantages and disadvantages, and therefore, entrepreneurs must have a deep understanding of these options.
Having multiple funding options can be advantageous, provided that entrepreneurs and shareholders are well-informed about the pros and cons of each. A thorough understanding of the funding options can help them make an informed decision that aligns with their business goals and objectives.
Urban Ideas and Solutions Through LKYGBPC
The Lee Kuan Yew Global Business Plan Competition (LKYGBPC), which began in 2001, is a biennial global university start-up competition hosted in Singapore. Organised by Singapore Management University’s Institute of Innovation and Entrepreneurship, focuses on urban ideas and solutions developed by student founders and early-stage start-ups.
According to Kei, as an entrepreneur, it is essential to have the appropriate capacity and seek guidance from knowledgeable individuals, particularly in the early stages of the business. As a university subsidiary, UTokyoIPC is well-equipped to assist entrepreneurs and help prevent them from making fatal mistakes out of ignorance.
The success of promoting entrepreneurship in culture depends on the ecosystem and environment that encourages and supports it. Singapore has a strong entrepreneurial environment, with universities such as SMU and NUS emphasising entrepreneurship. In contrast, Japan has a larger economy but tends to be more conservative.
The University of Tokyo has been actively fostering entrepreneurship by offering courses to students, which has led to the creation of numerous companies. The critical factor behind this success is the creation of an environment that supports entrepreneurship and motivates people to pursue it. Marketing and promoting the benefits of entrepreneurship are also vital to its success.
“The programme is expanding and involving many other universities beyond Singapore. This makes LKYGBPC an excellent platform for startups or the venture capital industry, as it is close to many countries in the region.” Kei believes.
Since joining the company in 2019, Kei has been actively involved in supporting startups, professors, and students through various initiatives. His passion is on deep tech startups or those with the potential to bring about positive changes in the world. He has invested in a diverse range of fields, including IT, robotics, AI and agritech.
Many successful entrepreneurs come from different backgrounds, such as business, engineering, finance, marketing and more. While having a technical background can be advantageous in some industries, it is not always necessary for achieving business success, Kei opines.
“Ultimately, having a strong business sense is more crucial than any specific technical background. What truly matters is possessing a good grasp of business and the necessary skills to succeed in it. This entails competencies such as strategic thinking, financial management, leadership, communication, and problem-solving,” Kei concludes.
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Pemodal ventura atau venture capital (VC) telah menjadi kekuatan vital dan katalis inovasi terkemuka selama beberapa dekade terakhir. Permodalan mereka telah menjadi sumber keuangan utama bagi sejumlah startup, sebab VC dikenal lebih ramah inovasi bagi pertumbuhan perusahaan pemula (startup).
Alih-alih meminjam modal dari bank yang memiliki suku bunga tinggi dan proses persetujuan pinjaman yang rumit, tidak heran jika banyak pengusaha lebih memilih alternatif pendanaan kepada pemodal ventura. Bagai gayung bersambut, investor pun mendukung upaya para pendiri startup dengan memasok modal yang mereka butuhkan.
VC menjadi jembatan untuk mengisi celah kebutuhan antara sumber modal inovatif dan tradisional. Pendanaan model ini menjadi alternatif sumber modal rendah biaya untuk mendanai bisnis. Untuk menyediakan dana besar bagi pegiat startup, bisnis pemodal ventura harus memberikan insentif yang menarik bagi para investor privat agar mereka mau menaruh uang mereka di perusahaan pemodal ventura.
Di sisi lain, besarnya ketersediaan sumber dana menjadi modal bagi VC untuk menarik potensi startup berkualitas yang berpotensi memberikan keuntungan tinggi. Secara singkat, tantangan pemodal ventura adalah mencari potensi untuk melipatgandakan investasi yang diberikan pada bisnis-bisnis dengan tingkat risiko tinggi.
Modal ventura bukanlah modal jangka panjang. VC bertujuan untuk berinvestasi hingga perusahaan mencapai ukuran dan kredibilitas yang bisa dijual ke korporasi lain atau bisa dijual sebagai likuiditas di pasar modal. Intinya, seorang pemodal ventura berinvestasi pada ide pengusaha, mengembangkannya dalam waktu singkat, kemudian mencari strategi untuk mendapat laba berlipat dengan menjual perusahaan atau melakukan penawaran saham perdana (Initial Public Offering/ IPO).
Namun, kiniada muncul tren baru dimana pemodal ventura beralih dari metode investasi jangka pendek yang agresif ke pendekatan jangka panjang yang lebih konservatif. Pasar startup yang sudah terlalu jenuh menjadi salah satu alasan transisi ini. Tren ini, dikombinasikan dengan kekhawatiran inflasi yang berkelanjutan, membuat banyak investor memainkan portofolio investasi mereka dengan lebih hati-hati.
Menyaring startup potensial
University of Tokyo Innovation Platform Co (UTokyoIPC) menjadi salah satu pemodal ventura yang melakukan pendanaan jangka panjang ini. UTokyoIPC berkecimpung sebagai pemodal ventura untuk startup deep tech. Sehingga, mereka lebih sering memberikan modal jangka panjang hingga 15 tahun untuk perusahaan yang mendalami inovasi dibidang bio teknologi, peralatan medis, dan obat-obatan.
Pendirian pemodal ventura UTokyoIPC sendiri berawal dari inisiatif Menteri Ekonomi dan Menteri Pendidikan untuk memberikan pendanaan pada riset-riset yang dilakukan kampus. Mereka ingin agar riset-riset itu bisa dikomersialisasi dan dikembangkan menjadi bisnis. Lantas didirikanlah UTokyoIPC di bawah Universitas Tokyo yang mendapat sumber modal dari pemerintah dan swasta.
“Di portofolio kami, ada sekitar 50-60 perusahaan dan kebanyakan bergerak di biotech, seperti penemuan obat, peralatan medis, dan sebagian kecil bergerak di pertanian,” tutur Kei Furukawa, Partner, Investasi & Pengembang Bisnis UTokyoIPC, dalam wawancara khusus dengan Mohit Sagar, CEO dan Pemimpin Redaksi OpenGov Asia.
“Meski tak banyak pemodal ventura yang bergerak di area ini, namun kami melihat sektor ini sangat penting dan berdampak pada hidup banyak orang, sehingga kami memutuskan untuk berinvestasi di sini.”
Ia lantas membeberkan sejumlah hal yang menjadi pertimbangan perusahaan pemodal ventura untuk berinvestasi di sebuah startup. Kei mengaku penilaian yang mereka lakukan tak jauh beda dari penilaian yang dilakukan oleh pemodal ventura lain pada umumnya:
- Memiliki tim yang bagus,
- Mengusung teknologi yang menarik di waktu yang tepat,
- Ketersediaan pasar,
- Potensi ekspansi, untuk mengukur seberapa besar perusahaan bisa dikembangkan dan berapa banyak pasar yang bisa diraup.
Tidak terpenuhinya sejumlah syarat itu menjadi kesalahan startup ketika gagal menggaet pemodal. Ketersediaan pasar dan potensi kecepatan pertumbuhan perusahaan menjadi pertimbangan terbesar para pemberi modal.
Modal jangka panjang
Sebagai pemodal ventura untuk startup yang bergerak dibidang bio-tech, UTokyoIPC menyadari bahwa mengembangkan inovasi teknologi medis memang membutuhkan waktu lama. Sebab, industri ini berkaitan dengan kesehatan dan nyawa manusia sehingga perlu riset mendalam untuk memastikan keamanan dan keakuratan produk yang dihasilkan.
“Di tahun pertama, kami mengelola startup agar mereka berkomitmen menjaga pertumbuhan perusahaan. Kami tidak mengejar-ngejar mereka agar lekas besar. Sebab, pengembangan deep tech memang perlu waktu, sehingga kami tidak perlu terburu-buru.”
Selain itu, skema pendanaan campuran antara publik dan privat membuat model pendanaan yang diberikan UTokyoIPC bisa lebih menerima pendanaan model ini. Mereka bisa lebih leluasa mengambil risiko ketika berinvestasi.
Untuk memberi pendanaan, UTokyoIPC biasanya memulai dengan melakukan konsultasi dengan berbagai riset yang ada di kampus-kampus. Mereka mencari riset yang berpotensi untuk diubah menjadi bisnis. Riset yang dianggap potensial akan diajak untuk mengikuti pitching sebagai bagian dari proses seleksi sebelum pemberian modal.
Setelah itu, mereka memberikan program bimbingan tahap awal. Perusahaan yang terpilih masuk ke program ini akan mendapat pendanaan dengan nilai maksimum US$100 ribu sebagai dana hibah. Mereka mendapat bimbingan selama enam bulan agar dana hibah yang diberikan bisa dipakai untuk mengembangkan perusahaan.
“Mereka tak tahu banyak soal bisnis, sehingga kami memberikan saran dan dukungan uang sebanyak mungkin agar mereka tidak terjegal di fase awal mereka. Tujuan kami agar startup bisa berhasil melewati pendanaan tahap awal (seed round funding) dan mencapai valuasi terbaik.”
UTokyoIPC memberikan pendanaan di tahap awal perusahaan mulai dari seed funding hingga seri kedua (second round funding). Sebagai investor tahap awal, Kei menuturkan sulit untuk mengukur tingkat kesuksesan investasi yang dilakukan. Sehingga, mereka berpatokan pada target-target yang telah ditetapkan bersama. Jika startup berhasil mencapai tiap target yang sudah disepakati, hal tersebut menjadi indikasi perusahaan telah berjalan dengan baik. Jika yang terjadi sebaliknya, maka perlu dilakukan peninjauan ulang untuk mengubah haluan.
Sukses di pemodal ventura
Sebagai seseorang yang tidak memiliki latar belakang investasi dan bisnis, Kei merasa beruntung bisa terjun ke bisnis pemodal ventura UTokyoIPC. Awal ketertarikan Kei terhadap bisnis modal ventura sendiri berawal sejak ia menjajal Pendidikan MBA di Singapura.
Merasa tak punya cukup mental untuk menjadi seorang pengusaha, Kei banting setir untuk mempelajari sistem pendukung bisnis yaitu pemodal ventura. Sehingga, ia pun banyak mengambil kursus pemodal ventura kala itu.
Meski demikian, jalan tak selalu mulus. Lantaran tak punya pengalaman kerja di bidang itu, ia tak langsung terjun ke industri pemodal ventura. Setelah melanglangbuana ke sejumlah perusahaan swasta, suatu hari ia berkesempatan berkarir di UTokyoIPC yang merupakan pemodal ventura.
Menurutnya, agar berhasil di bisnis pemodal ventura, seseorang mesti memiliki kemampuan berelasi yang baik. Sebab, bisnis ini selalu berhubungan dengan orang lain, baik dengan investor maupun startup.
“Karena Anda akan berhubungan dengan banyak orang, berbicara dengan mereka dan memahami siapa mereka. Sebab, ini akan menjadi aspek penting ketika melakukan investasi.”
Selain kepiawaian dalam menangani orang lain, catatan lain sebagai seorang pemodal ventura adalah semangat pantang menyerah. Pemodal mesti berjuang bersama tim startup hingga titik darah penghabisan. Optimisme dan kemampuan untuk terus mencoba strategi baru sangat diperlukan. Sebab selalu akan ada momen di mana rasa putus asa dan keinginan untuk menyerah muncul karena tidak melihat jalan keluar menuju keberhasilan.
“Tapi, saya tekankan untuk jangan menyerah. Anda harus mendorong diri Anda hingga hari terakhir, hingga berhasil.”
Selain itu, seorang investor juga perlu memiliki kesabaran untuk memberi waktu dan kesempatan bagi orang lain. Sebab, dalam investasi deep tech, banyak pekerjaan laboratorium yang tak segera terlihat hasilnya.
“Saya berbicara dengan berbagai tim ketika mereka bekerja di laboratorium dan berpikir bahwa sebagian besar waktu yang digunakan tidak segera menjadi uang atau menjadi produk, namun kami tetap memberi keleluasaan waktu. Kami melihat kesempatan apa yang bisa kita manfaatkan dari hasil penelitian mereka. Sehingga persoalannya, “Apakah Anda ingin memberikan waktu bagi startup yang dimodali? Yang kemungkinan dalam tiga atau lima tahun ke depan akan menjadi bisnis yang besar? Saya kira ini penting.”
LKYGBPC sosialisasikan minat kewirausahaan
Menurut Kei, Singapura memiliki kultur entrepreneurship yang kuat ketimbang Jepang. Hal ini mengejutkannya dan membuatnya tertarik untuk menggali lebih jauh ketika mendapat pelajaran entrepreneurship dalam proses mengambil gelar master di negara itu.
“Meski Jepang memiliki skala ekonomi yang lebih besar, namun warga di sini lebih konservatif ketimbang Singapura yang sangat agresif dengan entrepreneurship.”
Lewat kompetisi kewirausahaan seperti Lee Kuan Yew Global Business Plan Competition (LKYGBPC) menurut Kei berguna untuk terus memupuk jiwa kewirausahaan anak muda di Singapura dan berbagai belahan dunia. Selain itu, LKYGBPC juga memberi pengaruh ke berbagai universitas lain di dalam dan luar Singapura untuk ikut terlibat dalam pengembangan kewirausahaan.
Kompetisi ini juga menjadi sarana yang baik untuk mempertemukan startup dengan pemodal ventura. Sehingga, ia berharap program kompetisi ini bisa menjadi platform untuk melebarkan semangat entrepreneurship.
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A developer of robotic applications and systems based in Hong Kong has announced the release of ARCS, a Robotic Control System developed in-house and powered by cloud technology from a multinational technology corporation based in the United States.
The company is a member of Hong Kong Science and Technology Park Corporation’s Leading Enterprises Acceleration Programme (LEAP) and has received full support from HKSTP. This has enabled them to establish their office and a state-of-the-art automated warehouse, called the RobEX Centre, within the campus.
In recent years, work automation has become increasingly popular. The widespread use of robots in our daily lives has made it possible to free up human labour through highly efficient execution abilities. However, there has been a lack of agnostic platforms to coordinate and control robots of different brands, functions, and systems, which has prevented our robots from creating synergy in the most efficient way possible.
Furthermore, there is an urgent need for society to proactively explore alternative approaches to maximising the potential of robots, especially with intensifying community issues such as an ageing population and declining birth rates, which further widen the local workforce gap. This could greatly elevate our quality of life, particularly for those with lower self-care ability, such as the elderly and the sick.
Moreover, with environmental, social, and governance (ESG) subjects becoming more prominent, organisations are increasing their investments in sustainability and environmental research to find solutions that can boost energy efficiency through robotic technologies.
The HKSTP company is dedicated to developing a range of robotic solutions that address specific challenges, with the ultimate aim of integrating these technologies into daily life and supporting various sectors such as healthcare, smart city, logistics, and education.
With a vision to transform Hong Kong into a smart city, the company developed ARCS. Today, ARCS has been implemented in the fields of rehabilitation and healthcare, offering more autonomous and sophisticated care services, while also alleviating the workload of healthcare professionals through the assistance of smart technologies.
ARCS offers more than just improved efficiency and cost savings for enterprises and organisations. Its distinctive feature of centralised management streamlines the process of data management and analysis, resolving the isolation deadlock of different types of robots.
In the near future, ARCS will integrate artificial intelligence to cater to different scenarios, create the most suitable application plans, and provide tailor-made suggestions derived from the analysis of environmental data collected by robots. This will take the sustainability performance of corporations and organisations to the next level.
During the press conference, the company demonstrated a series of collaborative tasks performed by robots managed by ARCS in three simulated scenes. The first scenario applies to the retail and catering industry: when a store receives an online order, ARCS immediately obtains data from elevators and turnstiles through the Internet of Things (IoT) and delivers the product to the customer using a managed robot.
The second scene is suitable for public places with heavier traffic, such as malls and hospitals. When a patrol robot detects a mass gathering, ARCS can coordinate and send the concierge robot with its camera open for a live stream. This helps users to have a better understanding of the incident with minimised reaction time, while simultaneously instructing the patrol robot to resume its original task.
The third scene is designed for people with disabilities in various public venues. ARCS remotely controls the wheelchair robot, allowing one or a group of robots to safely carry those in need to their destinations.
Additionally, the company showcased the use of ARCS to analyse centralised data, illustrating the system’s capability to streamline the data collection and analysis process, as well as its great potential to incorporate the use of business intelligence.
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Startups are constantly looking to address new needs and demands in a novel way or solve existing issues with cutting-edge tech. They are the embodiment of innovative and creative entrepreneurship. Startups are often the catalysts for economic progress and inclusive development.
Building a successful startup for exponential growth is, nevertheless, as tricky as any other development. And while the winners receive much attention, a vast number fail. Moreover, the clamour that a successful startup generates often covers the many floundering ones. This skewed response and partial information only reveal part of the story – approximately 90% of startups fail.
There is good news though. The startup ecosystem has expanded dramatically over the last decade to help reduce the failure rate, with the total post-money market value increasing by 239%. The current environment facilitates startups in obtaining resources, access to talent, financing, and customers. In addition, it offers valuable coaching, business networks and potential future financing assistance.
According to research, firms who ‘graduate’ from an accelerator programme have a 23% higher chance of initial survival. Business incubators or accelerators have also assisted in increasing startup five-year survival rates from 75% to 87% and have successfully launched some leading tech companies.
Prepare a sustainable business
In an interview with Mohit Sagar, CEO and Editor-in-Chief of OpenGov Asia, Nguyen Quang Huy, a faculty member at Foreign Trade University (Vietnam) and visiting faculty at the Swiss School of Management, said that a sustainable business should develop its products and services while considering the needs of its customers. This involves verifying that the product or service is desirable and meets the demands of the intended market.
“The team need to need to discover about the customer – what are they looking for? Try to involve the customer in the very beginning of starting up the business. Get the customer involved in co-creation of the value and always get feedback from the customer,” he believes.
He advocates mass customisation to tailor the product or service to meet the wants of the consumers. Mass customisation is a marketing and manufacturing approach that offers the flexibility and personalisation of custom-made products, while still keeping costs comparable to those of mass-produced items. It is also referred to as made-to-order or built-to-order.
This approach is particularly suited to companies whose customers require assistance in expressing their specific needs and may feel overwhelmed when presented with a range of options to choose from. By offering mass customisation, companies can gain a competitive advantage over those that only offer standardised or generic products or services.
A prime example of mass customisation is developing tailored products or experiences based on individual customer information. This method not only enables businesses to scale up operations but also provides added value to the customer. This approach is equally applicable whether a company is a tech startup or not.
Once a business has a comprehensive understanding of its customers and their requirements, they need to adopt an entrepreneurial mindset to identify and convert its customers’ challenges into opportunities and then organise them into a structured business plan.
Once a business plan is in place, securing capital is the next daunting task when building a startup. In fact, of the 90% of startups that fail, up to 38% are due to insufficient funds and a failure to raise additional capital.
Therefore, to increase the likelihood of securing funding for their idea, Nguyen recommends focusing on three critical factors.
- Innovation. The team need to be creative with the products or service.
- The team must determine if the products or the service have the potential to be developed and carried out and attract the customer.
- The team must consist of the right people, skills and knowledge. More importantly, they need to have an attitude about lobbying.
If a company fails to address these three factors, it increases the risk of going out of business. Firstly, if the product or service fails to meet the customers’ needs, it may only be viewed as an optional “add-on” rather than an essential solution, making it easier to replace with alternatives. It becomes an additional “vitamin”, not the main course.
Secondly, failing to accurately assess the market opportunities and potential demand can lead to limited growth prospects. This may result in a smaller market share and lower revenue, making it harder to sustain the business in the long run, and, in fact, may not be viable at all.
Startups today must exhibit greater tenacity in securing funding as investment rates have declined in recent times, particularly in Southeast Asia and other regions across the globe. The social and healthcare sectors seem to have bucked this trend and there has been an increase in investment in these.
Nguyen’s recommendations stem from his extensive experience in the startup industry. In addition to his role as a lecturer, he has coached student teams in Vietnam, helping them win international business competitions in countries like Thailand, Cambodia and Indonesia.
He is also the founder and advisor of the Vietnam Social Innovation Challenge. Over a decade ago, he was one of the pioneers of the competition when the concept of social entrepreneurship was still new to Vietnam. However, over time, the idea became increasingly popular and numerous universities in Vietnam began participating in the competition.
“Entrepreneurship has become a popular mindset among young people, and as students, they are increasingly concerned about creating products that can have a positive impact on society,” he observes.
The fundamental philosophy of a sustainable business model is to address social and environmental issues through a commercially viable solution. The goal is to create a business that is financially viable while also generating positive social and environmental outcomes. This approach not only makes the business more meaningful but also enhances the overall quality of life
Despite the profound influence of technology on our lives, work and business. Nguyen does not view sophisticated technologies like AI, ML, and blockchain as a threat. According to him, humans will always remain at the centre of any technological advancement.
Nguyen believes that rather than fearing technology, people should take charge of it and act as drivers and caretakers of its development. He believes that as the creators of technology, entrepreneurs possess the knowledge and capacity to manage and regulate its use
“We are often afraid of technology, but in my view, we must be the pilots. We are responsible for ourselves and our actions. We create the technology and we (should) know how to control the technology,” he emphasises.
Nguyen suggests that before people can fully leverage the benefits of technology, they need to shift their mindset towards collaborating with it. Ways in which competitive advantages can be gained must be identified.
By viewing technology as a tool for enhancement and improvement, entrepreneurs can use it to augment their business ideas and practices, thereby achieving greater success and creating a greater positive impact. This paradigm can also lead to the development of more sustainable and socially responsible business models that use technology to address important social and environmental challenges.
LKYGBPC as a platform for entrepreneur
Technology can indeed be a powerful tool for entrepreneurs to innovate and find practical solutions that improve people’s lives, Nguyen is convinced. By using technology to save time and money, businesses can help people have more fulfilling experiences and ultimately make a positive impact in their communities.
Ultimately technology is not an end in itself, but rather a means to an end, and that end should always be improving people’s lives. Nguyen feels that technology is meant to help everyone live a better life.
To foster an entrepreneurial spirit in young people, it is essential to create a supportive environment. If startups and entrepreneurs are to flourish, systems and infrastructure are crucial early on – encouraging the youth to think creatively and critically.
As such, he believes that education plays a vital role in instilling an entrepreneurial mindset in students from a young age, encouraging them to think creatively and critically.
Additionally, he stresses the importance of mentorship and support networks, providing aspiring entrepreneurs access to expertise and experts who can guide and advise them throughout the journey of starting and growing a business.
“We need to have a more entrepreneurial education in the university and the school,” he believes. “There must be an environment that encourages a strong relationship between the educational institute (school or university), experts and the industry. Young learners, entrepreneurs and startups can get knowledge from the institution, be coached by industry experts and get seed funding from incubators or accelerators.”
This aligns with Singapore Management University (SMU) ‘s vision through the Lee Kuan Yew Global Business Plan Competition (LKYGBPC). The competition aims to encourage and empower young entrepreneurs worldwide to create innovative and practical solutions to address real-world challenges.
The LKYGBPC offers a platform for startups to network with like-minded individuals, access mentorship and coaching, and potentially secure funding from venture capitalists and angel investors. The competition has a strong focus on sustainable and social impact startups, aligning with Nguyen’s belief in the importance of creating businesses with positive social and environmental impact.
To keep the competition relevant in the next five years, Nguyen proposes evolving LKYGBPC as a gamification in the class to make the competition a more engaging and interactive learning experience. By incorporating LKYGBPC into the educational programme, learners can have a better understanding of the practical application of their knowledge and skills. In addition, the competition can foster collaboration among learners, allowing them to learn from each other and work together to create innovative solutions.
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Financing is one of the major pillars for startups, who often require a considerable amount of capital to mobilise their ideas. Investments allow a company to hire necessary talent, develop its concept(s), scale its operations and finally bring its products to market more quickly.
To be successful, a startup must successfully stand out from all, attracting investors’ attention and demonstrating its worth. Following an investment, they must show development and progress within a specified time frame, as monies are most likely to be given in benchmarked tranches. Failure to hit milestones and show growth could result in the investor withdrawing or leading to bankruptcy.
In the high-risk start-up landscape, investors must understand the chances and be prepared to lose their investment. Due diligence is a crucial procedure that investors undergo when examining a potential investment opportunity to guarantee that it is a good fit for their investment portfolio and risk appetite.
When it comes to startup business funding, venture capitalists and angel investors come to mind. However, they are only one of several options for capital. Nowadays, instead of relying primarily on venture capital, a new wave of more democratic and dispersed funding is sweeping the market.
Fuelling Business with Fundraising Best Practices
Diana Florescu, Wolves Summit Partner and Founder of mediaforgrowth, (MFG) Founder, discusses the top fundraising tactics that are fuelling startups in an exclusive interview with Mohit Sagar, CEO and Editor-in-Chief, OpenGov Asia.
Diana recognises that numerous research including Startup Genome reports, over the years, have been conducted to examine the reasons why startups fail. It’s not surprising that some of the main causes of failure are related to securing funding and achieving product-market fit before the company exhausts its funds, as well as team dynamics.
Yet, another area that presents significant challenges is the company’s go-to-market strategy and its product marketing methods. This highlights the importance of achieving not only problem-solution fit but also product-market fit, which is closely tied to having a go-to-market plan. A good plan can translate into marketing growth opportunities and consideration for brand positioning.
“Funding has often been a challenge for first-time founders. This year in particular will be a challenging one for a lot of startups in the market for fundraising. Getting cash from the right investors will continue to always be a concern,” says Diana, “A lot of founders are now turning towards venture debt or raising bridge rounds. She believes that the advent of accelerators and initiatives, such as startup and student competitions or government-funded grants is a step in the right direction. They have helped to decrease the funding gap in industries that are largely focused on producing deep-tech products.
The Rise of Alternative Funding Options
Many investors are grappling with how to segment the industry due to the difficulty of accurately estimating the market size and future applications of AI. This is particularly evident in discussions surrounding technologies such as ChatGPT.
“Microsoft, for instance, is now integrating this technology with Bing, its search engine, to improve search results. This move is intended to give Microsoft a competitive edge over Google and open new avenues for advertisers. The applications of this technology are extensive.” Diana elaborates.
Currently, advanced climate technology, life sciences and biosciences, as well as gaming, with a particular focus on Poland, are receiving significant attention. Poland is currently one of the fastest-growing gaming markets in Europe. The United Kingdom, on the other hand, is heavily investing in industries such as life sciences that demand significant research and development funding.
In addition to venture capital, there has been a rise in alternative forms of funding for startups in recent years, including crowdfunding, venture debt, revenue-based financing, and other options. There are various funding sources available to help a venture without necessarily diminishing an equity stake.
Some funding may be non-dilutive while others involve an exchange of equity. One of these non-dilutive alternatives is a venture loan, which has become increasingly popular in recent years. Additionally, there has been a rise in media for equity as a funding source.
What Investors Look for in a Startup
Most investors typically look for highly-scalable, proven-business models operating in a big-size and growing market and with a clear path to profitability. Historically valuations came down to revenue multiples, and some were very hard to justify. This year investors seek profitability, equality, and value in logical multipliers. When referring to media for equity deals, these funds apply the same due diligence as a traditional investor, however, they also consider the media-startup fit.
There are a lot more investors who prefer to invest in B2B companies than in direct-to-consumer businesses. Therefore, as those consumer enterprises grow and need to spend significantly more budget on advertising, I believe there will be a funding gap to fill,” says Diana.
“The UK has a few more consumer VCs than the rest of Europe. As more VCs are placing their bets on consumer startups and start seeing returns I expect the consumer space to emerge as a key area for VC investment in the upcoming years. In addition, mentoring is essential, especially in the startup phase of a firm. Entrepreneurs should consider early on what skill gaps exist in their team. If they are unable to fill those gaps with the right team members, it could be due to market or financial difficulties.
“Think about surrounding yourself with mentors or even having a board of advisors. Carefully consider how to structure it and how you want to incentivise these people potentially. But having a mentor, especially as a first-time founder, may give you a head start,” adds Diana.
She emphasises the importance of growth marketing for startups and believes it helps to drive success. During the early stages of a startup, many founders may be struggling to gain traction. Hence, a growth marketing mindset could save a lot of time and a lot of money in the long run for entrepreneurs. “So, try to do digital experiments as soon as possible in your business.”
Diana points out that founders are becoming aware of new trends and recognise the need for a clear path to profitability. Without it, it could be challenging for startups to attract investors in the coming year.
Urban Ideas and Solutions Through LKYGBPC
The Lee Kuan Yew Global Business Plan Competition (LKYGBPC), which began in 2001, is a biennial global university start-up competition hosted in Singapore. Organised by Singapore Management University’s Institute of Innovation and Entrepreneurship, focuses on urban ideas and solutions developed by student founders and early-stage start-ups.
“As I was finishing my bachelor’s degree I decided to take part in a similar contest in the United Kingdom (UK),” Diana reveals, as she shares her “best approach” to making entrepreneurship an integral part of one’s education. “I was aware of it because the organisation that was running the contest worked closely with approximately 100 Universities across the UK. One of the methods of making more students aware of such opportunities is making university “hatcheries” and student competitions part of the curriculum.”
Diana added that there are various strategies for scaling an idea-stage venture it is not part of a programme, module or curriculum, there may be frequent interactions with students as part of a university-based incubator. She witnessed a roadshow that has been touring many European nations, and she believes that this is the best approach.
She believes that understanding the individual preferences and inclinations of students is crucial. This includes identifying students who have entrepreneurial experience and where they are in the process. She believes it is important to help future entrepreneurs from an early age and incorporate entrepreneurship into curricula as soon as practical.
Diana grew up in Romania, where entrepreneurship was not typically taught in schools, like in other countries, and where the norm is to finish university and look for a job before attempting to climb the corporate ladder.
She feels that it is important to teach young people that they can achieve things on their own and provide them with the resources and support they need to succeed. She believes that it is essential to receive assistance from the government and educational institutions to promote entrepreneurship.
Diana suggests that creating a venture capital fund that is tied to the student competition, such as the LKYGBPC could be a great way to support startups. Such a corpus could provide follow-on funding to some of the companies and invest in the portfolio companies as they expand.
The LKYGBPC is positioned as an innovation campus movement with the goal of creating a global start-up ecosystem involving investors such as venture capitalists, corporate conglomerates, and government agencies.
Diana’s experience working with a startup had a profound impact on her and influenced the way she wanted to approach entrepreneurship. Before founding the MFG, she had worked in various industries and tech ecosystems. She specialised in building and delivering marketing and innovation programmes for growth-stage startups and some of the world’s largest accelerators, tech conferences and innovation consultancies.
After launching her food tech startup, Diana became eager to work with accelerators and foster collaboration between startups and investors. She went on to lead global marketing initiatives for companies such as Startupbootcamp and Rainmaking, both of which have programmes in Singapore. Through these initiatives, Diana aimed to bridge the gap between startups and established companies, as well as connect founders with investors.
When she was in Doha, Qatar, Diana helped run a sports tech programme, becoming a meeting point for innovators and investors in the field.
Diana has observed that one of the fundamental issues in the startup ecosystem is the lack of funding or expertise for consumer entrepreneurs and founders who aim to grow their businesses through digital means. This can often create a gap in both financing and skills needed to scale the business.
Her ambition is to support founders from seed to IPO to raise media capital funding and make a distinctive contribution to the media for equity space, which she firmly believes will undergo significant transformation in the coming decade. The idea of MFG emerged from the absence of a well-established global entity that could foster awareness and provide support to entrepreneurs seeking media financing.
“Having worked closely with numerous founders, I had first-hand insight into the challenges they faced. This prompted me to delve deeper into the industry and investigate the space,” says Diana. “And that’s when the idea of media for equity came about. I could leverage my background in marketing and media.”
As of present, numerous investors and media businesses support entrepreneurs, but there is no single formal industry body to help educate both founders and investors.
Over the 12 months or so, Diana has built a network of30+ investors globally including media investors in Singapore and Southeast Asia. Her experiences have helped her develop a strong understanding of the industry, and every year the organisation creates an annual report on the state of the industry
Diana is astounded by the number of young entrepreneurs seeking to enhance their skills and their eagerness to learn from success stories. She observes a rise in small and medium-sized businesses participating in global business competitions, indicating an upward trend year by year.
In the end, this is where she wants to be. She enjoys the pace of the sector and the impact she knows her company has had and will continue to have.
“I’m excited to see how the media capital space will evolve over the next decade. I feel fortunate to have a front-row seat to this transformation and to be able to create a tangible impact for both media companies and founders. As you may have noticed, I have a lot of energy and I strive to direct this energy towards finding creative and innovative solutions to problems Diana concludes.
About mediaforgrowth (MFG)
The MFG is a media for equity advisory firm and a global network of media investors specialised in Series A to pre-IPO media capital fundraising. Their goal is to optimise media capital fundraising for startups and emerging fund managers.
First, they partner with founders to grow revenue and scale internationally using media for growth investments. Secondly, MFG connects emerging and established media for growth funds with investors to accelerate the flow of media capital and the creation of new funds. For more information, please visit www.mediaforgrowth.co
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Pendanaan dari investor menjadi modal utama bagi para pebisnis pemula (startup). Pasalnya, mereka kerap membutuhkan modal yang besar untuk mengeksekusi ide bisnis mereka. Memiliki kapital yang besar membuat startup bisa merekrut sumber daya manusia (SDM) yang cakap, mengembangkan konsep, meningkatkan skala operasional, dan memasarkan produk lebih cepat.
Startup memiliki risiko gagal yang sangat tinggi. Hal ini membuat investor jadi lebih berhati-hati untuk memberi modal kepada startup. Mereka mesti mempelajari betul kepada siapa dana akan diberikan, sebab mereka mesti bersiap jika harus kehilangan investasinya. Sehingga, mempelajari secara mendalam startup yang mereka incar menjadi keharusan untuk memperbesar peluang mendapat keuntungan, serta mencocokkan portofolio investasi dengan profil risiko mereka.
Bagi pelaku startup, mereka harus berhasil memamerkan keunggulan tawaran mereka dari pesaing dan tampil menonjol agar bisa menggaet perhatian investor. Setelah investasi diberikan, mereka pun mesti menunjukkan perkembangan dan kemajuan dengan segera, sebab pendanaan kemungkinan besar diberikan secara bertahap. Kegagalan untuk mencapai target dan pertumbuhan yang ditentukan dapat mengakibatkan investor menarik dana sehingga berujung kebangkrutan.
Ketika berbicara tentang pendanaan startup, pemodal ventura dan investor individu (angel investor) kemungkinan muncul di benak. Namun, mereka hanyalah salah satu dari sejumlah pilihan sumber pemodalan. Saat ini, perusahaan memiliki sejumlah opsi pendanaan lain yang lebih demokratis ketimbang hanya mengandalkan modal ventura.
Taktik terbaik menarik investor
Dalam wawancara eksklusif dengan Mohit Sagar, CEO dan Pemimpin Redaksi, OpenGov Asia; Diana Florescu, Anggota Dewan & Direktur Wolves Summit, Pendiri Mediaforgrowth, membahas berbagai taktik terbaik bagi startup untuk mendapat kucuran pendanaan. Diana mengakui bahwa sejumlah penelitian memang menyebutkan ada beberapa sebab dari kegagalan yang dialami startup, namun yang menjadi sorotan adalah sulitnya mendapatkan dana investasi.
“Pendanaan selalu menjadi tantangan dan akan terus menjadi tantangan,” jelasnya. “Banyak pendiri startup kini beralih ke model pendanaan utang ventura. Akan tetapi, beberapa inisiatif pemodalan alternatif bermunculan untuk menjembatani kesenjangan berbagai putaran pendanaan bagi startup di berbeagai tahap.”
Namun, satu hal yang pasti menarik minat investor adalah: startup sudah mempersiapkan rencana untuk mencapai profit. Ketika melakukan pitching, para pendiri startup mesti memetakan jalur yang jelas bagaimana perusahaan mereka akan mendapat keuntungan nantinya. Tanpa itu, akan sulit bagi startup untuk menarik investasi. Sebab, tak dapat dipungkiri bahwa investor akan mencari perusahaan yang bisa memberikan keuntungan dalam upaya mencapai balik modal dan meraup keuntungan.
Selain peta jalan menuju profit, startup juga bisa menawarkan perhitungan profit dasar mereka. Caranya bisa dihitung dari berapa kelipatan pendapatan yang bisa diperoleh dari kecepatan pertumbuhan perusahaan.
Selain rencana profit, investor juga mempertimbangkan individu dan tim yang membentuk perusahaan. Mereka mencari tim yang nantinya akan peduli dengan pelanggan mereka dan para pendiri perusahaan, terutama yang memiliki kompetensi yang mendukung.
Hal berikutnya adalah produk atau solusi yang ditawarkan ke pasar. Poin ini mesti memiliki validasi pasar untuk mengetahui bahwa produk itu merupakan jawaban yang krusial bagi kebutuhan pelanggan. Semakin tepat solusi yang dihadirkan, maka pasar yang ditarget pun bisa semakin jelas dan bisa diukur. Hal ini penting untuk memperkirakan bagaimana sebuah startup bisa menjadi pemain dominan di pasar. Di dunia startup ada istilah pemenang yang akan mendapat segalanya (winner takes all). Titik inilah yang menjanjikan keuntungan besar bagi investor.
Waktu (timing) peluncuran yang tepat menjadi faktor sukses berikutnya. Meluncurkan bisnis terlalu cepat, kemungkinan besar akan sulit diterima pasar. Sementara bisnis yang terlambat masuk ke pasar pun akan sulit mendapat porsi. Namun, menurut Diana, faktor waktu lebih sulit diukur ketimbang faktor-faktor lain.
Di sisi lain, dalam beberapa waktu ke depan, ia memperkirakan bahwa perusahaan yang sedang berada di tahap awal malah akan lebih mudah mendapatkan pendanaan ketimbang perusahaan yang sudah lebih mapan. Sebab, menurut pengamatannya, pendanaan untuk startup di tahap awal lebih banyak tersedia, sebagai imbas dari berbagai krisis yang terjadi belakangan.
Tren baru pendanaan
Belakangan, terdapat sejumlah opsi pendanaan baru diluar pemodal ventura. Pemodal ventura menyebabkan pemilik saham sebelumnya mengalami pengurangan porsi (dilusi) ketika pemodal baru masuk. Namun, saat ini, pendiri perusahaan punya beberapa opsi pendanaan tanpa mesti mengurangi porsi kepemilikan perusahaan mereka. Apalagi ketika bisnis startup semakin besar dan sudah memiliki pendapatan dan bisnis model yang mumpuni.
“Banyak pilihan pendanaan finansial alternatif yang bersifat non-dilusi, beberapa bersifat tentatif namun masih melibatkan transaksi penyertaan modal (equity),” jelasnya.
Setidaknya, ada tiga model permodalan baru yang tengah menjadi tren, yaitu utang usaha, pendanaan berbasis pendapatan, dan crowdfunding.
- Modal usaha
Salah satu opsi yang tengah menjadi alternatif tanpa mengurangi porsi kepemilikan perusahaan adalah utang usaha (venture debt). Menurut pengamatan Diana, terjadi peningkatan penyedia utang usaha dalam beberapa tahun ke belakang.
“Tidak drastis, tapi sekitar 6% dari seluruh investasi pemodal ventura di Eropa tahun lalu adalah pemberi utang usaha. Pada 2021, angka ini hanya 4,5%. Sehingga terjadi peningkatan hampir 1,52%. Setidaknya tren ini tidak melambat.”
Pemberi utang usaha ini menawarkan berbagai model berbeda. Beberapa memberikan utang usaha bagi perusahaan teknologi berkembang. Sebagian lagi menawarkan utang sebagian, misal untuk menutupi biaya pemasaran perusahaan e-commerce, lantaran mereka hanya memberikan pendanaan jangka pendek saja.
Proses pemberian dana model ini biasanya terjadi dengan cepat. Ketika ada permintaan masuk, mereka akan memproses dalam 48 jam setelah mereka memeriksa kondisi finansial perusahaan. Penerima modal bisa segera melakukan pembayaran mulai dari satu bulan. Di Eropa, besaran pengembalian modal bervariasi mulai dari 10.000 hingga 1 miliar euro. Pendanaan semacam ini bisa menjadi alternatif bagi pendiri perusahaan, sehingga mereka tidak perlu terburu-buru untuk memutuskan dalam menerima pendanaan ventura di tengah situasi tak menentu seperti saat ini.
- Pendanaan berbasis pendapatan
Model pendanaan ini memberikan keleluasaan untuk tidak membayar utang dengan bunga seperti model sebelumnya. Pendanaan ini biasanya memberikan bunga tetap yang bisa dibayarkan ketika perusahaan mendapat pemasukan.
Pembayaran pun dilakukan berdasarkan performa pendapatan perusahaan. Pemberi modal akan memotong sebagian dari pendapatan itu untuk pengembalian modal. Umumnya, pendanaan model ini dilakukan untuk sektor perusahaan yang fokus pada produk konsumen akhir yang membutuhkan dana pemasaran yang besar.
“Jadi, jika perusahaan berencana membelanjakan US$50 dari pendapatan mereka untuk pemasaran tahun ini, permodalan model ini akan sangat menarik dari perspektif finansial. Sebab, hal ini bisa membantu perusahaan mengamankan ketersediaan uang tunai di perusahaan.”
Pemodalan dengan mengumpulkan dana dari masyarakat ini memang sudah marak dilakukan dalam beberapa tahun belakangan. Namun, kelemahan dari pemodalan ini adalah belum adanya pengoptimalan untuk pemodalan skala besar. Sebab, dalam penerapannya di Eropa, pemodalan model ini dibatasi oleh banyak aturan sehingga sulit untuk mengurus perizinan.
Tentang growth hacking
Selain menjadi seorang serial entrepreneur, Diana juga dikenal dengan keahlian digital marketing dan growth hacking. Namun, kapan sebenarnya perusahaan membutuhkan strategi ini? Menurutnya, growth hacking bisa dilakukan belakangan setelah seluruh kebutuhan tahap awal perusahaan terpenuhi.
Di tahap awal, ia menyarankan para pendiri perusahaan untuk memikirkan dan menyempurnakan produk yang mereka lempar ke pasar. Startup harus mengetes produk mereka untuk meraup konsumen. Sehingga, uang dan waktu di masa awal ini pun perlu digunakan dengan seksama, ketimbang dihamburkan untuk iklan dan pemasaran.
“Dan faktanya, banyak investor yang tidak peduli soal anggaran pemasaran dan iklan,” tutur Diana.
Kemampuan mengeksekusi strategi untuk masuk ke pasar (go-to-market) menjadi peluang pertumbuhan dan brand positioning menjadi ancaman berikutnya yang harus dihadapi setelah mendapat modal. Mereka mesti mencari cara agar diterima pasar dan menumbuhkan konsumen untuk produk atau layanan yang ditawarkan.
Kecepatan pertumbuhan pasar akan menjadi modal yang membedakan jumlah pendanaan yang bisa mereka dapat di satu tahap ke tahap pendanaan selanjutnya. Besaran pasar yang diperoleh juga berpengaruh pada valuasi perusahaan. Sehingga, mereka mesti menciptakan produk dan layanan yang tidak hanya menyelesaikan kesulitan konsumen (problem-solution-fit), tapi juga sesuai dengan pasar (product-market-fit).
Growth hacking berguna untuk startup yang ingin mengekslakasi perusahaan mereka. Cara ini bisa dimanfaatkan ketika tiba momen dimana perusahaan membutuhkan untuk memperluas pasar secara masif, terutama pada perusahaan dengan jenis usaha yang lebih komersil, dapat bertumbuh dengan cepat (scalable), dan lebih eksperimental.
Pokok utama growth hacking adalah mengamati pelanggan. Hal ini bisa dimulai dengan membuat website, memakai plugins untuk mengukur interaksi pengguna, serta memberikan formulir pendaftaran untuk mendapatkan data mereka juga untuk melakukan wawancara agar dapat lebih memahami konsumen.
Growth hacking menjadi bagian dari pemasaran untuk membesarkan perusahaan. Kegagalan membesarkan perusahaan bisa menjadi salah satu pembunuh startup, meski hal ini belum terlalu banyak didiskusikan karena hal ini seringkali kurang menjadi prioritas bagi para pendiri.
Hal ini akan menjadi masalah di tahap berikutnya pada perusahaan. Sebab, para investor akan menagih pertumbuhan portfolio investasi mereka dan akan mendorong startup untuk membesarkan usahanya serta melakukan branding.
Melatih kewirausahaan di LKYGBPC
Diana dibesarkan di Rumania, di mana kewirausahaan biasanya tidak diajarkan di sekolah-sekolah seperti di negara lain. Sehingga, pada umumnya, warga di negara asalnya hanya berminat menyelesaikan kuliah, mencari pekerjaan, dan meniti anak tangga karir di perusahaan.
Pengalaman Diana bekerja dengan perusahaan rintisan berdampak besar pada dirinya dan memengaruhi caranya mendekati kewirausahaan. Sebelum mendirikan Mediaforgrowth, dia telah bekerja di berbagai industri teknologi termasuk game.
Setelah meluncurkan startup teknologi makanan, Diana menjadi bersemangat untuk bekerja dengan akselerator dan mendorong kolaborasi antara startup dan investor. Dia kemudian memimpin inisiatif pemasaran global untuk perusahaan seperti Startup Bootcamp dan Rainmaking, keduanya memiliki program di Singapura. Melalui inisiatif ini, Diana bertujuan untuk menjembatani kesenjangan antara perusahaan rintisan dan perusahaan mapan, serta menghubungkan para pendiri dengan investor.
Berbekal pengalamannya tersebut, ia merasa kewirausahaan penting untuk dipelajari kaum muda. Sebab, lewat wirausaha, mereka bisa membuktikan pencapaian mereka. Mereka pun perlu didukung dengan memberi sokongan sumber daya yang memperbesar kemungkinan keberhasilan mereka.
Diana percaya bahwa peran bantuan dari pemerintah dan lembaga pendidikan sangat penting untuk mempromosikan kewirausahaan. Ia mendukung untuk memasukkan program wirausahawan sejak usia dini dan mengusulkan untuk secepatnya memasukkan kewirausahaan ke dalam kurikulum pembelajaran.
Saat ini, tidak semua negara memiliki kurikulim kewirausahaan. Sehingga, pertandingan kewirausahaan seperti Kompetisi Perencanaan Bisnis Global Lee Kuan Yew (LKYGBPC) yang diselenggarakan oleh Institut Inovasi dan Kewirausahaan Singapore Management University (SMU) bisa menjadi alternatif.
Dia mengamati peningkatan usaha kecil dan menengah yang berpartisipasi dalam kompetisi bisnis global, menunjukkan tren peningkatan dari tahun ke tahun. Ia pun kagum dengan banyaknya pengusaha muda yang ingin meningkatkan keterampilan dan keinginan mereka untuk belajar dari orang yang sudah lebih dulu sukses.
Ke depan Diana menyarankan kompetisi seperti LKYGBPC juga bisa memberikan pendanaan ventura atau pemodalan sederhana sebagai bentuk dukungan tambahan bagi startup. Pada akhirnya, dunia startup adalah tempat yang nyaman bagi Diana. Dia menikmati kecepatan kerja yang terjadi di sektor ini dan bagaimana perusahaan yang ia dirikan dapat memberi dampak positif bagi orang lain.
“Saya memiliki banyak energi, sehingga saya bisa melihat diri saya berada di sini selama beberapa dekade ke depan dan saya akan selalu berusaha melakukan sesuatu dengan cara yang inovatif,” tutup Diana.
Tentang mediaforgrowth (MFG)
MFG adalah perusahaan yang menyediakan jasa penasihat untuk ekuitas perusaahaan dan jejaring global dari investor media. Para investor ini punya spesialisasi untuk pemberian dana Seri A dan sebelum IPO. Tujuan dari organisasi ini untuk mengoptimalkan pengumpulan kapital bagi startup dan manajer pembiayaan.
MFG bermitra dengan para pendiri startup untuk meningkatkan pendapatan dan jangkauan ke skala internasional lewat investasi melalui media untuk pertumbuhan. Kedua, MFG menghubungkan media baru dan mapan untuk mendapat investasi pertumbuhan dengan investor. Hal ini dilakukan untuk mempercepat aliran modal media dan penciptaan dana baru. Untuk informasi lebih lanjut, kunjungi www.mediaforgrowth.co.
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Sustainability is built on the vision that everyone can meet their basic requirements without jeopardising future generations. Energy sustainability adheres to the same goals. Fossil fuels such as coal, natural gas and oil are not only harmful to the environment when consumed for energy, but they are also unsustainable as they are finite resources.
But renewable and sustainable energy is the solution to these energy problems. Specifically, sustainable energy poses a lower environmental risk and contributes little to climate change. However, it is costly. While the energy sources themselves are usually accessible, there are costs connected to developing and constructing methods of capturing sustainable energy.
Against this backdrop, tech-enabled sustainability solutions have emerged as critical weapons in the fight against climate change and other social, environmental and economic issues.
Mixing the sources
An expert in the energy sector, Giovanni Bruni, Partner, McKinsey & Company, shares his keen insights in an interview with Mohit Sagar, CEO and Editor-in-Chief OpenGov Asia. “The way I look at it, sustainable energy is something that has no or limited adverse effects on the environment, but there is also broader thinking on top of emissions: for example, the impact on habitats, the impact on water,” he explains.
He also notes the subtle difference between sustainable and renewable energy – the latter could regenerate itself instead of depleting. However, it still can adversely affect the environment and other areas.
Giovanni also acknowledges the importance of diverse energy sources when developing more sustainable energy systems in the future and that there is no absolute best mix of energy sources. “A fixed energy mix is unlikely. It’s always dependent on a given country’s dominant energy resources or location.”
Some areas may have a surplus in a particular resource but need more of others. For example, a windier area would have a good wind endowment, while another part with high sun availability might not get as much wind.
Mixing resources, ensuring grid interconnections, or developing energy storage capacity becomes vital when examining alternative energy. Renewables can be intermittent: the windier area should not rely on only windmills alone because sometimes there are conditions when the wind is not as good as usual to generate sufficient electricity.
“It was two years ago when there was a windless summer in Europe. So you don’t want to rely too much on one sort of the same resources. You want to have a mix; don’t put all your eggs in one basket,” he says.
Giovanni thinks it is a chicken and egg problem when it comes to pushing for the adoption of sustainable energy, which can be solved by collaboration between the industry and government. The private sector can drive initiatives while the government can support them with policies that allow industries to take decisions and embrace more risk.
“Usually, it is difficult for the government to drive it unilaterally. But policy can give more advanced visibility and help by creating these initial use cases, and maybe giving incentives could allow businesses to think forward. That’s one aspect which I think is important,” he elaborates.
Giovanni observes that many more sustainable energy commitments have emerged in the region and believes a majority of countries in Southeast Asia have moved toward a more sustainable perspective. This is signalled by shorter-term emission reduction targets, incentives, green business building and encouraging EV adoption.
New value chains and new economic opportunities could be the baseline to see decarbonisation as an opportunity to grow. It can be a way to leapfrog the economy and create new competencies.
Regarding which industry would be a priority to utilise sustainable energy, Giovanni feels that at this point, there is no way to pick a single choice. But among the sectors, power, transport, industry, agriculture and forestry make significant contributions, and each requires bespoke solutions.
“All these four big buckets have unique challenges; we need to find solutions and resolutions that look different, right?”
For example, instead of relying only on conventional fuels and renewables in the power sector, they can be coupled with some sources like hydrogen, which can be stored and provide ways to deal with intermittency.
And some industries, such as cement, face structural hurdles to reducing their carbon footprint. A possible solution is dealing with carbon by storing or reusing it.
LKYGBPC for sustainable energy
Giovanni has seen how the Lee Kuan Yew Global Business Plan Competition (LKYGBPC) has progressed since its launch a few years ago. At that time, the competition was based more on technology applied in a consumer sense. He appreciates that now LKYGBPC includes the energy transition and sustainability sector in the competition.
“These types of competitions allow a broader set of people to engage. That’s the value, to have an impact and influence.”
He adds that embarking on these competitions can also help entice the new generation to adopt new technologies and practices.
“It helps educate in terms of understanding how your choices link to outcomes because oftentimes we don’t have that transparency,” he says. “Do I choose to walk, or do I take public transport? One thing that is very important is getting exposure to the actual reality on the ground.”
“What is really moving the needle? What are the practical hurdles that are happening? So that we can have a slightly more intimate understanding of what is happening. These are complex systems, especially when we talk about energy in the economy,” he adds.
Creating an experience is a profound way to present innovation to the youth, and Giovanni is optimistic that youth can take away much from such competitions.
Ultimately, he feels that through business competitions, youths have the potential to take that experience and bring it into their lives, their work, and whatever areas they want to have an impact and influence – even in the field of sustainable energy.