– With Aditi Sharma, Grab Ventures’ Head of Investments & Programs
Southeast Asia is an attractive, but challenging region for startups. The countries in the region are diverse in culture, languages, consumer behavior, policies and regulations. Very few startups have managed to scale across the region successfully.
And if you compare startups in the region to their counterparts in China, you would realize that in the past much was still missing in this region. For example, in China companies could just plug in Alipay and Wechat – here they often have to deal with a myriad of payment gateways and aggregators, most of which are not able to handle disbursement.
Philosophy
Grab’s vision is clearly to become the everyday superapp in the region, offering more than 640 million consumers a suite of services for their daily needs.
With this in mind, Grab Ventures was launched in June 2018, with the tagline “nurturing the next unicorns of Southeast Asia”. This is to be achieved through building new businesses, not only in-house but also by partnering with startups that already have a great solution and are looking for ways to scale and expand.
It is clear from the beginning that “doing this all by ourselves is not entirely practical,” Sharma says. Strategically it makes more sense for us to build a healthy ecosystem of partners around our users. “Hence we are constantly seeking quality partners in the ecosystem to work with on our everyday superapp vision,” she explains.
“The biggest benefit of this approach is that we are able to bring a wide variety of services to our customers faster,” says Sharma. “This benefits the startup ecosystem in the region as a whole because younger startups building innovative solutions can now focus their energies on the main problem they are solving for their users while leveraging Grab’s support and resources (GrabPlatform capabilities example APIs) to scale-up.”
In China, the major internet giants have all attempted to build an ecosystem of startups. In particular, Tencent and Alibaba have been successful in supporting a matrix of startups around their core capabilities and resources: users, data, payment and network.
On this note, Grab seem to be moving towards such a model which, in addition to offering customers more services faster, also strengthening Grab’s strategic position in the market.
Grab Ventures Velocity
A lot has happened in the last 9 months. Grab Ventures has launched new ventures in both Singapore and Indonesia. It has announced plans to invest up to US$250 million into Indonesia’s tech ecosystem over the next 3 years.
In addition, it launched its scale-up program called Grab Ventures Velocity (GVV). GVV selects post-seed startups to helps them grow through capability building and piloting their solutions within Grab’s ecosystem.
The first batch has been successfully completed. Among the 500+ companies that have applied, five stood out and joined the programme: BookMyShow, Helpling, Minutes, Sejasa and Tueetor.
These 5 companies “provide customers with a wide variety of solutions that solve their everyday needs,” says Sharma. “Hence, through GVV, we pilot these potential superapp use cases within Grab app to test the response from Grab users on what they need the most.”
Among these, BookMyShow and Tueetor have self-explanatory names; Helpling and Sejasa provide home services, in Singapore and Indonesia respectively; while Minutes is an online barber, salon and spa booking platform.
“These are so different from Grab’s core businesses of transport, food and payments, but we feel that these companies will complement our superapp strategy,” says Sharma.
The outcomes from the GVV program batch 1 that concluded in January this year have been very encouraging. “Some of these startups achieved more than 70% growth through GVV pilots,” Sharma says. “It is humbling to hear from some of these founders how the program has been pivotal in their growth journey and augmented their trajectory like no other program can.”
“Simply amazing,” one of the founders told an audience that did not include any Grab executive earlier this year. “The traffic and the mentorship allowed us to quickly test a few hypotheses which previously would take months with inconclusive results.”
“Now we are firmly on the growth path,” the same founder said.
Grab Ventures Velocity – 2nd batch
With that achievement, Grab Ventures has just opened applications for the second batch, with a focus on two tracks:
Track 1 – Empowering farmers: seeking startups with innovative solutions to bring more affordable and fresh groceries to Grab users and merchant partners like restaurants and small grocery stores;
Track 2 – Empowering small businesses: seeking startups with innovative solutions that can either improve income, simplify operations or reduce costs for small businesses like restaurants and small grocery stores.
“GVV Batch 2 allows Grab access to nascent, yet potentially disruptive supply chain tech of tomorrow. In addition, track 2 allows us to discover startups that can empower Grab’s merchant partners with innovative digital solutions,” Sharma comments. “Hence, this is a natural progression for us to better support our ecosystem.”
In most of Southeast Asia (aside from Singapore), farming is still one of the largest occupations. Rural population accounts for more than 50% of the total population across Southeast Asia, according to a 2017 study jointly conducted by the OECD and Food and Agricultural Organisation of the UN.
The potential social and economic impact of sustainable and scalable food tech is quite obvious.
Even in urban Singapore, the industry is also transforming, with the government putting a lot of emphasis on its development. “In the digital age, we still need food, not just bits and bytes,” Singapore’s Finance Minister Heng Swee Keat said in this year’s budget speech.
Differentiation
So how does Grab Ventures differ exactly from other venture investors in the region, during a time where (some people say) too much money is chasing after too few good projects?
“Lots of people ask us this question,“ Sharma comments. “There are other superapps already in or expanding into SEA. Most people think that these companies are doing similar ventures to what Grab Ventures is doing. But it’s not exactly the same.”
“To put it simply, we are different because our USP is not cash, but all the other ecosystem support that we can provide to startups, including access to our customer base of 144 million downloads, ecosystem of more than 9 million (and growing) micro-entrepreneurs and capability building from seasoned C-suite experts,“ Sharma continues. “Our innovation model is comprehensive with a venture builder-cum-venture investor-cum accelerator – which is unique in the region. We select the engagement model for each promising startup based on their stage and specific growth needs.“
Sharma explained that in detail in an earlier interview.
Perception of a big guy
While Alibaba and Tencent have built up successful ecosystems, some other big companies in China have developed a reputation for engaging growth stage startups and then squeezing them dry.
One perception some startups might have on Grab is that it is big, and partnering with Grab, while opening up a lot of opportunities, also exposes themselves to a big risk of not getting enough attention in the Grab Universe, or getting their business model copied.
“It is, however, not accurate.” Sharma clarifies. “Strategically, Grab Ventures is acutely aware of the importance of an ecosystem, and perils of doing everything on our own. We are committed to building and growing the ecosystem together with the other players here.”
Key learnings and outlook
Sharma expresses that through the past 9 months, Grab Ventures team has picked a lot of “invaluable first-hand learnings”, including the importance of rapid iterations in the early stages of ventures, the precise pain points many startups are facing in scaling their business, as well as the role strategic partners play in this phase of growth.
Lastly, “we greatly value having the right partners to support us along this journey,” she adds. “We have a strong group of public and private partners like ESG, IMDA, EDB and EDBI in Singapore, MenkomINFO, BEKRAF, MDI in Indonesia and AWS regionally supporting our GVV program.”
“We are less than a year old, but already, seeing great enthusiasm in the ecosystem to work with us, in the form of venture partnerships, investments and our scale-up program GVV,” Sharma says.
“We will continue to build and scale our in-house ventures like GrabWheels,” Sharma comments and adds that more “exciting” announcements will be made through the year.
Another busy year, and probably more, ahead.
P.S.: The applications for the GVV program are open till May 15 for startups operating across the region (not only Singapore and Indonesia!) and the programme will be live from June to August this year. To apply, visit https://ventures.grab.com/gvv