Investment apps in Southeast Asia are attracting a lot of funding, and now some are raising fast follow-on rounds, too. For example, Indonesian robo-advisor app Bibit raised $65 million in May just four months after a $30 million growth round. Now Singapore-based Syfe is announcing that it has closed a $30 million Series B, only nine months after its Series A. It also said all of Syfe’s full-time employees will receive equity in the company.
The latest round’s lead investor is Valar Ventures, which also led Syfe’s Series A, marking the fintech-focused venture capital firm’s first investment in an Asian startup. Returning investors Presight Capital and Unbound participated, too.
This brings Syfe’s total raised so far to $52.4 million since it was founded in 2019. The startup did not disclose its Series B post-money valuation, but founder and chief executive officer Dhruv Arora told TechCrunch it increased 3.6 times from its Series A. The company also hasn’t disclosed total user numbers, but assets under management have grown four times since January, thanks in large part to user referrals and the launch of new products like Syfe Cash+ and Core portfolios.
“To be honest, we weren’t really looking to raise a Series B,” Arora told TechCrunch. “We saw some of the positive outcomes of resources from our Series A. We really scaled up the team and started launching new products and options for our users.” Syfe probably could have waited another six months to a year to raise a new round, he added, but its investors approached the startup again and offered good terms for another round. After discussions with investors, the company decided the funding was the right thing for it at this stage.
About 50% to 70% of new users each month come through recommendations from existing customers, which keeps Syfe’s acquisition costs extremely low, Arora says. Since the beginning of this year, it has also doubled its team in Singapore to more than 100 people, allowing the startup to explore different kind of distribution strategies and partnerships. The app currently has users in 42 countries, but only actively markets in Singapore, where it holds a Capital Markets Services license from the Monetary Authority of Singapore (MAS). It has plans to announce a second market soon.
Syfe was founded in 2017 and launched its app in July 2019. Prior to starting Syfe, Arora was an investment banker at UBS Investment Bank before serving as vice president and head of growth at Indian grocery delivery startup Grofers.
While retail investment rates are still low in Southeast Asia, interest has jumped significantly over the past year. One of the reasons most commonly cited is the economic impact of COVID-19, which motivated people to earn returns from their money instead of keeping it in saving accounts.
“Most of my career has been within Hong Kong, Singapore and parts of India. I think culturally we’ve always been told to save, save, save,” Arora says. “It made sense because banks were giving good interest rates, but now the majority of economies are in negative real rate of interest.” Along with consumers’ growing familiarity with online wallets and other digital financial services, this set the stage for investment apps to come in, attracting customers who might not have gone to traditional brokerages.
Arora says he expected people to become more interested in investing, but gradually, over the course of about five to seven years. Instead, that shift is happening much more quickly. “My view is that tomorrow’s saving accounts become smart investing accounts. That’s been my view ever since we started Syfe, but this last year has made it evident that it has to happen and has to happen much bigger. So I think this wave will continue,” he says.
While many investment apps focus on millennial users, Syfe’s target demographic is wider. In the last six to nine months, Arora says there has been an uptick in users aged 50 and above on the platform, and its oldest user is 93 years old.
“The users in that segment have become a bigger percentage and the reality is that they typically have more disposable income. The average customer in their 50s will deploy, in our experience, almost twice the more conventional demographic which might be between 30 to 40,” says Arora.
Out of the many investment apps that have emerged in Southeast Asia, users most often compare Syfe to Stashaway, Endowus and Autowealth when shopping around for a platform. Arora says the space has a lot of room to grow because retail investment in the region is still very low. “I think it’s still super early in the game. There is enough room for multiple players and I think more will come into this domain, because if you can get your acquisition metrics into place, this can be a very profitable business.”
In terms of differentiating, Syfe is focused on new product development and user localization and personalization so customers can create more customized portfolios.
Syfe has a team of financial advisors for users who want person-to-person consultations, but Arora says most of Syfe’s investors rely entirely on its app to decide how to invest. Over the last nine months, it has only added one new advisor to its team, while focusing on making its user interface more intuitive.
“The human touch is optional, but it’s not necessary and in many cases, it’s only needed to help people understand the offering once,” says Arora. “But our goal is always going to be technology company and for the app to become so intuitive that whether you are 18 or 93, you are able to use the offering with very limited guidance.”
In a press statement, Valar Ventures founding partner Andrew McCormack says, “Syfe was our first investment in Asia and we’ve been impressed by its rapid, sustained growth over the past couple of years. The opportunity for the company to meet the saving and investment needs of a burgeoning mass-affluent consumer population in Asia remains significant, and we are confident that Syfe will continue to expand at pace.”
Update: Post corrected to reflect that the funding was in USD.
A classic investing read for summer (psst … it’s free) – The Globe and Mail
Is there a good book you recommend for retail investors? I have read several that explain how markets and trading work, but I have found very few that discuss the strategies one should use to invest profitably. One of the hardest decisions I have is when to sell, since if I don’t have extra cash the only way to buy another stock is to sell something first.
As I discussed in a recent column, I’m not a fan of trying to create wealth by trading. Instead, I believe in building a diversified portfolio of solid companies, or exchange-traded funds, and holding them for the long run. Focusing on stocks that raise their dividends regularly has worked well for me, as a growing payout is usually a sign of a healthy company and provides a powerful incentive to stay invested instead of constantly trading in and out.
When I was starting out, one of the most influential books I read was Lowell Miller’s The Single Best Investment: Creating Wealth with Dividend Growth. It is an engaging and accessible read that will not only give you the tools to identify great dividend stocks, but will help you deal with the 24/7 onslaught of market noise that often leads small investors astray.
I’m not exaggerating when I say the book might very well change how you think about investing.
As Mr. Miller, the founder and now-retired chief investment officer of Miller/Howard Investments, writes in the book’s introduction:
“Investing isnʼt some athletic event where agility and flashes of virtuosity are the secrets of success. Rather, investing really is investing – the methodical accumulation of capital through a sensible and disciplined plan which recognizes that ‘shares’ are not little numbers that jump around in the paper every day.
“They represent a partnership interest in a real and going business. Your plan, very simply, must recognize that you will manage your investments by actually being an investor – a passive partner in a real and going business.”
Even though it’s a U.S. book and the latest edition was published in 2006, the principles are still relevant to Canadian investors. Here’s the best part: The book is now available as a free PDF download from Miller/Howard’s website at: bit.ly/SingleBestInvest.
Prefer a hard copy? Check online or at your local library.
In The Single Best Investment, Lowell Miller writes that a company’s bonds should have a Standard & Poor’s credit rating of BBB+ or better – considered “investment grade” – to qualify as a suitable stock. Is the bond rating something you consider when buying a stock for your model portfolio? Is there an easy way to check this for individual companies in Canada? I have tried scrolling through lists of bonds in my brokerage account but I can’t seem to find bond ratings for individual companies.
Yes, I consider the credit rating when buying stocks personally and in my model Yield Hog Dividend Growth Portfolio (tgam.ca/dividendportfolio). A lousy credit rating indicates that a company could have trouble meeting its obligations, and in such cases the dividend is often the first casualty. For that reason, I usually stay away from companies whose bonds are rated as “speculative,” or below investment grade.
Mr. Miller’s minimum credit rating is slightly more stringent than the common definition of investment grade, which includes anything rated BBB- or higher by Standard & Poor’s. According to S&P, companies in the BBB family generally have “adequate capacity to meet financial commitments, but [are] more subject to adverse economic conditions” than those rated A, AA or AAA. (Fitch and DBRS use a similar letter rating system as S&P, while Moody’s defines investment grade as anything rated Baa3 or higher on its scale.)
(One exception to the investment grade rule in my model portfolio is Restaurant Brands International Inc., whose debt is rated BB by S&P. However, the agency recently upgraded the owner of Tim Hortons, Burger King and Popeyes to “stable” from “negative,” saying it expects a continued rebound in sales and profitability as the pandemic recedes and the company opens more franchised restaurants. So I’m comfortable giving Restaurant Brands some slack on its credit rating.)
There are several ways to find a company’s credit ratings. One is to check the investor relations section of its website. A Google search of “BCE credit rating,” for example, brought up a company web page with all of BCE Inc.’s bond, commercial paper and preferred share credit ratings from S&P, Moody’s and DBRS. BCE and other companies typically provide additional credit rating information and analysis in their annual reports.
Another option is to go directly to the credit rating agencies themselves. For example, the DBRS website – dbrsmorningstar.com – lets you search for a company and read detailed reports about its recent credit rating changes or confirmations. This will give you an even deeper understanding of the company’s financial position and outlook. S&P and Moody’s also make credit reports available, but you’ll need to register to get access.
E-mail your questions to firstname.lastname@example.org. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.
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Condo Smarts: Existing condominium buildings can be good investment – Times Colonist
Dear Tony: We are retiring this year and considering downsizing to a condo. We have started looking at both new and existing properties around Vancouver and Victoria, but we encounter challenges with both options.
New developments are often available only through presales and the time periods for completion would require us to sell, rent until the property is ready, and with few assurances of completion dates would require us to move twice with no guarantees how the properties would be managed or how fees would be structured for long term operations.
Existing buildings are more attractive; however, we find most properties are sold within days of listing, and there appears to be more of a concern by realtors to keep strata fees low rather than looking at the age of the buildings and the long-term maintenance to protect owner investments.
Are there any standards or consumer rules we might consider following? As new buyers into a condo lifestyle we would like to avoid a sinking investment.
Karyn and Jerry W.
There are many existing buildings and communities that are an excellent investment. They are easily identified by reviewing the financial reports, investments, a depreciation report completed by a qualified consultant or reserve planner, and by reviewing the minutes of the strata corporation to identify how they address maintenance, planning and funding for the future.
While every building has different amenities, staffing and servicing requirements, an annual budget that identifies all the service contracts for maintenance and operations is a significant asset. An active use of the depreciation report to plan for future renewals and major maintenance components is a healthy indication of a well managed property.
Low strata fees are problematic for strata corporations as they often indicate a community dependent on special levies. Special levies require a 3/4 vote of owners at general meetings and many owners vote against a special levies generally due to affordability issues. The result of failed special levies is deferred repairs that will only rise in cost and damages, and the potential for court actions or CRT orders.
There is also a direct link between low strata fees, deferred maintenance and renewals, and higher risks for insurers. This results in higher insurance rates and deductibles for strata corporations.
Buyers should always request copies of depreciation reports, any engineering and environmental reports, minutes of annual meetings, the bylaws and rules of the property, copy of the strata insurance policy, and a Form B Information Certificate, which will also identify any courts actions or decisions against the strata corporation. Read all documents and discuss any issues with your realtor and lawyer. This should help separate the well managed buildings vs the buildings at risk.
New construction in some ways is easier to manage as the strata corporation is enabled to make the right decisions that will impact funding and future operations. Owners can have a direct effect on their investments by joining and supporting the newly formed strata council and making decisions that ensure a well funded and planned operations plan.
Strata fees for new properties often start low in the first year as there are service contracts included with the new construction that are included in the warranty period and some developers will entice buyers with low costs. Plan on an increase of fees once all units are occupied and the strata corporation is fully serviced for operations and maintenance.
This may be impacted by insurance costs, staffing, and consulting for warranty inspections, legal services and the management of warranty claims, the commissioning of a deprecation report, and operational requirements.
Every building, which consists of endless components, will have failures. The effective management and planning of those issues when they arise is the true test of a well managed property. Product failures and installations are often beyond anyone’s control; however, a well funded property will also be able to respond without a significant crisis for owners.
Tony Gioventu is executive director of the Condominium Home Owners Association.
Goldman and DWS prepare bids for NN Investment Partners – Financial Times
Goldman Sachs Asset Management and Germany’s DWS are preparing bids for NN Group’s investment management arm as consolidation in the industry gathers pace.
The Dutch insurer said in April it was considering a sale of NN Investment Partners, which has €300bn in assets under management.
The deadline for final binding offers is Monday. GSAM, which has more than $2tn in assets under supervision, and Frankfurt-based DWS are still in the sale process and preparing bids, said people familiar with the situation.
The deal price is in the region of €1.4bn, one of the people said. NN Group, GSAM and DWS declined to comment.
UBS Asset Management, Janus Henderson and US insurer Prudential Financial are among those to have previously registered their interest. All three declined to comment.
Investment managers globally are embarking on mergers and acquisitions designed to shield profits from rising costs and falling fees, while seeking to tap into fast-growing markets such as passive investing, private assets and ESG, and open up new distribution channels.
“The competitive environment for traditional active asset managers has intensified and a smaller group of larger players are now dominating the institutional segment,” said Vincent Bounie, senior managing director at Fenchurch Advisory, a specialist investment bank for financial services.
“It has become complicated to grow and very difficult to have a profitable business, in particular if you have undifferentiated plain vanilla products.”
Asoka Woehrmann, chief executive of DWS, which is majority owned by Deutsche Bank, told shareholders at the €820bn group’s annual meeting last month that it wanted to be “an active player” in industry consolidation. It is seeking further scale to challenge rival Amundi for supremacy in Europe.
Meanwhile for insurance companies, a prolonged period of low interest rates and higher capital requirements under Solvency II rules is prompting groups to weigh up where they allocate their capital, Bounie said. “For many of them, subscale asset management divisions are no longer core activities and there will probably be more divestments.”
NN Group, which is based in The Hague, came under pressure last year from activist hedge fund Elliott Management to improve returns and streamline its operations. It said in April it was considering options including a merger, joint venture or a partial divestment of the division.
NN Investment Partners has about 950 employees. Of its €300bn in assets under management, two-thirds is managed on behalf of its insurance parent company with the remaining third run for external investors.
The division’s range of funds covers fixed income, equity, multi-asset and alternative investment strategies. It has a strong position in ESG investing, notably in areas such as green bonds, impact equity and sustainable equity.
Additional reporting by Ian Smith in London
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