Alex had experienced an interesting childhood in Southeast Asia. A British boy relocated to live in Indonesia when his father moved to the land of archipelago (sounds like Obama’s story, huh?) to work in the oil field. He lived there for more than 10 years then moved to work across Asia Pacific and Europe. He then started his startups in Ireland, Norway, Australia, all are related to eCommerce, delivery, offline to online retail. Even helped Groupon to set up it’s business in the kangaroo country, managed Lazada Malaysia…
But eventually he still landed again on Asia. Perhaps his heart is always beating for Asia?! (Or his stomach felt in love with Asian food? I don’t know) then he now is based in Malaysia & Singapore to help operating for Jungle Ventures, a VC fund with several promising startups in it’s 19-startup portfolio in Southeast Asia region. Alex is a nice VC willing to share with the entrepreneurs what were going on in his mind about this $4M deal between iSelect from Australia and iMoney, an online finance comparison startup in Malaysia, also a Jungle Ventures’ porfolio. Check the Q&A and you’ll see you wouldn’t expect that much from a VC when you met him somewhere. Appreciate his valuable time and thought. Here we go!
iMoney Group which claims it’s the South East Asia’s largest financial services comparison service, recently announced it has raised approximately RM13M(USD$4.0 million*) from iSelect Limited, Australia’s leading online comparison service. iSelect gets 20.1% of iMoney shares in return.
When and why did Jungle Ventures invest to iMoney? And how long since iSelect started to know about iMoney?
We can be very patient when looking for companies to invest in. Often we develop an investment thesis for what we want to invest in
and go looking for the best startups across SEA. In many instances we have watched companies for over a year before we decide whom we think the break out winner will be we want to back.
This was the case with iMoney when we were actually looking for almost 2 years and monitoring about 9 companies. The team demonstrated great knowledge in both the online and offline realm. Also, fairly uniquely they had great connections and knowledge in the finance world, which has helped them considerably in becoming the leader in the region. The combination of ability and actually delivering results is what got us excited.
iSelect and iMoney had been in contact for a few months. iSelect had been looking around the region and talking to all the imitators, but inevitably it didn’t take them too long to figure out the right horse to back, which they did.
What are your investment criteria and how did you look at iMoney from investor’s eye, specifically?
We look at a lot of things when evaluating companies; the key criteria are not a trade secret! How you evaluate to the specific nuances of each business and the industry is the hard bit. Often I find companies will ask for specific numbers or metrics like it is an easy fix, but it is not that simple when you invest at early stage, and often the softer, more fundamental points are the most critical, as well as the most overlooked.
For every company I look at the following:
- Problem: There needs to be a fundamental problem being solved, this is key. I want customers to have ‘broken thumbs.’ There needs to be a real pain that a lot of people have and are not having solved adequately.
Alex: “There needs to be a real pain that a lot of people have and are not having solved adequately” - Solution: How is the company fixing this problem and how are they approaching it? With these broken thumbs, are you delivering a vitamin or a painkiller? I want something that knocks me out! Is the solution better than the competition, will they be the #1?
- Market size/opportunity: How big is the market they are realistically going after, how many broken thumbs? The market always wins, so the bigger the market the better. 100% of a $5m market is still small, right? Jungle only invests in businesses we believe will be regional category winners, we almost will never invest in a company focused on just one country, unless for a very specific reason.
- Product: How good is their product given the resources they have had? Product matters more and more these days, so shoddy UI/X doesn’t cut it.
We want to see that every pixel matters, that each process flow is optimized. If you don’t care about the details, why will you care about the big stuff?
- Team: We invest in teams, not ideas. Key for me is answering the question “Why will this team beat everyone else and why are they the best team to back?”
- Marketing: Simply put, how are they going to get big? I want to know CAC is greater than LTV. I need to see that there are scalable, repeatable channels for them to grow.
- Traction: “Up and to the right.” What milestones have been achieved, what is the stage of the business? What has been hustled with what cash? Execution is all that matters, I love people that hustle and never get complacent.
- Funding and application thereof: How much money are they looking for, how long does it last and broadly what are you going to use the money for? We don’t write $20m checks, so they raise needs to be in our ticket range. Depending on the market opportunity, we look to see that companies can achieve different exits with different amounts of invested capital. We have internal metrics on those.
Our thesis for iMoney was as follows:
- Consumer demand for financial services is huge in SEA, but underserved
- Supply side have limited scalable options to reach consumers other than through tradition channels (Agency and brokerage)
- SEA internet adoption reached to a point where internet is a viable model to deliver financial services
- Proven model in mature markets trade at high multiples
- Teams that can do lead generation through final processing will create barriers to entry
- Market leader will have many exit opportunities at high valuation
We saw a huge opportunity and believed the iMoney team was the best one to take it!
Currently, “iMoney sees 1.5 million unique visitors a month” is there any relationship between the number 1.5M unique visitors and $4M?
I don’t want to comment on numbers, but sure there are some out there.
Numbers are great to illustrate what teams have achieved and to prove there is a need, and as I mentioned before, execution and traction are really important to investors.
What is more important in emerging markets is the scale of the opportunity, the potential upside in the coming years. This is what investors buy into.
For early stage companies you can make ratios, compare metrics but they only form part of a bigger story, but for sure iMoney does have great numbers, they continue to execute well, and that has led to such a great investor as iSelect joining.
At the last bubble, investors were fixated on eye-balls and we found out that was illogical to a great extent. These days’ businesses need actual business models and iMoney has a great one, the millions of people coming to iMoney show that.
What is the most successful company with similar model to iMoney and how is it valuation now?
There are a number of billion dollar businesses with a similar model to iMoney. The UK really pioneered the field. Moneysupermarket.com is valued at GBP1.04 billion and there are other substantial businesses such as GoCompare and Confused.com nipping at their heels. In the US, you have companies such as Bankrate which is valued at about $1.15 billion.
I actually feel there is still a lot of upside for these businesses, and there is no fundamental reason they cant get as big as Priceline.
Current market cap of iSelect in Australian Stock Market is more than $AUD 362 ($US318.9) . This investment will put iMoney at the value of $20M+. Which valuation Jungle Venture and iSelect expect from iMoney eventually and how long could you wait for this deal to be exited?
Simply put, we aren’t selling any time soon! We see the medium-term opportunity for this model to be massive.
With the macro factors, for sure the value will not be realized within one year, but we are patient and have backed the best possible company for the long-term.
I am confident that iMoney will be a genuine success story everyone in Asia is going to proud to call their own.
I notice that there are several online finance comparison based in Malaysia: iMoney, RinggitPlus, CompareHero, LoanStreet, MoneyShop… Is it too many for a market of 26M population? Any reason behind?
All the imitators are simply testament to the fact there is a fundamental need for both financial institutions and customers which iMoney is serving. We think it is admirable that there are other companies looking to create value for customers and we applaud their efforts. However, I don’t think there will ever be ‘too many’ companies, they all serve to help educate customers, and market enlargement is critical to help more customers make the best possible decisions.
Look at the UK, there are a number of very large, valuable companies but there is also a leader which customers choose to go to and we believe that will always be iMoney.
How can iMoney make money and how is it different from the other competitors in the region?
iMoney is already making money. Our model may look similar to companies in foreign countries and even in Asia, but the team understands the needs and challenges in the market. They are not simply copying anything.
We believe the most value is achieved by doing hard things; the team looks at problems, rolls up their sleeves and doesn’t take the easy path, which won’t actually work.
Their willingness to take a long-term view, build real partnerships and take no short cuts is what really differentiates them in the industry. But don’t take my word for it, the fact they attract experts to invest in them proves it.
Note: ahhhhhhhh, finally we still don’t know how can iMoney make money. Let’s them keep their secret!!!
iMoney is targeting Malaysia, Singapore, The Philippines and Indonesia in Southeast Asia. There is only Indonesia a country without English as an official language in this group. Why Indonesia and how about Thailand/Vietnam?
I will not comment on their expansion plans. iMoney will be the regional leader and in most cases already is. Without getting into too many details, it is pretty simple to look at macro data and see which countries hold the most promise. Language actually isn’t as much as an issue as some people think. But shush, don’t tell anyone! So much of the value in iMoney is their ability to make very complicated things appear so simple to customers.
When you are able to make finance simple for the most un-financially literate customer, language becomes an afterthought.
iMoney is focused on creating as much value for customers as possible and will seek to do that where it makes sense, not on the basis of language.
This might be a result after joining Jungle Ventures’ portfolio, might be not, uhmm…What can you and Jungle Ventures help them to grow in Southeast Asia?
Jungle Ventures prides themselves on seeking to really add value to startups where we can and when founders need it. Frankly, the iMoney team are very capable and who doesn’t want to invest in teams that don’t actually need help!
With great teams at later stages, we typically seek to act as a sounding board, helping founders think through their plans, providing perspective in areas that may be new. As investors who spend a great deal of time talking to people, we are also placed to help with hiring of key management staff, making introductions to strategic partners and navigating new countries.
The best way to see how we help companies grow is to join our portfolio!
What would you expect from iMoney next 12 months?
iMoney is already on a great trajectory and they continue to assert market leadership across the region. Over the next year I am hoping they will become a household name. Whenever people are unsure of their financial needs and ask their friends, I hope the simple response is “just iMoney it” in the same way people go to Google to find general information. That may sound like a lofty goal, but it really is something everyone should do.
Who doesn’t want to save iMoney, I mean money?
Thanks for your sharing!