#2 Playing the long game
Head’s Up speaks to Aaron Sarma, Anja Juliah Abu Bakar, and Joachim Sebastian on their take of 2020 and sentiments on the coming year
Hello! This is the second post on Head’s Up, a weekly newsletter that comes out every Monday and Friday on all things SME, Startup, and Social Enterprise in Malaysia (and maybe in the region in time to come).
While the edition was scheduled for Friday initially, we thought it was best to publish the article on a working day rather than on a public holiday.
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Q&A with Aaron Sarma, General Partner, ScaleUp Malaysia
1. The pandemic in 2020 has certainly caused major tectonic shifts in the ecosystem, how were you impacted and how did you brace through these unprecedented times?
The Covid-19 pandemic and the economic upheaval it brought along with was a real seismic event to plans anyone had for 2020. At ScaleUp Malaysia we work with founders who are filled with ambition and vigor. Our focus once we realised what was upon us was to jump in to help our entrepreneurs.
We immediately did deep dives with each of our teams, helping them come up with plans to weather the crisis. Many of our companies also found opportunities to expand their business during this time. We also accelerated our investments into 10 companies from our 1st Cohort which had begun in December 2019. We also went ahead with our 2nd Cohort of companies in September and will invest in at least 10 more companies in Q1 2021.
2. What were some of the key takeaways for your startups in getting through the challenges?
The message we sent to our startups at the start of the pandemic was simple - survive, innovate and grow.
Each startup in our portfolio was impacted in different ways. For some it was fundamental where revenues were significantly cut due to the lockdowns. Some had to innovate to reach their customers better. Some of our companies actually found new opportunities to serve their communities as a result of the pandemic. And for others it was more about being resilient until the market improved.
3. In a couple of weeks, 2021 arrives and while the news of a possible successful vaccine is optimistics, what are your sentiments about the coming year?
I think there’s a lot to be optimistic about. The pandemic has forced many businesses to adopt digital solutions - this is a boon for startups who can innovate and sell these services to SMEs and large corporations. We’ve seen many corporations approach us to work with them and help with their digital transformation. The post pandemic future will be a more technologically reliant one which makes it really exciting for anyone in innovation.
Lifestyles have also been affected and society is now more ready to have digital solutions power their lifestyle. We’ve seen this in the adoption of video conferencing solutions for social events like birthday parties and weddings. The use of e-wallets are on the rise for contactless payments. E-commerce has also seen significant upswings in adoption and this shift in shopping behaviour has had ripple effects on retail and logistics.
That said, while we absolutely should be optimistic we should be tempered and level headed in our approach. The reality is that it will take some time to dispense the vaccine(s) and the efficacy of treatments need to be monitored. Realistically we should expect to turn the corner in the Q3/Q4 of next year and even then entrepreneurs should be strategic in how they build their businesses.
4. How will you apply the lessons learnt in 2020 for your direction in 2021?
The old adage is just as true today as when I first heard it years ago - tough times don’t last but tough people do. 2020 has been a stress test of entrepreneurs and innovators. It's been a year that has helped us see what we are all made of and how we react to adversity.
In 2021 this remains true. As entrepreneurs we should play the long game. Focus on the long term strategic goals of the business and adjust the present accordingly. We should also never forget the fundamentals - have a strong sense of mission, attract and retain good people and develop healthy cash flow.
5. What more can the Government and agencies like MaGIC do for startups and SMEs?
I’m heartened by some of the things we’ve seen from the government to support startups in 2020. In April as the pandemic raged we saw many reports of how most startups won’t survive unless something was done. My partner and I wrote an op-ed on 10 strategies the government can adopt to help startups weather the pandemic. By and large most of these recommendations seem to have been implemented.
MaGIC and Futurise have really stepped up with the National Technology Innovation Sandbox as well as the grants that come along with it. We are also very excited with the impact Dana Penjana, a RM1.57B co investment fund between the government and the private sector will have on the ecosystem. If implemented well this could be game changing for the Malaysian entrepreneurial ecosystem.
I think government agencies should think along the lines of how they can accelerate more public - private sector partnerships as they have done with Dana Penjana. The ecosystem isn’t like how it was in 1996 when MDEC was formed. We now have more industry players who can bring expertise and knowledge into the fold. Working in silos handicaps the impact the government can truly have with the ecosystem at large.
6. What are some of the considerations that have gone into your 2021 plans?
From a ScaleUp Malaysia standpoint, what keeps us up at night is how we can continue to support and provide the right kind of guidance for our companies. We truly believe each of them has the capacity for greatness. A lot of our plans for the next year involves helping our companies raise more capital and grow regionally.
We are also looking forward to our upcoming cohorts. We aim to launch Cohort 3 sometime in the first half of 2021 with Cohort 4 and 5 in quick succession. As we develop the programme for each cohort we aim to be able to provide our companies with the right kind of guidance and support.
7. Can you share some of your achievements in 2020 and what you hope to achieve in 2021?
In 2020, we were able to fund 10 great companies and launch our second cohort with the aim of investing in 10 more companies in early 2021. We are especially excited because in Cohort 2, we have been able to work with Quest Ventures, a regional VC to help our companies. The team at Quest has been fantastic to work with.
We are also really proud of our investee companies from Cohort 1. We invested in them in the height of the pandemic and despite difficult times. Most have seen quarter on quarter revenue growth and half of them have already raised funds in spite of the pandemic. Their plans for 2021 are indeed exciting.
On a personal front, I’ve been able to work with a few corporations and organisations on some of their digital transformation needs. I’ve also been able to help some entrepreneurs incubate and develop new projects. Some of these initiatives have resulted in some exciting new ventures. We’re not quite ready to announce these yet but stay tuned in the coming year!
2020 has been a transformative year for many of us. I’ve been able to refocus my energies on the things that matter - adding value to those around me and building for the future.
My hope for all of us is that we are better people and entrepreneurs in 2021. The future is indeed bright but it's up to us to create the world we want to live in.
Forming relationships vital to brace through challenges
Dubbed as the year of the virus, the Covid-19 pandemic ravaged businesses worldwide causing major tectonic shifts which also put a stop in most plans. However, some also saw these circumstances to find the opportunities hidden within.
Anja Juliah Abu Bakar, Founder of Athena Empowers and the President of Chamber of Social Entrepreneur Development told Head’s Up that the Chamber was informed by their suppliers as early as February 2020 that their orders for raw materials from China were not able to be shipped out due to the closure of all sea freight shipment to overseas.
Athena Empowers is a a reusable pad business and social enterprise.
Eventually during the first week of the Movement Control Order (MCO), they decided to produce cloth face masks. “We made a few samples and started to contact all our corporate clients to buy in bulks. We also collaborated with other social enterprises to help with the orders,” she says.
And eventually orders for the raw materials that was made in January eventually arrived in May 2020.
For Anja, the challenges also got her to realise the importance of several key takeaways, particularly networking and how to do it right during the MCO. “This is something that I started since 2011 and with a professional paid business networking group since July 2012.
I believe entrepreneurs should form relationships since their early ventures into entrepreneurship rather than hunt for customers,” she says.
Anja also believes in making the right decisions to make new products and to continue building business networks. “I accepted a lot of online talk events and this has increased the traffic of customers from universities and colleges into our e-commerce website.”
She also urges businesses to work on prototypes and samples beforehand and to be clear on the delivery timeline.
As for the coming year, Anja says she is optimistic enough to welcome 2021 as she and her team have fully leveraged their networks to be connected to few new prospects turned customers. The team also saw opportunities in government programmes such as RISE from MEDAC-MTDC and the Social Impact Matching (SIM) Grant offered by MaGIC.
“It was also a great start by MEDAC to appoint INSKEN to run SE Basic Training for SMEs and for those who wanted to venture into starting their own social enteprises,” she tells Head’s Up.
This year Athena Empowers was awarded the Malaysia Sustainability Leadership Award. This proved to be a good start for the coming year as Anja is currently planning for her new social factory concept that is set to take off in the first quarter of 2021.
“We achieved trust from our existing corporate client to rescheduled all our planned outreach programmes to 2021 and we hope to deliver our best and continue to build relationships with potential corporate clients,” Anja concludes.
Operating with a global perspective
As the vaccine is set to arrive in couple of months, Everpeaks’ Chief Executive Officer and Founder, Joachim Sebastian tells Head’s Up he is looking forward to it and believes it will start the recovery and normalisation process for many aspects of our lives.
“That being said, I do not think we will ever go back 100% to how things were. There has been major pivot in lifestyle, and our lives might no longer be the same.
Personally, I am very excited. Although the pandemic is a global disaster which has caused untold human suffering and misery, there is an economic silver lining. It accelerated the digitalisation of the world and for us at Everpeaks, the market became a lot bigger,” he says.
Sebastian is also committed to remain focused on Everpeaks’ goals for the coming year and that is to champion manufacturer-to-consumer commerce in Southeast Asia. They are close to launching their Duty-Free Ecommerce Integrated Fulfilment Solution that aims to lower the barriers for global trade, and position Malaysia as a global distribution hub.
“I have a positive outlook for 2021. I believe that with the RCEP being announced by MITI and the mass digitalisation that has occurred due to the pandemic, the competition is now regional, if not global.
We have to increase our standards, operate with a global perspective and pay more attention to compliance and cross-border legalities. Opportunities are everywhere for those with the network, infrastructure and experience to access them. We are working on raising our standards to compete globally as well,” he says.
“I must acknowledge that my team at Everpeaks, especially the managers have ensured that their division operate as required no matter the situation. The team also deserves recognition for staying motivated and performing to the best of their abilities even during these uncertain times.”
And with a solid team and determination, Joachim and his team are keen to lead in the coming year.
News Highlights
Logistics and courier service providers Ninja Van Malaysia has obtained the Best Customer Experience Awards 2020 for its breakthrough in customer service.
Established as a tech-enabled express logistics company that provides hassle-free delivery services for businesses of all sizes, Ninja Van Malaysia has gone beyond logistics to ensure customer needs and satisfaction are all met.
FedEx Express reaffirmed support for SMEs as it continues to be critical in building business resilience along the road to recovery. Singapore is one of their core markets as SMEs account for 98.5 percent of businesses in the country with a Gross Domestic Product (GDP) contribution of 38.9 percent.
MaGIC to expand GAP’s representation. This year’s GAP, they saw startup sector representation from Agriculture, Education, E-Commerce, Enterprise Solutions, Fintech, and Real Estate. Starting next year, CEO Dzuleira Abu Bakar aspires to expand representation to wider range of economic sectors.