Wednesday, February 19, 2020

SCB’s DV to focus on investing in start-ups

Jan 15. 2017
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By SUCHEERA PINIJPARAKARN
THE NATION

Digital Ventures (DV), the venture-capital arm of Thailand’s third-largest bank by assets, Siam Commercial Bank, is giving more weightage this year to direct investment in start-ups specialising in financial services to tap the B2B (business-to-business) market.

SCB founded DV in February last year to oversee the bank’s investment in financial technology (fintec) and the development of financial innovations, with an initial investment budget of Bt1.76 billion.

Polapat Arkkrapridi, managing director, corporate venture capital at DV, said the company throughout last year had focused on investment in terms of venture capital, with one such outlay being its investment is Golden Gate Ventures, an early-stage venture-capital firm based in Singapore. DV has defined its investment as falling into three stages: pre-series A, or early stage; series A; and series B.

Early-stage investment means putting money into enterprises that might have ideas or early products, but no revenue as yet, he said, adding that this was not DV’s primary focus, however.

The company has to date concentrated more on investing in series-A enterprises, which means they have proven products and a few key customers, a higher number of sales people and are growing very fast. 

Such enterprises, therefore, have the ability to acquire more customers, Polapat said. He cited DV’s direct investment last year in Ripple, a leading blockchain provider.

The move presents an opportunity for SCB, as Ripple is one of only a few blockchain companies that are targeting financial-institution customers, he said. 

The main customer-base target at Ripple is not individuals, but large financial institutions like SCB, Standard Chartered Bank or HSBC. DV has entered into a pilot blockchain programme with Ripple, which has 12 major clients, including some large international banks, he added. 

The information-technology team at SCB will make a final decision about whether to use Ripple’s product, but blockchain technology in DV’s view will be a major game-changer in financial services, the managing director said. 

Every bank in Thailand will be going down the blockchain route, but the question is which will be the first to do so, and on which platforms, he suggested.

He said that while he was “not an IT guy”, he regarded Ripple as “a great investment”.

With SCB discussing with Ripple the potential for using the technology themselves, Ripple is now regarded by DV as a series-B investment prospect, he said.

Turning to this year’s main investment focus, DV will concentrate more on additional direct investment in start-ups that have exposure in the fields of artificial intelligence, big data, biometrics, cybersecurity and blockchain, and especially those with specific B2B potential in regard to trade finance, insure tech (insurance technology), and possibly wealth management too, Polapat said. “In 2017, we will keep an eye on getting such start-ups into our portfolio,” he stressed.

Polapat said SCB had recognised years ago that technology would disrupt the way business was done, and then decided a couple of years ago that the challenge was to decide what was the best way to handle that technology, as it was by its very nature unpredictable, the MD said. 

The bank therefore created DV because it wanted a way to try and identify, and then handle, such disruptive threats.

“SCB wants DV to be what it calls its ‘early-warning radar’. We have a digital team in the bank, we have an innovation centre that can tackle all the near-term technology opportunities, but the bank wants a unit that is thinking a little bit further in advance – one that knows the threat coming over the next 24 months, but that would change business over the next five to 10 years,” he explained.

No-one knows exactly what financial services or banking will look like in the future, but SCB asks DV to try to understand what the financial sector might be like in the years to come, the MD said. While 2016 was the year of fintech, 2017 will be the first time that big corporates in Thailand set up venture-capital and accelerator programmes to support start-ups, he predicted.

 

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