The APAC region is home to half of the world’s population and probably the most important when it comes to built world technology. However, one of the biggest challenges for Tech startups is figuring out a way to get traditional incumbents to invest in their technology. I spoke with Nikhil Kapur, head of South Asia for GREE Ventures, who shared his thoughts on this and other factors driving the PropTech and ConTech markets in Asia.
Neall De Beer (ND): Nikhil, tell me about GREE Ventures.
Nikhil Kapur (NK): We are an institutional VC fund, Headquartered in Tokyo, and investing in early stage tech businesses across Asia. We were founded in 2012, spinning out of GREE Inc, a TSE listed gaming and social media company. Our goal is to invest in and manage a curated set of tech companies solving large meaningful problems in Asia, leveraging on our cross-border Asia presence and a team of entrepreneurs or operators. I am personally responsible for the fund’s investments and portfolio management excluding Japan.
ND: Is the APAC region a big focus for GREE Ventures?
NK: APAC is world’s most important region when it comes to real estate and property. With so many emerging markets, half of the world’s population, this is where the largest companies will be built in this sector.
ND: South Asia is your particular focus in the APAC region, what sort of companies have you invested in?
NK: In South Asia region we have so far invested in two companies in this segment. The first is BuildSupply, which is India’s leading construction tech company. They build an ERP and procurement marketplace for developers and contractors to manage the entire life cycle of the construction project. The second is Ayopop, which is a bill payments platform. They work with property managers to help increase timely collection of management fee and rents. Apart from the construction tech vertical overall, we are very interested in real estate and housing management. Subsectors disrupting traditional brokerages, leasing, and energy management are interesting sectors in the region.
ND: You mentioned BuildSupply, they seem to be making quite a noise in the Indian market?
NK: BuildSupply is our latest transaction in the sector in India. They are quickly penetrating the largest real estate houses in the country with their ERP and becoming the default construction management platform of choice. With their future plans of opening up procurement arm to streamline materials purchase, the company is poised very well for growth. I personally spend a lot of time with the company on the technology aspects as well as on helping put strong SaaS fundamentals in the processes.
ND: What are the things you consider when investing?
NK: It depends on the kind of company we are looking at. For tech companies selling software to the real estate sector we are usually looking at SaaS metrics such as Monthly recurring revenue, churn rate etc. For companies that are fundamentally changing real estate through things like leasing, we usually look at revenue per sq ft, area under management. For companies that are marketplaces, we look at GMV and margins. But in all the companies the biggest factor is growth, how fast are the numbers changing and how quickly can this become a large business.
ND: What advice would you give to entrepreneurs seeking venture capital investment?
NK: Well there is a ton of material out there to read to understand the mind of a VC including my own blog: grayscale.vc. But I’d say entrepreneurs need to focus on building large and meaningful business, and aim for fast growth leveraging technology and automation. As long as these key aspects exist in the business, it would be interesting for many venture capitalists.
ND: How can startups differentiate themselves from competitors seeking investment from you?
NK: Firstly, entrepreneurs should be coming up with a differentiated technology that is hard to replicate. I’ll give an example. We work out of a space in WeWork, probably the biggest “startup” in this sector, and a lot of people ask me why we chose WeWork. The reason was simple: they give a uniform experience across all their locations globally through seamlessly connected tech in the backend. When I fly into Mumbai and have a meeting, all I need to do is open the app and in a second I can reserve a meeting space. My access card works automatically at the gate. This uniform connected experience enabled by technology brings a wow-factor that no office space has matched so far.
Founders in PropTech usually end up being more mature. This is great since the sector requires inherently a lot of experience. However, in most cases the mature founders underestimate how important a role technology plays in PropTech. The ones who can get the technology part right usually end up winning.
Secondly, PropTech inherently relates to physical assets where human being spend time at. As a result great branding is very important to attract customers.
And lastly, property in general is a huge sector, but when it comes to selling technology to this sector the market becomes small, especially in developing markets. Figuring out a way to get the old traditional incumbents to pay you for your technology is no easy feat, and proving this early in your startup will help validate your business model.
Nikhil was a speaker at BWT Asia 2019, Singapore.
Interview conducted by Neall De Beer, Director, Built World Technology Alliance.