EME was the first investor into rural eCommerce platform, Ezay, just three months ago. Today, Ezay has raised its second round of USD 200K in order to continue the rapid expansion of its retailer and wholesaler network.
Ezay connects rural mom’n’pop retailers to wholesalers via its platform and provides same day delivery. This is a sea change for these shopkeepers, of which more than 90% are women. Previously they would have to leave the shop to travel to town or convince their spouse to do the same, but with Ezay they receive deliveries to their store and get a wider selection and better prices of products. Starting just three months ago from zero, Ezay has over 1,600 retailers to-date.
Leading this round is Seiji Kurokoshi, the impact investor who pioneered upside social impact bonds for single mothers, and who has a background in direct to consumer (D2C) models. The overwhelming majority of Ezay’s customers are women entrepreneurs and Ezay’s model includes many D2C elements. As such, EME and Ezay are both thrilled to have Seiji’s expertise in both the social and commercial aspects of serving Myanmar’s shopkeepers. This is particularly relevant as Ezay is currently working in partnership with leading Myanmar MFIs to offer finance to these shopkeepers - 75% of which have had no access to finance in the past.
In Myanmar, only around 25% of people have any sort of formal financial services. Ezay is helping provide access to the most rural users and in turn plans to reach out further into communities via these shops in the future. Ezay’s founder and CEO, Kyaw Min Swe, said “I’m pleased to be able to bring people into Ezay that understand and want to support our journey. We’re growing very quickly and having further expertise to aid our growth will help us reach our goals of serving 8,000 retailers by the end of 2020. The current concerns about hygiene and health are also leading to an increase in the need for our services, so we want to ensure we’re there for our customers during these times”.
Seiji said, “I wanted to invest in Ezay as soon as I met the founder, Kyaw Min Swe. His drive to help Myanmar rural communities and his ability to make it happen both struck me immediately. When I looked at the amazing traction that Ezay has had in just three months, my mind was made up. I’m very pleased to be able to support this great company and its mission to improve the lives of rural Myanmar women”.
EME is joining the round and continues to work closely with Ezay as the company expands in geography and services. Ezay was the seventh company to enter EME’s portfolio of eight companies. It is the second company in the portfolio to receive outside investment, following Joosk Studio which raised funds from Nest Tech VN earlier this year. La Woon Yan, EME’s Senior Investment Analyst said, “we couldn’t be happier with the amazing progress that Ezay has made since our investment just a few short months ago. During these turbulent times, it’s especially important for us to support great founders and great missions and Ezay is directly helping with keeping shops stocked and reducing the need for women to travel.”.
Seiji Kurokoshi’s company, Digi Search and Advertising, helps companies to adopt direct to consumer (D2C) models in Japan. He also has COEBI Incubation Office, a AAA incubation centre where he supports and invests in social entrepreneurs. Upside SIBs, mentioned above, are a public private partnership where repayment is made through increased tax revenues.
Above: Nang Mo (4th from left) and Soe Lin Myat (3rd from right) with members of the EME Myanmar team
EME has made its largest investment to-date, investing alongside United Managers Japan Inc. for a combined USD 750,000 into Kyarlay, Myanmar’s leading baby products ecommerce and delivery provider. Kyarlay was co-founded by husband and wife Soe Lin Myat and Nang Mo while expecting their first child. Frustrated with poor choice and availability of well-priced and high-quality baby products, they saw an opportunity in helping make parenting in Yangon safer and more convenient.
Both Soe Lin Myat and Nang Mo previously worked for the tech giant Garena and have been able to apply leading technology to Kyarlay, while maintaining an approach tailored to the Myanmar market. Their stores are open seven days a week and double as fulfilment centres, making Kyarlay the only company able to provide safe and efficient delivery within just a few hours.
Kyarlay has also created a strong community among young Myanmar parents, including with their app and website which include videos and content from Myanmar’s leading paediatricians and obstetricians. By creating a community around their business, Kyarlay is able to continuously learn more about their customers. It’s due to this community that Kyarlay recently started to develop their own branded products for the Myanmar market – meaning they’re able to offer quality items for a lower price to their customers.
EME Director, Hitoshi Ikeya said, “We’ve been watching Kyarlay for a while and we’re so pleased we’re able to support them, especially during this volatile time when others might shy away from new investments. Soe Lin Myat and Nang Mo have proven their ability to develop a leading business and EME is thrilled to join them in their journey. We’ll be helping to bring new and exciting products to market, but right now we’ll be helping to ensure that Kyarlay has everything it needs to help parents stay home and stay healthy.”
Kyarlay marks EME’s eighth investment in Myanmar since launching in October 2018. EME is a VC based in Myanmar and providing significant post-investment support to its portfolio companies to help them scale. EME is backed by private investors as well as the Dutch Good Growth Fund and seeks to contribute to Myanmar’s sustainable economic development by supporting great entrepreneurs who can change markets and deliver true value to consumers and businesses alike.
**Q&A with Nang Mo, Co-founder of Kyarlay**
Why did you start this business?
As a parent you always need certain items, diapers for instance, and you often forget them. In Yangon, forgetting something as simple as milk powder can easily mean a one hour round trip back to the store. We experienced this frustration and saw that we had the skills to address it. We realised that there was a large market of parents just like us and that this market was growing. We each applied our core skills and started Kyarlay, adding the app and 4-hours delivery late last year.
What makes Kyarlay different from regular bricks and mortar baby stores?
Our community-driven approach really helps us to be closer to our customers. We’re able to share with them and in return learn more about their challenges. It’s this community approach that drives our business, whether it's later opening hours so parents can visit one of our shops after work, or competitions and promotion within our app that helps parents engage with one another. We launched our 4-hour delivery because we realised that parents need items on the same day and our community and customer focus helped us to understand that.
Why did you choose EME as investors?
When Kyarlay started, there wasn’t an institutional investor in the Myanmar market that would invest in this type of business. With EME, they’re here in our market and understand our model and approach. While many VCs might think having bricks and mortar stores is a barrier to scale, EME have supported this approach from the start and understand its importance in this market. We’re looking forward to having people close by that we can brainstorm with and depend on.
What’s your vision for Kyarlay and how will EME help you to reach it?
We’ve recently launched our second store and we plan to open lots more in order to serve the whole of Yangon with our 4-hour delivery. As we build our store and delivery network, we’re really looking forward to being able to provide additional products – such as the private brand products we’re producing now. Once we can serve the whole of Yangon with competitively priced high-quality products then we’ll start branching out further. Our plans will require constant adjustment and a lot of operational savvy, so we’re very happy that EME can be nearby to help us with this physical and digital growth.
We’re just about keeping our feet on the ground after an incredibly exciting 2019. We added five great companies to our portfolio last year and established a team to help that portfolio grow. You could say we went from zero to one. But enough about how great EME is; what this post is about is how we build on what we’ve achieved to make sure that in Jan 2021 we’re asking ourselves the same question as this year “how do we top last year?”. We’ve given it some thought and decided we’d share this with our readers - as many of you may be a part of our 2020.
Engage Strategic Stakeholders
EME provides a lot of hands on support to our portfolio companies and this starts as soon as we invest and continues for as long as we’re adding value. With a portfolio of seven (soon to be eight…) companies, we have plenty of exciting work to do. But we recognise the benefits that a strategic player can bring to a startup. There’s untold value in someone who’s learnt the hard way, understands the problems that exist in particular sectors or business models, and has networks and expertise in a specific field. That’s why this year we’ll be bringing together new strategic stakeholders with our portfolio companies to help them receive the best insights and expertise to help them expand in Myanmar and across the region.
Seek Synergy in New Investments
EME is sector agnostic. The Myanmar startup ecosystem is still developing and so we invest in the best startups and founders that have the greatest potential. With a healthy portfolio which includes B2B and B2C startups, we’re better equipped in 2020 to find synergy between our portfolio companies and new investments we make. Right now our portfolio companies have customers inside the home and at the office, in urban and rural areas, and purchasing on and offline. We see strength in diversity and this year we’ll be especially looking for companies that can leverage and contribute to the skills and experience in our portfolio.
Work With Partners to Expand Our Knowledge
We’ve learnt a lot in the last couple of years and yet there’s always so much more to learn. Henry Ford said that anyone who stops learning is old and anyone who keeps learning is young. Whether you prefer Bob Dylan’s classic or Alphaville’s 80s rendition, at EME we’re planning to stay forever young. We’ll be engaging with new partners, where together we can expand our joint understanding of investing in the sustainable development of Myanmar. If we’ve learnt one thing, it’s that startups in Myanmar can experience phenomenal growth in short periods when they solve a real problem with a truly valuable solution. By enhancing and expanding our knowledge, we aim to increase our advantage for uncovering big problems and the founders solving them.
Get Close and Personal
To-date we’ve used our newsletter as our main mode of outreach (aside from lots and lots of one on one meetings). This year we’ll continue with our newsletter, but we’ll also be working on some new means of getting closer to our market. We won’t be throwing regular cocktail parties (although we will pull all the stops out in Q4 for our birthday). But we will seek to set up some small, intimate get-togethers where we can cosy up with founders, would-be founders or even corporates looking to work with startups and their founders. We’re working out the details, but we think it’s time to get a little closer now that we’ve built some solid traction and have a lot of lessons and insights to share.
Hire Someone Special (Tell Your Friends)
We’re a small team that works hard and we enjoy what we do. We don’t expect to have regular openings in our core team, but a position that we tried out last year turned out to be extremely valuable. Sadly, our young protege was always set to leave us for further education, but this means we’re hiring. We don’t consider EME to be ‘just another company’ and therefore we’re not looking for ‘just another employee’. We’re seeking a young, Myanmar individual who wants to build their career working with startups. It’s a very junior position, but it has every potential to grow into something much larger - as EME itself is growing rapidly. We’re looking for someone to mentor and invest in, or as Richard Branson puts it: someone we’ll train so well that they can leave, but treat so well they won’t want to. It might seem a stretch to put a single junior position in a blog about our year ahread, but that’s how seriously we take this role. If you’re reading this and have a tingling sensation about working with us, you’d do well to drop us a line. Full JD on our careers page.
If you read any of the above and thought along the lines of “hey, I’d be interested in…” then drop us a line. We tend not to bite and we’re always very happy to get coffee or beers and chat through some ideas, whether that’s a new venture, partnership or just putting the world to rights. Reach us at firstname.lastname@example.org.
From left: Thet Paing Kha - Joosk CEO, Soe Moe Kyaw Oo - Nest Tech Managing Partner, Hitoshi Ikeya - EME Investment Director, and Zeyah Htet - Joosk CSO
Nest Tech VN has led a six figure equity investment into Myanmar’s leading animation company, Joosk Studio. EME, who invested into Joosk last year joined the round.
Joosk Studio is a creative digital animation agency founded and run by artists Thet Paing Kha and Zeyar Htet. Joosk has worked with companies including Facebook, CB Bank and Telenor as well as NGOs, UN agencies and the World Bank Group. In September 2019, Joosk’s proprietary animation series, Sassy Bound ("BeBee and friends"), won the company the Myanmar Influencer of the Year Award for Art and Design. Joosk is doubling down on its popular comic series and producing BeBee The Animated Movie, while continuing to grow its core agency business. Joosk’s debut into cinema will bring Myanmar’s first feature length animation to viewers across the country.
Nest Tech VN’s Managing Partner, Soe Moe said, “Joosk have created a great business, serving high profile brands with their unique and funny animation. We’re excited to be a part of this movie, as well as helping Joosk to continue to build their creative agency”.
EME Myanmar joined this round, marking our second investment into Joosk Studio. EME’s Investment Director, Hitoshi Ikeya, said, “we’ve loved working with Joosk and we’re pleased to be able to continue to help them innovate and bring creative content to Myanmar companies and consumers alike.”
Q&A with Thet Paing Kha, CEO of Joosk Studio
What does this latest round of investment mean to Joosk Studio?
At Joosk, we use humour and illustration to reach audiences and share messages. We’ve been running our Facebook comic series alongside our agency work for a while now and this latest investment lets us develop that side of the company to bring our audience something bigger than they’ve ever seen before.
While everyone is very excited and already working very hard on the movie, we’re also continuing to find exciting new ways to serve our business customers. We’re fortunate enough to work on interesting projects - both for NGOs and private companies and we see a lot of synergy between the movie and our core business.
Creativity seems to be such an important part of what Joosk does, how does taking on new investment affect that?
We’re very lucky that our current investors, EME, have always given us 100% freedom when it comes to any remotely creative decisions. When we met with Ko Soe Moe from Nest Tech VN we got the same feeling and had many casual meetings to make sure that we were a fit for each other. We also see that Nest Tech have a lot of digital skills that could help Joosk with digital merchandising and discovering new ways to entertain our audience outside of traditional approaches.
When’s the film coming out and what’s it going to be about?
BeBee The Animated Movie will be in theatres nationwide sometime in 2021. For now that’s all the information we’re sharing I’m afraid, but we’ll be releasing some clues and hints in the coming months! One thing is for certain, if you’ve ever enjoyed anything we’ve made before, we’ve got a very good feeling you’re going to love what we’ve got coming!
Above: Ezay Founder and CEO (centre) with EME Investment Analysts Hla Win New (left) and La Woon Yan.
EME-Myanmar has led a six-digit seed round in Ezay, a Yangon-based rural ecommerce startup for rural Myanmar retails outlets, together with one of the most influential startup founders in Myanmar.
Founded in August 2019 by ex-Oway employee, Kyaw Min Swe, Ezay is helping to revolutionise commerce for rural retailers. Ezay provides a mobile platform that connects rural ‘mom and pop’ shops with wholesalers and provides delivery for all goods. Previously retailers would have to visit multiple wholesalers several times throughout the month, with no remuneration for that lost time. From today, retailers can re-stock at the click of a button.
EME’s Investment Director, Hitoshi Ikeya said, “We often hear people talking about ‘digital leapfrog’ in Myanmar but this investment really represents the value that mobile solutions can bring to rural communities across the country. Kyaw Min Swe is a great founder and we’re very excited to support him with his mission”.
Kyaw Min Swe at a recent Ezay retailer townhall event
Q&A with Kyaw Min Swe, Founder and CEO of Ezay
How did you come up with the idea for Ezay?
My sister has a small shop in rural Myanmar and each week her and her husband need to drive to the various warehouses to restock. This is a real burden and it’s common across Myanmar; often the husband will go to the wholesaler but must take time off work to do so. Choice is also limited by the common fact that most people will buy from only one or two wholesalers. I saw an opportunity to address this issue and connect wholesalers and retailers through a mobile platform - providing delivery to make life easier for retailers.
What impact does Ezay create for companies and users?
Retailers love Ezay because for the first-time ever they’re able to buy online for the regular shop stock needs and get the products on delivery the next day - all for the same price they’re currently paying to shop offline and fetch their own goods.
Wholesalers are thrilled to have more frequent orders and have regular collections from a wider-rage of customers. They’re able to think about their promotions through the app and really become more efficient throughout their business.
Why did you select EME as investors?
EME’s directors and staff have been really supportive of my vision and have helped Ezay even before their investment. For an early-stage business like Ezay I think it’s vital to have people behind you that understand your vision and can contribute to making it a success. With EME I felt they were very interested to support Ezay, but also that they trusted me to execute my ideas.
What is your vision for Ezay in the next 5 years? How will Ezay help change rural retail landscape in Myanmar?
Ezay is just getting started. Right now we’re onboarding new retailers all the time and we’re upgrading our platform to make logistics, payments, and commerce faster and easier. We plan to expand rapidly across Myanmar once we’ve proven this model across our key villages. Our expansion will be both in area and also in services: as we develop a closer understanding of the retail supply chain and customer’s preferences we can adapt to serve those needs in new and exciting ways. We’ve got a few ideas of how this could develop. For now we’ll just say that we intend to continue to offer real value to people that others have struggled to serve and create new opportunities for them while doing so.
About Kyaw Min Swe
Kyaw Min Swe is a committed and experienced professional with a proven track record. He was born and raised Nattalin, a township in Tharrawaddy District of Bago. He worked in Dubai and Singapore for five years and came back to work as the COO at Hello Cabs, and later at Oway as the Business Head. He stared Ezay based on his first-hand experience of the problems facing rural retailers and because of a passion to help rural communities embrace the benefits that technology offers.
Above, from left EME's Team: La Woon Yan, Hitoshi Ikea, Hla Win Nwe, Matt Viner, May Phoo Maung Maung, Claire Lim.
On Wednesday, 20th November EME celebrated it’s 1st anniversary and announced two new investments it has made into Myanmar-based and Myanmar-led startups: Natural Farm Fresh and Yangon Broom.
EME invested a six figure amount into Natural Farm Fresh, along with co-investor United Managers Japan Inc. (UMJ). Natural Farm Fresh produces high quality chilli and other dried food products at competitive prices, using locally produced solar dryers to increase yield value and produce products without dangerous aflatoxins. EME’s investment will help Natural Farm Fresh to scale up, develop new products for other markets and start to introduce digital technologies throughout the supply chain.
Founder and CEO of Natural Farm Fresh, Nay Oo said, “This investment is very rewarding, not just because it will help us to grow but because EME really shared our vision to help bring quality products to the Myanmar market, improving health while providing more income to farmers across the country”. EME Director, Hitoshi Ikeya said, “We’re thrilled to make this investment. We’ve been building a great relationship with Ko Nay Oo over the past months, love his vision and have already seen his ability to execute. The chilli market in Myanmar is well over $100m and growing; regionally, the numbers are even higher and together we’re very well placed to take advantage of this huge market potential.”
Above: Nay Oo, Co-Founder and CEO of Natural Farm Fresh
EME, along with co-investor NestTech VN (a Vietnam-based VC), invested a five figure sum into Yangon Broom, a Myanmar home-services startup. Yangon Broom provides on-demand services to home and businesses across Myanmar’s bustling Yangon. Currently, services include cleaning and ironing, but the company has more verticals to roll out in 2020. Founders Kyi Min Han and Kyaw Min Tun come from backgrounds in recruitment and building maintenance, a winning formula for high-growth businesses that contract hundreds of staff. Co-founder and CEO, Kyi Min Han, said, “The whole team is very excited to have two great investors behind us to help take Yangon Broom to the next level. We’ve built our business around people as we aim to provide safer jobs for women in Myanmar, and these two investors will help us protect that while we grow.”.
EME’s investment philosophy includes providing significant hands-on support post-investment, operating a full-time team who work closely with companies to help them scale. Matt Viner, EME Investment Manager said, “We’re so fortunate in Myanmar to have such passionate founders. Kyi Min Han and Kyaw Min Tun pay close attention to their most valuable assets - their staff - and in turn, they’re building a strong business. We’re looking forward to helping Yangon Broom quickly reach 10X growth in total bookings, bring in new tech with help from NestTech VN and add more services.” Nest Tech founder, Soe Moe Oo added, “Nest Tech is delighted to be investing into Broom. The two Founders truly care about making a difference in people’s lives, especially those amongst the more vulnerable in society. Not only are jobs being created, but a caring community culture is being developed too”.
Above: Yangon Broom's Team including CEO Kyi Min Han and COO Kyaw Min Tun
Earlier this month, EME joined nearly 2,000 leading experts from the marketing industry at Mumbrella 360 Asia - the region’s largest marketing and media conference, held at Singapore’s Marina Bay Sands. At this conference, the industry’s biggest players come together to forge connections, ask pressing questions and share their secrets and strategies to achieving success.
Speakers and panellists were invited from leading global companies such as Unilever, Johnson & Johnson and Prudential; tech giants like IBM and Netflix; media leaders such as CNBC; NBC Universal, BBC and Vice; and up-and-coming companies like Lazada, TikTok and Twitch - all of this in addition to the marketing industry’s biggest firms: Ogilvy, Kantar, Hubspot, UM and Accenture to name a few. As you can imagine, it was an action-packed two days of knowledge sharing and information overload. In this blog, we share some of the things we learnt.
Promotion by Emotion
Several of the keynote speakers emphasised the need for brands to strive to push out emotional content, rather than the typical barrage of rational and functional marketing messages that brands constantly churn out. Why? Because emotional content is more likely to be shared and engaged with, and it is also more likely to be remembered by the consumer brain. Since consumer behaviour is 99.9% driven by the highly emotional subconscious, there’s an emergence in neuro-marketing among companies and agencies, as well as media companies, for getting their messages across. This means marketing with behavioural economics instead of neoclassical economics - instead of using typical functional selling points like “a product is cheaper, bigger and tastes better”, there is now a shift to “a product gives you happiness, makes you feel safe and strengthens your relationships”.
Coke’s “Choose Happiness” is a strikingly obvious use of emotional marketing.
We learnt that while generally an average of 50% of purchases come from word of mouth, 80% of what triggers word of mouth is good brand experiences, not only functional from end to end (everything works, nothing is broken) but also meaningful (not only is nothing broken, it was so easy to use because my needs were anticipated). To take this up another gear: company’s should aim for pleasurable experiences (not only is nothing broken and the platform quite easy to use, the content was hilarious and brightened my day).
Where can customers rank their experiences with your brand?
(For)give Me Another Try
Building close relationships with customers is also a good hedge against future misdemeanours. Customers who have a connection with brands and companies, whether with positive brand associations or great brand experiences are not only more likely to make a purchase or tell a friend (this we knew already), but they are five times more likely to forgive a brand for mistakes made. This is crucial in the world we live in, considering such mundane things like a five-minute response delay or misspelled customer name could result in customer loss in this age of fast-paced and hyper charged customer service (the age of the pampered customer).
Just (keep) do(ing) it
Big brands are becoming all about predictive personalisation. That is, using data-driven content automation to enhance customer experiences and keep people coming back. In our digital age this is as easy as simply relying on users’ behavioural history with the brand’s platforms in order to determine the perfect algorithm for developing content that their users will find interesting, engage with and most importantly lead to sales or conversions. If you’re still unclear what this means - just scroll through Facebook and note that you keep seeing more cat videos ever since you spent a whole day watching cat videos.
Go your own way
Lastly, we learnt that we should be wary of “best practices” because it’s those disruptors who break the mold of best practices that truly find success. Startups and early stage companies especially are most likely to pattern growth strategies based on existing companies, which could be a crucial mistake[c1] . From a VC firm’s keynote we learnt the key steps for bootstrapped growth: identifying the brand’s purpose, building brand assets, identifying platforms, developing powerful stories, growing advocacy and loyal customers and of course, tracking. This is a good guiding light to follow, since doing too much in the short-term could be harmful for long-term growth if these short-term activities are not linked to long-term strategies.
All in all, it was great to link up with the region’s very best marketing professionals, and we can’t wait to take back everything we’ve learnt and apply them towards the growth of EME’s fast-growing portfolio companies. Do you agree with what we’ve shared? Have anything to add? Drop us a line at email@example.com.
Myanmar – land of the digital leapfrog! More phones than people! It’s all true, but stating that something is, is not the same as stating what it means. Does it mean that digital infrastructure is changing millions of lives every day? Yes, we’d say so. Does it mean rapid adoption of mobile applications by a great proportion of Myanmar’s 50-60M population? No, not really. Is there a range of startups successfully taking advantage of digital leapfrog Myanmar? There’s less of a “range” and more of a “few”. This post tries to lift the fog on Myanmar’s leapfrog headline and uncover some truths to success in this now famously digitising economy.
Let’s start with some basics from a macroeconomic perspective. Myanmar has the lowest income per capita of any SEA country. When incomes rise, people have a greater ability to consume. To begin with, most of this consumption is taken up with better food – meat and sugar consumption increases. But until incomes rise beyond around USD 3.5K (Indonesia today), people don’t tend to spend much more on non-essentials. At around USD 5K (China in 2010/11), things have changed significantly: people buy pets, vehicles and other luxuries. Myanmar is at USD 1.5K on average. That means the average person is giving one thing up to get another. Evidencing this point, one study of rural solar home systems (in Sub Saharan Africa) found people who bought the systems would then consume less meat and sugar.
This leads us to two observations: 1) let us think more about 10-20M then 50-60M people if we’re selling even a low-price product, because a lot of people just can’t afford new things. 2) If people are going to sacrifice nutrition to buy your product, it’s going to have to more value than a balanced diet. That’s some real value we’re talking about – in the example above, people with a solar lantern have clean light inside the home and avoid smoke and fuel costs and danger of fire. Even Candy Crush can’t compete with that. Unless selling to the very low income, people may not need to give up sustenance for your product but the concept remains: all decisions include giving up the next best option (opportunity cost) so you have to deliver tremendous value to have people choose your product / service. Indeed, the Irrawaddy recently stated that minimum wage earners spend 85% of their income on rent.
The next issue is best expressed in plain terms: if someone with limited education or need for an electronic device suddenly has one, they’re going to receive less immediate benefit from it than your average urban college kid because they simply won’t appreciate how to maximise its utility. People often talk about “customer education” – upskilling the customer to use your product. The conversation goes like this: “OK, it’s a good idea, but will people use it?”, “Yes, we just need to make sure we do a lot of customer education.”. That’s fine in principle, but education in general has huge free rider issues, as any garment factory owner can attest to. Example: If factory A provides training at a cost of $10 per person per month, factory B could hire the person for $5 per month more salary after they have been trained Factory A. In other words, customer education is expensive and there’s little guarantee you’ll see a return on your investment (you could teach customers to use your ride hailing app, but then they’re better equipped to use all ride hailing apps).
How then, do you create a product for the mass market that people will use? Let’s consider Bagan innovation Technology (BiT) (not an EME portfolio company). BiT have around 14M users of their Burmese language keyboard. They got into the market early with a solution that everyone needed. They also have a bookstore. To drive people to the bookstore, they leveraged monks and monasteries – places and people of education. Finally, they have a fortune-telling app that is growing exponentially – BiT tapped into something people are already spending money on and made it cheaper and more efficient. In summary, to reach millions you have to offer something useful, better than the alternative and that people find true value in. The key is “people”: unless you fully understand your customer, you can’t know what they will value.
A final point on reaching scale in Myanmar. In fact, in Southeast Asia because this isn’t unique to Myanmar. There is a lot of reason to consider offline and online approaches to reach or maintain customers. Tech has leapfrogged, but trust is catching up and offline approaches are easier to trust in (see a person, touch a product, go somewhere to get service, etc.) Just look at Shop.com.mm with their agent model or bricks and mortar shop, or BiT who initially reached customers through monks. The same is happening in Indonesia with Bukalapak agents or Storeking in India. People often don’t want to consider the expense of being offline and there’s little hype around opening shops (versus launching apps) but in markets where trust is limited and exposure to technology is still new, there’s a good reason to go beyond Facebook marketing to scale. That reason is: unless you innovate in how you reach and maintain customers not just your product, you’re unlikely to succeed in this economy.
Twelve months, six investments, three new hires. Since launching in October 2018, EME has had a stellar year, if we do say so ourselves. We’re not getting ahead of ourselves yet though. As we see it, we’ve set a high bar for ourselves for 2020 and beyond. When we meet startups we often ask what they’ve learnt in their short-lived experience trading as a company. There are no magic answers to this question, rather it’s a way to see how founders reflect, adapt and strategise. This post focuses on our reflections after twelve months investing in early-stage companies in Myanmar.
1. Relationships Matter
Strong relationships are formed over time and through good and bad times. When things are good, relationships tend to be easier. When things are challenging, relationships can either grow or suffer. We see that this comes down to trust. As investors, we ask ourselves “is this a founder / team we can trust to overcome challenges?” and startups should be looking to EME asking, “can I trust this investor to back me when things don’t go to plan?”. Great companies become great often by pivoting many times (Slack started life as a video game). Pivoting means admitting the first plan isn’t the right one and pursuing a new direction and for that there needs to be a lot of trust among both investee and investor. It’s hard to explain when the occasions arise where trust is deepened, all we can say is you’ll likely know when they arise. In these times, we try to be cognisant about the decisions we make today and how they affect the trusting relationship that we’ll need in the years to come.
2. Support is Crucial
Early stage companies in any market need mentors and advisers to succeed. In a frontier market such as Myanmar, this is even more true. In our experience, supporting entrepreneurs is about helping them to achieve their vision. This could involve a range of things, from analysis and strategy to direct support in sales and marketing. Most importantly, it’s about working with, not against, the entrepreneurs and their team. When we make an equity investment, we’re literally buying our way to becoming a part of the company and this comes with a lot of responsibility. Our investors have trusted us to find and help scale the companies of tomorrow, and the only way we’ll help great entrepreneurs create amazing companies is by letting them do what they do best. As investors, we don’t want to change or lead the strategy of our portfolio companies, we want to encourage them to push further, take risks and do those things that will redefine markets in Myanmar. To do that, we’re constantly looking inward about our support, its effectiveness and how we improve.
3. Research is Priceless
Being inside the market is crucial to investment decision making. This is true anywhere but again more so in markets that lack data, infrastructure and are going through economic transitions – like Myanmar. Our investment analysts live and breathe the market we invest in and they’ll write a full in-depth research report about each startup we present to our investment committee. This report is the output of weeks of intensive research, not just desk-based but being out in the market interviewing, testing, ordering, etc. It’s a lot of work, but it’s integral to our approach and has helped us identify truly unique companies. And it’s not just research into companies, but sectors too – EME is sector agnostic, but by researching individual sectors, we deepen our understanding of the companies within them. We’ve summarised this internally as “working with intellectual integrity”: to listen, question, test and think without bias.
4. First Impressions Last
The fabled elevator pitch. Those few minutes you have to impress/sell to someone before the meeting is over and they’re gone, perhaps never to call you back or to become your next customer / investor. Most founders are probably tired of hearing about how to deliver the perfect elevator pitch and we’re certainly not going to try that. What we have seen though, is that first impressions are stickier than gum on your shoe on a hot day. This works both ways: make a great first impression and there can be a lot of flexibility afterwards but, make a bad one and you may not bring it back. Pro-tips for anyone meeting us for the first time: read our blog. People are nothing if not easily flattered and seeing you’ve read our blog will show us you care (and that you do your research). We’re also big fans of the “four Hs” (happy, helpful, humble, hungry) and tend to get on well with people who encompass these elements.
5. Questions and Candidness Count
Since EME’s inception, we’ve considered it our responsibility to ask challenging questions and give candid, constructive feedback to startups we meet. Whether it’s a very first meeting or a board meeting after we invest, we’ll share our honest thoughts and recommendations. Mostly, the response to this approach is overwhelmingly positive – hopefully some of you reading this can attest to that. Of course, on occasion it backfires. On this note there are three things we have considered: 1) we’re not always right and don’t intend to give that impression, we just say as we see it; 2) we’ve met 150+ startups, so we’re a pretty good barometer of who’s doing what and what’s working / not working (we invite you to pick our brains anytime!); 3) to make an omelette you’ve got to break a few eggs – we’ll continue with the tough questions, to find those who have inspiring answers. Ultimately, we value sincerity and we’ll always be sincere with our questions and feedback. We’ve learnt it’s not always easy, but still believe it is always the best approach.
We’ve focused here on lessons in our investment approach, more than internal operations. That probably doesn’t do credit to the amazing EME team, which is therefore the final point to this post: being good at anything means building an amazing, inspiring, committed team. I’m honoured to work with my colleagues here at EME and we love seeing entrepreneurs and founders who put their team first.
To meet the full team and our portfolio companies, check your inbox for your invitation to our one-year birthday party this 20th November. If you don’t have an invitation, drop us a line and we’ll see what we can do – firstname.lastname@example.org.
Above: John Lim, ARA Asset Management (photo credit: DealStreetAsia)
We packed our bags and headed to clean and pristine Singapore to meet with and hear from leading regional investors and founders at the DealstreetAsia™ PE-VC Summit 2019. Arriving at the conference, we quickly noticed that we were in a very select minority of investors from Myanmar – an indication of the country’s early frontier status. People were curious about Myanmar and excited to hear about our work and our incredible portfolio companies. Over copious coffees and one or two beers, we shared, listened and learnt. This short post summarises some of the key insights from the presentations, conversations and gentle persuasions of the event. Underlying each of the following points are three core values we observed from the summit: know your customers and put them first, work hard and smart, and lastly, find an investor you can build a relationship with.
Lesson 1: Don’t Try to Make Money
One thing we weren’t necessarily expecting to hear at an event where the total assets under management of all parties was over $100bn was “don’t try to make money”. However, founder and CEO of Deskera, Shashank Dixit told a roomful of investors and founders to focus on building great companies that serve customers and let the money follow. We see value in this sentiment: startups need to deliver outstanding value to their customers - with scaleable unit economics - and if they succeed then exponential growth will happen. Once your product or service is too good to be without, you’re set on a course for scale; so long as you scale with the right unit economics, the riches will come. Focussing on making money, on the other hand, isn’t putting your customer first and introduces short-termism that could prevent you from building something great. Indeed, EME’s permanent capital approach (rather than a fund with an exit deadline), means that we can work with entrepreneurs to build great companies and take a long-term view with founders.
Lesson 2: The Importance of Trust
One of our favourite one-on-one on-stage discussions was the interview with John Lim. Son of a schoolteacher, John Lim is the cofounder of ARA Asset Management which has $58 billion in assets under management. Lim spoke about how crucial trust was in long-term business relationships, citing that he had a long-term multi-billion-dollar arrangement based purely on a handshake. This introduces an interesting thought experiment: would you trust your partner to honour the agreement purely on a handshake? Often the answer is “no”, which is why we have contracts and may be fine for short-term transactions. When it comes to investing, though, we want to be able to treat contracts as a formality, understanding that there is an enduring trust between us and those we invest in. This approach forces transparency, accountability and integrity on all parties, which can only be a good thing. Keep this in mind next time you review a term sheet.
Lesson 3: 007, not James Bond
China’s growth has been built in part upon the 996 model: people working diligently from 9am until 9pm, six days a week. This might feel quite gruelling for the employed, but for founders John Lim says they should be following the 007 model. 007, in case you haven’t worked it out yet, is 12am-12am, seven days a week (i.e. 24/7). Of course, even Elon Musk sleeps (a little), but the sentiment is that to build something great, founders must commit and put in the work. In fact, when asked about the secret sauce for founders, Lim offered: there’s no secret sauce for startups or CEOs. They must be passionate, know their stuff, be patient and work hard. He added: “Don’t open a restaurant because you love food. If you want to start a restaurant, work in one, understand the customers, the supply chain and the problems; after a couple of years, only then might you be ready.”
Lesson 4: Vision Without Execution is Hallucination
Southeast Asia is creating more and more unicorns (startups valued >$1bn), but these companies are coming from great execution more than they are fresh innovation. Given that SEA is quickly developing, there is significant scope to take models born in Silicon Valley or elsewhere and transplant them into these markets. Investors and founders at the event agreed: SEA is an execution game. This is as true in Myanmar as anywhere else and perhaps even more so given the country’s only very recent emergence from military rule. In Myanmar, there are plenty of opportunities to disrupt traditional business with nimble ideas from other markets. How to execute? This requires excellent founders who can deliver on their strategies, who can roll up their sleeves and make things happen, who have a drive and determination to ensure dreams become reality. Decisions might happen in the boardroom, but the real work takes place on the ground.
Lesson 5: The days of investing and taking a backseat are over
Investing in startups is becoming increasingly competitive. With a challenging global economy and more funds available for a greater array of startups, investors are reflecting on the role they play. Across many conversations and panels, a theme emerged that simply betting on a founder and walking away, hoping they succeed, is a dying strategy. Founders expect their investors to become partners, not just cheque books. In Myanmar, there is less capital than most markets in SEA but this doesn’t mean founders need to be happy just accepting cash. In fact, EME’s model is based on investing capital and significant time into our portfolio companies – helping them to overcome their challenges and find a pathway to scale.
Agree, disagree or have additional lessons to share? Drop us a line at email@example.com!