A: BSOS 是 2018 年成立的,在區塊鏈這個領域,我們創業的時間不敢說很早,但我覺得也不算晚。BSOS 是我第二次創業,在此之前的 2008 到 2018 年約莫十年中,包含創業或是更早的工作經驗,我都在 Internet 領域的相關公司,這段時期,剛好完整經歷了 Mobile Internet 起飛,在 2012 年整體產業進入流量紅利期,然後逐漸紅利消失、邁入成熟這一段週期。2018 年決定再度創業時,我最深刻的感受,就是我們過去那種 Internet 車庫創業的時代已經過去了。
倒也不是說 Mobile Internet 完全沒有機會,而是這個產業太集中化了,它變成是一個資本驅動較多,然後更集中少數科技巨頭的產業。對於沒有太多資源,那種還沒有辦公室,只能先在車庫裡、靠幾台電腦創業的新創,機會已經沒有那麼多。過去做出個小 App,只要有需求、用戶參與度夠高,基本上有許多流量自然成長的方法,很容易做成一個 Business,但這個時機已經過去了。
A: 我們會把自己的定位再放寬一點,就是要用區塊鏈技術,去解放實體世界資產的流通性,打開我們官網的第一句話,就是「Liquidize Real-World Assets with Blockchain」。區塊鏈最核心的應用,就是拿來做價值交換,不管是比特幣、以太幣或是其他區塊鏈資產,過去幾年來,已經充分驗證了價值交換這件事情,但除了這些,還有更大的一塊是 Real Assets,它在傳統上很多價值是不容易被表彰、創造流通性。
A: 根據我們實際走過的經驗,我相信 Web3 這邊的順序,會非常顛覆我們過去做 Web2 的三觀。過去,Web2 企業,要先把應用場景做好,延伸出的價值才可以被流通、才有流通的價值,Web3 則是先有流通性,再利用這個流通性回去創造應用場景。這樣的例子很多,各種 XX to earn 都可算是這個模式,例如,先發 NFT 頭像,再去發展社交的功能,有這個資產的人,就會衝進去玩後來才做的遊戲,然後 Play to earn,參與度會比 Web2 更高,因為他有更多經濟上的動機,這聽起來很顛覆三觀,就是先創造流通性,再從流通性去激勵。
Joseph is a Partner who joined in 2013 and has since covered our “kitchen” — portfolio management, operations and advising startups on finance and fundraising. He is also in charge of connecting the ecosystems between Japan and Taiwan. Prior to AppWorks, Joseph spent 11 years with the CID Group, a Greater China leading venture firm, where he helped raise US$575M across multiple funds and headed portfolio management. Prior to that, Joseph served as a Manager of Backbone Network at Gigamedia, a NASDAQ-listed broadband ISP. Joseph earned his Master in Agriculture Machinery Engineering from National Taiwan University. He is native in both Mandarin and Japanese.
One of the biggest challenges among first-time founders is putting together their first priced fundraising round. In markets like Taiwan and Southeast Asia, the venture ecosystem is still relatively young, leaving a number of misconceptions around deal making among both entrepreneurs and investors alike. Some first-time founders, especially those from blue-chip backgrounds or elite pedigrees, may treat the deal process as a competition driven by game theory—where there must be a winner and a loser. From my experience, however, treating discussions with investors as a win-lose proposition only leads to mutually-assured failure. Everyone should leave their egos at the door.
What’s at stake when a founder tries to over optimize their own self-interest? Some investors may choose to walk, making the fundraising process that much tougher. Worse yet, you may end up bringing on angel investors who begrudgingly put some skin in the game, but not enough to really help you out when push comes to shove. Setting a good faith tone between founders and investors from the getgo will make it much easier for both sides to come to an agreement. While a startup’s first round of fundraising may seem like a standard process, it sets the long-term legal and financial foundation for the company’s relationship with investors, making it mission-critical for founders to understand exactly what they’re getting into.
1. Find a founder-mentor
The most valuable thing that a first-time founder should do—and maybe the first thing they should do when starting a company in general—is find a founder-mentor, someone who has been there, done that, and knows the ropes of fundraising and term setting with early-stage investors. Founder-mentors can be powerful advocates and filters for your company when sourcing customers or potential backers. Remember, as investors run due diligence on you, it’s important that you also conduct due diligence on them as well. Not all investors are created equal, and you may sometimes find that their actions contradict their words only after the ink has dried.
That’s why first-time founders need to surround themselves with the right people. Mentors and angel investors play an indispensable role in guiding founders to understand the true nature of the founder-investor relationship. By seeking out founder-mentors or angel investors who have experience working with venture capital firms or joining an accelerator program that provides mentorship, first-time founders can better navigate the fundraising process with much greater ease. Finding such advocates will help founders avoid bad actors, understand term sheet best practices, and put the startup on a solid footing for the journey ahead.
2. Mind your timing
Before any team looks to fundraise, the most important factor is timing. Timing is everything. Investors want to invest in attractive companies in an attractive space. First-time founders should initiate fundraising efforts after gaining traction, signing on new customers, or proving out your MVP. The less founders have to show for the company, the worse the valuation and terms investors are likely to provide to discount the uncertainty, unless you already have some sort of track record or successful exit behind you. On a more macro level, VCs tend to invest in underlying paradigm shifts, so always be prepared to answer: why now and why you?
3. Use a savvy lawyer
Another area that frequently trips up first-time founders is finding quality legal counsel. In developing markets, founders cannot rely solely on lawyers to negotiate in their best interest. Outside of the Bay Area, venture capital is simply not a large or profitable enough vertical for legal specialization—so venture deals are often a low priority for emerging market lawyers. When it comes to structuring a deal, lawyers play a fleeting role as the relationship may be strictly transactional. Their nature is based purely on winning something on paper for their clients, and once the deal is done, they move on to the next client. For investors and founders, the first term sheet is just the beginning, as each round of investment adds another layer of complexity, requiring a solid foundation to build off of, with the initial term sheet setting sustainable grounds for the company’s development. Accepting a lousy term sheet is like building a house on poor soil, setting the structure up for collapse under adverse circumstances.
4. Understand the value of vesting
One of the most frequently misunderstood terms among first-time founders is vesting. Many founders ask me, why is vesting necessary? Or perhaps fear that the investors may try to drive out the founding team down the road for replacements. Vesting is a prevalent industry practice, acting as a mechanism to create forward-looking incentivization and alignment between founders and investors. Investors want founders to be in the deal for the long haul, rewarding their dedication to the company. I have found that vesting-related issues most commonly arise among solo founders, where there is significant key-man risk, whereas teams with multiple co-founders tend to reinforce one another to buy into vesting terms. If there is no founder vesting in place, co-founders who leave abruptly can just as easily take their shares with them. I’ve seen cases where 40% of the cap table is locked away due to a co-founder who decided to jump ship, leaving the other founders and investors with little recourse to salvage the company’s ownership outlook. For a more comprehensive explanation of founder vesting, you can reference this article.
5. Be wary of uncommon practices
As far as industry best practices go, there are some less common terms that may put founders at a disadvantage if not understood properly. For example, an investor can try to secure excessively generous veto rights, which could come into play if a company is looking to stay afloat by initiating a down round of financing. In some cases, I’ve seen an investor veto the round as they thought the company could still raise at a markup. In the end, the company had to shut down. To mitigate such an issue, it is important for founders to carefully design your cap table and avoid agreeing to unnecessarily strong minority veto rights, unless you believe the situation truly calls for them.
There are even more stringent examples of uncommon terms. Some investors may force upon founder unfair guarantees, requiring founders to be personally liable for unforeseen tax consequences and subsequent reimbursements to the company. This should be a major cause for consideration, as founders typically should not be responsible for these kinds of issues outside of integrity or fiduciary duty-related issues. Nevertheless, unusual terms are put in place for unusual circumstances. Every deal is contextual, so be sure to understand the full scope of your situation and adjust the terms accordingly.
It is also worth noting that in emerging and frontier markets where venture capital tends to be more scarce, some investors—especially those from traditional backgrounds—may view and treat founders as employees on the cap table. Now, there are certainly founders that do in fact appreciate and require this level of involvement or guidance; but, for many, these types of investors may end up micromanaging every course of action, leaving little room for creative freedom, flexibility, or control. It’s imperative to understand which camp you prefer.
Playing the long game
Now, is there any difference in term sheets for emerging markets compared to mature markets like Silicon Valley? Not really. There are global standard practices and terms that appear across markets that are consistent with the asset class; however, each market and sector have their own unique conditions that require investors and founders to adjust terms accordingly. Local investors may better understand regulatory conditions or cultural sensitivities, which allow both sides to come to an agreement that may better suit the on-the-ground circumstances of the market and company.
Ultimately, a term sheet is just a framework for partnership. What’s more important is whether or not you can see yourself working with this investor for the next 5-10 years, and then setting the terms from there. Over the past decade, financial literacy among first-time founders in Taiwan and Southeast Asia has improved dramatically. Investors have also adopted global best practices to help them win deals by removing once-common archaic harsh terms. For AppWorks, we aspire to work with founders throughout the entrepreneurial life cycle, guiding first-time founders in term sheet discussions and ensuring that founders are equipped with the tools for long-term success. Term sheets should not be a win-lose proposition for investors and founders. As the ecosystem matures, the market will naturally filter out bad terms, leading to better investor-founder dynamics that foster higher-quality investment and innovation.
【If you are a founder working on a startup in SEA, or working with AI, Blockchain, and NFT, apply to AppWorks Accelerator to join the largest founder community in Greater Southeast Asia.】
web3.GSEA Snapshot 2021 由 AppWorks 製作,有任何指教與建議,請 email 至 [email protected]。感謝以下 AppWorks 的朋友,在過程中提供的協助:Peter Ing (Co-Founder of BlockchainSpace)、Leo Pham (Manager of Access Ventures)、Hung Nguyen (CEO of Spores)、Tri Pham (CEO of Kardiachain)、Ben Minh Le (CRO of M3TA)、TN Lee (Co-Founder of Pendle Finance)、Lawrence Samantha (Founder of NOBI)、Eagle Su (Marketing Specialist of Zombit)
Jun is an Analyst covering both AppWorks Accelerator and Greater Southeast Asia. Born and bred in America, Jun brings a wealth of international experience to AppWorks. He spent the last several years before joining AppWorks working for Focus Reports, where he conducted sector-based market research and interviewed high-level government leaders and industry executives across the globe. He’s now lived in 7 countries outside US and Taiwan, while traveling to upwards of 50 for leisure, collectively highlighting his unique propensity for cross-cultural immersion and international business. Jun received his Bachelors in Finance from New York University’s Stern School of Business.
Founded in 2009, AppWorks is a leading startup community and venture capital firm built by founders, for founders. We are committed to backing the next generation of entrepreneurs in Greater Southeast Asia (ASEAN+Taiwan) and helping them to facilitate the region’s transition into the digital age. Building off the firm’s decade-plus of experience, AppWorks works closely with early-stage founders to achieve product-market fit, while helping growth-stage companies establish sustainable business models at scale.
Starting in 2018, blockchain was incorporated in the firm’s core mandate. We believe that the technology is currently driving a massive paradigm shift, opening up new disruptive and innovative opportunities for the next generation of entrepreneurs as the world transitions into the web3 era.
In 2021, blockchain entered a mass adoption phase. With the emergence of new innovative applications such as DeFi, NFTs, GameFi, and web3 infrastructure, an unprecedented number of new funds, retail investors, and users have flocked to the crypto world, creating a flywheel effect that has facilitated the formation of key web3 infrastructure that we believe will usher in a new era of large-scale commercialization.
“As the world decentralizes, will development vary between different countries and regions?” This is a question that we’ve mulled over years. With the accelerated development of blockchain, we recognize that, in fact, regional dynamics have become more pronounced. We found that in Greater Southeast Asia’s major markets, the confluence of different historical, economic, industrial, societal, and cultural contexts has resulted in crypto adoption taking different forms. The emergence of diversified crypto markets is driving growth in the region to meet different market conditions and leading to new business models and approaches in the industry that can be applied globally.
The following is an overview of our analysis and views on each major market in the region:
Indonesia: Crypto Investment Outstripping Public Equities
Indonesia, the world’s fourth largest population and the largest in GSEA, is estimated to have an unbanked population of 66%. Based on market size alone, Indonesia has become an important market for the development of blockchain. Indonesia is entering a financial paradigm shift driven by blockchain and cryptoassets, and overall development is trending towards exponential growth. According to statistics from Indonesia’s Ministry of Trade, during the first five months of 2021, more than 6.5 million people in Indonesia traded cryptocurrencies—far exceeding the 2.2 million who traded public equities—totaling US$25 billion in cryptocurrency transactions, compared to US$4.4 billion over the same period in 2020, representing year-on-year growth of 470%. With statistics like these, it comes as no surprise that cryptocurrency has become the most popular investment category among Indonesian retail traders.
Compared with other countries, the Indonesian government is relatively positive towards crypto. Since September 2018, a series of laws have been enacted, signaling the open attitude of the Indonesian government. The Commodity Futures Exchange Supervisory Board (BAPPEBTI) oversees cryptocurrency-related issues and has provided legal frameworks for licensing and trading. Currently, Indonesians can legally own and trade a total 229 different cryptocurrencies.
Indonesia’s crypto landscape is underlined by the rapid development and adoption of exchanges, wallets, asset management tools, and other DeFi applications. For example, Indodax, established in 2014, is Indonesia’s leading exchange with more than 4.7 million users. With increasing acceptance of investment in cryptocurrencies by the general public, new areas of development, such as investment platform NOBI, that provide asset management services that cater to crypto users will mark the next wave of growth.
Philippines: Massive User-Driven Growth
In 2021, Yield Guild Games (YGG) broke out in the Philippines and became a global phenomenon. Evolving from its initial function of assisting Axie Infinity in recruiting and training players, YGG is now home to more than 1,500 NFT game guilds based in the Philippines. YGG provides players with digital asset management, game scholarships, and community support—becoming the world’s largest NFT gaming guild.
According to Playercounter, more than 40% of Axie Infinity players hail from the Philippines alone. Play-to-earn has proven to provide meaningful income to users, effectively alleviating economic pressure caused by the pandemic for many users.
This model of massive user acquisition to drive ecosystem growth is a unique characteristic of blockchain development in the Philippines. We anticipate that with the mass inflow of capital and users, there will be a corresponding entrepreneurial response that will lead to the creation of new and innovative applications in the Philippines. We have seen this trend emerge with projects like NFT marketplace Vention and gaming guild management and data platform BlockchainSpace.
Singapore: Leveraging the Strength of Asia’s Financial Center
Singapore has always been known as Asia’s financial center, building off the government’s proactive policies over the past several decades. A similar trajectory is also taking shape in the country’s blockchain development. The Monetary Authority of Singapore (MAS) is the leading regulatory body overseeing cryptoassets, and has long demonstrated a relatively open and friendly stance on the development of blockchain and cryptoassets within the city-state.
As early as 2017, MAS issued “A Guide to Digital Token Offering” which established the Singapore government’s policy framework for ICOs, issuers and related platforms, under the purview of the Securities and Futures Act (SFA). In January 2021, the “Payment Service Act” (PSA) was launched, regulating all cryptocurrencies, exchanges, and digital payment services in Singapore.
As a result, there has been an emergence of several new blockchain-related applications. For example, Biconomy, which builds transaction infrastructure for blockchain applications and optimizes cross-chain transaction experience; Xfers, a developer of financial electronic payments; and Vauld, a service provider covering cryptocurrency transactions, lending, and wallets. In the future, we expect more projects coming out of Singapore in cryptocurrency-related asset securitization, license compliance, and international exchanges.
Thailand: From Late Mover to Frontrunner
While Thailand’s blockchain ecosystem can be considered quite early, 2021 marked an acceleration point with several milestones. In November, Thailand’s first blockchain unicorn was born as crypto exchange Bitkub sold a 51% stake worth US$535 million to Siam Commercial Bank. Paired together with logistics provider Flash Express’s newly minted billion-dollar valuation, Thailand welcomed its first unicorns of the internet and Web3 era respectively within a five-month period.
Bitkub’s success is galvanizing the Thai blockchain ecosystem, demonstrating that Thailand can develop scalable blockchain infrastructure. Bitkub alumni and seasoned Web2 entrepreneurs are diving into Thailand’s blockchain space, just as we’ve witnessed in other markets.
In fact, we can already see the emergence of more mature and advanced Web3 applications. For example, the emergence of cross-chain data oracle platform Band Protocol and metaverse gaming guild GuildFi show the level of innovation and reiteration happening in the market. We believe that in the near future, we will see more projects in the NFT space, building off Bangkok’s rich fashion and design industry and the country’s active NFT artist community.
Vietnam: The Axie Infinity Effect
When it comes to Vietnam, the most well-known player is Sky Mavis, the developer behind the killer NFT-based game Axie Infinity. According to CryptoSlam statistics, since its launch in 2018, the total amount of NFT transactions on Axie Infinity reached more than US$3.7 billion, with more than two million daily active users, culminating in Sky Mavis’s recently completed US$152 million Series B round of financing.
The impact of Sky Mavis’s success on Vietnam can be observed from two perspectives. First, it is driving the growth of Vietnam’s local NFT gaming ecosystem and attracting international capital to accelerate development and adoption. For example, in October, Sipher raised US$6.8 million in seed financing from major global investors. In addition, there’s been a surge in casual and semi-casual GameFi projects coming out of the woodwork including My DeFi Pet, Mytheria, Thetan Arena, and Faraland.
Second, Vietnamese users have demonstrated high levels of acceptance for blockchain and cryptoassets. According to the 2021 Global Crypto Adoption Index survey conducted by Chainalysis, Vietnam ranked first globally in terms of overall adoption. Among three indicators, on-chain value received, on-chain retail value received, and P2P exchange trade volume, Vietnam ranked in the top five in the world. We anticipate that new applications in DeFi, wallets, and asset management like we see with Kyber Network’s Liquidity Hub will highlight the next wave of blockchain innovation in Vietnam.
Taiwan: A Huge Digital Market Driven by Engineering Talent
Compared with other markets in the GSEA region, Taiwan has two notable characteristics and advantages in blockchain development. First, Taiwan is home to a massive digital gaming and entertainment market. To illustrate this market size, according to App Annie, in 2020, Taiwanese consumers spent US$2.44 billion in the App Store, equal to total spending from Indonesia, Thailand, Vietnam, the Philippines, and Malaysia combined. Second, Taiwan has accumulated a wealth of engineering talent across manufacturing, software, and hardware integration. This talent pool has formed the core of Taiwan’s blockchain industry.
In 2021, Taiwan also joined the global NFT wave with early-stage activity. Leveraging the island’s fertile digital gaming and entertainment market, Taiwanese founders are adopting NFTs to create products, services, and new business models. Musicians, artists, game publishers, and influencers have embraced NFTs to build public awareness and tap into this new digital format of ownership, demonstrating immense promise for large-scale commercial adoption of NFTs.
Since the advent of Ethereum, Taiwan’s local engineers have continued to explore the frontiers of blockchain development, becoming a key driving force in the crypto world. Taiwan is home to several notable projects led by seasoned teams, including Perpetual Protocol, which provides Virtual Automated Market Maker (vAMM) to implement perpetual contract solutions; smart contract wallet Blocto has become the go-to wallet for Flow—with more than 80% of Flow users trusting Blocto for Flow Token pledges. In cross-chain applications, Blocto also supports Ethereum, BSC, Solana, Avalanche (c-chain), and Polygon, among other mainstream public chains.
Bright Days Ahead
Just a few years ago, you’d be hard pressed to find the words web3, blockchain, DeFi, or NFTs uttered anywhere outside of niche crypto spheres in this part of the world. Now, sentiment from founders and investors across the region have evidently shifted from “why web3?” to “how do I get a piece of it?”—largely in this past year alone.
Taiwan is at the forefront from a technical perspective, with an unparalleled engineering pool in terms of cost and performance; Indonesia is emerging as massive market for web3 consumers, now with crypto traders outnumbering stock traders by severalfold; Philippines is in a close second, with everyday users showing an uncanny demand for GameFi to make ends meet; Thailand’s historically nascent ecosystem is expected to garner significantly more attention now with their first crypto unicorn; Vietnam, given Axie’s success, is quickly distinguishing itself as a the world’s NFT gaming hub; and lastly, Singapore’s position as the region’s financial and management hub will likely extend into the web3 era.
Any doubts of whether or not web3 is here to stay were certainly eroded by the massive strides that the regional ecosystem has taken in 2021. Looking forward, the development and adoption of web3 is looking especially bright. Although crypto markets will likely ebb and flow in the coming months and years, with the occasional bears and dips, many stakeholders across the value chain have already gotten taste, and will likely only want more.
The 2021 Greater Southeast Asia Blockchain Ecosystem Map is authored by AppWorks. For inquiries, please write to [email protected]. For this survey, thanks for several friends’ assistance: Peter Ing (Co-Founder of BlockchainSpace), Leo Pham (Manager of Access Ventures), Hung Nguyen (CEO of Spores), Tri Pham (CEO of Kardiachain), Ben Minh Le (CRO of M3TA), Rémy Perettieny (CEO of Reminiscense), TN Lee (Co-Founder of Pendle Finance), Lawrence Samantha (Founder of NOBI), and Eagle Su (Marketing Specialist of Zombit)
【If you are a founder working on a startup in SEA, or working with AI, Blockchain, and NFT, apply to AppWorks Accelerator to join the largest founder community in Greater Southeast Asia.】