Adrian Vanzyl from Ardent Capital presented on Investment Perspectives in Thailand at e27's inaugural VentureCon event held on 16 January 2014.

1. Investment Perspectives in Thailand
Dr Adrian Vanzyl
adrian@ardentcap.com
This presentation will be available at www.ardentcap.com

2. Thailand + Tech investing = genius or crazy?
•
•
•
•
•
•
•
Why we are all here – topline SEA numbers
Protests, politics, coups – serious or noise?
Ardent HQ in Thailand – Why specifically Bangkok?
Thailand specifics
The Thai ecosystem
Opportunities for investors and entrepreneurs in Thailand
Specific examples of what Ardent is doing

3. Why SEA, Why Thailand?
• We raise almost all our money OUTSIDE of Thailand and SEA
• For example, last year’s major investors for us included
Japanese (Recruit, GMO, NTT Docomo, Cyberagent) and USA
(Siemer)
• At some point we always have to explain SEA
• And in particular Thailand
• This is a very detailed deck with lots of data in the appendix
that YOU can use to answer this same question
• Please download it from www.ardentcap.com

4. SE Asian Population
Southeast Asia is bigger (2x) than the US and bigger than the EU

5. Internet Penetration is Exploding
2010
2020
31M
194m
24M
34M
18M
360m
New internet
users
Internet users
4M
55M
25%
62%
2010 internet
penetration
Est. internet
penetration
Source: We are Social, Accenture

6. Why SE Asia? eCommerce is exploding
Thailand, Philippines, & Indonesia Online Retail is Growing Fast!
Online Retail Sales Forecast 2005 – 2015 – Source ICD Research
26
23.5
24
22
18.7
20
Sports & Leisure
Equipment
Home & Garden
Products
18
16
US$ Billions
Furniture & Floor
Coverings
13.5
Books, News &
Stationery
14
12
Apparel, Accesories &
Luxury Goods
10
7.1
Music, Video &
Entertainment Software
8
6
2.5
4
3.5
Food & Grocery
2
Electrical & Electronics
0
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015 Year

7. GDP growth has not been affected by political instability
Despite frequent political turmoil, history has shown that the Thai economy
has its own dynamics and its own momentum
%
Coup
4,000
Attempted coup
3,500
Major protests
2011 Tsunami and
floods
3,000
2008 GFC
2,500
2,000
1997-98 Asian
Financial Crisis
1,500
1,000
500
0
Source: GDP Data from Thailand’s National Economic and Social Board

8. Political instability: implications
• Immediate – tourism
• Mid term – capital investment, factories
• Long term – affects everything. Quality of life,
exits, growth tied to GDP
• Thailand has survived so far despite the politics
• Reality – life goes on. Offices open.
Supermarkets open. Public transport unaffected.
No anti western sentiment – this is 100% internal

9. Quick overview of Ardent Capital
Ardent Capital is an operator VC headquartered in Bangkok with offices in
Singapore and Indonesia, 300 staff across the portfolio, 120 in Bangkok
Traditional VC – we make seed and early stage investments, with six
investments made in past 18 months throughout Southeast Asia
Labs business – we incubate companies in-house such as aCommerce and
WhatsNew
Three of founding team of six are Thai American (Paul, Tom, John)
My background – 20 years doing Internet – 1 ASX IPO (Sausage Software), 1
NASDAQ IPO (LookSmart), 1 Microsoft Exit (LinkExchange), 1 NZX IPO, 12
years VC in San Francisco (Blumberg Capital), 7 years across SEA

10. Ardent Capital team’s exits in SE Asia in the last 3 years
sold to
sold to
sold to
invested in
6 start-ups

11. Why SE Asia? Converging Trends
Sustainable GDP per capita growth (Avg. 5-6% est. 2013)
Rising disposable income
Growing mobile broadband penetration
Accelerating smartphone penetration
Social Media penetration
Increasing Credit Card penetration
AEC 2015
Over $17B of branded and direct to
consumer ecommerce coming into
SEA in next 3 years

12. Unique Market – LINE has 20M users in Thailand…
Messaging apps are looking to diversify by ecommerce and a mix of:
Pictures
Music
Newsfeed
300
Games
Stickers
272 400
234
210
300
210
200
280
300
194
230
151
200
200
150
100
100
160
120
100
50
2.8
30
14
0
Q2 2011
Q4 2011
Q2 2012
Q4 2012
Q2 2013
0
10
12-2011
40
30
50
50
07-2012
60
70
01-2013
Line
Source: Statista 2013
130
80
100
80
89
89
04-2013
Kakao Talk
100
07-2013
100
100
10-2013

13. LINE Stats for Thailand
aCommerce runs the eCommerce store for LINE
•
•
•
•
•
•
•
•
•
LINE platform came out of nowhere in 18 months
> 20M users in Thailand alone
Mobile first
Rivaling and exceeding Facebook member base
The LINE store has 5.5M friends, majority of which were acquired in 72 hours
Largest direct to consumer channel in the country, largest active reach
Most campaigns sell out in minutes
Last Monday – 700 vouchers, released at mid day, sold out 2 minutes later
Platform where competitors are now doing
– Movie sales, transactions, music, games, reservations
•
What should Facebook do?

14. Bangkok is the TOP Facebook city
•
Facebook counts > 20M users in Thailand, ranking 16th in the world. The Internet
population in Thailand is same as Facebook penetration
# City
Country
Users
Penetration
1 Bangkok
Thailand
8 682 940
104.34%
2 Jakarta
Indonesia
7 434 580
34.10%
3 Istanbul
Turkey
7 066 700
62.98%
4 London
United Kingdom
6 139 180
73.79%
5 Bogota
Colombia
6 112 120
82.15%
6 Sao Paulo
Brazil
5 718 220
29.88%
7 Mexico City
Mexico
4 294 820
23.30%
8 Santiago
Chile
4 129 700
73.35%
9 Mumbai
India
3 700 460
18.95%
Argentina
3 533 840
28.52%
10 Buenos Aires
Source: http://www.socialbakers.com/blog/647-top-10-biggest-facebook-cities

15. Bangkok has the MOST Instragram’d locations
•
•
Siam Paragon was the most Instagram’d location in 2013
Bangkok International Airport was the most Instragram’d location in 2012
# Location
Where?
1 Siam Paragon
Bangkok
2 Times Square
New York
3 Disneyland
California
4 Bellagio Fountains
Las Vegas
5 Disney World
Florida
6 Staples Center
Los Angeles
7 Central Park
New York
8 Dodger Stadium
Los Angeles
9 Bangkok International Airport
Bangkok
10 The High Line
Source: http://blog.instagram.com/post/69877035043/top-locations-2013
New York

16. Smartphone sales is robust and growing fast
Smartphone sales are
expected to have a
compound annual growth
rate of 43% from 2008 to
2016, reaching 59 million
units in 2016
Source: GoogleResearch, Euromonitor 2013

17. Smartphone sales is robust and growing fast
59m
60
51m
9.8
50
43m
Smartphone Sales (in millions)
9.7
36m
40
4.6
1.9
7.0
28m
7.5
1.7
30
2.1
20m
20
11m
4.2
1.3
3.5
3.8
3.0
25.8
6.0m
10
4.1
5.8
20.2
3.4m
13.5
0
2008
2009
2010
Indonesia
Source: GoogleResearch, Euromonitor 2013
2011
Malaysia
Philippines
2012
2013
Singapore
Thailand
2014
Vietnam
2015
2016

18. Mobile and desktop usage is converging in SE Asia
Southeast Asia is outpacing the US toward an equal mobile/desktop traffic share…
100
90
95
92
94
93
92
91
91
90
86
80
Mobile vs. Desktop % Traffic
92
91
85
89
86
88
85
82
76
70
71
69
60
50
40
29
30
24
20
14
8
9
9
6
7
8
15
18
10
5
10
8
9
11
14
12
0
2010-06 2010-09 2010-12 2011-03 2011-06 2011-09 2011-12 2012-03 2012-06 2012-09 2012-12 2013-03 2013-06
Southeast Asia Desktop
Source: StatCounter 2013
31
Southeast Asia Mobile
USA Desktop
USA Mobile
15

19. Social networks take up a large share of time online
Social Network Share of Time Spent Online
41.5%
Philippines
Malaysia
32.3%
Thailand
30.8%
Indonesia
25.4%
Vietnam
21.6%
Worldwide
19.7%
Singapore
16.1%
0%
Source: Southeast Asia Digital Future in Focus 2013, ComScore
10%
20%
30%
40%
50%

20. Most Promising Emerging Markets for Investors

21. The Thai Economy: Big

22. SE Asian countries rank high in ease of doing business
Source: Doingbusiness.org 2013

23. The Thai Economy: Sophisticated

24. Thailand - Online Retail Sales Forecasts
2010-2015: Compound Annual Growth Rate of 22.78%
Thailand- Online Retailers Segmentation, Sales Forecast by
Category (US$ Million), 2005- 15. Source: ICD Research
5.6B
6000.0
4.8B
5000.0
US $ Million
Sports & Leisure
Equipment
Home & Garden
Products
3.9B
4000.0
Books, News &
Stationery
3.1B
3000.0
2.5B
Apparel, Accesories &
Luxury Goods
2.0B
1.5B
2000.0
1000.0
0.8B
1.3B
Music, Video &
Entertainment
Software
Food & Grocery
1.4B
0.6B
0.0
2005
Furniture & Floor
Coverings
Electrical & Electronics
2006
2007
2008
2009
2010
Year
2011
2012
2013
2014
2015

25. The ASEAN Economic Community (AEC)
In 2015, Southeast Asia will transform into an integrated market, making it
easier for businesses in Southeast Asia to expand. Thailand is a logical regional
hub
What it is
comprised of…
What it
means…
Free flow of
goods
Cheaper and easier to sell goods across
borders
Free flow of
services
Easier to provide services and establish
companies in the region
Free flow of
investment
More attractive to foreign direct
investment
Free flow of
capital
Easier to obtain/move capital across
the region
Free flow of
skilled labor
Source: ASEAN
Easier to recruit talent from countries in
Southeast Asia

26. Key Thailand Incubators
•
True Incube
•
•
•
•
AIS The StartUp
•
•
500K THB (19K SGD) initial investment, with follow on for most
start-ups
99 days bootcamp in co-working space
Business support: 26M customer base, distribution channels, media
support, business partnerships
Mentorship program including market insights, investor access,
business support, co-working space, and pitching workshops
StartUp Weekends is a venture competition

27. Key Thailand Incubators (cont’d)
•
Founders Institute
•
•
•
•
•
•
World’s largest entrepreneur training and startup launch program
Active in 55 cities including Bangkok
1000 companies participated
89.5% survival rate
10,000 jobs created
•
•
•
20 startups initially selected for the workshop stage
Selection is subsequently narrowed down to 10
Finalists present at demo day and winner(s) flies to Silicon Valley
dtac Accelerate

28. Key Thailand Co-Working Spaces
•
HUBBA Thailand
•
Launchpad
•
•
•
•
•
•
Located in Ekkamai
Hosts various start up events
Upcoming Start Up Accelerator Program & Demo Day
Various business and technical workshops
Ultra High Speed Internet
Multiple Meeting Rooms
•
•
•
•
Located in Silom
800 sq.m. shared space
Ultra High Speed Internet
Six meeting rooms

29. Why Thailand – highlights.
•
•
•
•
•
•
•
•
•
•
Reasonable legal setup (BOI is a great structure)
Corruption in private sector is low
Reasonable payments infrastructure
Good credit card and banking penetration in the population
Reasonable logistics (transport and traffic are OK)
High mobile phone penetration (> 100% saturation)
High smartphone penetration
High quality mobile broadband
Large market
Closed language market, price premium on exit

30. Goldilocks Principle for SEA
• We do not start in Singapore
– the market is too small
– the exits are too small
– It proves little, experience not relevant to the rest of SEA
– Too easy, too many competitors
• We do not start in Indonesia
– it is too difficult as a first market, with too many challenges
– Legal, infrastructure, ownership, payments, staffing
• We start in Thailand
– because it is difficult, but not too difficult
– Lessons learnt are applicable to rest of region
• After Thailand
– Indonesia
– Then Philippines, Malaysia, Singapore, and Vietnam

31. Notable investments into Thailand-based companies
Company
Date
Q4 2013
Q2 2013
Q3 2013
Q3 2013
Q2 2013
Investor(s)

32. Challenges for Entrepreneurs and investors
• Building a team is tough
– People/HR/Culture scaling - Expertise to build a 500 person team in 18 months
– Tech scaling - Expertise to build tech that scales to 100s of millions of transactions
• Think big vs perceived lack of capital
– Historically have grown from cash flow – small, single markets
– MUST think regional – minimum 3 of 6 markets
– MUST think big problems – little solutions don’t sell for much
• Think exits
– Global acquirer doesn’t need your IP
– Does need your people
– So turn the tech model upside down – People are more valuable than IP

33. New Opportunities for Investors and Entrepreneurs
•
•
•
Similar to rest of SEA
Copying is not bad. OK to be inspired by proven models. Execution still very
hard
Focus on three things
– Team – competition is manageable so a strong team has head start
– Total addressable market – is it really big? Are you too early?
– Proven models – give you a roadmap, reduce risk
•
Ardent Capital – what are we doing?
– Basic infrastructure
– Transactional commerce – generate real revenue, easier to value, barriers to entry

34. Current Portfolio
Thailand
S.E. Asia
Thailand
S.E. Asia
S.E. Asia
Global
Sri Lanka
Indonesia

35. aCommerce.asia – Built by Ardent Capital
Online Orders
Storage
Quality Control
Phone Orders
Picking
Packing
Order Processing
Order Checking
Order Documentation

36. Full End-to-End Solution
Dispatching
Loading Motorbike
Cash on Delivery
Route Planning
Loading Truck
Delivering
Credit Card on Delivery
Customer Care Center
Finance & Accounting

37. aCommerce Warehouses
Bangkok
• Storage Space: 2,600 sqm
• Office Space: 500 sqm
• Central Bangkok on Rama III Road
Jakarta
• Storage Space: 1,515 sqm
• Office space included
• Central Jakarta location
• Same day delivery
• Same day delivery

38. aCommerce Clients – All in the last six months
No. 1 cosmetics and beauty
company in the world
No. 2 Largest Telecom
company in Thailand
B2B Beauty & Spa products
distributor owned by IBS Beauty
Malaysian online buying
and auction site
No. 1 messaging app in
Thailand (20M users)
No. 1 Largest Retailer
in Thailand
No. 1 Largest Retailer
in Indonesia
Leading online luxury cosmetics
and skin care in SEA
Largest Regional Luxury Online
Retailer (Funding $79M)
B2C Beauty & Spa products
distributor owned by IBS Beauty
B2B2C platform with 800 brands
and 20,000 different items
Blackmores, Australia’s leading
natural health brand
No. 1 Online Pet food and pet care
E-commerce site in Thailand
Premium Craft Beer with
hundreds of selectioin
No. 1 Online parenting Ecommerce site in Thailand
No. 1 Japanese TV
Shopping Network

39. Petloft (Pet Supplies) & Venbi (Parenting)
WhatsNew Thailand – Vertical eCommerce
Overview:
• Highly optimized model around customer acquisition
• Quidsi model in USA (diapers.com, wag.com) – sold to
Amazon for $545M
• Petloft is now number 1 in its space in 5 months
Key Data
• Annualized run rate revenue:
• Monthly Burn rate:
• Staff:
• Funding to date:
$2M
$100K
12
$700K
Three months’ top line average monthly growth of 47%

40. Thank you
Thank you
Adrian Vanzyl
CEO & Co-Founder
Email: adrian@ardentcap.com
+66 81 930 8308
946 Dusit Thani Building, 4th fl.,
Rama IV Rd. Bangrak,
Bangkok,10500 Thailand

41. Support Slides
•
Additional data slides follow.

42. Double Digit GDP Growth from 2007 to 2012
In contrast to the USA and Japan, Southeast Asia has experienced doubledigit growth in GDP per capita from 2007 to 2012
Cumulative Growth in GDP per Capita 2007-2012
Southeast Asia’s Average
30.2%
9.8%
5%
15.5%
60%
7,640
14.0%
7,425
12.8%
7,049
6,737
6,913
6,691
26.5%
2007
2008
2009
USA
43,228
43,636
2007
2008
37,185
43,070
2009
2011
2012
Japan
41,366
Source: Trading Economics
2010
2010
42,001
2011
42,447
36,392
36,817
36,473
36,161
34,822
2012
2007
2008
2009
2010
2011
2012

43. And further GDP growth is expected
Cumulative Growth in GDP per Capita 2012-2015
Southeast Asia’s Average
17.7%
6.7%
8.8%
5%
15.5%
60%
8,927
8,582
18.1%
18.8%
7,640
1%
2012
7,704
2013
41,486
43,112
38,975
2012
Source: Trading Economics
2013
2015
Japan
USA
42,447
2014
39,399
2014
2015
36,161
2012
42,085
2014
2015
36,963
2013

44. Disposable income has increased since 2007
Disposable Income per Capita [Male] (US$)
60,000
Disposable Income per Capita [Female] (US$)
60,000
Avg. CAGR =
9.26%
50,000
Avg. CAGR =
9.72%
50,000
40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
-
2007
2008
2009
2010
2011
2012
2007
2008
2009
2010
2011
Singapore
Vietnam
Thailand
Singapore
Vietnam
Thailand
Philippines
Malaysia
Indonesia
Philippines
Malaysia
2012
Indonesia
USA Disposable Income per Capita [Male] (US$)
60,000
USA Disposable Income per Capita [Female] (US$)
60,000
Avg. CAGR =
1.58%
50,000
Avg. CAGR =
2.37%
50,000
40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
-
2007
Source: Euromonitor
2008
2009
2010
2011
2012
2007
2008
2009
2010
2011
2012

45. …and will continue to grow
Disposable Income per Capita [Female] 2012-2015 (US$)
Disposable Income per Capita [Male] 2012-2015 (US$)
60,000
60,000
Expected Avg. CAGR
6.63%
50,000
Expected Avg. CAGR
7.16%
50,000
40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
-
2012
2013
2014
2015
2012
2013
2014
Singapore
Vietnam
Thailand
Singapore
Vietnam
Thailand
Philippines
Malaysia
Indonesia
Philippines
Malaysia
2015
Indonesia
USA Disposable Income per Capita [Male] 2012-2015
(US$)
Expected CAGR
3.14%
60,000
USA Disposable Income per Capita [Female] 2012-2015
(US$)
Expected CAGR
3.54%
60,000
50,000
50,000
40,000
40,000
30,000
30,000
20,000
20,000
10,000
10,000
-
-
2012
Source: Euromonitor
2013
2014
2015
2012
2013
2014
2015

46. Internet is the number one medium
Unlike the US, internet has surpassed TV in most Southeast Asian countries
as the #1 medium
Hours Spent per Week on Media
35.7
25
21.5
20.3
20.53
19.8
16.6
14
14
13.3
12
10.6
8.3
5.8
4
Indonesia
Malaysia
10.9
7.5
6.3
4.3
16 16.6
5
3.6
Philippines
Internet
Source: The Digital Media and Attitudes of Southeast Asian Consumers 2011, Nielsen; eMarketer
Singapore
TV
Radio
5.2
3.7
Thailand
Newspaper
4.8
3.9
2.22
Vietnam
USA

47. Credit card usage has increased significantly
Credit Card Transaction Value ($US Billion)
Indonesia
7.0
8.9
11.6
'07
'08
'09
16.7
19.1
'10
'11
20.5
22.2
24.4
16.4
17.5
20.1
'07
'08
'09
'10
'12
'13
'14
25.2
'11
29.7
32.8
36.0
6.2
7.2
9.6
'15
39.3
'16
42.7
'17
13.0
13.6
'07
'08
'09
46.1
'12
'13
'14
11.4
12.5
14.0
'15
15.8
17.2
20.2
'10
'11
Thailand
30.9
18.0
Philippines
5.9
30.4
11.1
Malaysia
14.0
27.1
Singapore
34.5
'16
18.1
'17
18.3
18.6
'07
'08
'09
20.8
30.0
32.0
23.9
27.9
33.9
25.9
'12
'13
'14
'15
'16
'17
46.1
49.1
34.6
37.5
40.3
43.2
'12
'13
'14
'15
'16
'17
2.2
2.6
3.0
1.8
'14
'15
'16
'17
22.2
'10
'11
Vietnam
'07
Source: Euromonitor
'08
'09
'10
'11
'12
'13
'14
'15
'16
'17
0.2
0.3
0.5
0.8
1.2
1.5
0.2
5.8
'07
'08
'09
'10
'11
'12
'13

48. Credit card and transaction volume will also grow
Number of Credit Cards
in Southeast Asia (‘000s)
50,265
47,631 49,351
42,159
53,254 56,071
Number of Credit Card Transactions
in Southeast Asia (millions)
64,248
58,856 61,609
66,749 69,101
1,857 1,942
903
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Source: Euromonitor
1,439
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
2007 Southeast Asia
Credit Card Transaction
Value
$56.12
billion
983
1,225 1,279
1,124 1,179
1,605 1,678
234%
Cumulative Growth
2017 Southeast Asia
Expected Credit Card
Transaction Value
$187.35
billion

49. Online Advertising is Totally Out of Line
In Southeast Asia, people spend 44% of their media time online, but only 2% of
advertising spending is devoted to online advertisement; however,
e-commerce is changing this
% of Total Ad Spend vs % of Total Time Spent on Media
60%
out of line
50.87%
50%
43.59%
40%
32.32%
34.48%
30%
20%
14.63%
9.46%
10%
4.79%
1.88%
0%
TV
Print
% Ad Spend
Source: Euromonitor, Nielsen
Radio
% Time Spent
Online

50. Biggest player in SEA - Who is Rocket Internet?
Rocket Internet has built over 100 companies in 50+ Countries
Started in 2007; headquartered in
Berlin
75+ active independent portfolio
companies
Indonesia
Malaysia
Philippines
Singapore
Thailand
Vietnam
Indonesia
Malaysia
Singapore
Thailand
Vietnam
Employing over 27,000 people
Raised over $1bn in 2012
Indonesia
Malaysia
Philippines
Singapore
Malaysia
Philippines
30+ exits
$2.5bn+ in revenue
7 companies currently in SE Asia
Indonesia
Malaysia
Philippines
Thailand
Vietnam
Indonesia
Indonesia
Malaysia
Singapore
Vietnam

51. Rocket’s SE Asia bets:
Started in Dec 2011
Started in Feb 2012
Adaptation of Zappos.com
Adaptation of amazon.com and
alibaba.com
1,300+ employed across the region
900+ employed across the region
Annualized Gross Run Rate: €115mm
Annualized Gross Run Rate: €92mm
Well over $126mm in funding
Well over $185mm in funding
Spent over $23mm in marketing in
2012
INVESTORS:

52. E-commerce has seen spectacular growth in SE Asia
Online Retail Sales Value in Indonesia, Malaysia,
Philippines, Thailand (US$ Billion)
13.05
9.90
7.57
4.80
5.07
2008
2009
3.86
2.71
1.95
2005
2006
Source: Online Retailers in Emerging Asia to 2015, ICD Research
2007
2010
2011
2012

53. Rocket Internet’s Lazada is catching up
Unique Visitors (‘000s)
+52%
2351
+84%
1550
1260
684
+60%
1086
679
+46%
430
Vietnam
Indonesia
Thailand
628
Philippines
235
166
Vietnam
Source: Southeast Asia Digital Future in Focus 2013, ComScore
Indonesia
Malaysia
416
-5%
137 133
123
490
577
-20%
295
328
-28%
…while Amazon is losing
visitors
-26%
+49%
Sep 2012
Mar 2013
Thailand
-5%
Apr 2012
Mar 2013
182 173
Philippines
Malaysia

54. More people living inside this circle than outside

55. Anything.lk
Anything.lk – The Amazon of Sri Lanka
Overview:
• Little competition, > 90% market share
• Path to exit started with 26% sale to Dialog/Axiata
(dominant carrier)
• Full product selection
• 100+ staff
Key Data
• Annualized run rate revenue 2014:
• Monthly Burn rate:
• Staff:
• Funding to date:
$5.8M
$112K
108
$2M