A Brave New World
The Aaron Sarma Newsletter | Issue #5
Goodbye to you, 2022
Here we are at the end of quite an eventful year.
On a macro front its been quite a whiplash from what most of us thought 2022 would be as we put the pandemic behind us. We were instead faced with rising inflation, a war, challenges with the supply chain and locally, political uncertainty.
That said, locally we finally saw some sort of closure with a new government being elected. We have a new Prime Minister, a new cabinet and finally, some hope for stability and direction as a nation.
On a professional note it was a year of ups and downs. At ScaleUp Malaysia we announced 11 new investments this year which brings our total portfolio to about 30 companies. We have also started recruiting for our next cohort with a larger cheque size of $100k (~MYR440), more targeted program structure and the same great team.
At Remote Ventures, we added Alive, Fit & Free and CargoMove to our portfolio of venture built projects. We also have a 6th venture in the pipeline that we’ll bring to market in the middle of 2023. We’re seeing a lot of interest from corporations to collaborate with us on incubating new projects. I think there’s huge upside for MNCs, GLCs and larger SMEs who want to innovate and self-disrupt.
It’s been a tough year for many of our portfolio companies. Deals took much longer to close and some rounds didn’t quite pan out as planned. That said, I’m pleased that across my collective portfolio of 36 companies, all are pushing to grow and at least a dozen are in the process of closing new investment rounds or striking key partnerships. As the adage goes, “Tough times never last but tough people do.”
A highlight of the year for me was heading to Silicon Valley for the first time with the team from The Hive and SIDEC. I made some really great connections there and we ended up participating in VC Lab to learn best practices from the best in the world. I’m glad that a few connections have also joined VC Lab in their most recent cohort.
So farewell to the year that was. Thank you for the lessons learnt, the memories earned and the friendships made.
What I’m Looking Forward To
Bring It On 2023
Over the last few weeks I’ve shared some thoughts on my expectations for 2023. I also moderated a forum on Venture Trends. Here’s a summary for what I’m keeping my eyes on:
Macroeconomic Trends: The big question isn’t about whether there will be a recession or not. Most economists agree that 2023 will be tough year economically, if not a global recession. Much of this has to do with geo-political stability and what will happen with the FED’s interest rates. That said, I don’t expect all markets to behave in a similar way. ASEAN and its 650m person market is going to be of great interest to investors as the next great frontier. Malaysia has a role to play in this landscape. We have much catching up to do and I’m looking to the new government to institute policies to attract capital and talent to foster innovation.
Investor Views: For venture capitalists and investors alike, the slowdown means better deals, with more upside. A recession filters out weak would-be entrepreneurs from starting up and spotlights better run startups thus raising average quality of deals. Most investors I speak to say that they will maintain their current pace of investing and may in fact increase their investment velocity.
Entrepreneur Opportunities: Startups will also see an improvement in the economics of execution caused due to lower costs of operations and availability of talents across skillsets but particularly in tech. A recession creates new problems or aggravates existing problems. This creates new opportunities for start-ups thus spurring innovation and adoption. A slowdown will impose greater cost discipline on start-up operations which will favour business models that prioritise revenue over growth.
Growth Sectors: I’m looking at 3 areas over the next year. If you’re building something cool that addresses these sectors, we should talk.
The first is Agritech. Malaysia has a large agriculture economy with plantation conglomerates and smallholder farmers who are looking for solutions that help them improve efficiencies and lower costs. Agritech innovations will serve to help solve meaningful issues including food security, sustainability, and rural development, which makes it an exciting field of innovation.
The second space I’m looking at is whats happening with generative AI. I wrote a post on LinkedIn about the possibilities with generative AI which got some decent traction recently. AI can now be used to create recipes, draft fitness regimes, create blog posts, write code and create images, such as the one above. The technology is only in its infancy but it’s going to be really interesting to see how entrepreneurs and society at large will adopt these solutions to solve problems.
Finally I was really encouraged to see that one of the first priorities highlighted by Prime Minister Anwar Ibrahim was to address the cost of living crisis in Malaysia. This is an opportunity for the digital economy to step forward to provide new businesses that could create job opportunities, and avenues for up-skilling and re-skilling. I think this is an opportunity for startups to bring forward solutions to help the economy at large. The cost of living crisis is not just in Malaysia so great solutions can be exported to other markets.
What are you hoping for in 2023? Leave a comment and share your thoughts.
Stuff I’ve been up to
Out And About
I’ve had a the privilege of sharing my views over the last few weeks on several mediums. In case you missed it, here’s a quick summary:
Post GE-15 Live Analysis, Astro Awani - Got on a 90 min session with Ibrahim Sani to discuss the then stalemate of the election. We talked about a range of issues about economic sentiments, market forecasts, and political stability through the lens of the business community.
Technology startups & the commercialisation journey, Mranti i-Nation - Malaysia’s commercialisation rates are 12x lower than nations such as Japan and the US. I moderated a lively conversation with Lilyana Latiff from Beta Foundation, Dr. Eric Balan from Asiatech Education, Carl Malmqvist from Axis Communications and Regina Summer of Vinnova, who called in from Sweden about what we can do to close the gap.
Startup Ecosystem In Malaysia & India, Malaysia Chapter of ICAI Annual Day 2022 - I sat on a panel featuring Sandeep Agarwal of MICAI, Raymond Siva of MDEC and Mir Shahriar of 360tf which was moderated by Dato Beatrice Nirmala of IBR Asia Group.
The Pros & Cons of Running A Business At Home, BFM - What’s it like as an employee and a business owner in the post-pandemic world? I had a chat on BFM
Web3: Real Opportunity or Just a Myth, Juwai IQI Adapt Conference - I’ve always had a strained relationship with Web3. I believe in the potential of the technology but I’m often turned off by the hype. I discuss this in this video.
C-Suite Exchange, Asia CEO Community - The Asia CEO community is a network of leaders from around the region. I had a quick interview about my entrepreneurial journey and the work we are doing at ScaleUp Malaysia and Remote Ventures.
2023 Startups, The Growth Engine, Astro Awani - I jumped on a call with Ibrahim Sani to talk about what our thoughts are on what 2023 holds for startups and SMEs in Malaysia. We discuss investor sentiment, the importance of talent and capital and the need for a steady hand to guide us through these challenging times.
Stepping Into An Uncertain 2023, The Edge - I shared some views on 2023 along with industry leaders such as Udhay Furtado from Citigroup Global Capital Markets Inc., Jaffri Ibrahim from Collaborative Research in Engineering, Science & Technology (CREST) Center, Alvin Gan from KPMG Malaysia, Rachel Lau from RHL Ventures, Sivavenayakam Velayutham from 25 Startups and Peter Wee from Malaysian Business Angel Network (MBAN).
Signing Off
Thank You
I’d like to share my utmost appreciation to all of you for subscribing and reading this newsletter. It started as a challenge I set for myself and I’m heartened to see that so many seem interested in these often times lengthy ramblings. Every DM, email and comment goes a long way in helping me think through issues and communicate them effectively.
Here’s to a great 2023! It’s an honour being on this journey with you.
Onwards & Upwards!