Lee Bagshaw wants to assist early-stage and established Kiwi tech businesses raise capital and explore partnership and M&A opportunities in Southeast Asia. He explains why there’s never been a better time to do it.
With his extensive experience in the fast-growing Southeast Asian tech landscape, his connections with investors in the region, and recent appointment to boutique technology law firm Simmonds Stewart, based in Wellington and Auckland, Lee Bagshaw is in a unique position to advise Kiwi tech firms on capital raising, partnership, and merger and acquisition (M&A) opportunities in Southeast Asia. In Singapore for the past three years, Bagshaw was a partner at RHTLaw Taylor Wessing, leading their Asian corporate technology practice, “helping companies from both within and outside of Southeast Asia manoeuvre across the region, including raising capital from local and international investors”.
Prior to this he worked in the London office of Taylor Wessing, which regularly tops the rankings of UK venture capital law firms, and has extensive experience in mergers, particularly advising on the sale of technology businesses to international buyers. Now, having moved to New Zealand for family reasons, Bagshaw is keen to assist young Kiwi tech firms grow and access funding through his Singapore connections, as well as act as advisor and facilitator for more established New Zealand companies looking to expand into Southeast Asia through a partnership or M&A transaction. Bagshaw paints a positive picture of the Singapore tech community, with its business-friendly policies, and the possibilities that the 600 million strong, and well-connected, surrounding ASEAN market offers.
“When I arrived in Singapore in 2012 it coincided with an explosion of early stage technology companies being funded, partly fuelled by the government-backed National Research Foundation Technology Incubation Scheme (NRF TIS),” he says. “By the time I left many of those tech firms were receiving their next round of funding and Singapore had become an exciting tech hub for both local and foreign entrepreneurs.
“Aside from the influx of institutional money flowing into the tech sector, there’s a tremendous eco-system of conferences, co-working spaces, early-stage seed investment and accelerator funds, all supported by the government.”
One company that benefited from all this early-stage support was TradeGecko, he recalls, a company founded by three Kiwis, which has received more than US$1.2 million in investment funding while based in Singapore.
“Singapore’s the default landing pad for raising investment capital as well as for more established companies looking to expand across Southeast Asia.”
He says emerging Kiwi tech businesses have traditionally targeted Australia, the UK and the US when seeking capital outside New Zealand. “But they don’t necessarily appreciate the sheer amount of capital that’s flowing into Southeast Asia and the number of funding transactions being closed – both seed investment and follow-on money from local investors and from the likes of Japan, Korea and the US.
“Singapore is a truly international city, with more than 30 percent of its population foreigners. It’s just four hours behind New Zealand, and an ideal place to build a technology platform (being surrounded by emerging economies), even if your ultimate target market might be the US.”
Southeast Asia is attractive for inward investment in the technology sector as well, says Bagshaw, when you take into account the young tech savvy population, the rapidly growing consumer middle class and the anticipated strong economic growth. “Southeast Asia, as a region, may well become the third biggest economic powerhouse, behind China and India. Disruptive technologies will have a key role to play in this.” Bagshaw says Kiwi firms would be pleasantly surprised by the ease of doing business in Singapore. “Singapore ranks highly in the anti-corruption stakes, has a healthy respect for IP rights, and a similar common law legal system to New Zealand,” he says. Consequently any joint venture or partnership agreements put to you will not look too dissimilar from what you’ll see in New Zealand.
“Singapore has an international approach to documentation and investment models. In fact, much of the documentation I saw there for capital raising in the tech sector was heavily influenced by Silicon Valley and adapted for local requirements.”
Groundwork
Bagshaw says he’s often asked whether a firm would need to re-domicile its business in Singapore in order to attract seed investment; or can they take investment directly into New Zealand? “While there’s no reason, from a structural point of view, why an Asian investor wouldn’t invest into a New Zealand company, you really need to be on the ground in Southeast Asia to improve your chances of success,” he says. “If a Kiwi company is serious about raising capital in say Singapore, or indeed looking at Southeast Asia as a market for its product or service, then it needs to be there, on the ground in front of potential investors or partners. To sufficiently capture their attention, investors will want to hear how your business is relevant to Southeast Asia and how it can be scaled across the region.”
Being connected locally is also vital for understanding the regulatory regimes and how they conduct business, he adds.
The challenge for Kiwi businesses is in understanding the complexity and diversity, both in terms of regulations and culture, of the different ASEAN markets, Singapore aside. Establishing a presence in certain jurisdictions can take a lot longer than anticipated. And there’s the issue of foreign ownership restrictions, which vary considerably across jurisdictions in the region. It’s certainly not a place to do it alone without local partners and legal counsel. And selecting the best market to target first is key.
So if you’re an early-stage Kiwi tech business with a scalable product and Southeast Asia in your sights, then Bagshaw can help open doors to quality, institutional funding – both seed investment and follow-on rounds – as well as assist with exits down the track. He describes the funding landscape there as “explosive”.
“Deals can happen very fast. Seed funding rounds are often executed by way of convertible loans, as opposed to equity deals – and that can happen within a week.”
On the other hand if you’re a larger, well-established technology company looking at growth opportunities in Southeast Asia, he can assist with advice on structuring and entering into partnership arrangements. Most importantly, Lee can make introductions to the right people locally to help. It’s all about ‘bridging the gap’ between New Zealand and Asia, he says.
