Singapore based venture capital firm and accelerator, TNB Ventures (TNB) has launched TNB Aura Fund 1, the only hardware / software focused fund in the region with a mandate to invest in IoT, Robotics, Machine Learning/AI and AR/VR. With a mission to become the next generation venture capital platform, TNB was founded in 2016 with the coming together of two very active accelerators and one Series A VC. In 2017 TNB will launch TNB Aura Fund 1, a SGD$50 million investment vehicle, that includes co-investment by SPRING Singapore, the Singapore government agency responsible for helping Singapore enterprises grow.
TNB provides early stage startups with funding support in 2 ways:
- TNB Accelerator: 6-9 month acceleration program with S$40,000 investment per startup;
- TNB Aura Fund 1: provides funding support from Seed to Series A/B stages
- Seed Stage: funds between S$250,000 – 500,000 per investment (looking to invest in ~20-30 companies); and
- Series A/B: funds between S$1-3 million per investment (looking to invest in ~15-20 companies).
Beyond investment, TNB is assembling a strong ecosystem of partners to provide startups in its portfolio with strong technical support, access to top tier corporate partners and mentorship.
Managing Partner, Vicknesh R Pillay, explains more:
How did TNB get together?
The 3 partners came together having managed our own proprietary investment vehicles. I came from an investment banking and real estate background, having set up a real estate fund with German capital managing about €350 million. After exiting the fund in 2014, which led me to start investing in other companies, I came across Michael Yap, former Deputy CEO of the Media Development Authority, who was hugely involved in the development of Block 71 and Singapore’s startup ecosystem, and Kelvin Ong, CEO of FocusTech Ventures and Executive Director of the Holding Company for leading HDD component maker, Seksun Group.
Thus, we had complementary skills and as we started to form our thinking about a new venture, SPRING Singapore announced the Advanced Manufacturing and Engineering Grant. We then created TNB, applied for the grant, and were one of only 7 VCs to be appointed as their specialised accelerator and receive funding.
So what is your investment approach?
We do not invest into e-commerce or marketplaces. Our thesis lies in the combination of hardware and software – the time is ripe for the intersection between the physical and digital. We invest into the hardware (sensors) and the software (where the IP and visualisation sits) knowing that by 2020 there will be >30 billion connected devices, and the size of the big data and AR/VR markets will be worth US$60 Billion and US$150 Billion respectively.
We felt there was a gap in Singapore to create a VC which supports its investments via a holistic approach, creating an ecosystem for success rather than just providing capital. We want to provide follow on capital, bring in corporate partners and even help with recruitment.
Another area of focus is that we provide access to corporates. If we find interesting startups we will introduce them to relevant corporate partners. For example, we would introduce a VR company to our travel partner Chan Brothers Group which has a lot of industry experience that can be leveraged to help the startup fine-tune its product.
We have also invested in this space by bringing on board PHDs in augmented reality and electronics engineering, and have our own talent management team which helps the startups with recruitment. It’s all about building the supporting infrastructure, so we are reinvesting management fees to create this ecosystem.
How do you access deal flow?
How do you access deal flow?
We are lucky to have Aura Group as our lead investor in the fund which helps to give deal flow from Australia. Plug and Play gives us access to the US, and Ruvento Ventures gives us access to Eastern Europe. Beyond that I would describe it as either natural or proactive deal flow:
- Natural – being a co-investment partner of SPRING Singapore where we get a lot of deal flow. Secondly, we have deep roots with the research bodies in Singapore with A*Star, NTU and NUS. Finally, we have a good network of investors/VCs who refer deals to us as well.
- Proactive deal flow – doing a global call such as this Sensing Cities Global Call & Accelerator Program 2016 to bring together a group of corporates with startups that are relevant to our investment thesis.
What is your strategy around corporates?
We want to provide corporates with a range of different options for their innovation objectives. Many of them spend millions of dollars to develop innovation strategies or they consider setting up internal investment funds. Our advice is to put a toe in the water via a platform like ours. For a sponsorship fee, they can get access to early-stage startups via the accelerator. Alternatively, they can invest in the fund (TNB Aura Fund1) and get access to everything we do. This doesn’t provide a full innovation strategy, but it complements it at a fraction of the price it costs to do it themselves.
As of now, our corporate partners include Chan Brothers Travel, Lignar Labs, A*Star, Temasek Polytechnic and Ngee Ann Polytechnic. We will soon be announcing partners in consulting and real estate.
What are you excited about in the property space?
AR/VR: We believe the way we view properties is going to completely change. Property sites will move from transactional to experiential, and there will be a lot of change in this space.
Estate Agents: There will always be a place for agents, but this will be reduced and the role will change to a service-centric role. It will be just like bankers who are paid a salary to assist you, rather than a commission on transaction.
What’s a good example of a successful exit your team has made?
One of our partners was a seed investor in Catapult Sports, a smart wearables company used by leading sports brands around the world. It listed on the ASX for a investment multiple of 15 times.
Finally, an update on the status of applications?
We have received >250 applicants for the Sensing Cities call, hoping to get 1,000 by 31 December when entries close.