Deal focus: Smartly plans pan-SE Asia robo advisory

Estonian entrepreneur Keir Veskivali had always wanted to launch a company in Asia. His plan was to make his entry with a simple English teaching gig in China. But then his company, a robo advisory for retail investors called Smartly, started to get off the ground. A residency at an accelerator in London was canceled at the last minute, and Smartly made its stand in Singapore. 

For Veskivali, there was a personal challenge in doing it the hard way. But establishing a company in a highly regulated industry in an unfamiliar country where the business model was unknown did end up creating some healthy barriers to entry. Part of the reason the London plan was abandoned was that there were already several robo advisors in Europe at the time. The strategy paid off this week when VCG Partners, the Singapore arm of Vietnam’s VinaCapital, acquired Smartly for an undisclosed sum.    

“When we moved in 2015, there were zero platforms in Singapore, and nobody knew about robots. The regulator didn’t know how to regulate them, and they didn’t know how the platform worked. There were a lot of questions,” says Veskivali. “But at the time, fintech had just reached Singapore so we timed our arrival well, maybe with luck, but very thought through. Now, Singapore is a good place to start because the processes have all been mapped out now – but for robos, you have to be in a market with a very large population.”

One of Smartly’s angel investors helped connect the start-up with VCG in early 2016 when it was having trouble cutting through the local red tape for investment advisory licensing. That relationship made VCG a logical acquirer when Veskivali was ready to take the company international. He considers excessive VC funding and team building strategies a false step in the robo game, noting that the scant fees associated with the model require companies to stay compact and lean.

The plan under VCG is to go cross-border where the largest populations can generate the volumes that make a robo work. Indonesia, Malaysia, and Thailand are high on the list and, as developing markets with plenty of first-time retail investors, they could prove compatible with Smartly’s no-nonsense style of transparency and inclusiveness. 

In addition to the usual challenges around the region’s fragmented regulatory landscape, the biggest challenges will be fighting off competitors during a necessarily patient ramp-up and, perhaps more importantly, the untested nature of the robo business model in general. 

“The whole industry is still looking for the right niche and model that works well,” says Veskivali. “Companies are trying different strategies and ideas, what to communicate to customers. I don’t think anyone – even the biggest robots – has really figured out how to do it best. It’s hard to say what’s the best robot in the world today because it’s still a very new industry.”   

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• Topics
• Southeast Asia
• Technology
• Financials
• Buyouts
• Singapore
• VinaCapital