Digital telco startup Circles.Life bags funding from Warburg Pincus

SINGAPORE-BASED telco startup Circles.Life announced Tuesday it has received funding in an equity round from global private equity (PE) firm Warburg Pincus to further fund growth and for expansion in new markets.

The startup did not divulge the investment sum, but injections from growth investor Warburg Pincus typically extend to a few hundred million US dollars, according to data from CrunchBase.

The firm has more than US$58 billion in assets under management, and in June last year announced the close of China-SEA II, a US$4.25 billion fund that will primarily invest in Chinese and South-east Asian portfolio companies such as Circles.Life. Previous investments include ride-hailing firm Gojek and retail analytics startup Trax.

Circles.Life had also named venture giant Sequoia Capital India, Singapore's Economic Development Board investment arm EDBI and Silicon Valley's Founders Fund as its earlier investors, with its latest undisclosed funding round announced just eight months earlier in June.

The company plans to use its fresh funds to tap two more new markets by the end of this year, with its eye on potential markets in the Asia-Pacific or the Middle East. It will also use the funds to strengthen its position in its existing markets Singapore, Taiwan and Australia.

The startup also plans to launch more "non telco-related" digital services to engage customers, said co-founder Abhishek Gupta, such as personalised content discovery, ticket booking or even financial services.

Circles.Life said it would spend more than S$250 million to move into at least five markets by end-2020, according to previous reports in The Business Times.

One of the ways the startup decides which markets to focus its funds on is based on how a customer's lifetime value weighs against the cost of acquiring the same customer.

For example, in Singapore - one of the startup's most valued markets - this ratio is high. The average consumer is expected to spend five to eight times more on Circles.Life's products during their lifetime compared to what it costs to invest in each customer, said Mr Gupta.

He added that this comes as the company is increasingly able to significantly lower operation costs, building operating systems in-house such that they would only need to spend about one-tenth of what a traditional telco would spend on its capital expenditure.

Mr Gupta said the startup has also managed to automate services including customer service and customer onboarding processes, where "the cost of running or servicing each subscriber has also been slashed by a factor of one-tenth".

As such, Circles.Life said its average revenues per user (ARPUs) have consistently been "10 per cent higher than the rest of the market". Monthly postpaid ARPUs of its competitor hovered around S$40 in recent quarters, according to its financial results.

Saurabh Agarwal, managing director at Warburg Pincus, said: "We see a tremendous growth opportunity for Circles.Life, particularly within the rapidly digitising mobile market in the Asia-Pacific. The industry has not adapted quickly enough to provide a seamless experience to its customers in this new age, creating a large white space for technology-enabled challengers."

Since its inception in 2016, the digital mobile service has grown its subscriber base to capture more than 5 per cent of the Singapore telco market, said Mr Gupta, with a compounded annualised growth rate of over 200 per cent.