Supporting businesses with a social impact

Climate change affecting crop yields. Industry 4.0 technologies transforming jobs and industries. Digital media reshaping the way we live, work and play. These are but some emerging trends that are impacting the world.

For venture capitalist Farquhar Venture Capital (FVC), food-tech, Industry 4.0, digital media, and medical and financial technologies are key areas to watch in the coming years. And it wants to support startups that come up with innovative and sustainable solutions to problems arising from these trends.

"Working among innovative and enterprising startup founders who aspire to change the world inspires our work daily," says chief investment officer Jason Su. The firm is also on the lookout for startups that have products or services that can mitigate income inequality and solve problems arising from an ageing population, he adds.

FVC is an Honouree in the Brands for Good 2021/2022 Awards, under the Capital for Good category. In this bracket, investment funds, including those managed by venture capitalists and family offices, are recognised for generating good returns from funding companies that have a social and environmental impact.

Most venture capitalists provide capital to companies with high growth potential, such as a tech startup, in exchange for an equity stake. Many of them play a significant role in providing advisory as well as resource and funding support to ensure a young company's success.

In much the same way, FVC provides promising startups access to capital and other resources required for growth through its extensive regional network spanning small and large businesses and investors. Through its network, startups can access capital, users and markets for their products and services.

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FVC also provides mentorship, guidance and advice on business development and expansion. It is also an Enterprise Singapore appointed Accredited Mentor Partner.

"What sets us apart from other venture capital firms is our unyielding attention to add value to our startups through deep connections with SMEs (small and medium-sized enterprises) and LLEs (large local enterprises) that are otherwise constrained by human capital limitations to invest in technologies continuously," says Mr Su.

"Often, our SME and LLE network provides the first commercial contracts that help propel our startups on trajectories that can enhance their survival chances. Besides making financial gains through investing in startups, the SMEs and LLEs can also improve their technological connectivity through working with the startups in our portfolio."

According to a December 2021 report by market intelligence platform CB Insights, 70 per cent of young tech companies fail - usually around 20 months after their first fundraising effort. Clearly, it takes more than a good idea to ensure success.

By building an ecosystem that connects SMEs, LLEs and startups, FVC aims to future-proof local enterprises.

Building resilient businesses

Since its founding in 2020, FVC has helped numerous companies as they adapt to new business processes and technologies. The journeys haven't always been smooth sailing.

"For example, many of the founders we support may not have the right mindset at the start to withstand the immense emotional and financial pressures that they will experience in their journeys. It could be an extremely painful process for the founders to get used to the pressure and we will do all we can to support," says Mr Su.

Some founders are more cognisant that as a startup, there is a need to make every dollar work harder and every hour more productive, he says.

Mr Su points out that both FVC and the startups it backs have to be "financially viable with minimal resources". He adds, "The emotional and financial pressures are immense."

To further ensure a startup's success, FVC also focuses heavily on helping these smaller companies integrate environmental, social and governance standards into their operations.

"Research has shown and we have, in our experience, observed that companies that are socially responsible tend to, in the long run, perform much better than the average company," Mr Su says.

If a startup falls below the threshold of its proprietary ESG score but shows enormous growth potential, FVC will design a post-investment plan to improve its ESG scoring, usually through enhancing corporate governance and human capital.

"We are committed to ESG as it is the right thing to do. Doing the right thing, we believe, will always yield good results in the long run," Mr Su says.