Now that 5G telecoms networks become the norm, we are about to see an influx of new technologies that hadn’t been possible before, says Edgar Hardless (pictured), chief executive of Singtel Innov8, the Singaporean telecoms company’s strategic investment arm.
And Singtel Innovate wants to be at the forefront of investing in this new tech ecosystem.
The unit was formed in 2010 with $250m and has operated as an evergreen fund, but Singtel provided a further $100m earlier this month, shortly after announcing it had surpassed 95% 5G coverage of its home country of Singapore, the highest percentage in the world. It is acting as a ‘big catalyst’ for technology, Hardless says.
“There’s a huge impetus for us to look for potential solutions that can drive usage of the 5G network,” Hardless tells Global Venturing. “We’re still looking at the consumer side and which applications are going to drive greater adoption of 5G, but a lot is happening on the 5G enterprise side.
“What we’re seeing is that there are a lot of innovations and new technologies coming out that want to leverage the low latency, multi-connectivity, high-bandwidth capabilities of 5G, and so we feel now is a really good time to make sure we have sufficient capital reserves to be able to deploy into these new technologies we think will help drive better services to customers on our 5G network.”
There are basically two ways 5G will strengthen the technology ecosystem according to Hardless, one of which involves utilising lower latency to make existing products 30% to 40% faster or more efficient.
“I think that’s where you’re going to see a lot of the initial use cases of 5G,” he says. “Making existing products and solutions even better than they were before. That obviously has value.
“But I think the more exciting opportunity is where 5G for the first time is going to enable new products and solutions which were not possible before, because the benefits and characteristics of 5G will enable those capabilities.
“You’re seeing edge compute as a big space, a lot happening in the industrial space like manufacturing 4.0, in terms of the potential for 5G to connect all your sensors and robotics in a low-latency way that can allow you to dynamically change and affect things in a factory, for example.”
ESG technology space continuing to heat up
Singtel Innov8 has been a big investor in the digital economy, backing online service providers as diverse as medical services portal Halofort and used vehicle marketplace Carro. Hardless says that trend accelerated during the coronavirus pandemic, especially in Southeast Asian markets.
A big recent growth area, however, has been in environmental, social and governance (ESG) technology, as businesses and governments set sustainability targets and then have to access the artificial intelligence and automation tools to measure and monitor their activities.
“It’s not like sustainability has suddenly become important this year or last year, it’s been a gradual process of understanding” Hardless says.
“But as a venture investor, we can only invest in industries once they appear. And it’s only in the last two or three years that we’ve seen a growth in companies which are now trying to help enterprises of all shapes and sizes get a better understanding of what they can do to reduce or limit their footprint.
“We’ve always been looking at that space but now we feel companies are starting to emerge and there’s impetus. I think you’re going to see critical mass in this space in the next 12 to 24 months. Therefore, we feel it’s a good time to be deploying capital, which will benefit Singtel and its group companies directly but which will also help us evolve and understand this important space.”
The importance of looking outwards
In addition to being the oldest CVC unit for a telecoms business in Southeast Asia, Singtel Innov8 is unique in that it invests internationally, maintaining offices in the US, Israel and China. Many of its consumer-facing deals are in local markets while it tends to look overseas for deeper tech, offering portfolio companies help in cracking local markets.
“Singapore is a small country and from that perspective, a lot of the best-of-breed technology we would want to use as a telco is not really found there. Therefore, looking at emerging technologies and solutions in places like Silicon Valley is really important,” Hardless says.
“We realised we need to be where tech is being developed and emerging. From a deep tech perspective, places like the US are where you have to be for things like artificial intelligence, cybersecurity and machine learning, and Israel in a similar fashion, though it maybe has a greater focus on cybersecurity. New software-as-a-service products will typically originate from the US or Israel.”
Singtel Innov8 has no plans to set up any more offices but one notable way in which it expands its reach is through partnerships.
The unit works with local peers like Deutsche Telekom, Telefónica and Orange in Europe while being part of a formal network of Southeast Asian funds within the Singtel group, such as Globe Telecom’s Kickstart Ventures and Telkomsel unit Telkomsel Mitra Innovation.
“We’re also a tech scout and our job is to bring all these companies back in so we felt having presence in these markets was a much better way to make sure we had the proper engagement with startups,” Hardless says. “In the Philippines for example, we don’t have an on-the-ground presence, so having Kickstart referring good opportunities is great for us – their network carries a lot of value to us.
“I’m sure other VCs in this part of the world would love to do it but it’s not cheap. We do work very closely with our sister CVCs and we provide them with deal flow in anything we’re interested in. Because if a number of them also want to co-invest alongside us then that portfolio company now has direct investors in Singapore, Indonesia, the Philippines, and their ability to accelerate their go-to-market is considerably increased.”
