On June 24, 2021, senior executives from the largest FinTechs in Southeast Asia announced that they have banded together to launch Fintech Angel Operators (FAO), a network of up to 100 angel investors bringing their on-the-ground expertise to early-stage startups.
The FAO network includes individuals who hold senior appointments at top-tier FinTechs, including Grab Financial, PayPal, Stripe, Wise and Remitly. Members of the Fintech Angel Operators network are investors with FinTech operational expertise in Southeast Asia who are looking to invest angel-sized checks into startups. The group operates with a cohort-based syndicate structure and will include up to 100 FinTech founders, executives, and operators in its first batch.
Capital from the network will be deployed collectively by investors interested in the deal via a standard angel investment structure. This could include an SPV (special purpose vehicle) entity or Angellist. For startups operating in specific fintech verticals like lending, remittance, or payments, the network will bring unprecedented access to capital from a curated group of operators from top FinTechs in the region.
Investors in the Fintech Angel Operators network are selected via an internal skills matrix to ensure that each specific skill set required to run a fintech — such as hiring, building a technical stack or fundraising — is captured by the expertise of an operator in the Angel network.
The network is evaluating a number of deals and intends to close its first investments by the third quarter of 2021. The pitch and raise process first involves a call with the FinTech’s founder and the network. This allows startups to connect with a group of relevant fintech angels while investors are able to bounce off each others’ insights and perform due diligence in real-time.
TechNode Global interviewed key members of FAO to seek their insights on the growing market for FinTech services in the Southeast Asia region with a particular focus on how the model of an angel investor network can accelerate growth in this space. We have insights from:
Vinay Palathinkal, Partnerships Lead for FAO and Regional Head of Wise for Banks; and,
Keng Low, Venture Lead for FAO and Co-Founder of Finantier.
What are the trends driving innovation in FinTech in the region?
Chia Jeng Yang:
Chia Jeng Yang, FAO Venture Lead, Co-Founder
Right now, there are a few clear trends. First, Open Finance is bolstered by the rising middle class — integrating the network nodes of FinTechs, consumers, and financial institutions.
We are also seeing an increasing consumer purchasing or savings power region-wide. What this means is an acceleration of consumer-facing financial services – retail investing, savings, card products, etc – that will be best served by the next generation of consumer-facing products.
B2B processes are also improving. After the first wave of digitization that was initially focused on e-commerce and digital consumer behavior, merchants themselves have become more digitized, and are seeking digital solutions. We’re seeing this across B2B payments, cross-border transactions, merchant financing, and other financial services.
Vinay Palathinkal:
Vinay Palathinkal, FAO Partnerships Lead
What will always be trend-agnostic is the importance of a quality fintech network. Regulatory nuances, compliance, and bank partnerships are not open-book access to every FinTech founder, and experienced operators can help bridge the gap from a knowledge and rolodex perspective.
Having been in the US FinTech scene for a number of years, I witnessed first hand how key super connectors in the fintech community – including investors, operators and regulators – have been a huge accelerator for ecosystem-wide growth. This is really what we are building towards with FAO – a FinTech intersection for those in the region with skin the game to co-align and develop frameworks for success.
What are the three key challenges facing both startups and angel investors that the Fintech Angel Operators aim to solve?
Vinay Palathinkal:
There are a few specific ecosystem challenges that FAO solves for:
First, strategic capital discovery for early-stage FinTech founders. In Southeast Asia, it can be challenging to find the right mix of strategic angels who can bring more than a financial investment to your cap table. FAO brings a curated cohort of angels who have been pre-vetted to connect with a founder.
Second, the multiplier effect for angel investors. Anyone who has been an on-the-ground operator in Southeast Asia knows that it is a complex and often fragmented market that requires specific industry experience to navigate. While this insight is incredibly valuable, without a syndicate-type network, the impact an individual angel can make is limited.
Third, we’ve set the intention and tone for the founder-angel relationship. From the start, one thing the FAO network was aligned on is that we want to provide founders with the largest value-add: check ratio. This means founders go in knowing that they have an angel operator in their corner, always ready to add value. What’s exciting is that our inaugural cohort already includes executives from some of the largest fintechs in Southeast Asia, with career experience spanning across Grab Financial, Stripe, Saison Capital, and more.
How will FAO address these challenges, and what unique advantage will an angel investor network provide?
Keng Low:
Keng Low, FAO Venture Lead, Co-Founder
Capital is cheap, experience is not. We believe that curating a list of FinTech operators is our key differentiator from other syndicates. FinTech founders who connect with us know that each of our angels has each been core to the growth of existing fintechs in the region and bring deep industry-specific expertise to the table.
We also make things easier for both angels and founders by doing direct group calls to streamline the due diligence process. This means that on their very first call with FAO they will already have the opportunity to be in conversation with multiple Angel Operators at once – saving time in sourcing and pitching to strategic angels. The live feedback loop is also helpful because angels can share their insights in real-time and founders can get a solid sense of potential industry response.
Can you tell us more about the mechanics of FAO? How can startups participate? How about angel investors?
Keng Low:
Startup founders can approach any of the FAO Committee via email our our contacts on the team page. We will then assess the company for a fit with the network, while getting an initial idea of which angel investors could add the most value.
For operators, founders and executives looking to join our inaugural cohort of angel investors can sign up via the following form: https://bit.ly/FAO-Members.
Will your network also include institutional investors or VCs, and does your model accommodate such capital infusion into portfolio startups?
Chia Jeng Yang:
Our thesis and network are focused on operators and executives who can add specific operational value to founders. Within our network, we’re connected to most regional and global venture firms, so startups exploring that route would have the opportunity to connect with institutional venture capital. However, our value isn’t focused around making these introductions.
