A leading entrepreneur says there is hardly a better place in the region for technology start-ups to take root than Singapore, owing to the accessibility to funding and its stable regulatory environment.
Mr Joel Neoh, who headed Groupon in the Asia Pacific, was speaking to The Straits Times on why his new venture KFit has been incorporated in Singapore.
“Singapore is well positioned, if not the best positioned, for Asia’s start-up scene,” he said.
“First, there is ample financing to be had here, with dozens of venture capital firms and private equity funds springing up here in just the past few years. That in turn is the result of the ease of doing business and transparency in Singapore.
“In its two rounds of fund-raising so far, KFit’s investors have been super comfortable with the laws and requirements here. Raising funds is easy because investors like that predictability.”
Launched in Singapore and Malaysia in April, KFit attracted its latest investment round two weeks ago, securing US$3.25 million (S$4.6 million) from a group of venture capitalists led by Sequoia Capital.
The firm offers a single monthly membership that allows subscribers to access more than 2,000 fitness locations – such as gyms and yoga studios – operated by more than 1,000 partners in 10 cities.
“Fitness-sharing” platforms like KFit are popular in the United States, but are just starting to emerge in the Asia Pacific as consumers seek a more convenient and cost efficient way to stay fit than having multiple memberships for various classes and facilities.
Similar platforms include Passport Asia, with a network across eight cities in Asia. But with about 130,000 subscribers, KFit is the biggest of the crop now, Mr Neoh said.
“In Singapore, KFit has over 250 partner locations and 30,000 subscribers – one of our top three markets so far. Judging from our internal data, we are confident that Singapore, along with our entire network in Asia, can grow by two to three times its current size by year-end,” he noted.
KFit is hoping to be the dominant player to tap the substantial headroom for growth in the Asia Pacific, where only 3.8 per cent of people have a gym membership.
“If that penetration even goes up a bit to 5 or 6 per cent, we will have a tremendous growth opportunity.”
But for now, the company is not yet profit-generating.
“At this stage we have to ensure we can deliver value to both customers and partners. We have to invest in building that trust and relationship. It may take at least another 24 months before we can turn a profit. By then hopefully our subscriber base will grow to millions.”
Mr Neoh is aware that it is taking time for KFit – and in fact all disruptive solutions – to gain wider market acceptance.
“To be successful an innovation cannot just be disruptive. You have to position yourself as a collaborator in a reform and make sure your service complements the existing solutions. For instance, a fitness sharing platform like KFit can help fitness operators improve their low utilisation rate, which in Asia is just under 10 per cent.”
Nonetheless, the time is certainly now for new tech solutions and start-ups to spread their wings, said Mr Neoh, who co-founded companies such as Says.com, a media firm merged with Catcha Media in 2013 in a US$20 million deal.
Sectors such as financial and health technologies are eye-catching now, he noted, while opportunities in the online-to-offline segment remain enticing. “O2O” companies like Groupon focus on attracting consumers online to physical stores.
“In the US and China, some 92 per cent of retail spending is still offline, despite the rapid growth of e-commerce platforms to capture the demand online. So I think there’s still a huge opportunity for technology companies to… create a better experience for customers.”