BT EXCLUSIVE

MoneySmart plans 2020 IPO, acquisition also on the cards

Singapore

ENTREPRENEUR Vinod Nair has a bold vision: to disrupt the financial advisory industry with MoneySmart, the personal finance portal he founded in 2009 to help consumers compare loans, credit cards and insurance.

He could be one step closer. He recently told The Business Times that the nine-year-old startup is poised for an exit, a move that will offer it more ammo to create a better product. It has set its sights on an initial public offering (IPO) in 2020, although an acquisition is also on the cards.

"We would consider listing on the Singapore Exchange as it would make a nice Singapore story. But whether or not the market is large enough is always a question," said Mr Nair, who is also considering the Stock Exchange of Hong Kong, Australian Securities Exchange and Nasdaq.

The MoneySmart founder is not ruling out a trade sale of the company to larger competitors or even Chinese Internet giants such as Alibaba and Tencent, though it is "harder to plan for an acquisition", he said.

"So our approach for now is to build a solid company, with strong revenues and profits, that can be listed."

MoneySmart received an acquisition offer in 2015 from a "larger startup in Asia", but turned it down as the "valuation wasn't right". Mr Nair said: "We saw a lot more growth potential in the company then."

In June 2017, MoneySmart raised S$14 million in Series B funding led by Japan's online service provider Kakaku, a round believed to value the startup at more than S$50 million. BT understands this translates to a target exit price of upwards of S$200 million.

Asked who would make a good buyer, Mr Nair pointed to a company that will "see through the impact the startup wants to make". That is, to remove the stress of financial planning by providing personal finance content in an objective, timely and transparent way.

"Banks and insurance companies are not good fits as they would want our content to be skewed towards their products."

Instead, the startup is open to larger financial aggregators such as MoneySuperMarket in the UK or NerdWallet in the US, Mr Nair said. "Both have no Asian presence at the moment."

Since its 2009 founding, MoneySmart has expanded from Singapore to Indonesia and Hong Kong, with plans for two other South-east Asian markets in 2019. It has raised US$12.6 million in venture capital - and was profitable as at June 2017 when it bagged its Series B funding.

But the business is now in the red, after a chunk of its money was used to "invest in growth", including its recent expansion to Hong Kong, Mr Nair told BT.

"I started MoneySmart because of the mis-selling and misinformation from bank and insurance salesmen who would recommend the wrong financial products just to earn more commission."

MoneySmart's solution? An unbiased portal that offers side-by-side comparisons of different personal finance products, including some 40 credit cards; home, car and education loans; as well as life, travel and maid insurance. It makes its money through performance (a fee for every successful product application that's referred by its portal) and advertising. Some 80 per cent of revenue comes from performance, said Mr Nair.

MoneySmart's competitors here include SingSaver, GoBear and GET.com. SingSaver, founded in 2015, is backed by its parent company, CompareAsiaGroup, which has a funding war chest of some US$96 million.

Mr Nair said: "Our rivals have raised millions, but we've been capital-efficient. We don't need to be the most well-funded company to succeed. It's about operations and taking a long-term view on building value."

He has two motivations as a founder. "The first is the magnitude of impact that my startup can create. Our vision is bold. We want to render financial advisory redundant."

To get there, MoneySmart intends to evolve from a comparison portal to a service that is "more involved in people's lives" - reaching out to people at different stages in their lives to help them with their financial decisions.

His second motivation is the professional and personal growth of his employees. "There is a big sense of motivation for me to see them grow as people. As the company gets bigger, I am more removed from its day-to-day operations. But I continue to think about how I can create the best environment for work, such as a workplace with no politics."

Should MoneySmart's exit plan materialise in 2020, it could mark the biggest exit for SPH Ventures, a major investor in MoneySmart, having led the startup's US$2 million Series A funding in 2015.

SPH Ventures, a S$100 million fund launched in 2013, is the investment arm of Singapore Press Holdings. Formerly known as the SPH Media Fund, SPH Ventures has backed over 30 tech startups, and seen two publicly-announced exits.

Advertising exchange Smaato was acquired in 2016 for about US$148 million by Beijing-based Spearhead Integrated Marketing Communication Group. E-commerce platform Kudo was acquired in 2017 for an undisclosed sum by ridehailing giant Grab.

SPH Ventures CEO Chua Boon Ping said: "We like the market dominance that MoneySmart enjoys in Singapore, as well as Vinod's vision to be a regional player. We are very bullish about this investment as MoneySmart has a proven monetisation model."

He noted that MoneySuperMarket in the UK is a listed entity "that is in the same business". "Hence, we see IPO as a viable outcome. At the same time, the footprint that MoneySmart has also makes it attractive to strategic acquirers."