Singapore start-ups eye Malaysia for growth
Calyn Yap 
SINGAPORE start-ups may give their Malaysia counterparts a good run for their money in the quest for expansion.

By nature, start-ups target aggressive regional expansion, so it comes as no surprise that the majority of Singapore’s ventures consider entering Malaysia as a logical step.

What makes them different is that they target niches with specific offerings, as compared to start-ups in the country.

FocusM speaks with two Singapore start-ups – soCash and Ezyhaul – on their business models and expansion plans in the country.

Financial technology (fintech) company soCash provides a digital cash management platform for banks, while logistics technology company Ezyhaul offers a Grab-type solution that connects shippers with road freight hauliers. Both target the business-to-business (B2B) market.

Going against the tide
While most fintech start-ups focus on mobile wallets and e-payments, soCash is heading in the opposite direction by focusing on cash.

The digital cash management company, founded by ex-bankers, enables users to withdraw cash from nearby “cashpoints” instead of ATMs. Cashpoints are typically small businesses or merchants.

Transactions take place via the banks’ own mobile apps, which soCash is integrated into. For example, the user places an order with soCash within an official banking app, selects a nearby cashpoint and picks up the requested sum.

This is done without the need for machines, cards or pin codes. soCash is then paid a transaction fee by the bank, which it shares with the cashpoint.

“Data from central banks indicate that there were over 761 million ATM withdrawals last year, and the number is growing.

“As the economic growth continues and the population increases, consumption is mostly transacted in cash,” says soCash CEO Hari Sivan.

He says it is likely that demand for cash-based consumption will continue to increase in the foreseeable future, which is an opportunity the start-up wants to tap.

Apart from benefiting consumers, it also benefits the banks and cashpoints.

This is because banks have traditionally made cash withdrawals available through ATMs or branches. But these are limited in reach and increasingly costly to maintain.

Hence, soCash’s solution helps provide banking customers with efficient access to cash while significantly reducing the banking industry’s need for infrastructure.

Small businesses and merchants benefit from additional foot traffic

In the case of cashpoints, small businesses and merchants benefit from the additional foot traffic to their premises and receive a cut of the fee paid by banks for each transaction.“Driving around searching for an ATM and then queuing up to withdraw cash is something we have gotten used to, but it is painful for consumers.

“Banks are finding it hard to set-up new ATMs and expand the network because it is very costly.

“On the other hand, there is cash floating all around us – in shops, with neighbours, colleagues and even strangers.

“Our idea was to digitally match cash demand with supply and bypass the ATMs,” Hari says.

For soCash, he says Malaysia is a “perfect market” owing to its high smartphone penetration rate and good digital infrastructure in urban centres.

“We are in early discussions with the banks and are encouraged by the sandbox framework defined by Bank Negara Malaysia.

“The good news is that we work for banks and don’t disrupt them. Once we define our strategy for the country and finalise our partnerships, we will approach the regulator,” he says.

The start-up has all the major regional banks with a strong digital focus in its sales pipeline, including those with businesses in the country.

That said, Hari needs to consult the regulators and go through the sandbox process if required before launching the platform.

Malaysia is the latest country to set up the fintech regulatory sandbox in an effort to help start-ups experiment with new products and services in a safe environment.

Logistics ecosystem
While there may be existing logistics tech start-ups in the country such as theLorry, iKargo and EasyParcel, they have different business models, offerings and target markets from Ezyhaul.

The company connects shippers with pre-qualified and reliable hauliers that have unutilised capacity in their trucks that ply domestic and cross-border areas.

It focuses on trucking, from vans to small lorries and 40-footers that handle long hauls.

The main difference between Ezyhaul and other logistics tech start-ups is its sole focus on the B2B segment, says Ezyhaul chief operating officer Mudasar Mohamed.

“All our applications, systems, processes and standard operating procedures have been built to meet the specific and challenging needs of this segment, like high standards for security, timeliness, visibility and insurance,” he says.

Mudasar says it is estimated that 65-70% of return loads in Southeast Asia are empty, and truck utilisation rates average just 40-45%. By using Ezyhaul, empty capacity and losses through return journeys can be significantly reduced.

All drivers on the platform are required to install its mobile application in their phones, similar to Grab’s offering.

Through the app, Ezyhaul drivers can receive and manage shipments, create e-proof of delivery, navigate to the pick-up and delivery addresses, and communicate with clients.

Shippers, on the other hand, can place bookings via its web interface.

Ezyhaul also works with its larger clients to enable seamless data transfer between the two parties’ systems.

Malaysia is its launch market, and its network includes over 1,000 trucks of various capacities.

Its sales director Nicky Lum says the aim is to have at least 3,000 trucks registered on the platform within the first 12 months.

“However, we value quality over quantity. As such, we vet all transportation companies that we take on board to ensure they can meet our clients’ strict requirements in terms of security and service levels,” he says.

The start-up takes carriers or truckers through an extensive 11-point checklist prior to registration on its platform and has plans to provide training to drivers on safety and other aspects of its service.

Meeting the challenges

SOCASH is a financial technology (fintech) start-up with a digital cash management platform for banks, while Ezyhaul is a logistics technology start-up that connects shippers with road freight carriers.

These start-ups are fast gaining ground but continue to face challenges as well.

“It took us a while to create the minimum viable product, define the business model, put up a team and raise funds,” soCash CEO Hari Sivan tells FocusM.

Fortunately, the start-up was given a financial grant by the Monetary Authority of Singapore, which enabled it to build the right technology stack.

Some of soCash’s challenges include dealing with regulations, finding the right talent, making decisions on scaling up and choosing investment priorities.

It has secured investments of over US$925,000 (RM4 mil) to date and is in the midst of raising more funds from its institutional round.

Its product roadmap covers the spectrum of cash-based transactions, which includes withdrawal, deposits and conversion.

Meanwhile, Ezyhaul CEO Raymond Gillon says building and expanding the business to keep up with its growth is a key challenge.

“Sometimes it is difficult to find the right balance between the speed of our growth and the thoroughness of finding the right people, but thus far we have been successful in building a very strong team of enthusiastic people that have the right experience and a start-up mentality,” he says.

Ezyhaul has raised US$840,000 (RM3.6 mil) from investors and has earmarked the funds for product development, expansion in Malaysia and venturing into other key Southeast Asian markets such as Thailand and Indonesia, by Q3 this year.

This article first appeared in Focus Malaysia Issue 240.