Endeavour Ventures

Digital Natives Demand More

Digital natives are quick to adopt online solutions and ready to shun incumbents that aren’t able to meet their expectations.

Changes in technology have allowed financial institutions to provide a more diverse range of products, which in-turn requires adaptive distribution, monitoring and administrative systems.

Technology is also reducing fees and increasing the responsiveness of financial services, opening up the potential for new players to compete against the dated systems of incumbents.

Incumbents Cannot Provide It

While FinTech companies present a threat to incumbents, they are also able to help them grow and increase efficiencies in their operations. Legacy infrastructure weighs down the incumbents, preventing them from innovating quickly. One of the largest financial services providers has had their computer infrastructure likened to a giant rubber-band ball
of ad hoc fixes.

Employees in incumbents aren’t encouraged to take career risk and try new things. Any innovation in incumbents is typically slow to respond to changing customer preferences because of decision making hierarchies.

They are Forced to Partner Or Compete

Incumbents are being forced to either work with the new-comers or absorb them to offer their clients the same seamless services that they have come to expect in this age of instant gratification.

Of those incumbents that have worked with FinTech providers, 87% have been able to cut costs. While 54% of incumbents have experienced increased revenue from working with FinTech providers.

Endeavour Ventures believes that crypto-economics could be as powerful a driver of change as the internet has been. We will be at the forefront of the industry in Asia with the networks to invest in and help develop these protocols.

Infrastructure Development:

• For institutional funds to be able to invest in the crypto-economy, the infrastructure needs to develop further. Some early movers have benefitted from offering basic services to the crypto-economy e.g. wallets, fiat on-ramp, vanilla and derivative exchanges.
• There is a need for custodians, brokers and origination platforms amongst other solutions to develop before we see institutional buy-in.
• The economics will be centralized as the infrastructure is built out, we’ll be investing in this first stage through traditional equity structures.

Dissemination and Cross-Pollination

• Currently security tokens are subject to the same rules and regulations as equity offerings so there is limited reason to want to utilize them over traditional equity.
• Security tokens have additional benefits over traditional equity such as: 24/7 markets, fractional ownership, rapid settlement, reduction in direct costs (capital tables automatically maintained), automated compliance, and the ability to utilize smart contracts.
• We believe that assets, which have typically been in the realm of equity investments will be tokenized.

Decentralised Dissemination

• There are limited applications of new protocols that have been created to date with crypto-currencies. So far we’ve seen promising projects in sharing file storage, sharing compute power, ensuring ticket authenticity, flipping centralized marketing models, rewarding peer producers, transferring digital rights, and enabling identity verification, amongst other things.
• There hasn’t been any agreement on the most appropriate way to value these networks. The hype combined with Metcalfe’s law has made the market a moving feast.

High Propensity to Spend

Computer games (mobile, desktop and platform) and E-Sports are benefitting from a rise in popularity and profitability as new models emerge.

Gamers have a high propensity to spend. US gamers spent $36bn on video games in 2017. Only 5% of app users spent money in-app but the amount spent is 20x higher than the amount earned from paid downloads.

Mathletes Become Athletes

There is serious money that’s being spent on E-Sports, which is beginning to challenge traditional sports.

Recently, Epic, the maker of Fortnite, announced that there would be $100m in prize money for the first year of competitions. In comparison, the prize pool for the US Tennis Open is $50m and the winner of the Tour de France could earn $500k.

New Hardware and Software

The rising amount of spend on and in games will encourage the development of new applications for video games.

The advances in technologies such as Virtual Reality (VR) and Augmented Reality (AR) stand to open up new ways of interacting online. New games and applications will be built on top of these emerging technologies.

Cheaper Compute Power

As compute power increases and prices are reduced, applications that can draw observations from massive amounts of uncategorized data are being created.

Self-learning systems will enable people to make sense of the tangled mess of data to solve existing problems in a novel way.

Rapidly Increasing Amounts of Data

90% of the data that has ever been created has been created in the last two years. Companies need to make sense of the ever-increasing data or they won’t be able to compete.

The current solutions in the market are reliant on either adopting an enterprise size solution or having an in-house data science team.

Position + Timing = Opportunity

Intellectual property protections and a diverse workforce mean that Singapore is well positioned to combine the break-throughs in English and Chinese research into AI applications.

Solutions that offer easy-to-digest conclusions from existing data sources will be able to find niches to service.