By NG MIN SHEN / Pic By ISMAIL CHE RUS
Apigate Sdn Bhd, an application programming interface (API) ecosystem provider, is looking to secure between US$20 million to US$30 million (RM122.4 million) in venture capital (VC) by the second quarter of 2019 (2Q19).
Its CEO Zoran Vasiljev said the company is currently in talks with Silicon Valley investors to raise the Series A funding, which would go towards the company’s aim of becoming a unicorn (a start-up valued at over US$1 billion) by 2021.
“We are very close to completing this (fundraising), probably by end-March or early 2Q19,” he said at a briefing in Kuala Lumpur yesterday.
Apigate is a fully owned subsidiary of Axiata Digital Services Sdn Bhd, which in turn is a wholly held unit of telecommunications company (telco) Axiata Group Bhd.
“In order to attract global talent and to become a billion- dollar company by 2021, it requires an external view and external shareholders. We are well-funded now, but this VC fundraising would allow us access to people who have invested in similar companies — access to the right advice, executives, new opportunities and new markets,” Zoran said.
Silicon Valley investors are ideal for the company, given the proliferation of start-ups that have emerged from the San Francisco Bay Area region.
Apigate plans to emulate the likes of business software company MuleSoft Inc, which raised US$259 million through seven rounds of financing, and open source software firm Red Hat Inc, which was acquired by International Business Machines Corp for US$34 billion last year.
Securing VC funding would likely also spell a new shareholding structure for the company, given that these investors would want to own a significant stake in the firm.
Zoran added that while Apigate is already a separate company, bringing in VC would create a separation from the current shareholders, which is positive as it would “create value for everybody that participates” while validating the parent company’s initial investment into Apigate.
“There’s an ambition to do a spin-out, led by what the VC parties require in order to consider investment. There are conditions that they put on something like this. Axiata Group can still own a minor majority of some sort, depending on what the final arrangement will be,” he said.
The company’s goal of reaching unicorn status by 2021 falls under its parent’s goal to turn three of its digital operations — e-wallet service Boost, digital marketing business, ada (analytics, data and advertising) and Apigate — into billion-dollar companies.
Zoran is confident of Apigate achieving this goal, given that the company was valued at around US$200 million as at December 2018.
“With every new month and every new large partnership and integration, our gross transaction value (GTV) spikes, so it’s only going up. We’re on the right path to get there fast — maybe even before 2021.
“We have signals from the VC community that this is a much more valuable company than what we think right now, but the evidence will only show when the first investments come in since these are paper valuations,” he added.
The company also remains committed to its mandate to turn profitable by 2021, by focusing on building a profitable business via profitable deals.
“I’m confident that somewhere in 2020, maybe early 2021, we will turn profitable.
We’ve been very disciplined so far — our losses are miniscule compared to our appetite.
The way we structure our deals and select the brands we work with, that will allow us to construct deals favourable to our cost structure,” Zoran said.
He said the company tripled its revenue last year, while volume trajectory could easily surpass the company’s target of tripling or quadrupling its 2018 GTV this year, given the scale of its business.
“In 2018, after extracting ourselves from Axiata Group, we began connecting to non-Axiata operators. We have connected to 21 operators in Africa last year through our partnership with Orange SA. The performance of four ope- rators in Africa over three months is already the total of one year with Celcom Axiata Bhd. So, the volume is possible to be created outside of the family,” he said.