In this month’s edition of our monthly interviews with SPECTRUM members, we sat down with Fernand from Aviva Ventures to learn a bit more about his background and the direction that the company is heading towards in the near future. What we unearthed was exciting to say the least. Here is our interview with the highly inspirational Managing Director:
Tell us a bit about your background and how you came to be the Managing Director of Aviva Ventures in Asia?
I actually came from an industrial engineering background, starting out in the healthcare and automotive sectors – different industries from the one I am in today. That being said, the great thing about being an industrial engineer is the strong problem solving foundation and flexibility one receives, and the ability to navigate different industries.
I started out by working for General Motors as an operations research analyst focused on developing simulation and linear programming models to optimize resources allocation. I then moved to Chicago Booth to pursue an MBA in Finance and Strategy. After a few years in New York City, I caught the entrepreneurial bug and went to Hong Kong to build a wealth management business. Shortly after landing there in 2008, the Global Financial Crisis hit, which turned out to be a blessing in disguise. We did our best to build the business but in the end we had to fold, and it was time to move to the next adventure.
I joined the embryonic strategy team of AIA where over the span of a few years I was involved in a number of exciting transactions including the USD 20 Billion IPO of AIA. I then joined the team at Aviva in a transformation and restructuring role in London working on divesting assets and cutting overall costs for the company. In 2016, I joined Aviva Ventures, our venture capital arm, and relocated to Singapore in January 2017 to drive our investment activities in Asia. Our mandate is to back early stage tech companies looking to disrupt the industry.
Can you tell us about Aviva Ventures? What kind of companies are you interested in and at what stage do you usually invest?
Aviva itself has been around for over 300 years. The insurance industry has been slower in terms of adoption of disruptive technologies but we are now in a position where technology is impacting the industry and insurance is no longer insulated, so incumbents and startups have been active in this space. Our mandate is to invest in early stage tech startups that will fundamentally change the insurance industry. Our focus in on Series A and B, and we typically write checks of USD1-5m. We prefer to work with companies that have already found the right product market fit so we can help them scale by providing relevant access to our broad customer base and expertise in the field. We are a CVC so we not only focus on financial returns but also invest in companies that can advance our strategic positioning in the market.
I would say that one area that we focus on (more in the UK than in Asia at the moment) is in the Internet of Things (IoT). Self-driving vehicles, for example, in the not too far future, will need insurance coverage that will diverge considerably from the traditional model as personal liability will move to product or software liability. We are not interested in the hardware, but in the data and how this data translates into risk models and product propositions that are relevant to our customers.
We also look at connected health. An example is our backing of Singapore based Biofourmis– a healthcare AI based remote monitoring and digital therapeutics platform as a service. Such technology will minimise overall claims and costs to the company for obvious reasons. We feel that early detection and prevention is going to be a game changer for insurance companies.
Finally, a key vertical for us is big data and analytics. With the growth of IoT devices and the proliferation of data, there’s an opportunity to upgrade insurance analytics by developing new proxies for risk models. The current insurance model is very much black and white where customers are divided into either high risk or low risk groups using the rule of big numbers to calculate averages. Technology offers the opportunity to increase granularity and help insurance companies find new segments of customers that could be covered with more flexible insurance packages. This could reach the point where insurance packages could be built around each individual, although that would need to be balanced with the societal benefits of the existing approach built on the aggregation of risks across a large population of customers.
What is the single biggest change you have seen in the VC industry in the past year?
I would say that one of the biggest changes has been the introduction of mega funds. The Softbank USD 100 Billion Vision Fund has put the traditional VC model on steroids. Funds like these have changed the dynamics in terms of liquidity, some of the top tier VC funds seem to be focused on starting larger funds to strengthen their ability to win large stake deals. Softbank has already entered Southeast Asia, and other deep pocket investors like Alibaba and Tencent will also continue pouring more money into the region.
Another area to watch is the rise of ICOs which provide an alternative funding mechanism for startups. I don’t think that this will cause the end of the traditional VC funding model because ultimately startups will always need to create real assets aside from digital assets like utility tokens and have viable business models, something that VCs can help with, thanks to their extensive expertise in these areas.
Finally, the rise of CVCs is also something that is changing the industry. In fact, over 25% of the money raised globally last year came from CVCs which is unprecedented.
Where do you see the biggest recent disruption in the insurance industry?
Various aspects of the insurance supply chain are being disrupted – distribution, products and customer engagement to name a few. However, the insurance business model per se hasn’t been disrupted wholesale and is unlikely to change in the near future. There are some exciting developments, especially on the general insurance front including areas like car and home insurance where we’ve seen a flurry of start-ups coming to markets. The life insurance sector is a lot more complex and harder to tackle. Aviva and Tencent are giving it a go and formed a joint venture in Hong Kong that launched the first fully digital life insurance company. I believe that the big part of the journey is still ahead of us. Ultimately, with new technologies like IoT, blockchain and AI, massive disruption lies ahead for the insurance industry.
What is your average day like? What is your favourite part of the day in your professional life?
I really enjoy meeting passionate entrepreneurs and founders, understanding how they are solving real-world problems. It’s a privilege to be able to change an aspect of people’s lives and make the world a better place. Whenever we consider making an investment, we think about how it will change lives by solving a big pain point and that’s the highlight of what I do.
My best days would be when I get to meet up with new companies and founders who are hungry about making a dent in the universe as well as with existing ones in our portfolio and help them.
How would you sum up your experience at SPECTRUM so far and are there any strategic connections that you have made?
What I like about SPECTRUM is the opportunity to network with key players in the ecosystem that it affords. I have met a host of startups and other investors and feel that the whole ecosystem acts as a catalyst to promote tech innovation. Our relationship with Golden Equator also allows for co-investments, the many events that they have organised allow its members to meet like-minded people, and get plugged into their wider ecosystem. I look forward to exploring further how we can work together in the insurtech arena.
And there we have it, Fernand and Aviva Ventures looking to continue and grow its strong insurtech presence in the region. Watch this space for next month’s edition, where we interview another member of SPECTRUM and find out more of how the business functions.