On the right track: Comex's funding triumph

SINGAPORE - Commerce Exchange (Comex) believes it has much to celebrate.

The e-marketplace service provider has moved to a new office, and was recently ranked third in the inaugural Enterprise 50 dot-com awards accorded by Anderson Consulting, and it has just announced the close of its first round funding yielding an injection of S$30 million.

Making the funding announcement was Michael Yap, Comex's CEO, who was sanguine about the future of the company.

"We want to be a pan-Asian player and we are very thankful to have been able to attract premier VCs like Baring Asia, JAFCO and JAIC," said Yap. "With the support of these VCs, we can now marshal the resources and support to march boldly toward our goal of being a key player in the pan Asian marketplace."

The round of funding actually began in the middle of April and was closed by the end of July.

"We started raising the round in the middle of the so called great correction," said Yap. "Despite the correction, we were able to raise the round, [that] is a testimony of the confidence that our investors have in us, but I think also, significantly, the right business model that we are in."

Comex positions itself as an e-marketplace service provider, building e-marketplaces for clients and providing end-to-end infrastructure that enables trading online.

The company currently has three lines of product: BecomeHub, an e-marketplace builder deployed to custom-build e-trading hubs for clients; BecomeCo, a suite of end-to-end business applications designed to take SMEs online and to plug them into a Comex e-marketplace; and FastTrax, an infrastructure enabling service that includes a network of payment, financing and logistic services.

The emphasis on being a B2B infrastructure player seems to have struck the right cord with investors.

"We were particularly attracted to Comex's business model, whereby it acts as a helper to companies wanting to go on the Internet," said Kenneth Cheong, a principal with Baring Private Equity, one of the two chief contributing VCs to the round of funding.

"We [also] concur with a projection by the IDC (International Data Corporation) that e-marketplaces will emerge as the dominant force in B2B commerce by 2003. It predicted that from a 70% share of worldwide B2B e-commerce in 2000, e-marketplace would handle 56% of the value of all B2B e-commerce worldwide by 2004," Cheong noted in a released statement.

Baring and JAFCO Investment each contributed US$7 million to the fund. Remaining investors are Japan Investment Co., Ltd. (JAIC) and Venture TDF Pte Ltd.

Yap believes that the B2B space is now undergoing changes and coming out of the change will be a number of winners.

"I think this is just the beginning of B2B, I think only 0.1% of all trade done in Asia is being done online. That means there is still 99.9% of the market left," said Yap.

"No one [vendor] will be able to take the whole 99.9%, what this means is that there will be a lot of sharing, and a lot of winners [in the end]. The only issue that is left is can I execute? Can I get my share of execution out of it?"

Comex's choice of their investment partners is not without some discrimination. According to Yap, there was actually a number of offers made toward investing in the company.

Likening the relationship to a marriage, Yap noted that the "chemistry" between company executives has been a deciding factor in the choice of investors.

The other main reason is Comex's plan to become a key player in the regional B2B space.

"We are very clear that we wanted to be pan-Asian, Comex wants to be an [enabler] in the pan-Asian space," said Yap. "That means that on the way we have to have the right partners. JAFCO and JAIC are very focused, they are very strong in Japan and in Asia. And Baring is actually very strong in North Asia, Hong Kong [for instance]."

JAFCO, the other chief contributor to the fund, has already expressed strong support for Comex's move into Japan.

"We believe in the quality of the management team of this company," said Tatsuro Hihuchi, director and vice president of JAFCO Investment, Asia Pacific. "And we will make every effort to assist Comex in its expansion into Japan."

"60-65% of pan-Asian trade somehow relates to Japan," Yap noted. "And if you believe that B2B online is about moving and expanding physical trade today to go online, then inevitably the path of Comex must be linked to Japan."

Comex currently has offices in four Asian cities, Singapore, Kuala Lumpur, Taipei and Hong Kong. Plans have already begun to extend its presence into Japan and India.

Aside from expansion, the funding will be used for R&D, building up product lines and in partnership building.

Yap has every intention to keep company spending on track, claiming that the company will not exhaust the round of funding if it sticks to its business plans.

"We actually should be positive soon," said Yap, "unless we decide to spend even more."