Franklin Templeton is expanding a startup incubator program from its base in Silicon Valley to Singapore.
Chetan Karkhanis, senior vice president and head of digital strategy and wealth management for Asia Pacific, has been tasked with leading the incubation strategy for the region.
The $1.5 trillion asset management firm launched its incubator in the US in late 2019 and now has a coterie of fintechs “in the double digits”, Karkhanis says. The firm aims to begin in Singapore with three to five fintechs.
“The inspiration for this was probably when Jenny Johnson [the firm’s president and CEO] attended the Singapore Fintech Festival, saw the size and felt the buzz,” he told DigFin.
From investments to incubation
He is overseeing this alongside Joe Boerio, San Mateo-based executive vice president and chief risk and transformation officer. Karkhanis also reports to Harshendu Bindal, head of digital strategy and wealth management, also based in California.
To support the extension to Asia, the firm is partnering with F10, a Swiss-based company that helps corporations incubate technology partners.
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Franklin Templeton has already taken stakes in larger, more established fintechs, including four from Asia Pacific: Bambu in Singapore, Quantifeed and Coherent in Hong Kong, and PictureWealth in Australia.
Bambu and Quantifeed help banks and other wealth managers build in-house robo advisors; Coherent is an insurtech that builds and manages API connectivity; PictureWealth helps people understand their holistic wealth.
Part of Karkhanis’s job is to seek out other fintech investment opportunities.
The incubation program, however, is aimed at nurturing promising startups at seed or pre-Series A funding status, including companies that are pre-revenue but that have identified a strong advantage that can support Franklin Templeton’s strategic requirements.
Three tech priorities
Karkhanis outlined three areas in which the firm wants to partner with or incubate fintech companies.
First is alpha: tech companies that add value to portfolio managers and research analysts and help with the creation of portfolios. “We want companies that help us deliver alpha and improve our risk management,” Karkhanis said. This includes specialists in artificial intelligence, ESG-related data, and big-data analytics.
Second is distribution. The firm wants to add capabilities beyond what its existing Asian investments (Bambu et al) provide. “We know where the puck is going” with respect to B2B robo,” Karkhanis said. “What’s the next wave?”
This could include alternative distribution platforms, personal finance apps, digital assets, and crypto products like non-fungible tokens.
Third is operations, including financial infrastructure such as blockchain tech, or regtech solutions in areas such as know-your-customer compliance.
Noting that some of these technologies such as blockchain are still early in terms of industry adoption, Franklin Templeton would be open to collaborating with multiple incubators, venture capital firms, or other asset managers.
Another aspect to Karkhanis’s role is engaging with VC and growth-equity investment firms. VCs are sources of ideas about pre-seed, proof-of-concept stage startups that could enter Franklin Templeton’s incubator program. At the larger end of the scale, the asset manager is interested in supporting post-Series A funding rounds.
“The point to these relationships [with VC firms] is idea generation,” Karkhanis said.
For the F10 collaboration in Singapore, Karkhanis says the scope may include startups from across Asia-Pacific but they’ll need to have a presence in the city-state.
Citing distribution platforms as an example, he notes there are strong domestic tech players in individual Asian markets. But these tend to struggle at the regional level. “We don’t want to be siloed by country,” Karkhanis said. “We’re looking to work with fintechs that can prove themselves in multiple markets.”