Even in Asia, where business is often a family affair, Singapore-based tech startup SourceSage is unusual.
Co-founder Jianmin Sim, 29, has all the hallmarks of the young entrepreneur — a former machine-learning researcher with a Masters in engineering from Oxford University. His partner, though, is his father, 63-year-old John Sim, who has three decades of experience buying and selling commodities.
Together, they are trying to shake up one of the world’s more opaque trading businesses, starting with the US$19-billion oleochemicals industry, which turns liquids derived from oil palms into ingredients for detergents, soaps and personal-care products.
The startup, launched in 2015, provides market information and connects buyers and sellers of raw materials. The son plots strategy as chief executive officer. The father develops the firm’s brokerage and trading businesses. It’s already turning a profit, according to Jian, and counts Cargill Inc. and Wilmar International Ltd. among 10,000 clients in 102 countries.
“They had an unfair advantage, coming from the industry inside, as opposed to people with a good idea based on what they read somewhere,” said Paul Santos, managing partner at Wavemaker Partners, which has invested in SourceSage. “They had a conviction that this industry was really messed up and needed a transformation.”
For Jian, his father is usually the first person he sees every morning and the last person he talks to before going to bed. The duo can’t remember a single day last year they didn’t see each other and talk shop.
“Once he retires, his knowledge would be gone forever,” said the son, who is known as Jian among friends. “I wanted to capture that, digitize it and immortalize John Sim as a brand.”
Many physical commodities markets are ripe for disruption using technology. Unlike stocks, where prices are typically determined on highly regulated exchanges, most niche commodities have dodged intense regulatory scrutiny because of their relatively smaller value and the wide geographical spread between production, shipping, processing and end users.
SourceSage joins a growing list of startups trying to shake up that model, mostly by targeting specific commodities in a country or region, such as mysteel.com (steel) and zhaosuliao.com (plastics) in China, or FarmLead (crops) in North America.
The Singapore startup gathers and verifies commodity prices from online and offline sources and distributes real-time data as well as weekly market analysis via its app, website and terminal. Chat-bot Amanda helps users navigate the app. They can search data on chemicals, oil and fats, oleochemicals, petrochemicals, freight and logistics and steel and iron ore.
The company hires independent researchers for market reports, some from major price reporting agencies such as S&P Global Platts and ICIS. Bloomberg LP competes with Platts and other companies in providing commodity-market news and information.
“It’s a robust technology platform that’s user-friendly and easy to navigate,” said Sathia Varqa, co-founder of news and data publisher Palm Oil Analytics, who uses the app daily to reach SourceSage’s palm-oil related community.
Still, SourceSage is a minnow in the global commodities market and Jian doesn’t see it as a major competitor to the established price-reporting giants, but rather as a platform for smaller players who can’t afford to pay a lot for market information. He subscribes to Clayton Christensen’s theory that disruptive innovation starts at the low end of the market.
The startup charges customers a subscription fee, which starts from US$800 per month for individuals, and between US$3,000 and US$25,000 for companies. It also makes fees from brokerage services. Eventually, it seeks to develop a commodities exchange platform.
The father and son defy other startup stereotypes, too. In a packed office of young staff in T-shirts, Jian wears a suit and calls his dad by his first name in professional settings. John is more casual and jokes about how he’s losing his graying hair because of the stress of running a startup at his age.
“This company is a rare balance of prudence and ambition,” Wavemaker’s Santos said. “Jian is mild-mannered, so it’s easy to overlook that there is grit and steel beneath that drives him.”
John began at Exxon Mobil Corp. in 1985, working in a variety of roles before moving to Salim Oleochemcals in 1990, under Indonesian tycoon Anthoni Salim. He joined P&G Chemicals before setting up his own shop, Integrated Chemicals Pte, which matches producers with buyers globally. John said he was quite content running his small, profitable business.
While building P&G Chemicals’ supply chain in China, John met junior managers at chemical factories, many of whom became wealthy after taking over state-owned factories.
“They remembered him as someone who helped them, and they became our clients,” said Jian.
Other contacts John made during his career who have since become customers of the startup are Nadir Godrej, managing director of India’s Godrej Industries Ltd. and Tatsuya Imou, CEO of Kenko Corp.
Father and son weren’t close when Jian was growing up. John says he was a typical Asian father of his generation, busy building his career and with little reason to talk to his son other than about his grades. He never expected his son to follow in his footsteps, as he figured it was an antiquated industry.
One day in 2013, John asked his son to set up a website for his trading company. Jian responded: “Why bother with a website when mobile apps are going to be the future?”
John scribbled his workflow on a piece of cardboard and passed it to his son. They began talking about the pain points in the industry — how nice it would to have cheap, reliable, real-time data and a platform for buyers and sellers.
When Jian returned home after studying overseas, their relationship blossomed. In 2015, they started SourceSage with US$38,000. Further backing came from venture capital firms Wavemaker Partners and iGlobe Partners. Now SourceSage is in talks to raise US$10 million to expand.
Jian said working side-by-side with his dad has taught him many lessons, including the value of personal contacts — meeting people face-to-face, rather than via Skype, and remembering to take a small box of their favourite cookies when he visits.
“Not many people get to work with their parent in that proximity and intensity,” he said. “I recommend it.”