All posts tagged venture capital

UPDATE Dec 4. In a deal that blows the previous deal out of the water, GrabTaxi raised another $250,000,000 Series D round, just one month after the previous round of funding. The time between fundraising rounds is almost unprecedented, which makes me believe the previous round was reported some time after the ink was dry. The grand total on fundraising is US$340 million raised over the last 14 months. The latest round was fully invested by Softbank. This is more great news after Uber was declared illegal by one Thai official. Good luck GrabTaxi – your investors are watching!

 

In what is one of the largest rounds in South East Asia to date, GrabTaxi has raised $65,000,000 in a series C round from new investor Tiger Global, with participation from existing investors Vertex Ventures, GGV and Chinese travel giant Qunar. Another new investor, Hillhouse Capital, joined in on the round.

Grab Taxi is active in cities in Thailand, Vietnam, Maylasia (HQ), Indonesia and Singapore. Coming just a few weeks after the announcement of a massive round of investment into Ardent Capital and aCommerce, this 65M Round is yet another very strong signal that funding in South East Asia has reached a critical mass.

Investors from outside the region are starting to take notice of the massive opportunity are taking the region very seriously. This is a reason any entrepreneurs should also be taking the region seriously, and consider setting up a company here.

Who are the Investors?

GGV also known as Granite Global Ventures during it’s founding years starting in 2000 is a VC firm focused on expansion stage investments in the US and Asia. They invest primarily in nternet/Digital Media, Cloud/SaaS, and Mobile sectors in the U.S. and China. Since inception, the firm has raised $2.2 billion of investor commitments across five funds. Notable investments include Athena Health, Pandora, Square and Alibaba.

Vertex Venture Holdings Ltd (Vertex Group) is a wholly-owned subsidiary of Temasek Holdings, which is a very important Singapore investment company,that was Incorporated in 1974. Supported by 11 offices globally, Temasek owns a S$223 billion portfolio as of 31 March 2014. Vertex focused on privately held technology companies, and is a very active investor form the series A onwards.

Hillhouse Capital Group was founded in 2005 and according to their website, is a fundamental equities investment firm focused on the long, long-term. Led by Key Executives: Ms. Jing Hong who is the managing Director of Hillhouse Tiancheng Advisory and Mr. Lei Zhang  who is the Chairman, their office is at Floor 28, Building B, PingAn International Financial Center, No. 1-3 Xinyuan South Road, Chaoyang District, Beijing,  100027 Very notable, because we are seeing Chinese investment in the Region in a massive way.

Tiger Capital has its offices in Singapore at 14 Robinson Road #13-00 Far East Finance Building. Listed on their website is Mr. Henry Yu, Vice-President with the Email: [email protected]

Qunar is a publicly traded travel company based in China. However, like many Chinese companies, they use offshore companies to take on investment. Qunar Cayman Islands limited trades on the NASDAQ stock exchange as QUNR. CEO, Chenchao “CC” Zhuang has a very interesting interview here on how he built one of the largest travel sites in China.  You can also check out our investor interviews with other VC’s here.

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rakuten logo

rakuten logo

A new $100 million investment fund was announced by Rakuten Ventures. The global fund is to be directed towards investing in startup companies around the globe, with a focus on those in the Asia Pacific region, Israel, and the USA. This fund will use an earlier Southeast Asia fund, which was launched in 2013, as its model.

In a press release announcing the fund, Rakuten Ventures emphasized that the new fund will support the startup ecosystem in countries beyond Japan, where they have their headquarters. One of the goals is to invest in startups with potential to use technology to give users a better experience. And in time, they will increase their focus on helping to grow the startup ecosystem, improve technology, grow membership, and eventually seek financial returns.

Companies in the technology sector that have the potential to deliver a return and become relevant in a strategic way will be important, but the focus will be broad so that the fund can choose from a wide range of companies to invest in. Key ingredients to a successful company will be areas such as strong leadership and teams, value for the company, innovative technology, and desire to give a future stake to Rakuten for increased participation down the road.

Saemin Ahn, the Managing Partner of Rakuten Ventures, will act as fund manager based out of Singapore. Speaking on the ability of startups to offer new strategies for tackling long-standing problems, Samin said:

If you just look at the last couple of years, companies like Waze and Viber are great examples of companies taking on massive issues like transportations and communications, breaking them down to their basics, and providing an engaging and sticky user experience that people have come to love and depend on. More Asia-based VCs are venturing out into different regions to look at investment as long-term growth vehicles. Since 2013, Rakuten Ventures has been one of such VCs to aggressively invest larger amounts into younger companies, to enable them to focus on product and service development.

Although the initial focus of the fund will be in the three geographical areas of Israel, the US, and Asia Pacific, Rakuten Ventures intends to aggressively seek more investment worldwide.

 

National Research Fund Singapore

National Research Fund SingaporeThe National Research Foundation (NRF) of the Prime Minister’s Office of Singapore has announced six venture capital funds to take part in the second round of its Early Stage Venture Fund (ESVF) program. The NRF will contribute S$10 million to each of the 6 funds on a matching basis for a total of S$120 million to go towards capitalization of Singapore-based tech startups.

The six funds chosen are: Golden Gate Ventures, Jungle Ventures, Monk’s Hill Ventures, SBI Ven Capital, and Walden International.

Under the program, the NRF makes matching 1:1 investments up to S$10 in each of the venture funds to be used to fund early-stage local high tech startups in Singapore. The NRF then takes a corresponding equity stake in each of the funded companies.

The scheme received 32 proposals last November from the initial call for proposals. These were whittled down to a shortlist of 18 candidates. The NRF then selected an eight member panel composed of representatives from both the public and private sectors to chose the final six venture capital funds. The range of investment for the chosen six venture funds is to include clean technologies, medical technologies, communication technologies, and industrial applications.

According to the NRF’s press release, the chairman of the selection panel, Mr Steve Leonard, Executive Deputy Chaiman of Infocomm Development Authority of Singapore (IDA), had this to say:

With a growing pipeline of exciting new tech startups in Singapore, founders will require funding, experienced mentorship and strong networks to build companies that can compete in worldwide markets. We want to help build an investor community based in Singapore but with connections around the world. The six venture capital funds and fund managers selected have an excellent reputation of helping build the companies that they fund, and their successes will further strengthen our tech startup ecosystem.

Additional comments were provided by Prof. Low Teck Seng, CEO of NRF, who said:

We recognize that it is very competitive for high-tech startups to secure follow-on financing as they have to fight with the best in the region to get VCs’ attention. Through this investment, the government is addressing the gap in Series A funding, which is critical in sustaining the rapid growth of startups beyond the seed stage. With their expertise and savvy investments, VCs will help commercialize promising technologies into innovative products.

The National Research Foundation is a department of the Prime Minister’s Office that was set up in 2006. Their directive is to set up policies for research, innovation, and enterprise. It is also charged with establishing funding channels for research and development in Singapore. It’s goal is to transform Singapore into a hub of research and technology, and to attract the brightest minds from the region and beyond.

In 2008, the Early Stage Venture Fund was implemented by the NRF in order to provide funding to venture capital funds on a 1:1 matching basis to be used to for early-stage investment in local high-tech companies. The first round of funding took place in 2008, and at that time the NRF provided a total of S$50 million to five venture funds. Those first five funds were: Bioveda Capital, Extream Ventures, New Asia Investments, Raffles Venture Partners, and Walden International. Of the original five venture funds, Walden International is the only one to be part of this second round of funding.

The original five venture funds to receive NRF matching funds has to date invested in 24 startups. Among these early stage companies, some of the notable success stories are:  HungryGoWhere restaurant review portal, Brandtology online business intelligence services, and YFind Technologies, which has developed an indoor positioning system.

 

 

 

Sawasdee CyberAgent Ventures
The collective attitude of entrepreneurs and businesses in Thailand is positive and welcoming, as the Venture Capitalists establish a new office in Bangkok and bring much needed experience, expertise and capital to the Kingdom of Thailand. There are currently many promising startups coming about, and it is exciting to see investors starting to recognize the size and potential in both Thailand and in the Region.
CyberAgent Ventures is not a newcomer to the startup scene in Southeast Asia, having already invested in 23 companies in Vietnam, Thailand and Indonesia to date.

Some of their portfolio companies in Thailand include Priceza Co. Ltd., and aCommerce Co. Ltd. (run by notable investor and entrepreneur Adrian Vanzyl, who is also the head of Ardent Capital), who recently raised a bridge round through CyberAgent Ventures.

From CyberAgent Ventures press release:

“Given the popularity of the Internet and the abundance of entrepreneurs in Thailand, we consider Thailand as a very attractive market, and will enhance our investment and incubation activities by establishing the new office in Thailand.

CyberAgent_Ventures_logoAfter establishing the Bangkok Office, CyberAgent Ventures, Inc. now has offices in 4 cities in SEA including Hanoi, Ho Chi Minh (Vietnam), Jakarta (Indonesia) and Bangkok (Thailand). We will fully utilize our experience accumulated in our investments in global to expand our business in Thailand.”

This is an interesting movement in the Venture Capital scene in Thailand, which has few investors, but many promising companies. Other VCs that have invested in Thai startups include Galaxy Ventures and Golden Gate Ventures, located in Singapore.

Golden Gate was one of 6 VC firms selected for the “series A” placement of venture capital with 1:1 matching from NRF (The National Research Foundation of Singapore, under the prime ministers office). These funds will be able to start making investments in late July.

Overall, there is a shortage of venture capital in Thailand, and very few angels or VCs actually writing checks. CyberAgent Ventures has been one of the more active investors in the region, and it is great to see them set up an office in the country. Hopefully this is a sign that they are looking to make more placements within Siam in the coming years.

For more information please head to: http://www.cyberagentventures.com/en

We welcome CyberAgent Ventures to Thailand, and wish them luck as they continue their strategic investment in the region.

Thailand Game Company

Thailand Game Company

Ini3, a Thailand based company with a hand in the game development market, has closed a round of funding with SoftBank Ventures Korea Corp.

Ini3 owns some leading game development companies with a number of titles, both online and mobile. Founded in 2004, Ini3 has 140 employees and is the lead investor in Galaxy Ventures, an early stage investor in local mobile game developers and other technology startups.

For the past few years, Ini3 was planning to file for an Initial Public Offering. While they were re-organizing the company to go public the company found other opportunities. “While preparing to be listed, we’ve met with other investors,” said Pattera Apithanakoon, CEO of Ini3. “With SoftBank it’s not about the money, it’s about the connection and opportunities we’d get.”

SoftBank Ventures Korea has taken a 23 percent stake in Ini3 with the goal of expanding in Southeast Asia. This marks the second investment in Southeast Asia by SoftBank Ventures, the first being the Indonesian e-commerce site Tokopedia last year. “Ini3 has a long history in the game industry,” says Daniel Kang, COO and partner of SoftBank. “Their philosophy focuses on customer satisfaction. They also have great vision. With these three combined with what SoftBank has, we can do so much more for the gaming industry.”

Apithanakoon said Ini3 aims to become a regional player by expanding into other Southeast Asia markets. “SBVK’s strong portfolio will help us access potential game content,” says the CEO. “Together with our 20 years’ experience in providing online-game services, we will go regional together. This year we aim to increase our profit by 20 percent from last year.”

pile of bitcoins

pile of bitcoins

John John Kim is a Singapore based VC investor who has worked at some big firms such as Goldman Sachs and Mercuria. He talks about his new cross-border venture capital firm Amasia, and what kinds of investments they look for. John also discusses the startup ecosystem in Singapore, including the special government schemes the Singapore government has put in place to encourage investment in entrepreneur ventures. And perhaps most interestingly, John gets into Bitcoin, and why he thinks the future may be in Bitcoin, not as a currency, but as a platform.

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Part 3:

Hello. Today I’m joined by John Johan Kim. Mr Kim is a Singaporean VC with a pretty interesting history in both venture capital, angel investing, and also entrepreneurship. So I’m going to let him do his own introduction today, contrary to what we typically do here on the podcast. But John, thanks for joining us, it’s good to have you here.

Thanks a lot Edmund, it’s a pleasure to be here. my first angel investment was in 1998, and it was actually the same year that I invested in my first company…or started my first company rather. So it was an electronic books company, and like many investments of the era, I thought I was a genius for awhile before the whole thing crashed and went to zero.

Beyond that, I’ll just tell you a little bit about my background. That first company that I started was an internet music company. It basically came out of an internship that I was doing for IDG (International Data Group), which is the largest technology publisher in the world. I was building an online decision support system, kind of an online data base for the CEOs of their subsidiaries. And I though it would be interesting to use this technology to solve a pain point that I had. I was very passionate about music—I still am—and often I would think about what music events were taking place in a particular city, and I wanted to know and figure out where to go. So I thought it would be nice to build an engine like that.

I hired a team, went out and built this thing, then realized that a lot the companies, the bands, the venues, and the companies that were looking to list in this engine didn’t have sites of their own or any understanding about the web. So we started building out some of their websites and thinking about online marketing and online strategy, and helping them with that. So, we had two different parts of this company, and our advisers suggested we start thinking about focusing a little bit more. And because the consulting part of the business was generating more cash, I decided to take that with a couple of my other partners. And then the other folks who kept the online music engine, they actually joined forces with some folks at GoLite Tonight, and that eventually became part of CitySearch, which I think was a much better ultimate outcome for them.

But it was a great experience, I made a bit of money, and what I found—and this is something I tell entrepreneurs all the time—was that I lost my passion. You know, the original impetus for the business was that I was passionate about music and a pain point that I had. But once it was just about e-consulting, the money wasn’t in the music industry. So we were doing projects for manufacturing companies…we actually built a small incubator. MBAs at school that were wanting to build online communities or commerce sites.

And so it lost its passion a little bit for me, but from there I decided that I wanted to get back to my passion. So I started my third company, which was a Delaware incorporated rock-n-roll band. We had some success with that. We toured around the US, did some session work, and played in Korea as well with some folks. I did that for a while. It was a really great experience, but it wasn’t really my calling at the end of the day. I think a lot of—kind of like starting a company as well—what you see on stage is really quite appealing, but all the rest of it is a lot of hard work that goes into it. There’s sometimes conflict with bandmates, and you get punched in the nose, you know it’s just like starting a company. So all of that stuff I hadn’t really reckoned for, and ultimately I just wasn’t sure if it was my calling at the end of the day.

So I went to Korea, and that’s when I kind of started my financial career. So I was at a hedge fund for four years, and Goldman Sachs for five years here in Singapore, and then joined a privately held Swiss commodities trading and investment firm called Mercuria. Before this opportunity presented itself with my current partner, who’s been a VC investing in tech companies for over 20…22 years now. And we felt there was an interesting opportunity in entrepreneurship in technology in Asia, and so we kind of put our heads together and we started this firm called Amasia, so we’ve been doing that. We started talking a little over a year ago, and started investing a little about eight months ago. So that’s currently what I’m up to.

That’s great. can you tell us a little bit more about Amasia since we’re on the topic. What typically is that fund looking for? What type of investments have you made and are you looking to make?

Sure. Amasia…we’re kind of a cross-border venture capital firm, with a presence here in Singapore and in Silicon Valley. Basically the thesis is this: because there’s certain technology trends that have allowed startups—and companies in general, but particularly startups—to go international a lot earlier then they’ve ever been able to before, think about mobile penetration, think about computing, there are businesses here that have…there’s one computing company here that has 40,000 clients that we can speak to, and over half of them are in the US, but I don’t think they’ve ever taken a business trip to the US to make any sales. So this is one example of companies that can really go international a lot sooner than they were able to before.

Now simultaneously, top-tier companies…they don’t need money. They have their choice in investors—it’s really about what you can bring to the table as an investor beyond your money? What’s your value proposition on top of that? And there’s this trend in Silicon Valley where some of the top-tier VC firms are really proactively adding value. So take as an example, Andreessen Horowitz and Google Ventures have been at the forefront of this trend. If you take a look at Andressen’s website, i think they have twenty people on the investing team and seventy people doing everything else. So you know, helping companies with PR, with hiring, with everything.

And so, there are these VC firms that are focused on adding proactive value, but the nature of VC investing is very…it’s a little bit less codified and distributed than later stage private equity investing or public equity investing. The reason for that is: once a company gets more mature, you can encapsulate more of the value of a company—whether it’s got good prospects ahead of itself or not, in numbers. So you can codify it in numbers because there’s a longer track history, you have top line/bottom line, you can have growth, and for all these things you can actually capture numbers. And when you can capture something in numbers, you can actually distribute the decision making. So when you look at later stage private equity firms, they’re almost like mini investment banks—they have offices all over the place, you can actually have analysts go out and look for companies that fit certain numerical criteria—and the thing in venture, as you move earlier in the cycle of a company, it becomes much more intuitive, the decision making. So you don’t have that same kind of numerical track record and history, and because of that when you are making an investment decision with a committee of people, the partnership needs to be very tight-knit. Because you need to be able to convey to your partners, “Well, yeah, this team was really inspiring. This leader is a visionary.” It’s not something that you can just put in a spreadsheet. And for that reason, it’s been very difficult to build global VC firms under an umbrella. There are some global brands, but they typically operate out of multiple funds and with a different set of partners.

And so, our thesis is kind of that companies are going global faster than ever before, VC firms of top-tier are adding value much more proactively, but they’re adding value typically at home a little bit more than internationally. And that’s because of this intuitive decision making process that takes place in the venture world. And so we thought if we could try and build a one firm/one fund structure cross-border, where we’re helping entrepreneurs to scale outside of their home markets, that would be a very orthogonal value proposition. And so we actually managed to invest alongside some of the top investors in the world because we’re adding value, and they’re happy to have us along because we’re adding value in a very different way than some of those other investors are.

That’s kind of the main thesis—the main criteria—is that we’re looking for businesses that can go global. They don’t need to be going global tomorrow. We have some businesses that just want to think about going global a little bit earlier in their life cycle. They might not do it for three years or five years, but they should just want some advice about how to do that. For instance, there’s a company that we just invested in called Iodine, which is a big data company focused in health, and we know some people, such as leaders in the Korean Food and Drug Administration and Singapore Medical Council, and so forth…that would be interesting for them, but they have a lot to do in the US. They would probably not go to Asia for 3-5 years, but it’s just interesting for them to get that kind of advice early on. Then later, when there’s a specific need, we can help out, potentially participating in series A investment.

The main theme is cross-border. We have some teams on sector focus, and I can go into that a little bit more if you like. But that’s really the main idea.

Some VCs have missed the boat on a new trend, and that’s VC as a service. So that’s this thing where, now you can really get money from anywhere and it’s getting easier and easier for entrepreneurs. So it’s exactly what you said earlier: Who do you go with? Which VCs do you choose, and what extra value are they bringing to the table as a venture capital fund beyond just the money? So it’d be interesting to hear you say some more on that, and also—picking teams—what kind of teams do you pick as being potentially successful. If you could talk to us about that, it would be great.

Sure. Absolutely, the VC as a service is something that really resonates with us, and is really at the core of what our thesis is, and what we try and do for our companies. You know, you’re absolutely right—with all these crowdfunding platforms now, it’s very easy for good companies with good ideas to raise money. There’s been a lot of material written about it by VCs…the model is being completely upended. Part of that is the emergence of crowdfunding platforms. I think a lot of it also has to do with cheaper infrastructure costs. Way back when—when the scions of the industry were starting out in venture capital—it was much more focused around silicon, which is where we get the name Silicon Valley. So you had to have massive capital expenditure to start some of these companies. And even in the first internet boom you had to have significant amounts of capital—maybe tens of millions of dollars, maybe single digits. But nowadays you can go online—because of computing—you can go and start a company… Actually you can find companies to help you with your outlay of expenses. So Amazon is giving free hosting for startups for certain programs, as is Microsoft, and so forth.

So it really takes a lot less in terms of infrastructure costs. Everything can be a variable cost that you need to pay out for. So it takes less money. So capital becomes less important, less necessary—partly because there’s more of it around—but because the costs are so much lower, VCs really need to focus on what else they can bring.

Well I think that’s absolutely correct, and it’s maybe to the point where entrepreneurs nowadays are spoiled where you have things like Twitter Bootstrap, things like Ruby on Rails, which allows you to develop things much quicker. You have Amazon webhosts services, which you just mentioned, which allow you to have hosting and scale infinitely with pretty much a low cost to begin with, and then the cost rises along as you grow. So those things are obvious and definite trends.

I don’t know if you read the recent Economist piece on the Cambrian explosion for startups, but I think that really summed it up well. One of the places featured in that piece was Singapore, and you’re also based out of Singapore—you do some deals there. If you could talk to us more about the Singapore ecosystem—what you think its advantages are, what you think its disadvantages are, if any, and maybe what the Singapore government could do to improve it, or what Singapore entrepreneurs could use there. Talk to us about the Singapore ecosystem for a bit.

Singapore is a real interesting place. I talk to a lot of entrepreneurs all around the globe, and I tell them if your main hurdle is getting a bit of seed funding, then Singapore is a great place to come. There are a lot of schemes here to support entrepreneurs. One of them—I guess the most prolific of those—is what they call the technology incubation scheme, or TIS. So there are 14 incubators that out there—they’ve been sanctioned by the government to invest. If they invest up to 88 thousand dollars in Singapore, then the government will match with 500 thousand dollars. And it’s a great scheme for the incubators because they get to take out the government’s stake almost at cost. It costs a little bit of interest if the company does well. And if the company doesn’t do well, then it’s on the government’s bill.

So that’s led to this proliferation. You can call it a Cambrian explosion of startups here in the ecosystem. That’s led to a few different knock-on effects. In general, it’s good to get people interested in startups I think. it’s not unique to Singapore. It’s a phenomena that’s taking place all around the world, and my thesis for that is that you have this widening of income gaps all around the world. And because of that, there’s this political trend where the masses are getting increasingly unhappy with the rich getting richer. And so governments, by definition start with the small guy, so they want to help the small guy to become big. It’s just a lot more politically palatable compared to helping big banks or big conglomerates. So I think it’s a trend that’s not just unique to Singapore.

This scheme has led to a lot of interest, but it’s also led to a lot of non-market based funding. Startups that just would not have gotten funded otherwise have gotten funded. So it makes it a little bit more difficult, to be honest, as a VC, to kind of sift through and try to find the gems.

Now there’s a new scheme that’s coming up, which is the Early Stage Venture Funding (ESVF). The first iteration of the scheme was before TIS took place. It was maybe a little bit too early because in order to get series A funded companies you need the incubated companies. But now that TIS has been going for a while, and there’s a good number of companies that have been funded, they’re kind of re-introducing this scheme. There was actually a call for proposals last month. I think it will be five funds that are chosen to get 10 million dollars in matching money from the government for 10 million dollars that they put up from venture capital funds for companies focused on series A in Singapore.

John, tell us what makes a deal investible for you? What are you looking for in this phase?

There are three broad categories of things that are most important to us. And we have a pretty extensive proprietary scoring system. The three main things that we look for are team, large opportunity, and financial trajectory. If you dig into each of those, there are a few things we look for in the team. The top characteristics are: one is a history of success—that’s just an indication that people are going to work hard. They know how to execute. And increasingly that doesn’t need to be success in exactly the same thing that they’re starting a company in, if it’s not exactly the same domain. But if they’ve been successful in something or other, it just shows a bit of track.

The second is a will to win. Being an entrepreneur is one of the toughest things—maybe the toughest thing—a human being can possibly do on the face of the planet. There’s so many tough days when people are saying no to you, and you get punched in the nose. And if you don’t have that kind of endurance and perseverance to stick with it, then it’s obviously not going to be good for investors. So that’s the second thing: win to win.

Third is a sense of humility, and that’s related to a number of knock-on effects of humility. We want people with confidence, but at the same time people who are willing to listen to advice. They don’t need to listen to everything that everybody says and certainly not everything that we say, but they just need to be open to advice, and also there are some CEOs who are very fixated on the fact that they should be in the leadership role, for instance. And they’re threatened by people they hire who are capable. So the general attitude you want to have as an entrepreneur is to hire the best people, and bring them in. Whatever title that requires, even if that’s CEO and you’re hiring your boss. Because ultimately, what’s good for the company is good for you.

I used to hear this a lot when I was at Goldman, and I started believing it after a while—after my bosses kept saying it to me. But in the venture world, a lot of the value that comes from a particular individual is from the fact that a very small pie becomes a very big pie. So because of that, interests are aligned, and entrepreneurs should be fixated on getting everybody on board to make that pie as big as possible. Because even if they’re not the CEO and they own a little bit less equity, if you get a 1000x outcome, it’s going to be very good for you. Those are the three things under team that we look for.

The second thing is a really large opportunity. So we look at problems that are tackling a billion-dollar plus markets and have global potential, leveraging disruptive trends. so just really large opportunities. And one of the reasons that needs to be the case in the venture world, you know, you have high data portfolios, and a high percentage of companies will stagnate and fail in this space. So the ones that win, you need to make sure they’re going to have a chance to win big.

The third characteristic is financial trajectory. So we just want to make sure that the companies we invest in are capital efficient. They don’t need too much more money to become successful. We see a lot of random things in…clean tech, real estate…I used to be an oil trader, so I see a number of things there—these are all pretty capital intensive businesses. So we want to stick with capital efficiency. We want signs of traction: early customer wins, paying customers. If it’s an consumer internet company, then a bunch of users. The What’s App news that came out recently is an example of that. And just a clear path to profitability. You know that doesn’t mean that there is necessarily a clear business model for monetization. There should be some ideas. It doesn’t need to be in execution just yet. But if there isn’t, then we need to be comfortable that this company is going to be able to raise enough money to get to a situation where they’re profitable. Those are the three broad categories that we’re looking at.

So are there specific industries in there? You mentioned capital intensive, but maybe you could give us a little bit more specifics about specific companies that you can add value to. Or if I’m a SaaS application, I want to go to John because he can help out with X. Or are there specific companies that would maybe fit your investment perspective and that also you feel you could add value to?

Absolutely. we have four broad categories of sector focus that we look at: crowd computing, big data, fin tech, and consumer internet. Now crowd computing, we’re very focused on Saas companies as you mentioned. These are the best examples of companies that can go global really early in their life-cycle. We just completed an investment in ReferralCandy, which is a SaaS company here in Singapore. And the majority of their customers are in the US, number two client base is in the UK. So because you have companies that can go global earlier, our value proposition is particularly relevant for them, whether the company is in Asia trying to go overseas, or whether they’re vice-versa.

For big data, I can give you a quick example, there’s a company called Bay Sensors that we’ve invested in. They are a big data company focused in the retail space, they’re working with really big retailers in the US such as Starbucks and Samsung, and so on. And they have some of the top investors in the world on board. Andreessen and Google have invested in them. But they didn’t really have too much going on in Asia. And there are a couple of angles that they’re interested in. One is market penetration, so we’ve introduced them to some of the top retailers here in the region. But they’re also interested in manufacturing. And this is something that we see as a really particular value proposition for a lot of these big data companies. There are many different parts of big data. But really where the power comes in data, where the most powerful companies will be situated in is this chain of the big data ecosystem, is the people who own the data. So you can own data—often it’s acquired for a particular reason, but you can re-analyze it much later for many different purposes. So the people who own the data are going to be the most powerful players. But in order to own data you need some sort of acquisition layer, so that’s really made possible through…we started talking about infrastructure parts before, but sensors are just getting so cheap now, you’re getting a trend of an internet of things, and everything in the real world being sensed and being put onto the internet.

And there’s a lot of talk about manufacturing, and especially the high quality manufacturing houses moving back to the US eventually with energy costs so low and so forth, but I think it’s going to take a while, and at least for the foreseeable future—5, 10 15 years—Asia is still going to be the manufacturing base of the world. So, this particular company, they’re also interested in manufacturing partnerships for their sensor solution in Asia. So that’s another example of a big data space.

And consumer internet, we’ve done some things…we’ve invested in a pure play consumer company which is about to launch in Silicon Valley. We’ve done an e-commerce company here called RedMart, which some of your listeners may have heard of. They’re doing groceries in the online space here in Singapore. This is an example of cross-border value with not necessarily a cross-border company. I think that RedMart has potential to be cross-border. It’s very internationally renowned folks who are on the team there, all the way down from the managers to advisers, employees and so forth. But right now they’re just tackling Singapore, which is a seven billion dollar market in grocery. So they can become a billion dollar company just in that one market. But the thing is, with e-commerce best practices, the space is wide open. The product offerings were not very comprehensive here, and my partner was the first VC to call Jeff Bezos who has actually written about…there’s a chapter on him and John Door and their bidding war for Amazon back in ’93 or ’94 in the Amazon book, and I’d been coding shopping carts since 1997, so we’ve been watching this space for a while and just bringing some of those best practices, thinking about margins and so forth, and having conversations..for product growth map and so forth. I think it’s useful for companies like RedMart that are not even necessarily looking to grow abroad anytime soon.

The last sector is fin tech. Personally I think the most interesting thing happening in fin tech right now is crypto-currency. Bitcoin is the most visible of the crypto-currencies. It started out with a lot of visibility due to some associations with criminal activity and so forth, but it’s quickly moving into the mainstream. You have top-tier VCs in the world investing in Bitcoin companies. Andresson Horowitz, Google Ventures, Union Square Ventures…you have people like Peter Thiel, as the inventor of PayPal he said something like, “Bitcoin has the potential to be everything I wish PayPal was.”

It’s really interesting what’s happening in this space. It’s not really well understood because in order to get it, you need a really deep understanding of technology and of finance. And even a lot of the financial folks, the economists, have not really dug deep into what the meaning of money is, you know, the essence of what that is, and will not really understand the technology side of things. So there’s a lot more debate that needs to take place and a lot more education, but it’s a really interesting space that has a lot of potential.

I would agree with you, and I’d love to talk more about that. Particularly in Southeast Asia, where do you see Bitcoin being more useful? Is it in the payment space? How can they beat out premier solutions for payments in Southeast Asia as opposed to say…credits on a cellphone or leveraging teleco infrastructure? Why would an entrepreneur want to use Bitcoin? Anything on your thoughts on Bitcoin in Southest Asia would be interesting.

Sure. Southeast Asia is a pretty diverse set of countries. One the one hand you have countries such as Singapore, that are very advanced. And on the other side of the spectrum you have countries such as Laos and Burma, which is quickly becoming much more advanced, but there’s a very broad spectrum of levels of development I guess you could say. So the problems and the pain points in each of these regions are very different. You touched on payments…Bitcoin does have a potential to solve the payment problems that are in developing markets like in Indonesia. The problem with that is that we need gateways. People ask me all the time, “How would Bitcoin solve this problem?” YOU can go to a gateway—it can be a 7-Eleven, it can be a bank, or anywhere—you deposit money, you get Bitcoin, you have a wallet, and then you can buy things online, or you can tap that into a merchant and so forth. And so why can’t PayPal do that? Actually they can. Visa can do it, but the thing is that Bitcoin is an open source architecture, right?

A really good article that I would suggest your viewership reads is called Bitcoin isn’t Money – It’s the Internet of Money. If you think about it—the Internet—the actual underlining protocols that are the foundation of the Internet, things like TCP/IP, those really allowed for innovation, but the innovation around the internet and around those protocols really happens at the fringe. And because it’s an open protocol, you have people, mobile developers who can develop apps for all these different applications, and you see this proliferation, this explosion that kind of has to do with the Cambrian explosion you mentioned in the Economist article, where people can come up with all sorts of ideas and execute on them. So, Bitcoin…it’s not a company, it’s not one of these innovations on the fringe. It is like TCP/IP. It’s the network in the middle on which people can actually innovate.

And so, that’s the difference. It’s kind of like VisaNet. I went to a presentation just the other morning where one of the vice presidents of Visa was talking about payments and some of the issues in the region with governments that they faced over the last year or two. And he described VisaNet sounding very similar to Bitcoin. He described themselves as not a credit card company, but as a payment processing company. And so they just had this system that processes payments, it sits in the US, and that’s becoming increasingly problematic because of the Snowden leaks. so people don’t want to have their data just processed in the US. They have I don’t know how many hundreds or thousands of employees sitting there full-time. So imagine all of that, and American Express and Mastercard have the same thing. So they’re all duplicating all this technology. So imagine all these companies not having to use their own systems, but using this open architecture, and from there they can go out and make their own credit cards. They can make their own bank accounts and so on and so forth on Bitcoin.

So I do think there’s a potential for the payment space, but I think it’s misunderstood a little bit. I think there’s a company in Indonesia…which is focusing on the payments problem, and there doing a good job of it, but it needs to be tackled from a more holistic perspective, a little bit more systematic perspective than I think is currently happening with a lot of the debate.

I think one of the most interesting things about Bitcoin is the Bitcoin ledger, where you have this artifact or kind of living document of all of the Bitcoin transactions that have ever happened. And having that verify a transaction, as a proof of existence, a proof of record for every Bitcoin exchange, every Bitcoin transaction up to that point…that infrastructure doesn’t really cost anything. It’s kind of spread as a distributed system, and I wonder who will be the company that kind of leverages that distributed system to build something on top of it as a platform like you said. It’s really interesting times, and there’s certainly a need for it in the payment space, and you can look directly at somebody like Visa or Mastercard and say, well there are Mastercard charges on this, but Bitcoin is essentially free. And I think one of the barriers to entry for the modern day consumer is, as you mentioned, the technical expertise that’s needed to even buy Bitcoin right now. It’s just so difficult, and there are some companies like Coinbase, which are trying to solve that problem. Have you seen any companies in Southeast Asia that are working on it? You mentioned that company in Indonesia, have you seen anyone else working on this problem?

Yes, we invested in a company recently called MaiCoin. there billing themselves as the con base of Asia. The founders are good friends with the folks at Coinbase and the folks at BTC China. I mentioned recently in an interview, we’ve invested alongside these two brothers, Bobby and Charlie Lee, who have been dubbed by a lot of folks in the community as the most powerful family in Bitcoin. Bobby runs BTC China which is the largest Bitcoin exchange in the world, and Charlie is the inventor of Light Coin, and is a developer at Coinbase now. They also happen to be cousins-in-law of the CEO of Bay Sensors, the company that I just mentioned.

Coinbase is very focused on making it frictionless to buy Bitcoin, sell Bitcoin, and get merchants to accept Bitcoin in the US. MaiCoin is effectively tackling that problem in Asia. They’re about to launch their product any day now. I’ve seen a lot of companies here, but the things that really makes these guys stand out are their focus on security and their technical expertise. It’s just something that’s just far beyond what I’ve seen with most of the Bitcoin companies in the region. They’re Harvard and Stanford guys, PhD’s, and very linked in, so they know all the best practices in the space. So I think they’ll be doing a good job as soon as they launch.

And just to touch again on some of the differences…I think it’s relevant for the region, but not just in Asia and the US. In the US, because it’s one very big market, it’s interesting and it’s easy for a company like Coinbase to go out and plug into all the banks and make it very frictionless. But here in Asia, outside of China, it’s much more of a split cultural and regulatory framework. So it’s not easy for a company like MaiCoin to just go spread out through the whole entrenet. China came out with some regulations recently which would ban Bitcoin from merchant space and so on, so the opportunities here…I think that’s definitely one of them—the typical wallet and payment merchant processing model of Coinbase. There are also some other things.

There are a lot of folks who are going out, and let’s say I have a 100 million dollar hedge fund and I want to allocate. If I allocate one percent of my portfolio to Bitcoin, then maybe this year I make 13 percent instead of 14 or whatever it is. But if it goes 1000x and becomes the real underlying infrastructure of the payment ecosystem in the world, then that’s pretty life-changing. So maybe I should just buy a million dollars of Bitcoin. The thing is, the exchanges out there, they’re not very liquid. It’s very difficult to buy a million dollars of Bitcoin. There have been these dark pools of liquidity in the United States where buyers and sellers of larger chunks of Bitcoin have emerged and come together. Now a lot of those transactions are done very informally. Somebody asks me—they know I’m in the community—I know some hedge fund managers, who know someone else in the community, and someone is trying to sell. The reason that works is because there’s trust throughout the chain. If you create a programatic and scalable system with a bit of trust, maybe with one of the big banks in Singapore, you could actually get almost a monopoly on some of these transactions.

So that’s another idea we’ve been toying around with incubating here in Singapore. And so—just touching on what we were talking about before—the opportunities are very different in different parts of the region. Singapore is really uniquely placed—not from the merchant perspective—it’s a small market, it’s only five million people. But because it’s such a visible and trusted financial hub of the world, it’s really uniquely placed to take advantage of some of these opportunities. Actually the commissions are very high on that sort of business, they’re three or four percent. So whoever can put this all together can stand to win quite a bit.

That’s a fantastic business idea. You already skipped ahead to the lightning round closing, but, Wow, that would be an impressive thing. I wonder if the big banks in Singapore would understand that opportunity because it certainly is a big opportunity. and Singapore is so well positioned as you say, as just this very stable, predictable financial hub. Almost fifty percent of all the foreign direct investment in Southeast Asia goes into Singapore. Yet it’s the smallest country by a long shot. So it’s be interesting to see if you can put that together. I think you’ve got quite an idea on your hands. There’s also a lot of funds in Singapore, so that’d be an interesting business model.

We’ll see how it goes.

We are at the lightning round closing, but you already answered number three. Let’s get your answers to number one and two. What are you reading right now? What’ on your bookshelf John?

I just finished a book on big data. I read pretty broadly I guess you could say. The exact name of this book is “Big Data: A Revolution That Will Transform How We Live, Work, and Think“. It’s by Viktor Mayer-Schönberger. It’s good…if you follow this space, a lot of it will be information that you know, as it was for me. But it’s just a good overview on some of the principles of big data. So that’s kind of the most recent book that I’ve read on entrepreneurship and technology.

I read pretty broadly, I’m a churchgoer so I read a bunch of Christian books. I’m also interested in politics and international affairs, so I have a few things I’m reading there as well.

What’s one piece of advice you’d give to entrepreneurs?

There’s so much…well, it really depends on the entrepreneur because there are so many elements of being successful as an entrepreneur. And everyone comes at it from a different angle. So for instance, I get a lot of these enterprise-y feeling guys. So for example, they’ve worked at big companies and they’ve risen very high. And then they decide, “I’m going to go and start a company.” So for guys like that, I’ll say—in the three things we talked about in “team”, they have a track record of success, but they might not be as open to being humble, I guess you could say. Because they’ve been so successful, they think they know how everything operates. So they tend to try to bite off a lot more than they can chew.

There are certain startup methodologies that are best practices now. And so for a lot of these entrepreneurs, I’ll say rather than going and trying to tackle the whole world at once, which is what you’ve been used to doing—in a startup you have very limited resources. So you need to do it really quickly. Go and read some of these books on minimum viable product and so forth, and also be prepared to get punched in the nose a lot. You need to make sure that you have a will to win.

There are other entrepreneurs—the younger guys who are just out of school, who maybe haven’t risen very high in big companies and so forth, and at the beginning I’ll tell them that you need to have a lot of advisers on board to help you with the domain experience. so those would be some of these guys like entrepreneurs who have been at corporate jobs for a long time. They don’t need to entrepreneurs, just advisers that you can surround yourself with, people who know a lot about a particular domain.

And then also as entrepreneurs scale, there are all sorts of challenges that a company can go through in different parts of it’s life-cycle. So what we’re talking a lot about, with one of our particular companies now…they’re just about to do series A, and typically when you start a company, you can find engineers who are really passionate about solving a particular problem. and so the culture of this particular company is that they have these really hard-core engineers who are working all the time—the work Saturdays and Sundays, they work till midnight or two in the morning, and that’s all great. But as they start to scale out a little bit and build out the team, there’s no sense of vision or purpose, and Marc Andreessen actually wrote a blog post about this very recently, but there’s this trend in the valley—that there’s no amount of money that can get you the top talent now. Everybody’s paying ridiculous sums. so in order to really motivate people to come over to your company, you need to set out a broad vision, a broad mission for them. They need to feel like they’re working on an effort that’s really greater than themselves.

So I think that’s really important, building on a great culture, a great vision and a great mission that people can buy into. Also, just having passion for the product and for the company.

Thank you very much for you time John, we appreciate it.

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