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What do Venture Capitalists Want? Getting Under The Skin of Asia’s Most Influential VCs

Last updated: 2021-06-02 (originally published on 2016-09-05)   — by Alex

Currently hovering at around a total of 51 deals totaling $255 Milluion, Southeast Asian investment activity has halved from its peak in the fourth quarter of 2015. This slowdown in deals is reflective of the attitude of investors. Brexit and the U.S. Presidential elections throw serious doubt about what the future economy might look like.  As a result, investors are now more cautious, becoming more selective and focused on the core fundamentals.

Cycles like this present an incredibly unique opportunity for us to enter some good businesses that stand the test of time in spite of those cycles -Eduardo Saverin Co-founder at Facebook. Angel Investor

Eduardo Saverin

Co-Founder at Facebook. Angel Investor.
Discussion at Tech in Asia, Startup Asia Singapore (Apr, 2016)

 

So, what is the magic formula?

Is it a formula that checks all the right boxes? Or some sort of ‘Founder’s DNA’ as Sequoia Capital calls it?

“These kinds of founders hold the purpose higher than themselves. Then, it’s not about building a company, raising capital or selling a product or service. They are truly convinced they want to devote their lives to a mission.” Shailendra Singh Managing Director at Sequoia Capital Interview with Tech In Asia (Apr, 2016)

Shailendra Singh of Sequoia Capital

Managing Director at Sequoia Capital
– Interview with Tech In Asia (Apr, 2016)

 

1) Walk the talk

There is still VC funding out there for your company. But what does it take for you to be funded?

“Is the dreams that you have, big enough for you? If you cannot even sell yourself the potential of your own story, who are you going to kid?” - Khailee Ng Managing Partner at 500 Startups

Khailee Ng of 500 Startups

Managing Partner at 500 Startups
– Keynote at Tech In Asia, Startup Asia Singapore (May, 2014)

 

With the need for high returns, investors need to be reassured that you and your team have got what it takes to walk the talk.

 

As such, Golden Gate Ventures focuses on the tangibles in the first meeting:

“The first bar to entry will be a prototype regardless whether it’s private beta or publicly used, ... execution is preferred over presentation slides and ideas on a napkin.” -Jeffrey Paine Managing Partner at Golden Gate Ventures. Director at The Founder Institute. Interview with Tech In Asia (Sep, 2015)

Jeffrey Paine of Golden Gate Ventures

Managing Partner at Golden Gate Ventures. Director at The Founder Institute.
Interview with Tech In Asia (Sep, 2015)

 

Ideas are cheap; execution is everything,” made famous by Shark Tank investor, Chris Sacca; echoes the sentiment of many Asian investors, more so with the economic uncertainty. Beyond the intricacies within the pitch, more so than ever, VCs are looking for the brains and hands behind the plan. Laura Sachar, Founder and General Partner of StarVest Partners once said at Business Insider’s Startup 2012 conference, “A lot of people have ideas. If you can’t execute, you don’t have a company.”

 

Releasing your product on beta?

Be sure to pre-warn your fans and customers about possible risks associated with pre-release software, and protect yourself from the consequences of problems with your product.

Use a Pre-release Software Terms of Use document.

 

 

2) A focused leader

With the right ideas and team in place, teams need a leader to align them towards a focused direction. Much can be said about unfocused startups in their rush to do everything and be everything.

“A leader who will make the tough calls when necessary is essential, and share distribution needs to reflect this.” -Leslie Loh Managing Partner at Red Dot Ventures. Founder & CEO at Lithan. Ebook on Asia’s Entrepreneurs (2013)

Leslie Loh of Red Dot Ventures

Managing Partner at Red Dot Ventures. Founder & CEO at Lithan.
– Ebook on Asia’s Entrepreneurs (2013)

 

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Jeffrey Paine of Golden Gate Ventures

Managing Partner at Golden Gate Ventures. Director at The Founder Institute.
Interview with Tech In Asia (Sep, 2015)

 

So you have established grounds for a Term Sheet, what is stopping your beloved VC from committing? After months of courtship (due diligence, background checks, etc.), popping the question might be more about you and your team dynamics and less about your business.

Jeffrey Paine of Golden Gate Ventures Managing Partner at Golden Gate Ventures. Director at The Founder Institute. “ … the number one for me, is coach-ability of the founding team.” -Interview from High Net Worth with Yong Hui Yow (Nov, 2015)

Jeffrey Paine of Golden Gate Ventures

Managing Partner at Golden Gate Ventures. Director at The Founder Institute.
Interview from High Net Worth with Yong Hui Yow (Nov, 2015)

 

VCs want to help you maximise your potential with their own experience and network. Closing up to their help and advice is a sure fire way to make any future discussion go the way of the dodo.

Do your past failures contribute to their decision? Perhaps, to a certain extent. Voicing the opinions of several investors, Vinnie believes that any experience of the team working together is a plus point. VCs also like to see track record of experiences showing that the team can work together for the long haul. The cemetery of failed startups is littered with deaths due to frigid team dynamics.

Vinnie Lauria of Golden Gate Ventures Managing Partner, Golden Gate Ventures. “If a team has worked together through failed business and is in the process of starting another, I am very very interested in seeing how we can partner with them. (That’s because) failures are a huge life lesson and if you can stick together through thick and thin there is a good chance that you are going to do really really well in life.” -Podcast from Analyse Asia with Bernard Leong (Jan, 2015)

Vinnie Lauria of Golden Gate Ventures

Managing Partner, Golden Gate Ventures.
Podcast from Analyse Asia with Bernard Leong (Jan, 2015)

 

3) On scaling

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Tan Yinglan of Sequoia Capital

Venture Partner at Sequoia Capital. CEO at Sequoia Capital (India) Singapore.
Panel discussion at Tech In Asia, Startup Asia Singapore (Apr, 2016)

 

Lastly, as most investors covered here have their sights set on Asia. It will be fair to cover their thoughts on local and regional expansion.  Not straying far from points made about focus; Vinnie stressed on the importance of localising.

Vinnie Lauria of Golden Gate Ventures Managing Partner at Golden Gate Ventures. “Localizing is more than translating the language. A lot of times you have to put a different twist. It is about making it work for local buying behaviors and work flows of the country.” -Podcast from Analyse Asia with Bernard Leong (Jan, 2015)

Vinnie Lauria of Golden Gate Ventures

Managing Partner at Golden Gate Ventures.
Podcast from Analyse Asia with Bernard Leong (Jan, 2015)

 

Willson Cuaca of East Ventures Co-founder & Managing Partner at East Ventures. CEO at Apps Foundry. “Target a single big market for dominance first before regional expansion. Multiple market launches at an early stage might not be wise due to huge upfront capital costs. Secondly, the rapid knowledge growth of founders is more important than what has been achieved in the past.” -Interview with Tech In Asia (Sep, 2015)

Willson Cuaca of East Ventures

Co-Founder & Managing Partner at East Ventures. CEO at Apps Foundry.
Interview with Tech In Asia (Sep, 2015)

 

 Fundraising? Do you know what legal documents you will need?

Find out by taking our free Legal Health Check:

Take Legal Health Check for Fundraising

In a nutshell…

  • Though VC funding is slowing down, VCs are still investing
  • Believe in yourself, your company and the mission
  • Ideas are one aplenty, but its value will only be realised through execution. Hence, create your minimum viable product before starting talks with VCs
  • There needs to be a distinct leader with a razor-sharp focus to maximise the startup’s scarce resource
  • Scale in accordance with local needs

 

Read more:

Download free eBook: Early Stage Funding

This article was written by Zegal’s Audrey Aug, and was first published on tech publication e27.

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