This Wicked Wednesday past, we invited two top investors from two top venture capital firms to share with us their stories of the hustle and bustle of the world of venture capital, insights into what makes successful startups, and perspectives of the challenges that face businesses in Singapore.
Joining us were James Tan, Venture Partner at Quest Ventures, and Albert Shyy, Principal at GREE Ventures.
Any opening words?
Albert: Good evening everyone, it’s my first time here.
James: Pardon me — I’m a little filled with emotion here. I used to be a KE7 (King Edward VII Hall) ‘hostellite’. I just had a walk around the places where I used to assemble computers in my free time — it was the dot-com boom then. Fast forward years, and now I’m here.
First question: what is the ‘X-factor’ that you look for in startups?
James: The team. Always about the team. The startups that have signed with us are mostly from NUS — and a lot of them are from the NOC programme.
Albert: Definitely the team. But within that, also competitive advantage. That is, ‘what can this team do over someone else doing the same thing?’. After all, there are probably other smart people doing the same thing. So I’d look for traits that give this team a competitive advantage — such as industry knowledge.
Both of you mention the team. Any specific qualities about the team? Well-roundedness, perhaps?
Albert: Well-roundedness is always a good thing. But as the company starts to grow, there will be fewer gaps down the road — the team will get rounded out eventually. Startups at the series A stage should be more or less stable , maybe missing one or two key people. They’d need to start looking quickly. For startups at earlier stages it’s probably about the right mix of talent or a group with the passion and motivation to tackle a problem.
James: I’d live to give a shout-out to others in this crowd who can also answer this question. Sang! You all need to talk to him. And Agus! (author’s note: those are Wong Sang Wuoh, an associate director, and Agustiadi Lee, a senior executive, both at NUS Enterprise). A key prerequisite before I agree to meet startups is that they must come from a trusted referral. Why? Because we have to sieve through 40 to 60 unsolicited business plans a day — trusted referrals will definitely get a meeting with me.
You’ve probably met many startups. Did any stand out for unusual-ness or creativity?
James: There was one that’s similar to Burpple. They preached to the press with polaroids, food, coupons (those were hip at the time), shirt — it was like ‘wow’, not just another email asking them to cover their story. They received a lot of coverage from this tactic. But I’ve got something to say for people who drops things at doors — please, don’t try to do that.
Albert: I once received flowers at my door. (Crowd: Ha-ha).
James: Hah! Now you guys know what he likes. (Crowd: Ha-ha-ha).
Albert: Yeah, that was memorable for a short period of time. But we actually don’t respond to all applications, and we can’t meet all of them in person. It’s best if you can get someone to meet you in person. I don’t recommend using packages. I think if you can’t get a referral, go to events where you think the people you want to meet will be. Meet people, talk a bit, and get an email. You can then talk afterwards.
Questions were opened to the crowd. Here are some highlights.
Hypothetical question — 10 million user base with low revenue; Or 10 million in revenue with a small user base. Which would you choose?
Albert: 4 months ago I would say user-base. Now, revenue. I think it’s important for companies to demonstrate that their business isn’t just a venture that will burn money. It’s always a good thing to demonstrate a good product that can earn its keep.
James: For me, it always depends. I would say users, all of the time. Think about it: a big number times any number is always a big number. That’s why Carousell, a C2C model, is very attractive. Another point: customers can go anywhere else. If prices fall, without a user-base you’re suddenly earning a lot less revenue — if you are able to keep your customers with you, there’s always the chance for you to earn.
As a startup grows, the leadership skills of the CEO will grow in importance — either the CEO adapts, or the situation exposes the extent of his or her leadership abilities. What happens if you feel that the CEO of a startup is no longer the right person to lead the team?
Albert: That’s a good question. It happens, and when it does, you not only have to figure out when is the right time, but also figure out what’s the solution — such as, who then would be the right person? How to replace the person without severing the relationship with the other members, and still have him or her remain as part of the team? Sometimes it’s also about giving the founders the benefit of the doubt — you can work past corners if they’re willing to learn. But if they’re insensitive to other details, that’s when we’ll have difficult conversations.
James: This happened to us, twice, both voluntarily. They moved down to chairman status. The thing is, when startups grow and have the money, they can hire better CEOs, who may be more qualified and have the know-how.
What’s the biggest difference between Singaporean and foreign startups? For example, in China, programmers work so hard their offices are their homes.
James: You’re from (NOC) Shanghai, right. Ok, I’m generalizing now, because there are always exceptions. But the Chinese way — pardon my Singlish — is pia all the way. They have ‘only one life’ — if they were to join local corporations, they’d be like a cog in the wheel, so why not just give a startup life a shot, and work hard? You know, that’s the purpose of N-House isn’t it? If you’re sleeping here already, do something here lah! The countries around us, like Malaysia, with MaGIC, and Indonesia, with their initiatives, they’re very active — they’re now opening their eyes to opportunities. And from an investors’ point of view, startups from these places are more reasonably priced. But within the microcosm of Singapore, we still have people who can really chiong.
Albert: If you’re a looking at building a consumer-facing business, you must get out of Singapore as quickly as you can — grow out of there. I think that the tech talent here is stronger. But you have to move as fast as you can. The dynamics of the startup ecosystem has changed — in Indonesia, Malaysia, or Thailand, there probably are already local teams with the same idea. And if you think these places are where your core market lie, then you must move fast.
As the talk winded to a close, we asked for some parting advice from our speakers.
What are some books or sources of knowledge that you use, and would recommend?
Albert: Blog sources for me. Fred Wilson’s. Andreessen’s. In Asia there’s not much thought leadership yet for the startup world. Maybe James could start a blog. (Crowd: Ha-ha).
James. AVC.com. Short and sweet. Paul Graham’s articles. As for books, I would recommend the book “Venture Capital Fund Management” by Wong Lin Hong. For insight into the day-to-day life of a VC firm you can follow Quest Ventures on Facebook. (Crowd: Ha-ha-ha.)
Any parting advice?
Albert: Entrepreneurship isn’t for everyone. To chase your passion — sure, that’s not wrong. But the idea of entrepreneurship’s been too over-popularized. There’s a lot of risk involved in building something yourself. You need mentally and physically prepared, to have the stamina to live without a salary, to go through a lot of rejections — all the downsides. Many companies struggle for a long time, only some make it. It’s a lot about stamina and persistence.
James: You only have one life. Got opportunity, just come out and do it! There are always waves. For example, a few years ago dating sites were all the rage. If you’d launched a dating site then, you’d probably have gotten funding. Second thing — what do you see in the market? Example, a B2B flowers market? (Crowd: Ha-ha). Please, when you find something, start and do it! Talk to Agus or Sang.
With the parting advice, the crowd then dispersed, with James and Albert allowing guests for some private face-time.
We’d like to express our deepest thank-yous to Albert and James, for their willingness to share their time, insights, and stories with us.
That’s all for this update. Stay tuned for next week’s event — Lead-Up to Pitch Night!
