The Startup Scene in Southeast Asia

Golden Gate Ventures https://www.goldengate.vc/is one of Southeast Asia’s most established early-stage venture firms, having backed companies across the region since 2011. They have invested in companies that are now household names in the region. Examples include Gojek, which started as a motorcycle taxi service in Indonesia and grew into a super app spanning payments, food delivery, and logistics, and Grab, which began as a ride-hailing service in Singapore and similarly expanded across Southeast Asia into food delivery and financial services. Jeffrey Paine https://www.linkedin.com/in/jeffreypaine/ is a co-founder and partner at Golden Gate Ventures. In this episode, Jeffrey joins Gregor Vand to discuss how the Southeast Asian startup ecosystem has evolved, why the regional copycat model is giving way to globally ambitious technical founders, what companies like Manus and Supabase reveal about Singapore’s emerging role in the global tech landscape, and what advice Jeffrey gives founders today who want to build something that matters beyond their home market. Sponsorship inquiries: [email protected] mailto:[email protected] The post The Startup Scene in Southeast Asia https://softwareengineeringdaily.com/podcasts/the-startup-scene-in-southeast-asia/ appeared first on Software Engineering Daily https://softwareengineeringdaily.com.

• 0:00Speaker 00

  Golden Gate Ventures is one of Southeast Asia's most established early-stage venture firms, having backed companies across the region since 2011. They have invested in companies that are now household names in the region. Examples include Gojek, which started as a motorcycle taxi service in Indonesia and grew into a super app spanning payments, food delivery, and logistics. And Grab, which began as a ride-hailing service in Singapore and similarly expanded across Southeast Asia into food delivery and financial services. Jeffrey Paine is a co-founder and partner at Golden Gate Ventures. In this episode, Jeffrey joins Gregor Van to discuss how the Southeast Asia startup

• 0:44Speaker 00

  ecosystem has evolved, why the regional copycat model is giving way to globally ambitious technical founders, what companies like Manus and SupaBase reveal about Singapore's emerging role in the global tech landscape, and what advice Jeffrey gives founders today who want to build something that matters beyond their home market. Gregor Van is a security-focused technologist, having previously been a CTO across cybersecurity, cyber insurance, and general software engineering companies. He is based in Singapore and can be found via his profile at van.hk or on LinkedIn.

• 1:34Speaker 01

  Hello and welcome to Software Engineering Daily. My guest today is Jeffrey Paine from Golden Gate Ventures. Nice to have you here today, Jeffrey. Hi, and thank you so much for inviting me. Yeah, of course. So this is a slightly different one. We've done a couple of these in the past on SE Daily where we actually get to hear more from the venture capital side of the industry. And today, I would say it's like extra special. We get to hear from venture capital from Southeast Asia, which is a whole different ballgame in some respects, and as we'll probably discuss, maybe is trending more to a similar game as the US, who knows? So that's kind of what we're here to discuss today and hear about.

• 2:15Speaker 01

  As usual, just love to understand your background, Jeffrey. I believe you were grew up in Singapore and studied in the US. But how like, what was the connection, I guess, US back to Singapore and then getting into VC?

• 2:28Speaker 02

  So after working in California for a while, I came back to Singapore. And then helped, I guess, a public listed company set up their first corporate venture fund. So that was how I stumbled into this. And I originally wanted to do this. It just this came on my lap and okay, this is something I can do from scratch, which is quite cool. Yeah. And then we ended up looking at deals globally, investing in a few. And then after maybe three and a half years, I moved on to do some private equity work in Shanghai. But the gist of where everything started was I brought the program called the Founder Institute to Singapore back in 2010. So as you may know, FI started in 2009 in the Bay Area.

• 3:13Speaker 02

  And Singapore was the first chapter in Asia. So that's how I got back into the super early stage. I mean, FI traditionally is the idea stage incubator. So that was a pretty interesting stage to be mentoring and advising founders on. So. So FI was actually the main push and we launched chapters in Southeast Asia. And then we flew mentors around from the region and from the US to Southeast Asia. So. So that was, I would say the timing was just nice. It gave us an excuse and leverage to meet as many of the ecosystem leaders as possible and really, really quickly. And that got me to meet Vinnie, my co-founder of Golden Gate Ventures. He was backpacking in Asia after he sold his company.

• 3:59Speaker 02

  I met him for coffee. I was like, oh, since you're bouncing around, so maybe I can get the chapters, you'll fly you around. So that's how he was moving around mentoring founders in the region. And then we came together and said, oh, there is something here. And we started the fund shortly after probably late twenty twenty twelve.

• 4:17Speaker 01

  Nice. And I mean, like, I'm quite familiar. If I look at some of the names that you've invested in over the years through Golden Gate Ventures, I mean, two, I guess, that stick out, Gojek is one, which is an Uber-like company for those in the US. And then actually, we've got Redmart as well, which is a Amazon-like company, or like that's a supermarket delivery company. I think just talk us through, especially back then, and what were the kinds of companies that were evolving? And I guess you would deem the successful ones from that era.

• 4:50Speaker 02

  Sure. So to be clear, we did not invest in Gojek. We invested in a payments company in Indonesia that was acquired by Gojek and it became GoPay. So that's how, that's how we ended up being shareholders of Gojek, because there were some cash and share swap. I would say back then it was still very consumer fintech marketplace ideas. If you look back, it has almost always been copycats. I think the top, in fact, the top hundred companies in Southeast Asia for the last twelve, fifteen years has been copycats. And that's perfectly fine, because in emerging countries where things are kind of new, kind of raw, the problems still exist. It's just in a different timeline, in a different adoption rate cycle.

• 5:34Speaker 02

  And back then, many founders are not very, very technical. So it's not unusual to see a lot of copycats. So so back then, it was mostly consumer issues, consumer problems. How do I pay online? How do I pay for a game? That kind of thing. Yeah. So marketplaces, logistics that surrounds marketplaces, payments that surround marketplaces, all this stuff, things that are needed because it's very silo here and every country is different. So back then, yeah, it has been consumer and fintech for a long time.

• 6:03Speaker 01

  Yeah, I guess I moved to Hong Kong from the US. I was in the US for about three years and I moved to Hong Kong about 2014. And that was the kinds of, I was usually sitting in co-working spaces in Hong Kong. But yeah, that was exactly the kind of companies I was seeing. I noticed, I think TradeGecko is another one that you guys invested in. So that was definitely on my radar back then of a player. I think that's interesting. They were a bit more global though, in the sense that that just happened to be a platform that was based out of Hong Kong or somewhere. But is that right?

• 6:33Speaker 02

  Yeah, I mean, they have a Hong Kong office, but they're headquartered in Singapore. They were started by Kiwi founders. It is basically an order management software for people who start online businesses, right? Which is literally the growth of marketplaces and Shopify and that kind of thing.

• 6:47Speaker 01

  Yeah, yeah. So I guess if we maybe fast forward to today, I think that's what I'm most interested to dig in a bit on. If we take Grab as an example, so Grab, for those that aren't aware, is Singapore's Uber effectively? And they have reached into other geographic markets, but still Southeast Asia generally. So if I fly to Malaysia or to Thailand or something like that, I can usually open up Grab and there is now a service operating, especially if the rideshare model. But then seeing where they're going, for example, like they're into flexi loans now. And I think the number of almost like 1.2 billion, I think Sing dollar maybe, or if it is US, but like a loan book of that size.

• 7:32Speaker 01

  That to me says there's a, not a problem, but what's going on there? Like in terms of how are these companies supposed to grow? To me, that just feels like the wrong direction for like a company of what it's doing otherwise. But I guess from the investment side, yeah, I don't know. How do you look at that?

• 7:46Speaker 02

  I would say you can kind of compare Grab and Uber, but then you can also kind of compare Grab and WeChat, right? So Grab is a little bit more multi-featured and they have different services. And obviously, once you're in many countries in the region, you, I think they probably have over 40, 45 million consumers from merchants to drivers to passengers, right?

• 8:10Speaker 02

  And they've been operating for a while, so they have a ton of data. So from right activity to payment industry. So this technically, if you wanna actually build a credit bureau based on that, you probably can. Because most people have used Scrap at least once by now. So this is something I would say it is inevitable if that's your strategy, right? To provide more value to your consumers and not only passengers. It could be the drivers if they needed something, if they needed some loans quickly or even your merchants. So this is something I would say not every right sharing company would do or try. But yeah, this is something they obviously did and they are doing very well.

• 8:50Speaker 01

  Yeah, that makes sense. Analysing it slightly more to like a WeChat. If we look at, again, just to take a comparison for a second, if we do take Uber, Uber technically, I guess, could have gone that way. Having that touch point with so many people in the U S. But instead, I think they are focusing much more predominantly on transport, especially driverless now. And they're trying to play that game. Where is the divergence? Like, I don't know, where in your mind is it like that's why a U S market player goes and doubles down on their core thing? And and here we see them actually spreading tentacles into like many other things which we see. Yeah, especially like that that influence from, say, the Chinese super apps. Yeah.

• 9:27Speaker 02

  I think it's.

• 9:28Speaker 01

  Is it like Southeast Asia and the geography?

• 9:30Speaker 02

  I think it's partly strategy, partly cultural and then partly regulatory, right? So if they go into fintech, there's another ton of regulatory requirements they have to do. And there are incumbent competition as well. So potentially it is a strategy kind of thing. So it's like asking how come like Facebook Messenger did not become WeChat, right? So it's just kind of the same thing. I would say it's probably more strategy than anything. But at the same time, I'm sure they know what's happening around the world. So it's either they chose not to do this or they have plans, but not now.

• 10:07Speaker 01

  Yeah, okay, that makes sense. And I guess now thinking about founders here, I became aware of you going through another accelerator here in Singapore and you kindly came and gave an hour-long pep talk to us as we were navigating things. And that was just at the cusp of like the AI boom, like ChatGPT was out, but I don't think any of us even then fully got like where AI was going. And we were still being kind of encouraged, not necessarily by you, I just mean, we were encouraged in that cohort to really still look at the copycat model effectively, like think of these B two B ideas, copycat. And I would say no more than like three months later, I felt a seismic

• 10:51Speaker 01

  shift between that kind of approach. And actually, you can't really sit here and create something competitive unless you're basically competing with the US because everything is global now. And don't create AI specialized on Indonesia, for example, you just create the best AI. Yeah, like, how are you now seeing that? I mean, in terms of any investments you are making these days, or like just advice you're giving to people, especially in the region, like, can you maybe just walk through what you saw? Because that was like me as a founder, watching from the outside a little bit, or trying to understand what I was being advised to do. But as somebody who didn't particularly want to go and sit back in the US again, for example. But yeah, how would you look at it now?

• 11:32Speaker 02

  Yeah, so let me rewind back. I think back then when I was speaking, there is a period where maybe about a year where everybody don't really know what's happening. They're enjoying the products being released, they're astounded by the amount of money being spent, but then they don't know what's happening. But at the same time, there are people already shouting what's happening. They're shouting this is going to change everything. They're shouting this is 10 times bigger than the internet, but people are kind of not listening back then. And actually, that's pretty normal, right? Because generally, you should not be jumping in and believing whatever people are saying right off the bat. You have to be a bit skeptical and trying to figure out what does it mean to you. But on the hindsight, what is actually happening is the people shouting are the top one percent of influencers.

• 12:18Speaker 02

  And they actually know more things than everybody else in the world. So if they are shouting, that means you should be leaning in a little bit more. The problem is people do not know that they are the most important people in our current generation of A I. And then, like you say, fast forward three, six, nine months, then you're like, okay, this is getting real. You can see maybe the shift of venture capital, right, went over to V C. It moved away from probably climate tech, right, that kind of thing. And it's completely swung over and it's like seventy or eighty percent of the money went there. And because of that vacuum, which is Silicon Valley, most of the money went to the US, right? It didn't go anywhere else. So then we started realising, okay, there's something here.

• 13:01Speaker 02

  And then after one more quarter, we're like, it's still the same, right? The way more money is just flying there. Then we realised, okay, this is real, right? And then what you normally see is you see the I E S start changing, you see startups having A I everywhere. Right, the top accelerators, most of the pictures are A I. So then you start the entire global, the way people understand this is definitely important, started changing really fast. And then we start joking, ah, every startup has an A I, my grandmother know what G P T is, that kind of thing. Now, as of today, it is still going on, it's probably not stopping. Is there a bubble? There is a bubble, but it depends. So what I can explain to people maybe outside of the Bay Area is.

• 13:44Speaker 02

  If you're not in the U S, you're probably about six to twelve months behind what's happening. And I say that a lot here in Singapore. So the only way to really understand what you should be building, you need to close the knowledge gap a little bit more. You need to be travelling a little bit, attending conferences a little bit, you need to be reading research papers a little bit. I think technical guys don't normally read research papers unless you were a grad student before, so it comes naturally to you. I can almost say most investors don't read research papers, right? So everybody needs to catch up. Now, most things are in English, most things you can find on podcasts like yours and others and YouTube channels. So you definitely can catch up. It just takes effort and a little bit of inquisitiveness and just keep asking questions.

• 14:30Speaker 02

  So at the moment, what we are seeing is obviously a lot more B two B, a lot more deep tech, a lot more founders who are highly technical. You can tell just by looking at Y C's graduate pool, I hardly ever see M B A students anymore. Most of them are highly, highly technical or they were dropouts of M I T and Stanford. So things have shifted. Even the batches at Y C can give you a signal. In the past, there's copycats from every country that will go to Y C. Now you don't see that very much, maybe one or two percent. The rest of them are global from day one and it doesn't matter where you're from. There's a bunch of founders from Europe, but they are global from day one. Most of them will move to the Bay Area. So things have changed. It's pretty drastic change, actually.

• 15:13Speaker 02

  Probably it's been one and a half years and it's been like this. And I think it will continue to be like this for a bit of time. So I think here, I would say if our mode of operation has always been copycats, then founders here should be copycatting what's in the U S, which is actually happening. But to copycat this kind of stuff, it takes a different kind of founder, right? So you need to be slightly highly technical. So we will see less startups being formed, which is true. And then the teams are a little bit more technical than before, which is true. Then lies the problem. The problem is the region is probably too early for what you're copying. That's one problem. The second problem, the region might not be as big as you think.

• 15:53Speaker 02

  So I would say the A I copycats will still raise money if they focus on one country or the region. But how big they can be, that's a separate topic, which is exactly what we went through in the back in the day, right? Which is consumer and fintech. Now, consumer and fintech, we are definitely big enough depending on where you go and timing. But not every idea is big enough, right? Even in consumer and fintech, yeah, not every idea is big enough.

• 16:17Speaker 01

  Yeah, I mean, to take an example, I'm just trying to think like when we talk about copycat, I can't imagine. Easily, literally just to go to one extreme, like an anthropic copycat coming out of Singapore in the next year, for example. But I could imagine like a Harvey legal copycat coming.

• 16:33Speaker 02

  Yeah.

• 16:33Speaker 01

  Yeah, is that more of the level or?

• 16:35Speaker 02

  Oh, yeah, yeah, yeah, yeah. You can see it already. I think every country probably have three to five of these. And then at some point, what will normally happen is lawyers are hardest to sell to. And then they'll push back. And then sometimes the top down, right? Sometimes the law societies will ask the legal firms to try it out and they may give some incentives or grants. So there's a little bit of hustle and push from the industry. And then some of us will say, there are three of you in one country and then how many law firms are there? Right? So how can I make my twenty X return? It's impossible, right? And then by the time you go to another jurisdiction, there's another five competitors, which is exactly what happened back in the day, right? So every e-commerce company has twenty copycats around the region.

• 17:20Speaker 02

  So it's the same thing. So it will repeat again. So then the question is, what do they do? Right? So that is the challenge that most founders are facing now. Now, over the years, what has changed? We have a little bit more experienced founders in the region. We have a little bit more technical people in the region, right? And their level is getting better and better, higher and higher, because there are more R and D centers in Asia, including Australia and New Zealand and Taiwan, that kind of thing. So there are founders who, maybe I don't do this, maybe I do something bigger. For example, maybe I do a Harvey but for construction law and I'm number one in the world, right? I just do something small, but then I'm number one in the world at something small.

• 18:05Speaker 02

  As opposed to do something horizontal for one country, right? This is something the founders had to go through to quickly realize, okay, this is not big enough. This is harder than I thought. I am probably two years too early because the lawyers just don't understand. They don't want to use me. They don't believe in what I do, whatever reason, right? Or they might want to still charge that rate, right? And they don't want to perceive to a customer that they are cutting corners and still charging that rate. And then they don't want to fire half the team. So there's many, many political reasons. But this is what the founders have to slowly, slowly realise once they're out there in the market. And sometimes they realise, yeah, the market is actually too small and it takes too long. Sometimes the investors tell them, you should think bigger. And then some of them will change, some of them won't change, but that's the way it is.

• 18:51Speaker 01

  Yeah, thinking about Singapore specifically, for a while, there was a entrepreneur first cohorts used to be here and they dried up and left. Singapore, I think, three or four years ago. And at least if I looked at the one that I went through, I I've got the feeling there were probably less and less, especially international people. Maybe coming here for that, they would rather try and do the same one in a different jurisdiction. And the one that I went through not that long ago, opened up a US version of what they're doing. So I'm trying to think, I mean, when people hear that I live in Singapore, they say, oh, that's like the tech hub of Asia, right?

• 19:29Speaker 01

  And I say, well, actually, I think it's got a bit of an identity crisis right now because it can be quite conservative in how it looks at investing in things generally from like both a. If you want to call a government standpoint as well as private investment, like, or sorry, VC investments. To me, this is still kind of looking for the safe investments, which is like, to me, the, you know, the ante of VC. So, yeah, like, where is it just, I don't know from what you're saying, are our founders actually just saying, well, I don't need to come to Singapore to start a company? If I want to start it from Southeast Asia and have a lower cost base somewhere else. To me, that's never been a draw. I'm somebody who's drawn to cities that I feel the networks are in that city and so on and so forth.

• 20:11Speaker 01

  I've never been drawn to find the lowest cost base and operate from there. But, yeah, I'm trying to think, and I'm like, I'll just bring in Sweden for a second. You're like, Sweden has shown that you can generate some really exceptional companies from quite a small population base. And that does rely a lot on, like, if we think of like lovable, for example, a lot of lovable team now is international, but they all, they do relocate to Stockholm and they're working from there. So. I'm curious why Singapore can't do that or where else in the region is doing that, I don't know.

• 20:44Speaker 02

  Yeah, yeah, good question. So I was speaking to someone from New Zealand yesterday. So I think I've said this before a while back where if you launch a company in Singapore, regardless of your background, right, so you can be local, you can be a foreign expert and been working in APAC offices based in Singapore. Generally, you are a little bit confused where you should expand to. So for example, because we are distracted very easily. Now, partly because where we are from, partly because how we are as a country, right? So for example, we speak English, but Americans don't understand what I'm talking about because I speak too fast. I speak Chinese, but the Chinese have no idea what I'm talking about because I'm not Chinese.

• 21:25Speaker 02

  So founders back in the day, they think they can attack China, then after a while they're like, okay. Even the Taiwanese gave up, so I I probably should give up too. Then they tried the US, then obviously back then the skill set, everything's not as good. And then we'll definitely do Southeast Asia, which is predominantly most, most companies, I would say. So here is a little bit tricky where you either go China and then they shut it down. Or you go develop Asia, which is like Singapore, Hong Kong, Taiwan, maybe KL, maybe Bangkok, right? And then after that, you're like, okay, this is actually way too small. Then you may try to go to Middle East, you may try to go to Europe, you may try to go to New York, right? Generally, Bay Area is usually not like something people think about, actually. And then Australia is one, Japan is one.

• 22:10Speaker 02

  So we are kind of like a little bit lost because we are being pulled by different places. And then we assume we can do different places, right? So part and parcel of knowing maybe two or three languages. Then we realize, oh, Indonesia is different from Malaysia. Vietnam is extremely difficult if I'm not local. Thailand and Philippines is quite unique by itself, right? Then you realize, okay, Southeast Asia is really, really hard. And then the only similar country is probably Malaysia. Even then, when I add everything together, it's still too small. Now, so after all this ding donging, then we realised, oh, we waste a lot of time. That's why I think Singapore is a bit, sometimes they're spinning around a little bit.

• 22:53Speaker 02

  But Sweden and New Zealand by now, they should know that our home country is too small. Nordics is still the same. Europe is weird and doesn't make sense. And if I want to dominate, I should go to the US, right? So it's the same thing. New Zealand will say, New Zealand is too small. Adding Australia doesn't mean anything, still too small. Asia is not New Zealand and Australia. China is not any of that, right? So they know straight away, they have to be either in the UK or in the US. So they are less distracted. So that's why I would say by now, right, probably twenty fourteen onwards. Most investments, most founders, they know for a fact, I have to think bigger. Otherwise, it's gonna be tough.

• 23:38Speaker 02

  Now, sometimes it's not, I have to think bigger. Sometimes it's, I can think bigger, right? I am much more educated, I am much more experienced. I can do better, I can do, I can think bigger. I can be the company that go public in the US. I don't have to be the company that someone in the US will buy, right? I buy them, they don't buy me, right? So I would say over time, confidence levels go up, which is good, right? That needs to continue.

• 24:05Speaker 01

  Yeah, I think that's very interesting. I hadn't, if I think back to like when Spotify was released, I was living in the UK back then. I think UK must have been one of the first markets they kind of targeted, I guess. And then it obviously seems natural that the US was another one. But yeah, I mean, I assume they didn't get, you know, think to release it in Singapore at the same time as the UK, for example, like that just isn't a thing. So taking a slightly different example of late is this company Manus. Manus.ai, which some of our listeners will heard about probably more recently because it was acquired by Meta for about two billion, at least reportedly. But this is a really interesting case. We have a monthly news slots, we did cover some of this in that. So apologies to anyone who listened, and this is a bit of a repeat.

• 24:50Speaker 01

  But this is a company that did start in China. And then re-domiciled itself from a corporate perspective in Singapore. And it's got American investors like Benchmark, global user base. And like, I mean, there's another example I'll give in a second where I work now. That's a slightly different case, but Manus is, let's stick on Manus for a second. Do you think this is more what Singapore is going to be helpful for? Kind of being that neutralizing ground for anyone that needs that, I guess?

• 25:22Speaker 02

  I think that there is a trend, not because of Manus, but there is a trend before Manus for Chinese founders that wants to do global business to move out. Probably started somewhere in 2018, 2019, that's the first batch. We call them too high, they're leaving the sea. And then with geopolitics issues, I think if they can ever set up in the US and just move to the US, they would have done that. Singapore is probably a slightly easier way to do it. You know, the rule of law, IP protection, setting up companies, getting your visas done, you know, moving your family. That's actually easier in Singapore than than in the US. So I would say that there will be more people doing this. Now, is Singapore a launchpad or like a place of convenience? I would say it's both, right?

• 26:05Speaker 02

  Because Singapore is set up that way for many, many years. So, but do you forget the world? Do you forget not to go to the US? No, right? Singapore is just a place where you have your apartment, but then you're just going to bring your luggage everywhere. Right? So those teams will still be flying and then trying to figure out ways to set up, trying to figure out another visa for me to stay longer in the US, whatnot. So that's probably what they will be doing. But the difference is probably they are doing a bit more consumer AI type product, right? Which is what the Chinese is very good at doing, right? You look at the top games in the world, mobile games, most, most of them are Chinese. They don't need to set up an office anywhere. So maybe certain models, this works very well.

• 26:49Speaker 02

  But imagine if this was a company selling drones to defence in the US. I can guarantee you they will not do that well. So yeah, so it all depends what they do.

• 27:00Speaker 01

  Yeah, because the other example, different, but where I work today, Superbase, people think it's a US company and actually did start as a Singapore company. And yeah, founded by a Kiwi, you know, New Zealand person and a couple of British guys. But I think that has, at least to me, that's what drove the culture there of being a bit different as a Singapore founded company. And we have many Singaporeans in the company, but we nowadays, it's a fully remote company. It's a fully async company. But the team that is based here is not a team that I would normally have come across. If I can say, it's an interesting mix of Singaporeans with a very global outlook, I would say. And then just other people from around the world, like Australia and Germany and so forth, living here.

• 27:44Speaker 01

  I say that, I mean, the majority of our employees do now live in the US, so they are American people. But yeah, I think it's a shame that, not the only reason for any means, but one of the reasons I went to the joint space was because I struggled to find any other company that I thought fitted that culture model. Again, just curious to get your take, like, why weren't there more of those? It just seemed like this could have been such a great place for so many people to take that road.

• 28:09Speaker 02

  My feeling is, it's just confidence, right? It's just the ability to, I'm going to start this kind of business and then just gonna go global and then we'll see what happens, right? So I think back in the day, because I didn't invest in them, but I would assume it is a problem. They are seeing there was not many good options and they're technical enough to try to do this. And sometimes it is actually that way, right? So for example, there are really, really good technical people in Singapore. And many of them have told me before, I don't know how long this was. I think I was in Sydney, I think I visited one of them, he works for Atlassian as well. So back then, I don't know where he is now. But yeah, you were saying, I want to build things for my people, right? So I wanna build things for developers and then I wanna build things that don't exist.

• 28:54Speaker 02

  And many of them who have been through multiple copycat startups, they're like, I don't wanna build another copycat startup anymore. Because they don't need to anymore and they just wanna build something that I want. Then build something that my, my people want, right? And if it's a small business, so be it. I don't have to raise money. I can break even right away. If it's a big business, then so be it, right? So I think that's probably what's happening. As you can see, you know, there's a lot of dev tools, a lot of highly technical guys, you know, building open source things. Purely because they are just solving their issue, right? So my feeling is probably, it's probably started because of that.

• 29:30Speaker 01

  It's interesting because in both cases, it is more about like what the product is that enables somewhere like Singapore to actually be a vaguely suitable base, at least to begin with. Or as in the man's case, come over here to springboard, be more attractive to a US acquirer, investor, that kind of thing. But yeah, as you say, there are other industries like military drones. That's, that's gonna be a tough one to bring out of here. So I guess you as an investor now, I mean, are you still making the same kind of numbers of investments you used to make or like just what do you look for? I think at some point you talked about the seven hundred million number. This was like a few years ago, saying if you're not gonna get to seven hundred million

• 30:12Speaker 01

  in valuation, then it's like not even worth our time kind of thing, which makes a lot of sense, but where is that number now or where is your sort of investment thesis now, I guess?

• 30:22Speaker 02

  So I think the investment pace, we are gradually starting to go up. I think this year it started going up last year. Many people don't know, we stopped investing in April twenty twenty one. I think maybe you might not even know. So we drastically stopped in twenty one because it's too high and then we predicted the crash in twenty two and twenty three. So for a while, we didn't invest very much. We only do, you know, small seed deals. Then we started coming back in twenty five and then twenty six seems, seems okay. So at the moment, what I'm seeing is a few things. One is there will be companies started for the vision for potentially one country only, potentially a few countries. Southeast Asia, that's never gonna change. But then the way we do deals have to change.

• 31:05Speaker 02

  It has to be capital efficient because it's impossible to raise five rounds and be worth fifty million, right? You have to know what it will be worth after ten, twelve years. And then we have to make money, which means everything needs to be heavily calculated, which means valuations needs to be correct. Amount of money need to be correct. When you break even needs to be actually quicker than normal. Because you you can't raise more money to dilute because there's no money. If you're worth fifty million in three years' time, five years' time, no one's gonna give you ten million, right? All these things needs to be calibrated for Southeast Asia companies, you know.

• 31:41Speaker 01

  Also looking kind of relative to say five years ago or or before that, as in when you were still investing pre twenty one. Can you just give is some sense of difference there, like, you know, when you say like valuations have to be calculated and break even has to be sooner, like? What does that look like relatively and what has changed in not just in your mind, but what has changed, I guess?

• 32:01Speaker 02

  Not much has changed. I think in twenty nineteen, we started using more data and trying to figure out stuff. I mean, for example, right? So like a simple analogy would be the US market is thirty times bigger than Southeast Asia, right? But how come our startups in Southeast Asia is thirty percent lower in valuation? Like, shouldn't it be thirty times lower? So this thing just doesn't make sense. And then we have one unicorn every five to six years, right? In the US, it's probably eighty unicorns every year, right? This alone doesn't make sense. And then the the number of trillion dollar companies in the last five, ten years is is heavily skewed to the US. It doesn't happen here.

• 32:38Speaker 02

  So if you look at law of large numbers, you look at power law distribution, you look at the amount of money being raised, invested versus pricing, it doesn't make sense. The speed that revenue compounds also doesn't make sense, right? So over in the US, you know, triple, triple, double, double is very normal. Here, you're really good to get two X. Every year, two X is super, super hard to do. Sometimes even getting to a million ARR takes about four years. So things, things are very different here. So when you calculate that and then you calculate your fund size, then you realize if you really wanna make money as a VC, everything needs to change. Now, your fund size cannot be too big.

• 33:18Speaker 02

  Right. And we don't have a lot of money in series B and C. So so it's actually harder to raise later stage rounds, right? Which means you need to do extremely well to raise money, or you're profitable enough to raise money, or you're big enough to raise money, right? So when you calculate all that, you need to work in the funding landscape, who invests after you, because I cannot invest four rounds myself. I probably can do one and a half rounds, right? So I need to factor in all these situations. Then it's very clear that there is a mathematical formula to do this, especially outside the US. And once you are slightly clear, then you kind of know, okay, if I'm gonna do this deal, this is my expected return.

• 33:59Speaker 02

  I cannot dilute that much. The pricing cannot be more than this, otherwise there's no point, right? And then there's the way it goes, right? Now, the second group of investments would likely be the one we've been talking about so far, which is launch in Southeast Asia or Singapore, or can be KL, can be Bangkok, and then go global from day one. Right? So that's probably more the trend at the moment. It doesn't, it is not a lopsided trend. It's not like eighty percent of startups are doing this. But it's much bigger than before. So, you know, if you go to New York, you'll see service agents coming through. If you go to San Francisco, you'll see some of them doing business, having clients, doing meetings.

• 34:45Speaker 02

  They may not be moving there, but they're there, right? So it could be trade shows, could be conferences. So people are moving around, people are traveling more, you can kind of tell. And it has changed. Is it a lot? Not really, but it has changed. The founders are thinking bigger, having more confidence. They are really asking questions. And they're trying. They're doing their best. They're trying, right? Can I compete? Can I compete? Can I compete? So they're not self doubting. They're not having limiting beliefs and say, no, no, no, you know. I'm not good enough. They're legit trying to figure out how can I be good enough?

• 35:17Speaker 01

  I think it was interesting. You very kindly gave a bunch of slots to founders a little while ago where you said fifteen minutes or something and, you know, you would give advice. I was one of those, which I was very thankful for. And the advice you gave me at the time was go spend more time in the US. And I think that was great advice and that was exactly what I needed to hear to decide I didn't want to pursue my startup.

• 35:39Speaker 02

  Did you go?

• 35:40Speaker 01

  I didn't go. And I think maybe for other people, founders listening today, they might say, well, that's ridiculous. You know, you should, that's what being a founder is. And I would totally agree. I think the difference is I had, have been a founder in the past, run a company for ten years, decided to leave the US at some point, moved to Hong Kong, moved to Singapore. And I thought going to the US, a lot of that would probably mean like at least have the open idea that you might move back to the US. Obviously, administration notwithstanding, and I made a very conscious decision that was not where I wanted to move to. So it was really helpful. And I guess I'm curious, was there any broad brush advice you ended up giving to a lot of those chats? Was it the same kind of stuff or like from what you remember or?

• 36:25Speaker 02

  Yeah, for those of you who don't know the context, I think I did an open call for office hours online and people can book twenty minute chats with me. I may do that again. I don't know. I had like fifty people reach out. I spoke to twenty something, twenty five or something.

• 36:38Speaker 01

  Really, really amazing. Yeah.

• 36:40Speaker 02

  That was interesting for me. It's the first time I'm doing it. And there's a reason for that, right? For number one, if the investors are sitting there complaining, there's no deals, then, then that's not helpful, right? We should be actually talking to founders, trying to help them fix their ideas so that at least if you want to see something exist in the world, I can tell the founders, if you do this, I'll fund you, right? So that's probably the reason why I did it is to make sure that at the ideation level, you know, whoever needs help, I can try to give some help. But whether it's talking to them or talking to other companies recently, maybe at some incubation programs or whatnot. I think the two things tends to keep coming up. Number one, understand the problem statement really, really well. And for some reason, they don't understand what that is.

• 37:25Speaker 02

  And usually they try to do too many things, right? They are a little bit unfocused. And then they are always, okay, where's my I C P? I don't know. I have four industries talking to me, but I I wanna do all four industries, but then I'm not good at all four industries. So they are kind of like spinning again, right? They're kind of like spinning. So the first thing is, yeah, make sure the problem statement is really, really, really hard. And then make sure your solution is the best in the world. Uh, that's the one that is the trickier one. But how do I know it's the best in the world? Yeah, because you have not travelled, so you have no clue. You don't know means you don't know, right? So or rather, you don't know what you don't know. So you need to collect as much information as possible. So sometimes it could be a European team doing something, but then I'm like, bro, there's like seven companies in the U S doing this. They've probably been around longer than you.

• 38:09Speaker 02

  Can you at least benchmark yourself with them, right? And do it better, right? I would say there's a bit more startup research that founders don't do enough of, which is exactly what twenty twenty one is. Right? The reason why we didn't invest is because the founders are not doing research. The investors are not doing research. The blind are leading the blind. So I think with the current A I bubble, that's probably gonna happen this year and next year. You see all kinds of ideas being pitched, right? And none of them have done enough research. So I would say, yeah, your question, it will be mostly understanding the problem really, really well. And then making sure you are the best in the world at doing this. Now, if the problem is niche and your eventual market size is small, it's fine, right? I haven't invested in in you yet.

• 38:54Speaker 02

  So your data collection is for you to digest, right? And if you wanna continue, then continue. And then maybe that means you raise a small round and break even. That's it, right? And have a small team and that's it. So this is for the founders to realise, right? And then if you wanna continue, carry on. If they wanna think bigger, carry on. If they wanna do more R and D and and attack a larger industry, carry on. But at least they they kind of know where they're heading. Similarly, competition is another thing. That's something they probably need to do a little bit more of. But I also recognize the stage, right? Sometimes they are still early in the ideation, so they haven't had time to do more research. And sometimes they are not from the industry. They have to do a lot more work to try to understand what's happening. Yeah, but that's the typical stuff that we normally see.

• 39:39Speaker 01

  Yeah, that's really great advice. When I first moved to Singapore, I was the CTO at a company called Black Panda, which is cybersecurity and cyber insurance. And our play was to do that, but very much in the region. But the CEO, one of the best things that he did was send me off to the US and say, all right, I've got you meetings with the CEO of blah and CTO of blah. And it was in an industry where the US still, I would say, leads the way for when it comes to some commercial output of cybersecurity solutions. And that was just so helpful to understand what was there right now. And these were companies that you just wouldn't hear about otherwise. Like you needed to be really embedded in the industry and then you'd go talk to someone and they say, oh, well, now I need to go to see this other company, actually.

• 40:24Speaker 01

  Like, and the interesting thing there, it didn't feel too, we were asking for any secrets because we were just saying, like, we're doing the same thing, but in a totally different geography. Same thing holds true, just going and traveling and talking to people. And I mean, I get to do a bit of that, obviously, just through SE Daily. I get to meet all sorts of companies, but I think it's fair to say, because listeners might just say, well, I can just listen to SE Daily then. I say, no, actually, the companies here are still probably on the latest side. They've already, we're not featuring companies that are three months old or six months old, right? They tend to be two years old or more, you know? So it really is go especially to the US, talk to people, find people. I think that's great advice. Well, Jeffrey, thank you so much.

• 41:09Speaker 01

  It's been great to have you on. I've been really keen that we get to show a bit more from this region in tech on this podcast. So this has definitely hit the mark on that and I'm really thankful you've been able to come on. So.

• 41:21Speaker 02

  Yeah, thank you very much. You're welcome.