The 1% focus

99% of companies should not raise capital from venture capital firms.

But many founders who are in the 99% thinks they are the 1% who should. Sometimes investors think the same way and that may spell trouble many rounds or years later.

Work with your cofounders, advisors and investors to make sure where you stand.

If you are the 99% (and there is absolutely nothing wrong with this), and want to be the 1%, work hard and leverage on your team, capital and strategy (timing/speed), and execute to address larger markets (Y-axis) and increase the sophistication of your MOATs (X-axis). See http://reactionwheel.net/2019/09/a-taxonomy-of-moats.html.

Once you know who you are and what you will be in 7-10 years will you be able to honestly approach the right investors who fit you. 


Accelerators - any tips?

Accelerators should exist in every country where a startup ecosystem has been initiated whether they raised private capital to operate or are government supported, here are a few tips for operators of accelerators (especially in emerging markets):

1. Go sector focused if you can as they are more dependent on being able to localize and where the power of local networks are more important.

2. Work on both inbound and outbound recruiting of founders. Leverage on PR, both on and off line marketing activations to improve your funnel. After knowing the profile of founders you would like to fund and assist, you can use Linkedin to do an outreach campaign to have them apply direct or engage with your team in a call to find out more. Work on improving your funnel.

3. If you are an agnostic accelerator, be as close to market standard as possible with your investment amount and terms. Best teams will either raise money on their own or apply to YC or nothing, so you need to be able to stand toe to toe when compared.

4. Set up an advisory panel of honest and committed founders and investors to help you select your final cohort. Diversify this panel of advisors to get the most honest set of feedback as possible. This will improve your selection of founder types, and ideas. In emerging countries, almost all ideas are copy-cats, the more data you have in your hands the easier to select the final cohort that will result in success.

5. Run a rigorous feedback loop during the program, focusing on company building exercises, and making sure they are venture back-able. Work with more people in the investment sector from angel, seed to Series B/C to help select, critique and refine models as they move along the program. This will help increase the funding rate post graduation. Also cut founders that do not fit your own criteria as an accelerator early on, ideally within the first 2 weeks.

6. Work on a sustainable model financially so you can build a brand to carry the product forward. Sometimes you rely on the investment model (e.g. x% of investment will be paid as a program fee or a put option to sell your stake at Series A), others may resort to doing consulting gigs with corporates and/or raising private capital or sponsorships to self sustain. There are various models, make sure it suits you and your team. 

Hope this helps any new or existing programs.

Investing without meeting founders

In the next many months, this might be the new normal. Meeting founders for the first time over Zoom and making bigger efforts with personal reference checks. Perhaps, if investors have a wide network or have team members in various outpost offices (for e.g. for us in Singapore and Jakarta) and already know potential founders before hand, the time scale will stretch out less.

How do you read people over video within 15 mins?

Using voice, and verbal cues as signals to judge people.

How do you source and rely upon on your network’s references?

New skills need to be acquired to collect such data for decision making.

Finally, trends for your business will accelerate, which means the traditional way of managing venture capital funds will change quicker sooner. Whatever you think that will happen in 10 years will happening in the next few years. Be prepared.

3 Focal Points when Fund Raising


Points to note when you are fund raising:

1. Do your homework - Your job is to get your fund raising materials (deck, financials) to a level that is ready to be communicated and consumed. It will constantly be updated as you move along in your business as well as while you are pitching. Research your target investors really well to better optimise conversion rates (which stage and average check size, geography (your beach head market vs your eventual markets), sectors, do they lead or follow, post investment engagement with the company etc.).

2. Have a different mindset from selling - Your job is to get your "nos" as quickly as you can as you go down the list of investors to reach out to as opposed to trying to convince an investor and wrestle them down to a "yes". Investors know what they like to invest in, that is their day job. From your own research and interviews with founders who received investments from investors, you are only maybe 70% of the way there as far as you how much you know an investor and what do they like to invest in "at this time", it will never be apparent. 

3. Start with 3 warm up pitches followed by 7 ones - Use the first 3 pitches to hone your real-time pitch down, have a cofounder be in the room as well to jot down frequently asked questions and watch for any visual cues that signals that your pitch is weak or strong. If you get 10 straight rejections, stop fund raising and regroup with your team, advisers/investors and find out what is wrong. Sometimes its you, the targeted investors, or its because the investment environment has changed. Find out the cause and tweak (A/B test it) your approach again. Sometimes you need to hit a different set of investors to talk to, and most times it is not your pitch style or flow. And of course, there are times when the reason is you. But trust me, there are enough investors out there now to invest in all types of founders, so just keep going.


Your first and now

Your first cry and now faking it to get attention. 
Your first poop and now cute facial expression when you make one. 
Your first smile and now loud hearty laughs that melts hearts. 
Your first murmur and now baby words. 
Your first crawl and now fearless walking by trial and error.  
Your first reaction to ice, birds, dogs and now to people close and far. 

Your first birthday party with balloons, candy, but now with family and friends you will remember.

Happy first birthday our little man.

We love you,
Mommy and Daddy

Reflecting on Singapore Startup Ecosystem in 2014 - Happy National Day!

After digesting (partly) the ICM Masterplan  and various ideas suggested for the Startup Ecosystem, these are my thoughts below. I will try to keep this brief. If you have questions about any of it, please email me (it's been a long week). This post will be updated along the way (beta).

As of August 9, 2014, this is my assessment of the Singapore Startup Ecosystem (as per Founder Institute (1 to 5), there is no "3" rating) ;).

Founder Training - 2 
Founder Culture - 2 
Labour Training - 2
Labour Culture - 2
Mentor Quality (SEA) - 4
Mentor Quality (US) - 2
Infrastructure - 4
Regulation/Policies - 4
Market Size (Platform/Distribution) - 2
Monetization (Payments) - 4
Capital - 2
Exit (IPO) - 1
Exit (M&A) - 2
Media - 2

What are the 3 major issues/discussion points facing startups in the Singapore Startup Ecosystem?

1. Culture
Culture takes time to change. Make tech sexy again for students through education and media outreach. Need a coherent long term effort by all stakeholders in the ecosystem. 

2. Market Expansion
Choosing the right markets to expand to with expertise to navigate Southeast Asia and the USA like we do Orchard Road.

3. Government's continuing role
Government efforts need to stay its course (it is a marathon not a sprint) - be humble/flexible and listen, move out of the way if need be. 

What do I propose?

The establishment of one unified entity (with full autonomy - private sector led, public sector supported) to direct all innovation driven enterprise (IDE) efforts, funding and activities.
  • With the one unified entity (privately led with government support), government resources will be allocated as quickly and efficiently as possible. 
  • Collapse all IDE grants, initiatives, funding, subsidies under one roof. Rewire all government grants and funding systems.
  • A central resource for programs, education, travel subsidies for founders and mentors to and from target markets.

Why?

Great intention and a large budget. Too many cooks (spread too thin).

It is not working as best as we want it too. It can be improved. We can achieve (sorry if it is a bit cheesy).

Happy National Day!


- The End -

p.s. love to hear your thoughts, there are ways to fix the 1 & 2 ratings, if you want to know more or how email me.

Kickstarting Emerging Markets Startup Ecosystem Part 1 - Bandung/Jogja

It was my first time in Bandung and Yogyakarta (Jogja) Indonesia recently speaking and visiting startups, incubators and co-working spaces. I caught up with several Founder Institute Singapore graduates in Jogja (above) and dived deeper into the startup community and where their state of affairs are. Here are some findings and feedback on what I discovered.

Ecosystem report card (1-5, no 3): Jogja/Bandung

Founder Pool - 2 (getting better)
Labour Pool - 4 (strong in tech)
Training - 4 (strong technical training)
Culture - 2 (risk adverse, little coopetition)
Infrastructure - 2 (slow broadband speed infrastructure, low operational cost)
Regulation/Policies - 2 (some friction incorporating new companies)
Market Size - 4 (large domestic market)
Capital - 1 (early stages of risk capital coming on board)
Media - 1 (little to no media coverage celebrating startup heroes)  

Positives:
- 1 mobile operator backed accelerator program (Telcom). They run it both in Bandung and Jogja. Definitely a great initiative but not enough from what I hear, as they have certain criteria (telco related) before accepting applicants.
- A large density of Universities and Sekolah Teknik graduates who are technically trained. Strong technical talent pool which is well known for the last few decades.
- Low cost of living compared to other larger cities in Indonesia with much better traffic. Quality of life is better according to many.
- The community is hungry for knowledge, expertise and are gradually looking to be in business for themselves. Looking at product not services companies.

Negatives:
- Little to no risk capital.
- Little to no mentors. Jakarta mentors do come through, but not often enough.
- Crowd are shy and not open to critiques and discussion. Rarely share what they do or what they are thinking.
- Not bold enough to think they can do well outside Indonesia. Even in Indonesia, they don’t think of using Jakarta as a launching pad.
- Ideas are not refined, too insular, but I found a few great teams with great ambitions who hold back because of the realities of life and the ecosystem. No funding, hence need to go slow or bootstrap by doing client work.

Actionable Plan:
- Organize meet ups to discuss ideas (e.g. read Techcrunch, Hackernews, AngelList, producthunt.co) to exercise their thought process on how company/product visions are set.
- Bring more mentors to energize thinking/ideation process. In person or via online. e.g. an Ideation Weekend. Put the community online or on Qiscus/Slack for discussion and feedback.
- Startup a Jogja tech blog to keep track of activities. E.g. Jogjastartup.com
- Set up a Founders Guild to meet, discuss, and keep track of everyone’s progress. Include mentors and investors via an online platform (e.g. Qiscus/Slack). Founders sharing with founders.
- Setup a co-working spaces similar to Hubba in Thailand or Hideout in KL, only for technology startups and developers/designers work/contract for product startups.

I love emerging startup ecosystems, lots of potential especially Jogja and Bandung. Will be visiting more often and striking matches to ignite some crazy teams.