The global IT spending landscape presents both tremendous opportunities and significant challenges for startups seeking to establish themselves in enterprise markets. While the total addressable market appears massive at first glance, the reality for emerging companies is far more nuanced, shaped by regional purchasing behaviors, cultural preferences, and established vendor relationships that can either accelerate or hinder startup growth.

Total IT Market Size Comparison Across US, Europe, and Southeast Asia for 2025

Startup Total Addressable Market comparison showing conservative and optimistic scenarios across three regions

Radar chart comparing startup market attractiveness across multiple factors for US, Europe, and Southeast Asia

The torch of technological rebellion is being passed—and it’s burning brighter than ever. What we’re witnessing today isn’t the corruption of Silicon Valley’s hacker culture, but its magnificent evolution. 

The idealistic builders who gave us Facebook and Twitter have paved the way for a new breed of rebels: entrepreneurs harnessing artificial intelligence to augment human potential, not just connect the world.

The Natural Progression: From Connection to Augmentation

The journey from Mark Zuckerberg’s Harvard dorm room to Roy Lee and Neel Shanmugam’s AI revolution was inevitable. While the social media generation taught us to connect minds across the globe, the AI generation is showing us how to amplify those minds’ power. Facebook, PayPal, and Twitter weren’t just companies—they were the infrastructure that made today’s AI revolution possible. Zuckerberg’s “Hacker Way” of rapid experimentation and boundary-pushing has become the playbook for today’s AI rebels.

Two Generations, One Mission: Breaking Barriers

The data tells a story of unprecedented acceleration. Where social media startups took 18–24 months to reach market, AI-native companies now do it in 6–12 months. Teams have shrunk from 15–25 to just 5–10, thanks to AI’s transformative efficiencies. This isn’t just about moving faster—it’s about fundamentally changing how innovation happens.

Redefining Rebellion: From “Move Fast” to “Think Instantly”

What critics call “cheating,” these visionaries call democratization. When Cluely’s founders say “we want to cheat on everything,” they’re not promoting dishonesty—they’re challenging systems that artificially limit human potential. Lee’s suspension from Columbia for creating Interview Coder wasn’t a setback; it was the catalyst for building a universal platform for AI-augmented performance. This is positive rebellion: breaking the right rules to unlock new possibilities.

The Democratization Revolution

AI is making innovation accessible to more people than ever before—74% of innovators say AI has broadened access to entrepreneurship. Gen Z founders, raised on technology, move fast, experiment freely, and scale globally from their bedrooms. They spot opportunities and create solutions that previous generations might never see.

AI-Powered Entrepreneurship: The Numbers Don’t Lie

Cluely’s meteoric rise illustrates this new paradigm. Within weeks of launch, it attracted 70,000 users and reached $3 million in annual recurring revenue—a pace unimaginable in the social media era. AI-native startups now achieve product-market fit in months, not years, and VC funding is following suit: Cluely secured $15 million in Series A to fuel this rapid growth.

Enterprise Validation and Viral Growth

Cluely isn’t just a consumer phenomenon—it’s already proving itself in enterprise settings, especially in sales, with rapid adoption and real business impact1. The company’s growth team, each with personal audiences over 100,000 followers, exemplifies how the AI generation blends technical prowess with modern marketing.

Positive Disruption: Amplifying, Not Replacing, Human Intelligence

This generation’s rebellion serves a different purpose. While their predecessors connected people and information, the AI generation is focused on amplifying individual human capability. AI isn’t about replacing intelligence—it’s about enabling people to perform at levels never before possible.

A Cultural Shift: Creative Rebels with a Cause

Today’s entrepreneurs are “positive deviants”—rebels with a cause, willing to embrace controversy to advance human potential. Their viral campaigns and user-generated content strategies aren’t just for attention; they’re about demonstrating AI’s real-world impact.

A Utopian Vision: Empowerment at Scale

The future these companies are building isn’t dystopian—it’s utopian. They envision a world where everyone becomes a creator, where technical barriers disappear, and where AI personal assistants are available for every task. Just as Facebook democratized publishing and Twitter democratized broadcasting, the AI generation is democratizing expertise itself.

An Ecosystem of Acceleration

The success of AI-native startups creates a positive feedback loop, inspiring more entrepreneurs and attracting greater investment. The result: an ecosystem where innovation accelerates and barriers to entry continue to fall.

Conclusion: The Spirit of Rebellion Lives On

The entrepreneurs behind Cluely and similar companies aren’t destroying hacker culture—they’re fulfilling its highest aspirations. They represent the evolution from connecting minds to amplifying minds, from breaking things to building intelligence. Their rebellion isn’t about chaos, but about progress: breaking barriers so the rest of us can achieve more than we ever thought possible.

The AI revolution isn’t happening to us—it’s being built by a new generation of audacious entrepreneurs. The rebels are coding, the barriers are falling, and the future is being written in real-time. This is what progress looks like when “impossible” is just the starting line.

This analysis is based on quick data scan of research publications and developments from Stanford University, UC Berkeley, MIT, and Carnegie Mellon University throughout 2024, representing the latest trends in artificial intelligence and machine learning research.

🚀 Like this post? Share it with a founder who’s still hunting for their Delaware C-corp papers and remind them: the next great AI unicorn might be born in San Francisco—but it will grow up everywhere. If they need references on foreign venture funds who can help you access markets, let me know.

For founders based outside the United States, deciding whether to raise capital from American venture capitalists before or after entering the US market is a pivotal and also a costly strategic decision. The optimal approach depends on your industry, market readiness, and operational objectives. Drawing on recent data that we analysed, here’s a comprehensive look at the factors that should guide your choice.

Key Data on Overseas Startups Raising in the US

A study of 153 overseas startups that raised capital in the US reveals several notable trends. On average, these companies secure their first US investment 4.3 years after founding. Nearly 45% obtain US funding within two to five years, while only about 13% do so in their first year. Interestingly, startups founded after 2015 reach US investors more quickly, with those established in 2020 averaging just 1.6 years to their first US investment (due to 2021 bull run).

Patterns: US Hiring vs. Fundraising

The sequence of US hiring and fundraising varies by industry and can influence the scale of capital raised. About 30% of companies hire US employees before securing US funding, a pattern most common in healthcare, biotech, and payments sectors, typically resulting in lower initial capital raised. Roughly 35% raise US funding before making local hires, a trend prevalent in fintech, software, and IT, and these companies tend to secure larger funding rounds. A smaller group, around 14%, hires and raises in the same year, while a niche 3% raise US capital without hiring locally, often in remote-first or specialized sectors. The data suggests that startups raising before hiring in the US are more likely to secure larger investment rounds.

Industry and Geography: What Shapes the Sequence

Industry and geographic origin play a significant role in shaping US entry strategies. Life sciences and regulated sectors, such as healthcare and biotech, often prioritize hiring US talent before fundraising. This approach is driven by the need for local expertise, regulatory navigation, and credibility with investors and customers. In contrast, digital and software startups-especially in fintech and enterprise IT-frequently raise US capital first, leveraging product traction and global relevance to attract investors before building a local team. Startups from Southeast Asia and Australasia are more likely to establish a US presence before fundraising, signaling commitment and reducing perceived execution risk for American investors.

Strategic Implications for Founders

Fundraising Before US Expansion

This approach is best suited for SaaS, fintech, and enterprise software platforms with strong product-market fit and global appeal. Securing US funding before establishing local operations preserves capital for growth, demonstrates capital efficiency, and allows startups to test US market demand before making significant investments. Typically, these companies secure US investment and then set up US operations within two to three years.

Hiring Before Fundraising

For regulated or capital-intensive sectors like healthcare, biotech, or financial services, hiring US talent or leadership before fundraising is often essential. Building a local team enhances credibility, accelerates regulatory approvals, and signals long-term commitment to the market. The typical path involves recruiting key US personnel, setting up local operations, and then approaching US investors.

Simultaneous Approach

Some startups, particularly those with ample resources or operating in highly competitive sectors, pursue parallel strategies-raising funds and hiring in the US simultaneously. While this maximizes speed and market learning, it requires greater capital and operational bandwidth.

Best Practices for US Market Entry

Successful US market entry requires more than just capital or a local presence. Deep market research is essential; founders should avoid assuming that US buyers behave like those in their home markets and must localize their value proposition accordingly. Strategic partnerships with established US players can accelerate credibility and market access, sometimes reducing the need for immediate local hires. Phased rollouts-starting in select regions-allow startups to test and adapt before scaling nationally. For regulated industries, early legal and compliance planning is crucial to avoid costly delays. While many US investors still prefer local teams, especially at early stages, there is a growing acceptance of remote-first models and global teams.

Practical Guidance by Sector

For enterprise software and fintech startups, focus on demonstrating product traction and global relevance. It is often possible to raise from US investors before hiring locally, but you should have a clear plan for US expansion. In healthcare and biotech, prioritize hiring or partnering in the US before fundraising, as local presence is often a prerequisite for regulatory and investor confidence. Regardless of your sector, align your US hiring and fundraising strategies with your operational capacity and market readiness. Investors seek both commitment and capital efficiency.

“There is no universal rule, but your US hiring strategy should align with your market readiness, funding strategy, and operational capacity. Investors want to see commitment, but also capital efficiency and product clarity.”

Bottom Line

There is no one-size-fits-all answer to whether overseas startups should raise capital before or after entering the US market. The optimal sequence depends on your industry, business model, and market strategy. For most SaaS and digital startups, raising capital before building a US team is often preferable-but this usually requires exceptional traction that signals the potential for a 20x or greater return. In regulated or high-touch sectors, establishing a US presence first is crucial to unlocking investor interest and market access. Many successful startups blend both approaches, adapting as they learn from the market and investor feedback. Ultimately, careful planning, deep market understanding, and a tailored strategy are essential for a successful US entry and fundraising journey.

This version 2 research extends our machine learning approach to identify high-potential AI startups from the 2021 vintage, yielding compelling results that further validate our investment methodology.

Project Framework

We applied our established machine learning methodology to identify promising AI ventures in the 2021 cohort, maintaining consistency with our previous analysis.

Our approach continued to incorporate:

- Six predictive variables: Industries, Company Description, Founder Biography, Founder Gender, Location, and Educational Background

- A dual-model ensemble combining Random Forest and XGBoost algorithms

- Advanced text vectorization for unstructured data

Portfolio Performance

Our model selected 19 companies from the 2021 vintage all the way till 2024 (evenly distributed) with the following current performance:

- 9 companies (47.37%) have already achieved valuations exceeding $500M, including:

  - Perplexity AI: Reached $9 billion valuation in December 2024, with over $100 million in annualized revenue as of March 2025

  - Cyera: Secured $300 million in Series D funding, reaching a $3 billion valuation in November 2024

  - Hippocratic AI: Achieved unicorn status with a $1.64 billion valuation in January 2025

  - Anumana: Showcasing leadership in AI-powered cardiovascular solutions

  - World Labs, Protect AI, Mytra, DatologyAI, and Revefi

- 4 companies (21.05%) demonstrate strong growth trajectories

- 4 companies (21.05%) are too early in their development to evaluate conclusively

- 2 companies (10.53%) have not ceased operations but are unlikely to achieve significant success

This 47.37% high-performer rate significantly outperforms the best venture capital unicorn success rates of 5% (Sequoia), with potential to reach 68.42% as companies currently on track continue to develop. The 10.53% failure rate thus far remains substantially lower than industry averages of 75%, not factoring in various constraints of real investing.

Our model continues to demonstrate strong predictive capability while serving as a decision support tool rather than a replacement for comprehensive due diligence.

We will continue to analyze additional vintages across larger geographies and sectors, publishing results as they become available.

Disclaimer: This analysis is for educational purposes only. Past performance does not guarantee future outcomes.

As a Singapore-based VC, I've witnessed how innovation ecosystems evolve naturally when properly supported. Singapore initially emphasised deep tech but allowed market forces to shape developments organically.

Critiques of New Zealand's funding imbalance misses a crucial point: successful startups need significant market power quickly, regardless of their technological depth. Creating numerous small non-deep tech ventures won't deliver the economic impact New Zealand seeks. You need to continue to focus on both.

Three focused recommendations:

1. Establish a national coordination body with a hands-on advisory panel of experienced entrepreneurs and investors who can directly mentor founders to scale globally. This addresses both fragmentation and practical scaling challenges.

2. Develop diverse funding mechanisms prioritizing ventures with global potential rather than simply increasing startup quantities. Government initiatives on grants, fund of funds support should continue with momentum but understand the signs of change and adapt to it.

3. Implement more talent development/retention programs, one example to take note of is Singapore's NUS Overseas College, which immerses students in innovation hubs like Silicon Valley, creating globally-minded entrepreneurs with valuable networks. Net new migration into New Zealand needs to be positive over time, but this is likely to be the toughest challenge yet.

New Zealand should focus more on building globally competitive companies with proper ecosystem support. I know you can do it. You know you can do it. Whāia te iti kahurangi - pursue that which is precious.

Investing in Southeast Asia for many years now, I’ve witnessed cycles of growth, correction, and reinvention. Yet, the current moment feels uniquely challenging—and transformative. The sectors emerging at the forefront for the next few years—B2B and deep tech—are ones where many of us have struggled to find consistent success over the last decade, especially compared to B2C and fintech. At the same time, our fund sizes have grown larger than ever, but the market size we operate in hasn’t proportionally expanded. This mismatch creates a tension that demands we rethink how we approach risk, ambition, and execution.

Since the 2022-2023 crash, large VC funds have increasingly gravitated toward safer, private-equity-like deals while becoming more multi-stage. It’s understandable; preserving capital feels prudent in uncertain times. But playing it safe won’t build the future. We cannot afford to give up on audacious founders—those who dare to think big and aim for transformative impact. These are the people who will unlock new markets, redefine industries, and create outsized returns—not just for investors but for society as a whole.

To thrive in this new era, we must retool and reinvent ourselves as investors. This means recalibrating how we assess risk, developing deeper expertise in emerging sectors, and being smarter and more calculated in our bets (keeping Power Law Distribution firmly in mind). It’s not about reckless optimism; it’s about supporting bold ideas with discipline and clarity.

This is a call to action: let’s not retreat into comfort zones or limit our vision. Let’s figure out what needs to change—within ourselves, our teams, our ecosystems, our founders, and our strategies—and make those changes happen. The future belongs to those willing to take calculated risks on founders with big dreams. Let’s ensure we’re part of building that future.

As we journey through the fascinating world of top venture capitalists, we uncover a treasure trove of insights that shed light on the educational backgrounds, career paths, and the shifts in the demographic landscape of the industry. This data-driven exploration aims to provide a comprehensive view for limited partners, aspiring VCs, and students, as we delve into what makes these venture capitalists stand out.

Key Insights and Importance of Education

Top Undergraduate Universities

- Stanford University (13% of VCs)

- Harvard University (8%)

- MIT (7%)

- University of Pennsylvania (4%)

- Yale University (3%)

Stanford's dominance is unmistakable, emphasizing its pivotal role in the tech VC landscape.

Top Undergraduate Majors

- Engineering, Computer Science, and Related Disciplines (30%)

- Economics (17%)

- Business or Management (11%)

- Public Policy, Political Science, or Government (8%)

- Mathematics & Applied Mathematics (6%)

The importance of a STEM background remains evident, but there's a significant representation of business-related studies, reflecting the need for a multifaceted skill set.

Graduate Education

Graduate Degrees: 67% of VCs hold graduate degrees from esteemed institutions:

  - Stanford GSB (14%)

  - Harvard Business School (12%)

  - Columbia Business School (3%)

  - Wharton School, University of Pennsylvania (3%)

  - MIT Sloan School of Management (2%)

This trend speaks to the value placed on continuous learning and specialization in fields like business, finance, and technology.

Entrée into the Venture Capital Arena

- Direct Entry: 23% of VCs under 45 started their careers directly in VC, compared to only 13% for those over 45. This early specialization trend highlights a demand for nuanced expertise at the outset of one's career.

A New Generation's Rise

- Technical Backgrounds: 38% of VCs under 45 vs. 25% over 45, indicating an industry shift toward tech-savvy investors.

- Investment Banking: Investment banking serves as an initial career path for 45% of young VCs vs. 30% of their older counterparts, showcasing the sector's increasing integration with venture capital.

Experience and Impact in VC

- Founder Experience: 29% of VCs under 45 were founders, in contrast to 37% for those over 45, signifying a slower but still prevalent trend of operational experience.

- Analytical Backgrounds: Both cohorts show high levels of analytical savviness, with older VCs boasting experience in diverse roles like sales, strategic planning, and product management.

Diversifying Demographics

- Female Representation: A gradual increase in the younger cohort to 12% vs. 8% for older VCs, signaling progress in industry diversity.

- International Backgrounds: 36% of top VCs have international roots, underlining the global nature of venture capital, with significant representation from China, India, and Europe.

Key Insights for Stakeholders

For Limited Partners

- Invest in funds with multi-generational VCs to leverage industry trends and seasoned experience.

- Recognize the evolution in career paths, with younger VCs more likely to have an analytical or entrepreneurial background.

For Aspiring VCs and Students

- While technical education is advantageous, business and economic knowledge is equally important for understanding the broader market dynamics.

- Seek internships in investment banking, consulting, sales, or product management for hands-on experience.

Advances in Venture Investment Trends

- Industry Evolution: The venture capital landscape now leans towards sector specialization, with notable increases in tech-focused investments (most recently in AI).

- Diversification: Despite incremental progress in gender diversity, the industry recognizes the need for further internationalization and broader inclusivity.

In conclusion, the profile of top venture capitalists has evolved, adapting to changing industry needs, educational trends, and innovation. The combination of technical knowledge, diverse professional backgrounds, and a nuanced understanding of market dynamics remains key to navigating the entrepreneurial journey and gaining success in venture capital.

The artificial intelligence gold rush isn't just about the tech giants and mega VCs anymore. A new quick and dirty analysis of the top 390 investments in top AI startups reveals a fascinating shift in who's really driving innovation in the AI ecosystem, with individual operators and specialized firms playing an increasingly crucial role.

The Rise of Operator-Investors

Leading the pack is Elad Gil, with investments in 12 cutting-edge AI companies including Perplexity and Character.ai. Gil's investment pattern reveals a keen focus on foundational AI technologies that could reshape entire industries. But what's particularly interesting is how former tech executives are leveraging their operational experience to spot the next big thing in AI.

Take Nat Friedman (former GitHub CEO) and Scott Belsky (Adobe CPO), who have each made strategic bets on three AI startups. Their investments often focus on developer tools and creative AI applications – areas where their deep industry expertise provides unique insight into market needs.

The New Wave of Specialized Firms

While traditional VCs still dominate in terms of dollar amounts, smaller, specialized firms are proving to be remarkably influential in shaping the AI landscape. Firms like Alumni Ventures (18 investments) and HongShan (19 investments) are punching above their weight, particularly in early-stage deals.

What sets these firms apart is their focused approach. Rather than casting a wide net, they're making concentrated bets in specific AI domains:

• Enterprise AI infrastructure
• Developer tools and platforms
• AI in healthcare and biotech
• Generative AI applications

Geographic Diversification

Perhaps most intriguing is the growing geographic diversity of AI investments. While Silicon Valley remains the epicenter, we're seeing increased activity in:

- Toronto (Cohere)

- London (DeepMind spinoffs)

- Berlin (Helsing)

- Beijing (Moonshot AI)

What This Means for the Future

The emergence of these new power players suggests a maturing AI ecosystem where expertise and specialized knowledge are becoming as important as capital. For founders, this means more options for smart money that comes with deep operational expertise and focused support.

The trend also points to a future where AI development might be less centralized than previous tech waves. With individual operators and specialized firms backing startups across the globe, we're likely to see more diverse and innovative applications of AI technology.

For those watching the AI space, keep an eye not just on the big names, but on these emerging kingmakers. They're the ones spotting and nurturing the next generation of AI breakthroughs, often before the bigger players take notice.

The AI investment landscape is rapidly evolving, and while the headlines might focus on the biggest checks, it's these individual operators and specialized firms that are often the first to spot and support the most innovative AI startups. Their growing influence suggests a future where AI development is more distributed, diverse, and potentially more impactful than ever before.

The artificial intelligence (AI) startup ecosystem is a complex network of founders, investors, and companies working together to drive innovation and growth. To better understand the dynamics of this ecosystem, we conducted a quick and dirty network analysis using GAT (Pytorch Geometric) of 601 AI startups (deemed successful since 2013), focusing on the connections between founders and investors. Our findings provide valuable insights for founders seeking to raise funds at different stages of their startup journey.

Our analysis revealed the top 10 most influential investors in the AI startup ecosystem based on their number of connections:

1. Sequoia Capital: 43 connections

2. Insight Partners: 41 connections

3. Tiger Global Management: 40 connections

4. NVIDIA: 35 connections

5. Andreessen Horowitz: 34 connections

6. HongShan: 32 connections

7. Lightspeed Venture Partners: 29 connections

8. Google Ventures: 28 connections

9. BlackRock: 25 connections

10. Intel Capital: 24 connections

These investors play a significant role in shaping the AI startup landscape through their investments and partnerships for the last 10 years.

Series A Investors

1. Sequoia Capital

2. Andreessen Horowitz

3. Lightspeed Venture Partners

4. Google Ventures (tend to invest a little more in Series B in recent years)

5. Intel Capital

Series B and Later-Stage Investors

1. Insight Partners

2. Tiger Global Management

3. NVIDIA

4. HongShan (Focused on China mostly, going international now)

5. BlackRock (More later stages)

Advice for Founders in AI

Based on our analysis, we recommend the following approach for founders seeking to raise funds:

1. Series A: When raising a Series A round, focus on investors like Sequoia Capital, Andreessen Horowitz, and Lightspeed Venture Partners. These investors have a strong track record of backing early-stage startups and can provide valuable support beyond just capital.

2. Series B and Later: As you progress to Series B and later rounds, consider investors like Insight Partners, Tiger Global Management, and NVIDIA. These investors have the resources and expertise to help startups scale rapidly and navigate the challenges of later-stage growth.

3. Build Relationships: Regardless of the stage of your startup, it's important to build relationships with investors early on. Attend industry events, participate in startup accelerators, and leverage your network to get introductions to potential investors.

Disclaimer: Of course, past track record does not mean the future will be the same.

In Southeast Asia's vibrant venture capital and startup landscape, a transformation echoes through the realms of enterprise software and deep technology as they descend upon us. As we embark on this new era, nations, both burgeoning and mature, ponder deeply on nurturing startups that reach for the stars. The venture funding sphere, once a bastion of bold dreams, now yearns for revolutionary creations and teams with global aspirations.

Reflecting upon this, I have discerned three pearls of findings:

First, the Luminance of Product and Technology:

In an age where only the extraordinary captivates, a startup's product or intellectual property (IP)/technology must not just innovate but shine among the global elite. This shift towards top-tier innovation resonates with trends favouring enterprise and deep technology.

Second, The Founding Team's Odyssey Beyond Borders:

The spirit of the founding team is pivotal. In a world without borders, founders must carry belief, confidence, and courage to journey globally. This international vision is the heartbeat of venture capitalists seeking market disruptors.

Third, The Art of Skill and Global Canvas:

The founding team's mastery in global expansion is crucial. Skills in international storytelling, team building, and capital raising form the fabric of their venture. Success is increasingly measured by the global footprint and international business acumen.

As we conclude, remember that in the universe's grand dance, every venture has its place. The pursuit of large venture capital FDI is a journey through an ocean of possibilities.

Echoing Rumi, "You were born with wings, why prefer to crawl through life?" Startups and nations must realize their potential to soar in the global market. Let this understanding uplift them toward horizons of success and innovation.

In recent years, researchers and practitioners alike have been studying the personalities of successful startup founders to understand what makes them tick. By analysing the Big Five personality traits—openness, conscientiousness, extraversion, agreeableness, and neuroticism—we can gain insights into the characteristics that contribute to a founder's success or failure. In this blog post, we will use what a quick Google search list as the best and worst rated founders and take a look at their personality traits. However, I only did a small sample set as a quick experiment. 

Best Rated Founders

The following five founders stand out as examples of those who excel in their roles:

1. Patrick Collison (Stripe)

2. David Vélez (Nubank)

3. Max Levchin (Affirm)

4. Brian Armstrong (Coinbase)

5. Stewart Butterfield (Slack)

These founders generally exhibit high levels of openness and conscientiousness, moderate to high agreeableness, moderate extraversion, and low neuroticism. These traits help them navigate the challenges of building and growing successful startups.

Worst Rated Founders

On the other hand, there are founders whose actions and decisions led to negative consequences for themselves and their companies. Some notable examples include:

1. Travis Kalanick (Uber)

2. Elizabeth Holmes (Theranos)

3. Parker Conrad (Zenefits)

4. Billy McFarland (Fyre Festival)

5. Adam Neumann (WeWork)

Founders here often display high openness and extraversion, but extremely low conscientiousness and agreeableness, along with low neuroticism. Their actions and decision-making processes contributed to the failures of their respective ventures.

Findings

Based on the analysis of these founders, several patterns emerge:

- Successful founders typically exhibit high openness and conscientiousness, moderate to high agreeableness, moderate extraversion, and low neuroticism.

- Unsuccessful founders often show high openness and extraversion, but very low conscientiousness and agreeableness, and low neuroticism.

- Sociopathic founders are characterized by very high extraversion, very low agreeableness, conscientiousness, and neuroticism, with variable openness.

- Founders with Narcissistic Personality Disorder (NPD) tend to have high extraversion, very low agreeableness, moderately low conscientiousness and neuroticism, with no clear pattern in openness.

As Rumi once said, "What you seek is seeking you." Similarly, the qualities that make great founders also attract them to entrepreneurship. 

The Analytical Pathway: A Common Ground

Our findings reveal a striking pattern: a substantial 91.1% of top venture capitalists previously held positions in analytical fields. This statistic underscores the value of an analytical mindset in the world of venture capital. Analytical roles, encompassing areas such as financial analysis, investment management, and data-driven decision-making, equip VCs with the acumen to dissect complex market trends, evaluate business models, and make calculated investment decisions. The high percentage of VCs with this background suggests that an analytical foundation is not just beneficial but perhaps essential in navigating the intricate landscape of venture investment.

Entrepreneurial Experience: Valuable but Less Common

Contrary to the popular belief that most successful VCs are former entrepreneurs, our analysis paints a different picture. Only 21.5% of the top venture capitalists were founders before stepping into their current roles. While this figure highlights the significance of entrepreneurial experience, it also clarifies that it's less common than one might expect. Having been in the founder's shoes does provide unique insights into the challenges and dynamics of starting and scaling a business. However, it appears that having a founder's background, while advantageous, is not a predominant trait among the world's leading VCs.

Diverse Roads to the Top

The journey to becoming a top VC is diverse and multifaceted. While a strong analytical background is prevalent among these successful individuals, it is by no means the only path. The world of venture capital values a variety of experiences, whether it's steering a startup through turbulent waters or navigating the complexities of financial markets. This diversity in backgrounds contributes to a richer, more versatile approach to investment strategies, benefiting both the VCs and the innovative companies they choose to back.

Conclusion: Blending Analytical Acumen with Varied Experiences

The landscape of venture capital is as varied as it is challenging. Our analysis reveals that top venture capitalists often share a common thread of analytical experience, providing them with the skills necessary to assess and manage risk effectively. However, the path to becoming a leading VC is not monolithic. Experiences as diverse as entrepreneurship, financial management, and technology development all play a role in shaping the instincts and insights of these investment leaders. As the venture capital industry continues to evolve, the blend of analytical rigor and diverse experiences will remain pivotal in identifying and nurturing the next generation of groundbreaking companies.

As venture capitalists, we see many promising business plans from talented founders. However, the stresses of starting a company can take a toll on mental health especially since Covid. Studies show over 70% of founders report some impact on their mental wellbeing[1]. While passion and vision are critical, we must also evaluate how a founder's mental health could affect their ability to lead a successful startup. 

- Look for self-awareness and maturity. Founders who are open about their mental health needs and actively manage them signal responsibility. Seek out those who prioritize self-care and have supportive personal and professional networks.  

- Scrutinize financial planning more than usual. Impulsivity or unrealistic projections may reflect impaired judgment. Look for pragmatic financial models with executive pay aligned to value creation.

- Assess the team dynamics. Diverse, complementary teams tend to be more resilient. Watch for "red flags" like frequent turnover or poor communication that may indicate unmanaged mental health issues.

- Consider market viability to another level of detail. Evaluate the business model, competitive landscape, and addressable market.

- Provide mentorship. All founders need guidance navigating startup life's ups and downs. Be available as a sounding board and connect founders to resources like coaches, therapists, and peer support groups.

With awareness and support, founders with mental health issues can channel their creativity to build sustainable, impactful companies. As investors, we have an opportunity to foster an ecosystem where mental health is openly addressed so founders can fulfill their visions. Evaluating founders holistically is key to funding resilient startups poised for long-term success.

Times are different now, investors should be more aware of what to look for and how to help founders more going forward.

Citations:

[1] https://www.pnas.org/doi/full/10.1073/pnas.2215829120

[2] https://executive.berkeley.edu/thought-leadership/blog/impacts-poor-mental-health-business

[3] https://hbr.org/1985/05/how-to-write-a-winning-business-plan

[4] https://www.nature.com/articles/s41598-023-41980-y

[5] https://www.forbes.com/sites/melissahouston/2023/05/31/the-impact-of-mental-health-on-business-owners/?sh=266080683e41

[6] https://www.crowdspring.com/blog/what-investors-want-in-a-business-plan/

[7] https://www.forbes.com/sites/annefield/2023/04/29/startup-founders-report-entrepreneurship-is-taking-a-toll-on-their-mental-health/?sh=266a8c8e2192

[8] https://www.forbes.com/sites/tracybrower/2023/02/28/mental-health-delivers-big-business-benefits-3-strategies-for-success/?sh=2667109b3c8d

[9] https://www.linkedin.com/pulse/what-do-investors-look-business-plan-mike-kovach

[10] https://finance.yahoo.com/news/72-startup-founders-report-impact-190904214.html

[11] https://www.paychex.com/articles/human-resources/workplace-mental-health-effects

[12] https://startupnation.com/start-your-business/investors-business-plan/

[13] https://www.fastcompany.com/90969820/will-your-startup-fail-personality-traits-for-success

[14] https://hbr.org/2021/10/its-a-new-era-for-mental-health-at-work

[15] https://www.indeed.com/career-advice/career-development/business-idea-evaluation

[16] https://www.sciencedaily.com/releases/2023/10/231017215925.htm

[17] https://www.ncbi.nlm.nih.gov/pmc/articles/PMC9969895/

[18] https://www.investopedia.com/financial-edge/0412/5-essential-steps-to-evaluating-your-business-idea.aspx

[19] https://link.springer.com/article/10.1007/s11187-018-0059-8

[20] https://blog.exit-planning-institute.org/how-owning-a-business-impacts-mental-health-and-stress-levels

[21] https://www.entrepreneur.com/starting-a-business/5-things-investors-want-to-know-before-signing-a-check/234536

[22] https://grepbeat.com/2022/07/13/startup-lifes-dark-secret-founders-often-face-mental-health-challenges/

[23] https://www.putnam.com/individual/content/perspectives/8047-mental-health-is-a-business-issue-how-companies-are-supporting-their-employees

[24] https://aofund.org/resource/what-do-investors-look-for/

I recently did a quick data analysis on Southeast Asia early stage venture capital investments in different firms over the past few years. The data (from Crunchbase) shows the ratio of investments made by each firm in a recent period of hype (March 2021 to March 2022) compared to their average number of investments over the previous 2-3 years. Let's dig into the data and see what insights we can gather. 

Overall, the data shows a fair bit of variation between firms in terms of how their recent investment levels compare to their historical averages. 

A few key observations: 

• Most firms (15 out of 17) saw increases in their investment levels compared to historical averages. This indicates an overall uptick in VC activity among these firms during the hype period. However, the degree of increase varied quite a bit. 3 firms saw modest increases of 50% or less compared to their averages. There are 2 firms that saw massive increases of 200-500% above their typical investment cadences. 

• There were 2 firms that saw decreases in investments in the 25-60% range compared to historical averages. So the pullback in investing among these firms depicted strong contrarian behavior compared with the surge in activity among the highest growing firms. 

Overall, these data reflect a VC market that saw accelerated growth in 2021 but with an uneven distribution - very few firms are pulling back showing investment discipline while others are rapidly expanding investments. 

In the complex and multifaceted realm of venture capital and startups in 2023 post 2022 slow down, emerging markets present a unique set of opportunities and challenges. A significant challenge is the potential diminution of later-stage follow-on funds and a concurrent decline in the quality of later-stage investors. This situation can engender a funding gap for startups in their growth phase and a dearth of strategic guidance. However, through strategic planning and innovative thinking, early-stage funds can effectively navigate these challenges.

When later-stage capital becomes scarce, it can create a funding vacuum that hampers the growth trajectory of startups, potentially leading to a deceleration in the overall startup ecosystem. The decline in the quality of later-stage investors can exacerbate this situation (based on performance and just the law of large numbers). In such a scenario, early-stage funds need to adopt a proactive and innovative approach. Here are some strategies:

1. Strategic Partnerships: Early-stage funds should seek alliances with firstly your limited partners, corporate investors, family offices, or other entities that have a vested interest in the startup ecosystem. These partners can provide not only capital but also strategic guidance, market access, and other resources. Focus and Lean on your Limited Partners, especially those who are financially driven not just strategic.

2. Syndicate Investments: Early-stage funds should consider forming syndicates with other early-stage investors. Syndicates allow investors to pool their resources, share risks, and increase the total amount of capital available for follow-on rounds.

3. Investor Relations: Early-stage funds should maintain strong relationships with existing investors and continuously engage with potential new investors. Regularly communicating portfolio companies' progress and milestones can help attract follow-on investments. 

4. Continue to focus on Capital Efficiency (from 2022): Early-stage funds should work closely with their portfolio companies to improve their capital efficiency. Adopt an advisory mindset builds trust and results.

An Analysis of Founder and Executive Education Backgrounds at Top Southeast Asian Startups

I conducted an analysis of the educational backgrounds of founders at 99 of the highest-funded startups in Southeast Asia. Using Crunchbase as the database and then researched the schools and programs listed for key leaders at each company.

By far the most represented university is National University of Singapore (NUS), with 18 attendees out of 227. No other university comes close, underscoring NUS’s dominance as a pipeline for Southeast Asian startup talent (bachelors). 

U.S. schools are also popular, especially Stanford (6 attendees) and Carnegie Mellon (6 attendees). However, an interesting finding is Harvard Business School (MBA) comes in second with 12 attendees.

Several other insights emerge:

• Within Singapore, beyond NUS, notables include Nanyang Technological University (10 attendees) and Singapore Management University (5 attendees).

• STEM degrees are common from schools across the board.

• US schools beat UK and Australian schools by a wider margin.

• Indonesian founders - ITB is creates more of such founders than University of Indonesia.

This analysis still only scratches the surface. With additional data on companies, founders, executives, and their educational paths, we could develop even richer insights into the human capital flows behind Southeast Asia’s tech innovation and entrepreneurship. Please let me know if you would like me to pursue any further research.

p.s For Parents from Singapore: Go to NUS for bachelors and HBS for MBA - there you go no pressure. You are welcome.

Forewarning: 

I accurately forecasted the tech crash globally and in SE Asia earlier in 2021 (although I was a quarter late (Q3 2022)- I did not predict the the war). The tech industry has seen a major downturn in 2022 due to various macroeconomic factors like rising inflation, interest rates hikes, and geopolitical tensions. While the timing of my prediction was slightly off, the rationale behind the forecast was sound.

The next softer correction is expected in Q3/Q4 2023 due to declining late 2022/early 2023 funding and disparity between performance and valuations. Venture capital funding in tech startups peaked in 2021 and has been declining ever since. At the same time, the valuations of many private tech companies remain very high relative to their performance and growth. This disconnect is unsustainable and will likely lead to a downward valuation adjustment for many startups.

To safeguard your investments and your own startups, consult with trusted advisors, investors, and shareholders on your business growth, projections, and capitalisation strategy. Startup founders and investors should review financial projections and valuation models to ensure they are grounded in realistic expectations for growth and performance. Companies should also evaluate their capital needs and options for meeting those needs if VC funding continues to slow down (this slow down will stretch till end of 2023). Plans may need to be made for extending runway, cutting costs, and pursuing alternative funding sources. There will be instances where existing investors may force strategic options to even cease operations and return capital, be mindful of the rationale and use data and evidence to help with your decision making.

Brace for impact from end of Q2. The effects of reduced funding and more cautious investor sentiment will start to be felt more acutely toward the end of the second quarter of 2023 and into the third quarter. Startups and investors should prepare now for this changing landscape to avoid being caught off guard.

Stay alert. 

Art by Ivan Dubovik

Firstly, let me apologize for this really tardy post. I have been wanting to post this back in late 2019 and again in mid 2021. Startup activity and valuations crept higher in late 2019 due to the launch of several new funds in 2018 in Southeast Asia, followed by more capital inflows from US, Europe, Korea, Japan, India and China.

In 2020, we had a short burst of panic from March to July 2020 but investments restarted with smaller rounds and finally back in full vengeance from the start of 2021. This contributed to the best year ever in 2021 in terms of capital inflow in our region. To top it off we had interests from US SPACs and direct IPOs with companies in Southeast Asia. 

At the moment with the public market correction and uncertainty coupling with the effects of the US inflation due interest rate hikes and the war in Ukraine. There is a fear that this will come to the private markets, and yes it will. Valuations are 50-70% over valued since years before the pandemic.

What are the reasons? I will briefly touch on two.

1. We have not experienced a correction in Southeast Asia since the GFC contributing to a strong growth of new founders and investors in our ecosystem. In addition, without a flow of exits like quick acquihires, M&As and IPOs, many of our companies remain private with mostly paper gains and when IPOs do arise, early investors are cashing out and not invested for growth. As such, the quality of founders and investors reduces over time. This gives rise to undisciplined investments in companies where unit economics and growth rates are blurred between companies that gives venture returns vs those who don't. Finally the pandemic don't help in with the situation as it also gives rise to a postponement of performance and extension of rounds with little to no causation to performance.

2. Compressed funding rounds spread out over a shorter period of time in order to capture market share became more prevalent. If research on market size, adoption and timing is not done well, the execution of the business will be impacted. Overselling of our region's size and growth without relying on real business or consumer drivers affects the speed and consistency of market adoption. Hence some valuations of companies fails to be justified with performance. The region is still an emerging one, its maturity may sometimes be far from what we expect, making business projections difficult to forecast. 

So what do you if you are a founder or investor?

1. For new startup founders - Work on and refine your 12 year plan and capitalization strategy and find valuation comparables that are realistic to achieve. This is not an easy exercise but an exercise you have to do nevertheless.

2. For operating founders post Series A - Speak to Series C and D investors and ask them what are they expect of your business milestones and try to close that knowledge gap.

Besides the usual rhetoric of telling you to tighten your belt and extend your runway to over 18 months, you need to be operating your business at a level that will interest capital providers who have now sharpened their pencils. The silver lining here is there is still a large over hang of venture capital raised in 2020/2021 but trust me the investors will be more stringent going forward. Realign your approach to performance once you are clear of what is expected of you. There are situations when it is too late to turn back, and this will lead you to take a strategic option that unfortunately is the best path ahead for your company, employees and shareholders. 

I foresee higher stress levels for founders in the next few quarters. Do lean on your trusted network of advisors, mentors and coaches to help guide you through whatever is coming. 

If you need help or someone to talk, do reach out to me or the team at Coachable Initiative. 

Keep your heads up, we got this.

Here are some questions you can try with your kids to have a healthy exchange after picking them up or coming home from school.

1. What happened in school today?

- this trains observation and descriptive abilities

2. What did you perform well today?

- encourages no matter what is deemed good to be shared and we can encourage them to do better

3. What did you learn today?

4. Are there anything you don't know or don't understand today? Anything disturbing or feels weird?

5. Are there areas mom and dad can help you with?

- help to figure which areas they can solve themselves and which areas parents can help solve

I have been asked many times about smaller startup ecosystems in Southeast Asia what they should do to generate large technology startups and thus attract more foreign direct investment in their countries. After yet another roundtable with a government entourage and local and regional ecosystem leaders, let me share a few thoughts. 

Start by using historical data and research to give you a place to start. We have over 10 years of startup and funding data to study in Southeast Asia of which I will not cover in depth, but for those who are keen to chat about using data driven strategies to run your fund please contact me.

Here are some high level data for you.

In SE Asia, most of the largest valued companies are:

• Global aspiration - 8% (most are B2B)
• Indonesia only aspiration - 40%
• SEA regional aspiration (usually with Indonesia as one of the aspired market) - 30% (1 in many)
• SEA ex-ID Squids - 17% (many in 1)
• SEA ex-ID only aspiration - 3% (hardly funded nor grow fast enough - 1 in 1)

With this as a backdrop, and the fact that the founders are aware that they are more than likely a copycat (99% are).

What should you do then?

1. Gather Knowledge

• Understand your environment in your beach head market or markets you are targeting and figure out your problem statement, consumer and business drivers and timing
• Figure if you and your team are the ones that are capable to address these market(s)
• Then focus on product and growth metrics while serving these markets and try to move from the bottom left to the top right corner of the chart above

We (founders and investors) have a fundamental lack of knowledge flow between capital providers from different stages. I would recommend more open conversations between accelerators and Series B to D capital providers to really understand what they are looking for. We also need to speak to other founders they are likely to copy around the world to learn what not to do in their businesses. Lastly, we need to learn from others in both developed and developing markets and understand what drivers are needed to help startups to be successful. Everyone needs to gather knowledge.

2. Market Mapping

If you are able to go global and compete with the best in class, likely aiming to be the top 4 in the world, go for it. However, from historical data, the probability of that happening is low but not impossible.

The higher probability of where you are now or will be are the 2 bolded options above.

First, if you are not addressing Indonesia from day one, you need to start planning your regional plan from day one as there will be other copycats in the region as well with a head start because they are either already based in Indonesia, or has raised more capital and/or launched in multiple markets earlier than you.

Second, be a Squid

This is where most startups get stuck, they are there but not quite. Look to be a squid with 2 tentacles and 8 arms in your home country, and plan to extend 2 tentacles to potentially 2 countries and 8 arms into potentially 8 different business lines. This way, your total combined addressable market will be larger than you originally sought out to do.

Hope this helps. 

Happy New Year!

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. 

In Vietnamese

99% các công ty không nên huy động vốn từ các công ty đầu tư mạo hiểm.

Nhưng nhiều nhà sáng lập nằm trong 99% này lại cho rằng họ là 1% còn lại nên muốn làm. Đôi khi các nhà đầu tư cũng nghĩ như vậy và điều đó gây rắc rối trong nhiều lần hoặc nhiều năm sau đó.

Làm việc với những người đồng sáng lập, cố vấn và nhà đầu tư của bạn để đảm bảo vị trí của bạn.

Nếu bạn là 99% (và hoàn toàn không có gì sai với điều này) và muốn trở thành người 1%, hãy làm việc chăm chỉ và tận dụng đội ngũ, vốn và chiến lược của bạn (thời gian / tốc độ) và thực hiện để giải quyết các thị trường lớn hơn (Y -axis) và tăng độ tinh vi của MOAT (trục X) của bạn. 

Xem http: //reactionwheel.net/2019/09/a-taxonomy-of-moats.html.

Một khi bạn biết bạn là ai và bạn sẽ là gì trong 7-10 năm nữa, bạn sẽ có thể tiếp cận thực tế những nhà đầu tư phù hợp với mình.