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ask a VC: Golden Gate Ventures

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We’re speaking to Singapore’s leading VC funds to find out about their thoughts on the current state of the Southeast Asian startup and venture ecosystem, and what they currently are looking for in companies.

This week we’re speaking to Justin Hall from Golden Gate Ventures.

how is the Southeast Asia startup and VC ecosystem looking in 2019?

It’s going very well, from strength to strength. There is definitely an increase in the ‘growth stage’ i.e. series B and above. It’s good news, because it means that the gap is more or less resolved. It points to the evolution in the SEA scene – we’ve grown linearly.

what is the impact on the ecosystem of the tech unicorns, eg Grab, GoJek, Tokopedia?

The effects are plentiful. They help validate SEA as a market to global investors. They help recycle capital as they are becoming one of the few serial acquirers in the scene. These are companies that have the capital to acquire locals and return some capital to LPs and GPs who in turn can re-invest in the scene. This is important because we still lack a meaningful exit landscape.

These tech companies are also accelerating the growth and training of the local workforce. They have these processes in place to train people to expand across the region, and to create products that are relevant for each market. They’re helping accelerate the growth of Southeast Asia as well as creating a really fertile ground for new tech companies.

people talk about Indonesia due to its market size, but which countries in Southeast Asia are producing amazing startups?

Singapore and Indonesia have received the lion’s share of the benefits, but there are opportunities in Vietnam, Malaysia, and the Philippines. Investors are starting to understand that.

Singapore was attractive because of its economic environment and Indonesia because of its population, but these are things that you can’t replicate. Their fundamental advantages (as countries) were clear and accessible.

I think the other countries were a little ‘aimless’ – they couldn’t figure out their defensible advantage. There are some areas that lend themselves to building valuable, high scalable companies, but they do need to be more embedded into the DNA of the country and highly localised.  It’s not a coincidence that, for instance, one of the few Vietnamese unicorns is focused on driving value for people in Vietnam. These countries can differentiate themselves, if they double-down on their own advantages.

what kind of startups are catching your eye?

Insurance tech (‘insuretech’) across the board is very interesting. It’s a very local problem. The suppliers are local, the regulations are local, and the solutions are local. There are companies coming out of every single country that are interesting to watch.

any predictions for the SEA ecosystem over the next two years?

I think there will be an explosion in growth capital, particularly B and C regional funds. This is the last remaining gap for startups before you can (and should) approach global pools of capital. For the first time, there will be a clear path from pre-seed to post-growth. The gap will be bridged within the next two years, it’s going to reach an inflection point.

any Southeast Asian startups to watch?

One would be Ninjavan. They’re tackling something meaningful – logistics –  which would be incredible impactful for the region. Hmlet is another one, for addressing some real inefficiencies in the real estate market. And Tokopedia, for reinventing the game across logistics and e-commerce.

tips for founders pitching to you?

Everyone says to look out for the startups who have the large market and traction – this is universal. I obviously look at that, but specifically, I look to invest in a founder with a chip on their shoulder. I want the founder that has something to prove, who will never give up, who will stop at nothing to steamroll their competition.

Founders need to have deeper motivations beyond money. Most investors will ask, ‘why are you doing this?’ Getting to the real reason, when it gets to the psychological drivers, that’s where I think the success is.

Learn more about Golden Gate Ventures.

 

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