Southeast Asia: The bright spot for VC investing amidst global uncertainties?

“Southeast Asia: The Bright Spot For VC Investing Amidst Global Uncertainties?” was a panel that featured Thomas G. Tsao of Gobi Partners, Roderick Purwana of East Ventures and Angela Toy of Golden Gate Ventures, moderated by James Kwan, Founder & Executive Chairman, Jumpstart Media at the ORIGIN: Asia Tech Conference. ​​

The panelists discussed about VC investment strategies and trends in Southeast Asia, opportunities and challenges in the region. These investors also discussed some of the criteria they look into when they fund promising startups in Southeast Asia.

The text below has been edited for clarity and brevity:

Thomas G. Tsao, Co-founder and Chairperson, Gobi Partners:

Criteria to look for when funding startups: The first one is the team. When I say team it depends on what stage your company’s at. It really comes down to your personality and your character.

The second one is “coachability”. it’s not like just doing whatever a VC tells you because that’s always wrong but knowing when to take advice and knowing when to push back. Knowing the tech advantage and competitive edge is also important. That’s usually the technology.

Then you have to be in a growing market. Here’s why market is important because you could be the biggest beeper company, you have the best team and you got the best technology for beepers but you know what, nobody wants beepers anymore so you got to be in the right market.

Investment strategies: At Gobi, we look at a couple of things. There’s long-term and short term. The famous saying – demographics is destiny. When we first started investing in China in 2002 and China was an emerging market. It enjoyed uh this massive population,  growing, increasing fertility rates. They were going to have this massive labor. It was at a very early stage of the technology adoption.
At that time the Western Capital markets, the Western media.. the narrative was all about.. look at Chinese people they are just like us. Every day, there’ll be an article like they just opened up their first Starbucks, the first Nike store. Then at some point, maybe after the 2008 Olympics, that narrative started to change. You see the sort of similar narrative now in India. So you want to stay away from these narratives and look at the underlying, the deeper undercurrents.

The narratives (about different markets – China, India) are always changing when it suits maybe people’s maybe agendas so we try to stay away from that. We look at the deeper, underlying, fundamental trends. We are long-term investors so a lot of the kind of headlines I call it “white noise”.  We try to stay away from that and focus on those deeper trends.

Roderick Purwana, Managing Partner, East Ventures:

At East Ventures, we are a very founder-driven firm. Ultimately we look at the founders, the management. We try to look at the character or integrity which is very important whether they hustle or persevere during good or bad times. The other part is the capability itself and then you know inherently whether they can do the things they say they can.

Where do you see the next emerging technology? and what do you prioritize in your investment models in the next two to three years?
The areas we are looking at right now is around healthcare, ClimateTech. I think going forward of course artificial intelligence (AI). It is in everybody’s mind. How to really play that, especially for the Southeast Asia and Indonesian market is something that we are looking into. I think there are still different areas sectors that are probably ripe for disruption.

Angela Toy, COO & Partner, Golden Gate Ventures:

One thing that sticks out is the market size when it comes to evaluating startups because at the end of the day we are unlike like the US or China with large homogeneous markets.
Determining whether the market size is large enough is really important for us. Integrity in the founder so that’s quite important, that’s something to look for.

Investment strategies: We don’t really have a threshold where we like or we need to invest a certain amount in each country. I don’t think we can succeed as a fund like that but it’s really more of what are the kind of emerging themes and is the market size large enough to serve uh the needs and for a company to grow.
For us, the three main markets would be Singapore, Indonesia and Vietnam. Now Vietnam is really interesting for us and for a lot of other investors as well in the region. The people have very similar traits when it comes to Chinese kind of culture. Adaptable, very hardworking and they they just find different ways to make things work so we really like it.

Recently we’ve actually managed to launch a fund in the Middle East so we are looking outside of Southeast Asia. With the Middle East being an emerging ecosystem for startups and VCs. For us the mission at the end of the day is to empower the audacious and help emerging ecosystems and the startup founders. So we’re not saying that we’ll always be in Southeast Asia but it’s more of who else can we help with the ecosystem building that we did you know in Singapore 10 years ago and then Vietnam three years ago. I think we are going to do that from the Middle East and hopefully other other countries.

---

The original article was published on TechNode Global, 19 June 2023.