The case for the Southeast Asian startup scene

Jungle Ventures put together this deck to show the opportunity for startups and VC’s in SEA region and how it is probably the most attractive sector in Asia.

I dig slide 11 for obvious reasons.

Anyway. Lots of stuff in there – hats off to Alice and Yash for all the work.

Term Sheet Hell

Update – Another post about this discussion ::

Interesting post out today getting lots of Internet chatter, from a blog I have not read before –
The short of it is the discussion around how a new investor, say a seed stage VC like myself, wants to see the term sheet expressed in post-money valuation terms versus pre. I am not an expert at this by any means so I won’t claim to be but I think this paragraph really nails it though as to why this is happening:

Today, nearly all early stage term sheets I see are expressed as post-money valuations. The main reason for this, I think, is that there has been such a proliferation of convertible notes, SAFE’s, and other instruments that it becomes tough for a new investor to feel confident that they fully understand a company’s cap table prior to an investment. On top of this, the rise of multiple seed rounds prior to an early stage investment further complicates matters, since you might have multiple notes stacked on top of each other, each with different discounts, caps, etc.

Lots of startups are taking notes – which I won’t diss but generally it means there is very little paperwork, not much due diligence and many of the documents needed for an equity round have not been created or finalized. So when the equity guy comes around, they want to get things all cleaned up and sometimes the only way to do that is to get the post money math all worked out.

I think it is a good thing for the startup and the VC.

Your mileage may vary.

On this point I will also add that if you are a startup raising money and you have NOT read this book – you are entering into a complex deal without the knowledge you need to negotiate it.

Read the book :: Venture Deals: Be Smarter Than Your Lawyer and Venture Capitalist

Happy fundraising!

No NDA’s

I think most startup folks know this but funnily enough, we get asked this quite a bit.

Let me break it down – VC’s don’t sign NDA’s.

Let’s have Brad tell you why ::

I love this paragraph:

As an entrepreneur, don’t think of this as “arrogance”, think of it as “practicality.” Your friend the VC is actually trying to save you time and money. If you think you have something super secret that no one else should know, just don’t tell me about it. Oh – and check your assumption in that case – especially since the value is in creating the thing, not simply having the idea.


Thailand and Apple musings…

I am sitting in the newly remodeled Don Muang airport and using an unlimited WIFI pack. Which I bought for 39 baht to get unmetered WIFI till midnight. For all of you penny pinchers out there – that is like 1.12 USD. Pretty decent in my opinion. I have been using 4g for the past week for 99 baht. Been getting good speeds but that has 2GB cap for 7 days of usage. That’s 2.84 USD. For a whole week of 4g but of course I used it up and added 400 MB for 15 baht. That’s .43 USD. 

Crazy the competition in wireless data and how easy it is to get it and top it up.

This week I paid for our truck insurance but this was after realizing that we don’t have the bill for it. So my wife called the insurance company who then sent her 1 SMS with a number in it we took to 7/11. Paid the bill and the 15 baht convienence fee for paying at the ATM. The services one can pay for at 7/11 or other convienence stores is cool.

It is always interesting to me the fintech stuff that pops up in rural Thialand when credit cards are not the thing and cash is king. Not sure if this type of stuff will flourish more or if credit cards start to take over but given the way my wife’s parents bank, they will never get a credit card so these cash delivery systems are key for them.

As a side note this is what is always bugging me about Apple. In the rural parts of Thailand you just don’t see a lot of iPhones except for the wealthy or the aspiring wealthy or hip teenagers who want to show off. I think in all the emerging markets this same phenomenon exists in that outside of the cities you see way more android than iOS phones. I personally have never thought this was only about the price of the handset but it is more about the ecosystem that Apple has created which is basically a wall that only people with credit cards can climb over. Apple continues to power the App Store and Apple services with credit cards where Android, who pushes Google pay, but allows app developers to integrate lots of local payment methods is flourishing. Apple really should do telco integrations or work with wallets that are not card based to get something going before it is too late.

When I was a resident of Thailand, it was always uniquely frustrating place as an expat trying to make it but when I visit I tend to look at things with another lens and I am impressed with the infrastructure growth, the mobile connectivity and the startup mantra that is slowly permeating the place. Maybe some day even politics will get changed but that is not a subject for this blog.

At the airport now they have a sign for a co-working space which I find odd to be located here but who knows. Is it peak co-working spaces in SEA yet?

For the time being I will have some overpriced airport coffee but enjoy my all day 39 baht WIFI.

Marketing in 4 easy steps :: Seth Godin

Always amazing to me how Seth can boil huge subjects down to simple steps.

Here he attacks marketing ::

I love step 4:

The last step is so often overlooked: The part where you show up, regularly, consistently and generously, for years and years, to organize and lead and build confidence in the change you seek to make.

I think this is the one the startup crowd likes to overlook. The patience required in building a real brand and how that takes time and consistency.

Hence – my newest read ::

Think Simple :: Books

Finally finished up Think Simple and I enjoyed it.

Last weekend was the last delivery of the FT weekend and I am going to move all my newspaper time into reading and blogging instead. I think a better use of my time.

I did not read Ken Segall’s first book, Insanely Simple, and after finishing Think Simple I assume I don’t need to.

The book is not earth shattering but it did help to drive home some key thoughts around what it means to drive for simplicity which we all know is not easy. Been in more than a few startups and once the org grows, trying to make stuff simple or keep it simple gets super hard.

I also loved the chapter on head versus heart since I see a lot of orgs doing the data only thing which I think is a mistake. I am big on the heart to and I think as seed stage VC, SeedPlus,  we generally have to look at the heart stuff more – team, culture, product and vision since the numbers to use the data path for decision making are not there yet.

All in all. Worth the read and there is plenty of stuff to apply to your day to day life emanating from the book.

Korean Startup Scene

I have to admit I am not plugged into it enough.

I watch Scott and his winner/loser video every week – this stuff is pure gold ::

Was interesting to see him mention the Korean app – snow, which is the same Naver folks who brought us Line ::

So basically we have a straight up SnapChat clone that is targeting only Asia which in certain pocket countries can work. Not saying it is a novel strategy but certain companies can pull it off.

What I also find interesting in this NYT piece is the opinion on the Korean tech scene ::

“For the longest time, the holy grail for a lot of Korean founders was to get U.S. market share,” he said. “They all failed, and failed because there were so many issues. There was no American working culture, they didn’t have a network in America, they didn’t speak English.”

“With the rise of China and China’s infatuation with Korean culture, it’s breathed new life into Korean start-ups and founders,” Mr. Chae said. “This is a market that happens to be a lot bigger than the U.S., that seems to be more welcoming for Korean technology and culture than the Western world ever was.”

It’s a great point – why bother with the USA at all if one can essentially focus on Asia and win it? With the growth of SEA region, the 4g penetration coming in India and all the other fringe possibilities like the Middle East – an Asian startup could essentially go big in every place but Europ and America and due well enough to not care.

I see Singapore has a pretty amazing tech HQ – the equivalent of USA’s Delaware for startup incorporation but I often wonder if Taiwan, Japan and Korea ramped their startup tech game in hopes of dominating Asia would that be more powerful than the Chinese brands trying to do the same thing?

I think the core issue still for pure Asian startups focusing on Asian markets is exit strategies – do they sell to American companies? Is there a go-to stock exchange besides the USA they can list on? Going forward as the startups scene keeps heating up I think the I can’t raise seed, I can’t raise an A will start to turn into – where do I go public? 

Hoping one of these regions can figure out a market to list on that works for the Asian scene.