GP profile: Golden Gate Ventures

When Jia Li Tan saw a company in trouble, she knew she couldn’t turn away. As head of market development for Golden Gate Ventures she is responsible for the firm’s entire portfolio of start-ups, but one investee needed special attention following a restructuring and a round of layoffs that had led investors to ask difficult questions about its long-term viability.

Tan thought she could help turn around the struggling e-commerce company, but it would mean temporarily leaving Golden Gate to work at the business full time, personally leading the hiring efforts and revamping the business plan. She had only been with the GP for a year at that point, but she was confident Golden Gate’s management would support her plan.

“This is actually the first time I’ve seconded myself, but I wanted to do it because I liked the company, and I'd been watching them, and I felt that right now, for what they needed to prove to investors and where they were at the moment, they needed me,” says Tan. “It was up to me to assure the management that I won’t forget you, you’re paying my salary, but right now I need to go and build something.”

There’s a super-flat hierarchy within the firm, so everybody attends the partner meetings, and everybody’s input is valued equally – Kenrick Drijkoningen

This kind of initiative has become a hallmark of Golden Gate and its employees, as the firm seeks to mirror the energy and flexibility of the early-stage founders it backs and help build Southeast Asia’s native start-up culture. With a growing community of entrepreneurs and investors in the region, the GP is now planning to move into the next stage of its development.

Meeting of minds

The seed that became Golden Gate was planted in 2010 with the meeting of Vinnie Lauria, a start-up founder and angel investor based in Silicon Valley, and Jeffrey Paine, a Singapore native who had formed the local branch of global start-up accelerator the Founder Institute. The two immediately realized a shared passion for helping encourage the burgeoning entrepreneurial ecosystem in Southeast Asia.

Lauria had noticed the potential of the region during an extended honeymoon in Asia the same year, visiting major cities in Korea, China, India, and Southeast Asia. After exiting his second start-up, the Silicon Valley veteran was looking for a new direction and the Asia trip was an opportunity to connect to the various local start-up scenes. It didn’t take long for him to detect a pattern.

“The type of conversation that I had in Southeast Asia stood out to me, in that when I would meet a founder in any city in the region they would almost universally ask me, ‘Do you know how I can raise money? Can you make some intros for me?’” Lauria remembers. “People in China and India were not asking that.”

The lack of VC and angel investors was puzzling. In his travels, Lauria had seen plenty of evidence that the region was just as ripe for technological disruption to traditional business models as India and China had been in previous years. But unlike those markets, entrepreneurs in Southeast Asia had little support from overseas investors and a smaller network of local angels and start-ups to build momentum in the community.

The problem crystallized for Lauria when he was planning an angel commitment to Singapore-based personal finance portal MoneySmart. The company’s business model was similar to that of a start-up founded by a fellow entrepreneur and angel investor from Silicon Valley, and the two seemed like a natural fit. But when Lauria reached out to connect them he was unexpectedly rebuffed.

“I said, ‘Hey, I'm going to do a small angel investment, do you want to participate alongside me?’ And he said, ‘Oh, I don't do anything outside the Valley,’” he says. “That was a second light bulb moment for me: the realization that there are definitely investors that understand this space, but none of them are looking at Southeast Asia.”

Having concluded that Southeast Asia’s entrepreneurs needed more than financial support, Lauria decided to move to Singapore, where he could be more active in the community and organize meetings, hackathons and other events. He soon encountered Paine, who had become a leader in the community through the Founder Institute and had made several angel investments himself.

The two complemented each other well, with Lauria’s Silicon Valley experience supporting Paine’s local market understanding, and their partnership quickly progressed from pooling their own money for select investments to planning an early-stage fund dedicated to Southeast Asia.

Silicon Valley entrepreneur Paul Bragiel added his reputation to that of Paine and Lauria, and Golden Gate closed its first vehicle in 2012 at $10 million. Commitments mainly came from a consortium of angel investors that knew Lauria and Bragiel, along with a program sponsored by the Singapore government that matched private commitments five-to-one with public funds.

Entrepreneurial DNA

Golden Gate has seen itself as a different kind of VC investor from the very beginning, with all of its founders having come up through the entrepreneurial and angel worlds rather than the financial sector. The firm has sought to preserve this DNA through its subsequent hires: all its 10 current employees had some entrepreneurial experience before joining, and many had been angel investors as well.

“They really value someone with an entrepreneurial background who has empathy with all these founders, not just asking for numbers and progress and high-level picture but being able to support them and help make things happen in the field as well,” says Dea Surjadi, head of business development for Indonesia. “This is something that I've found very relevant, because I really want to be able to do that, and not just jump to the VC financial side.”

Like most of her colleagues, Surjadi was brought on board with the expectation that she would provide specific operational enhancements to Golden Gate’s portfolio companies. Surjadi focuses on helping start-up founders grow their teams through improved hiring and training practices, while Tan leads the firm’s ongoing community building efforts in the form of conferences, seminars and other events, while also developing marketing strategies through part-time or full-time work for specific portfolio companies.

Kenrick Drijkoningen, the firm’s head of growth, regularly splits his time between Golden Gate and the firm’s investees as well. He has served on the team of several companies including property rental portal 99.co and home care marketplace Homage, contributing one day a week or more to help them reduce their marketing costs. In one case, a portfolio company reduced its marketing spend from $150,000 per week to $50,000 by bringing operations in-house and ceasing to work with an expensive outside firm.

“We invest a lot in these companies, and a lot of that then goes straight out the door into marketing, and often that is not spent in the wisest way possible,” says Drijkoningen. “So just keeping an eye on that from our perspective is very helpful for us and is very helpful for the companies involved.”

Golden Gate’s culture also allows employees to enjoy a considerable degree of initiative, reflecting its start-up heritage. Staff members are encouraged and expected to contribute to each other’s projects in addition to their regular duties. Drijkoningen regularly participates in due diligence sessions for companies in the e-commerce and gaming sectors, since his previous experience was in these verticals.

The firm even supports employees in larger strategic initiatives. For instance, Drijkoningen has been involved with several of Golden Gate’s investments in blockchain technology, and recently proposed a new fund dedicated specifically to companies working in blockchain and related fields. Golden Gate plans to launch the fund in the near future with Drijkoningen as the manager.

“One of the unique things about Golden Gate is that there’s a super-flat hierarchy within the firm, so everybody attends the partner meetings, and everybody’s input is valued equally,” he says. “We’ll partner with our portfolio companies, but we also support people inside the organization to do what they’re truly passionate about.”

Pursuing scale

To some degree, this freedom of initiative is a function of the youth of the firm. Although Golden Gate has developed quickly since its launch in 2011 and has made a significant impact on Southeast Asia’s entrepreneurial scene, the GP is itself still a start-up in many ways. Its leaders acknowledge that the culture may change as the firm develops.

Golden Gate already underwent a significant shift when it launched its second fund in 2014 with a target of $50 million. Hitting this goal – and beating the target to close at $60 million as it ultimately did – required marketing to a wider range of LPs.

“The first fund was people betting on us because they knew us. The second one was a more traditional fundraise: we had a portfolio and we’d done one exit at that time, and so it became a much easier conversation,” Lauria says. “We ended up talking to a very different class of people, and that’s why we were able to step up from $10 million to $60 million.”

Lauria and his fellow founders still leveraged their personal networks in the second fundraise, with many of the angels and high net worth individuals from the first vehicle returning, and the firm expects these investors to remain part of its story in future fundraising cycles.

However, the institutional players that propelled the second fund to its final close, including Temasek Holdings, South Korea’s Hanwha Life Insurance, and Thailand’s Siam Commercial Bank, are likely to assume a greater role as the firm pursues larger fund sizes going forward. Golden Gate has never believed in judging its performance based purely on financial returns, but the firm’s growing string of exits from prominent Southeast Asia start-ups such as online grocer RedMart and payment platform Ruma should prove enticing for future investors.

Along with larger fund sizes will come a larger team. There are plans to add three new investment professionals in the coming year to manage the growing portfolio. Current team members suggest that newcomers may not have as much freedom to pursue their own initiatives as the organization becomes larger, though it is hoped that the flat structure where all are free to contribute their ideas will continue to be a hallmark of Golden Gate.

This points to a broader desire for the firm’s core standards to remain firmly in place, even as it matures. Southeast Asia’s start-up community has made rapid strides since Golden Gate launched its first fund, but there will always be opportunities for an investor that can understand the issues faced by entrepreneurs and push them to put their ideas to the test.

“We bump into a lot of founders that are great at coming up with concepts, and they have good consulting backgrounds, and from a high-level perspective it looks beautiful. But turning that into execution is very much a different challenge,” says Surjadi. “They must be willing to do all the groundwork of learning the market and what it takes to win the market.”

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• Topics
• Southeast Asia
• Venture
• GPs
• Technology
• Golden Gate Ventures
• Venture
• TMT