VCs should favor originality in SE Asia start-ups - AVCJ Forum

Khailee Ng, a Southeast Asia-based managing partner for 500 Startups noted that his firm has 44 companies raising Series A, B or C rounds at present and follow-on funding discussions are dominated by questions about comparables. Investors who are not from the region want to know if a Southeast Asian company is the equivalent of Meituan-Dianping in China or any number of start-ups in the US.

“Pattern matching is part of late-stage funding. You want to find a benchmark. You want to see that five similar companies in other markets have achieved $1 billion valuations,” Ng said. “But there are unique aspects to Southeast Asia. Companies have selected their own path and creating something that is different.”

Roderick Purwana, a managing partner with Indonesia-based corporate venture business SMDV, added that copying established business models is part of the growth curve of a venture capital ecosystem in a country. But usually, some indigenous innovation comes out of it. He cited the example of Go-Jek, which started out as “Uber on two wheels” but has since developed a suite of products ranging from parcel delivery to financial services.

“Pattern recognition is the basis of what a lot of VCs do. We have India and China and others ahead of us. Is Indonesia going to be like China or India? It’s going to have its own flavor of VC investing and we as an ecosystem are trying to figure that out together,” Purwana said.

The China parallels have inevitably drawn Chinese strategic investors to the country, although for online retailer JD.com the preference is to build its platforms using local talent as partners rather than make acquisitions. From a systems perspective this is easier, but in Southeast Asia “some things are built to sell so they are less attractive,” noted Winston Cheng, president for international at JD.com.

“We try not to replace businesses with JD.com from 10 years ago – we have to assess what is different in this market, what should be the next model,” he added. “We are seeing a lot of innovation, it’s like China 15 years ago. People are learning fast.”

 

• Tweet  
• Facebook  
• LinkedIn  
• Google plus  
• Save this article  
• Send to  

• Topics
• Southeast Asia
• Technology
• Early-stage
• Indonesia
• 500 Startups
• JD.com
• TMT
• AVCJ Events