As COVID-19 exacts a heavy toll on Southeast Asia’s tech startups, in crisis there is always opportunity, too. In a stars webinar, Yinglan TAN, CEO of early stage technology venture fund Insignia Ventures Partners, explained why the days of “easy money” for tech startups are now over and how the focus on finding paths to profitability therefore increasingly replaces the “growth-at-any-cost” philosophy.
Not least due to the US-China trade war and India’s regulatory challenges for foreign investors, Yinglan nevertheless expects to see much higher investment volumes in Southeast Asia’s tech sector. In his view, Southeast Asia represents a sea of opportunity that will attract a lot of capital in the next few years. All the right ingredients are in place: an abundance of great talent and entrepreneurs, a big enough market and good business models with traction. But the real proof of the pudding will be the number of exits. While Sea is the shining star in Southeast Asia and one of the best-performing stocks in the world – its stock price has trounced the FAANGS over the past 18 months – the number of exits are still few and far between. For comparison, in this year alone, 17 Chinese companies IPO-ed in the US.
Looking at Southeast Asia’s “pandemic growth sector”, Yinglan particularly sees the online education space as well as digital banking as prime examples where COVID-19 has been accelerating innovation and growth. Further verticals that benefited from COVID-19 include B2B marketplaces and cybersecurity.
Before investing into a startup, Yinglan looks for a favourable combination of three things: team, market and product. For any entrepreneur or any team to be successful, they need to be unstoppable: “Tenacity, the ability to never take no as an answer, is an important trait of an entrepreneur.”
As a final piece of advice for (aspiring) venture capitalists, Yinglan shared the three most important lessons learned from his personal experience of investing in tech startups:
- Trust your gut
- Put serious effort into due diligence
- Be there for your entrepreneurs in good and hard times
To watch the recording of the stars webinar, please click here.