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What are VC investors expecting from early-stage startups in 2021 and how should such founders prepare for their future fundraising journey?
e27 asked these questions to Goh Seng Wee, CEO of Brain Too Free Ventures (BTFV), a licensed VC of Singapore MAS (Monetary Authority of Singapore) based in Singapore.
Launched in 2019, BTFV is an early stage investor, still largely agnostic. However, they favor startups targeting mid-range consumer-oriented startups in Southeast Asia (SEA). Its two most successful investments are Moovaz and ErudiFi (both enhance Series A).
In this interview, Seng Wee shared BTFV’s investment criteria, priorities and plans as well as his views on the SEA’s early stage VC investment scene.
Quote from the interview below:
Do you think investing in VC at the early stage has changed since COVID-19?
We think that with COVID-19, real-world problems of connectivity, logistics, branding, discovery, experience, sustainability, etc. are all solved.
Investors are returning to value sensitivity rather than vision, so founders should not be discouraged by smaller valuations and smaller investment tickets.
Capital market excitement meets tech startups that are evolving in a more sensitive direction. In addition to figuring out the numbers and visions, investors are digging deeper into the platform.
Ultimately, investors need confidence in the value of their money. Such confidence can only be built by having a strong backend – solid team, sustained growth, honest scalable product.
These combine to create value for investors. In fact, if the founders know how to make good use of their resources, S $ 1 million (about US $ 755,000) today is worth the equivalent of S $ 3 million (about $ 2 million). US dollars) before the pandemic.
How do you think the tech landscape will look for early stage startups in a highly developed country like Singapore?
The region’s unicorn / success story ratio will likely accelerate at the greatest rate of any other market continent in the world. Many winners will come from this region.
In Southeast Asia, Singapore will receive a disproportionate rate of success thanks to strong public policies and enormous resources pouring in to transform the city-state into a technological powerhouse. Singapore is friends with other technology powers, such as the US, China, Asia Pacific and the EU.
The tech wave here is growing faster than anywhere else in the world and the tide is rising fastest in Singapore. Lay the groundwork for your startup from Singaporee is probably the right decision to pay exponential dividends over time.
The fact that Southeast Asian startups have generally been doing quite well, and I told everyone that the people who started their startups last year or this year have the potential to be the richest people around.
What are some of the main criteria you use to evaluate early-stage transactions?
Investing in early stage startups requires us to sift through the primary metrics that really matter, then exercise our acumen to make investment decisions. Most people invest on “good or bad”, we also invest on “cheap or expensive”.
There may be many good ideas for solving large problems with seemingly large markets that can be solved, but early stage investors need to know that a few will turn out to be a capable product. open and profitable.
Startups’ valuations are always overblown, so we need to have a strong business imagination to bet on how people want to live their lives and spend their money for two to four years. next. We invest in people’s dreams, acumen and ability to perform.
Once we sign an investment agreement, the rest is not given up and done vigorously. We expect the highest level of monetary discipline and believe in using the fewest resources to make the most impact. These are ways that startups can outrank incumbents.
As an early stage investor, we need to balance holding the founders while giving them the space to find their way. At the end of the day, we believe many companies will become great and admired in the next 5 to 8 years being built today – while BTFV will not claim that all companies in Our portfolio will emerge winners in the segment, we are sure that the winners are on the market today.
What kind of support does BTFV provide to companies in its portfolio?
Overall, our team has extensive business experience in multiple segments and markets over the past 18 years (in our pre-VC businesses). Startups in our portfolio thus we connect them with dynamic business networks. Nadar Ajlani (Non-Executive Director) and I went through SARS in 2003, the financial crisis of 2008 and the oil crisis of 2014.
In addition to providing investments (between $ 100,000 and $ 300,000), we are able to lend our portfolio companies experience and courage as they steer and deliver difficult decisions.
Up and down market cycles are common. It is true that last year it was the Black Swan, but the basic principles remain the same. Together with the founders, we always pay attention to being on the right trajectory.
We constantly search our networks for synergy and believe in sharing learning points within portfolio companies, to a mistake and a wasted dollar of One founder will learn and earn others’ dollars.
Our endeavor is to learn from our competitors, listen to customers, discuss issues in-depth as a team, test new approaches and duplicate quickly to achieve success. original public.
What advice would you like to give to early-stage founders trying to raise money?
Reputation for trust, the ability to re-learn new rules and the intelligence to understand customer problems faster are timeless business skills that are still heavily applied in the post-pandemic .
The founder must have the regional network in a new state to begin with. Regionalization is becoming more difficult; Imagine you can’t even fly into new markets to meet your local team. As a result, we see decentralized growth, with each city / market led by strong early employees and over time, industries across the market will converge.
The next wave of startups is likely to emerge that way. Litmus testing should always be customer satisfaction – customers often love cheap and honest products that save them time and money.
Get more done through partnerships, early build positive business economics, develop your reputation as a trusted technology aggregator for your segment. These keep you ahead of companies that build proprietary in-house technology to solve similar problems.
Founders should also focus on users and changing norms rather than the returns of their investors. Every business – from MNCs to startups – will make many mistakes within the next one to three years, and the fastest learner and the fewest wins. The J-curve and inflection point have been brought forward with COVID-19.
What are BTFV cards for the rest of 2021? Are there any investment plans?
We are satisfied with our portfolio of 11. We hold almost 40% dry powder to selectively double the success of companies in our current portfolio, but they are I also know that it is hard to deny the brave and brilliant founders who might come knocking on the door.
We want to hear from 5G, green solutions, innovative use of cryptocurrencies and social e-commerce. Every new startup we run is not just a dollar investment, but also adding value to them in engaging them, such as a foothold in new markets and reference customers. .
Image credit: Goh Seng Wee
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