The new generation of venture capitalists

IN 2014, around the time when future tech unicorn Carousell was on its way to hitting 5 million listings and raising a major funding round, Angela Toy was shutting down her online business - the first company she had ever started on her own.

The idea was straightforward. Toy had seen the traction of BarkBox's subscription business for dog products in America and wanted to replicate it in Singapore. But the ecosystem was not built for e-commerce at the time and margins were razor-thin.

She let the startup dream go. It turned out not to matter that much, because she spent the next 8 years at the frontline of South-east Asia's tech boom.

"I'd thought I would just be in venture capital for a year perhaps, and then learn and maybe start another business. But being in Golden Gate was pretty much like starting my own entrepreneurial journey," Toy says.

She joined Golden Gate Ventures as its second employee to work on operations and finance, and got to witness small outfits like Carousell and online grocer RedMart flourish into complex businesses. Today, Toy is leading portfolio growth across the region as the firm's newest partner.

For the longest time, South-east Asia's venture capital (VC) scene has been dominated by the pioneers who laid the foundation of the ecosystem over the past decade.

Some firms have become synonymous with their "key men". Willson Cuaca of East Ventures. Hian Goh of Openspace. Tan Yinglan of Insignia.

But promotions at VC firms over the past 2 years have pushed a new generation of investors into the front seat. These new leaders are operating in a vastly different environment from when their predecessors first started out, with investments moving at a breakneck pace and competition heating up.

They ponder many things - their purpose, the tricky VC-startup relationship, and how to build their firms into a brand that goes beyond the "key man".

"I've personally experienced a few things as a founder that I feel the investment community could do better to support, and a lot of that actually is just in representation," says Susli Lie, who in February was appointed partner at early-stage VC firm Monk's Hill Ventures.

Lie co-founded Indonesia-based ErudiFi, a tech startup focused on education financing. In the 3.5 years of building her company, she's gone through the rigour of fundraising, the anxiety of steering the business through crises, and and the loneliness of being a female founder juggling parenthood.

Part of the reason she crossed to the other side of the negotiating table was to give voice to a different group of founders, she explains over a call, moments after apologising in advance - with a laugh - for any screams from her toddler.

"Being able to relate and being able to empathise, while still delivering the value as an investor, is something that's still quite lacking in the industry," she says.

The VC allure

Not all roads lead to venture capital, but those who have found their way there believe they've chanced upon something special.

For one, it opens up a world of access to the most interesting people.

"These are founders who may already have years of industry experience, or have done a PhD, and they're coming to you to share their insights. That's a very invaluable position to be in," says Joel Ang, vice-president of investments at deep tech VC Wavemaker Partners.

Ang's affair with VC began like a summer romance. By the end of that 3-month internship, he was so enamoured with the role that he took the next chance he got to ask for part-time work while finishing his undergraduate degree.

"I found it so interesting that I just did the bare minimum for my last year of uni," he admits with a sheepish smile.

There is a lot to be demanded of a good VC. They are expected to become subject matter experts in a flash. They often need to roll up their sleeves and work closely with startups to solve issues.

But this also means the opportunity to have a direct impact is high, which could be valuable for young people building out their careers. In contrast, the impact a young person can make in a large organisation could be limited.

Most VC firms in South-east Asia have fairly small teams too, which means easier access to senior leadership. For Jennifer Ho, a recent partner at Integra Partners, getting to absorb how her seniors Chris Kaptein and Jinesh Patel thought about startups proved invaluable.

The team used to work together out of a tiny room. "When I first joined, Josh (Integra principal) said to me that the best way to learn is to just eavesdrop on all their conversations. Which is what I did for a good 6 months!" says Ho.

Today, Ho and her peers are operating in a much more mature startup ecosystem starkly different from the early days when the existence of every new startup was already a win.

"Everyone has to step up their game. It's challenging, but also very rewarding. Because when I look across the landscape, I know that I'm going to be sitting on a board with other people who are incredibly talented and who bring their own experiences to the table," says Ho.

In the early days, the VCs were more in power because they had the money. "But now, it's completely flipped, right? Especially if you're a hot startup, it's the VCs that are knocking on your doors all the time," says Golden Gate's Toy. "So being true to who you are and connecting on a very genuine level - that goes a very long way."

Diversity and community

Here's a quick challenge: name three VCs that aren't male, were not bankers, and do not have a prestigious MBA.

If the answers don't come easily, that might be because South-east Asia VC has a diversity problem.

It's not just a matter of female representation or minority representation, says Qualgro's newest partner Neo Weisheng.

One reigning perception is that many VCs come from the finance or consulting world, when the investment scene can benefit from people with different backgrounds, domain expertise and life experiences spanning the globe.

"Like in the Valley, you have Mike Moritz, right?" says Neo, referring to the billionaire Sequoia partner who had a long career in journalism before making the switch in the mid-1980s.

Back then, 5 VCs told Moritz they were unsure what to do with a history major and journalist who, by Moritz's own account, "had never worked in a technology company, was poor at math and couldn't tell a voltage regulator from an amplifier". But his investigative training and sharp mind helped Sequoia bag deals in Google, Yahoo! and PayPal.

It could just be a matter of time before the venture world opens its doors more widely to those built outside the mould. Longtime South-east Asia tech journalist Jon Russell, for instance, in January joined Crypto.com's fund as partner.

"Being a board member and an investor is to be able to provide alternative views so that the company or the founder can have the widest choice of optionality," says Neo.

"Otherwise, it's just a very siloed track if everybody thinks the same way and doesn't open themselves up to either possibilities or threats that are coming."

Cutting through the noise

South-east Asia's tech growth story has attracted a gold rush. The region's startups raised a record US$25.7 billion last year, according to DealStreetAsia, more than double the previous year as investors soaked up the promise of rapid digitalisation accelerated by the pandemic.

Global investors from Chinese tech majors to sovereign wealth funds are finding themselves drawn to the region. New York-based hedge fund Tiger Global, known for cutting large cheques at a moment's notice, have been making big moves as well.

"And so there's always going to be a question of why a founder would take investment from one capital provider versus the other," says Lie of Monk's Hill. "That actually forces all of the industry players to stay relevant."

With deal flows becoming massive, VCs are finding the need to sharpen their lens to spot opportunities amid the noise. For those transitioning from manager to partner, the Covid-19 crisis has been an unprecedented training ground.

"They have seen many more companies in the past 3 to 4 years that have not succeeded... They have seen entrepreneurs behaving in the right or in the wrong way," says Heang Chhor, founder and managing partner of Qualgro.

Chhor, a Cambodia-born VC with a Yoda-like presence, spent most of his life as a McKinsey partner and serial entrepreneur, and has seen the best and worst of times - and people. He believes the younger generation will gain early lessons from the crisis that will be critical for them to succeed as partners.

"But only if they take the time to understand how some of the best entrepreneurs have been able to face the challenges of competition and of Covid-19," he says.

READ MORE:

• A new monthly series from Garage: 5 Questions with Jenny Lee, investor with the 'Midas touch'
• Who wants to be a venture capitalist?
• Grab, Sea and more: How Singapore forged a startup ecosystem