What Do Venture Capitalists Want?
As a seasoned venture capitalist, Jeffrey Paine has seen a variety of founders. His calm and self-deprecating style must certainly help ease the nervousness of entrepreneurs pitching their ideas to him. But when it comes to business, the founding partner of Golden Gate Ventures, an early stage technology incubator based in Singapore, doesn’t like to sugar-coat his words or beat around the bush.
Paine co-founded Golden Gate Ventures, or GGV, in 2011 with Silicon Valley entrepreneurs Vinnie Lauria and Paul Bragiel, as a $10 million seed venture fund to invest in Southeast Asia (SEA). By 2015, it raised a $60 million fund. Last month, it closed its third fund at $100 million to accelerate investment into consumer Internet startups in Singapore, Indonesia, Malaysia, Thailand, Vietnam, South Korea, the Philippines, Bangladesh, and Myanmar. Since inception, GGV has made over 40 investments, with the portfolio including Carousell, the e-commerce marketplace, real estate site 99.co, and dating app Noonswoon.
We spoke to Paine, who also leads the Singapore chapter of the Founder Institute, a global network of startups and mentors that helps entrepreneurs launch technology companies around the globe, to learn about the journey of GGV, what makes a successful startup, and future plans. Edited excerpts:
How did GGV happen?
I met Vinnie Lauria in 2011, while Vinnie was backpacking with his wife Kristine from San Francisco to SEA. Singapore was the last leg of his tour, and Vinnie reached out to me through a co-founder newsletter that I help run. We met up, chatted about the startup ecosystem in Singapore and Silicon Valley and invited him to help mentor at Singapore’s Founder Institute. It was then that we both lamented that founders in SEA face trouble finding smart money, and decided with Paul Bragiel to start a VC fund together with our combined experience of being entrepreneurs and investors focused on the SEA market. It was timely as NRF (the National Research Foundation of Singapore) came knocking to match our seed fund to boost the Singapore startup ecosystem.
GGV has been focusing a lot on SEA’s steadily growing e-commerce, digital payments, and mobile apps markets. Any reason?
B2C, fintech and B2B, probably in that order. Consumer adoption and growth will typically come first in emerging markets, followed by small and medium businesses.
GGV recently launched a $10 million fund to invest in startups that deal with cryptocurrency and blockchain technologies, which have been in the news over security issues.
The underlying technologies are extremely secure at the protocol level. Bitcoin itself, for example, has never been hacked in its 10 years existence. The hacks reported in the media stem from applications on top or human error, much like how websites get hacked. It provides great opportunities for companies addressing these issues and bring the industry to the next level.
What is the biggest appeal of GGV?
We empower the audacious (through human and financial capital). Our team and our pursuit to help founders clear their path so they can get to where they want to go, and the constant work-in-progress mentality that we embrace as a team and as individuals, to learn, fix, and upgrade. We want to be always on our toes and never complacent.
Why do venture-backed companies fail?
Lack of focus, wrong team assembled, wrong timing and small market size.
What are the traits of a successful entrepreneur?
Talent, integrity, and hardwork.
What mistakes should founders avoid when looking for funding?
Be unprepared. They should live and breathe the life of their user or customer and explain their pain points clearly.
Is Singapore a startup’s best first market, after China and India? How should founders choose their first market?
No. It needs to be a market they can comfortably set up a base in, and be No.1. Many times it is not Singapore. Founders should choose their first market on the basis of: market size and readiness/ timing, competitive landscape, and ability to hire.
How has the Singaporean startup ecosystem evolved over the years?
All facets of an ecosystem have grown: legal/ regulatory, financing landscape, talent, media celebrating heroes of entrepreneurship (lessen the stigma of being a founder), Indonesia’s proximity. More use of English language and budget airlines.
What are some of the challenges of starting up in Singapore?
Higher cost and small market.
What criteria do you follow when you choose companies?
Founding team — stubborn but listen (coachable); big market; defensibility; and right timing.
How many pitches do you receive in a year?
We see more than a 1,200 deals year, and looking at the past years’ activities, we fund between 10- 15 companies a year.
Future plans for GGV?
Tell you, must kill you. Joking!