Welcome to Tech in Asia’s Sunday newsletter, your weekend brief on the biggest moves in Asia’s tech and startup world. Not on the mailing list? Register here. Got a story tip? Send it to editors@techinasia.com.
In focus
- Collin Furtado on the gray areas in the VC and startup ecosystem
- How VCs are forced to make changes in the AI world
- OpenAI’s insatiable appetite for funding grows ever larger
Hello reader,
My travels in Singapore and Indonesia over the last two weeks made me realize that things aren’t so black and white. Many investments are based on relationships between investors and founders – they might be university buddies, or a common friend that convinced an investor that a founder needs support.
These investments might be more prevalent with angel rounds, but there have been instances where it has taken place in large fundraises. This taught me that human networks matter more than pitch decks.
Image credit: Arsal Ysfin
Another gray area is who calls the shots of when to shutter a startup. While you would think it should be the founders, I learned that isn’t always the case. There may be more startups on life support that I could have imagined, just because VCs may not want to pull the plug to keep their fund alive.
While I feel this amounts to VCs defrauding their limited partners, it is more nuanced than that. One investor explained to me that if they aren’t able to raise their next fund, that would lead to less money in the ecosystem.
Speaking of VCs, Insights writers Pang Lee and Joyce Wang recently discussed how AI has changed the way VCs operate, which includes their funds’ timelines.
Gone are the days of 10-year term funds, as AI has shrunk that to a few years. With valuations soaring to such high levels, waiting for an exit through an IPO would be met with disappointment. Now, VCs look at exits in AI companies through M&As and secondary share sales.
In exits, what matters isn’t how large the deal is, it’s getting returns from the exit. In a market like Southeast Asia where exits are scarce, every exit – no matter how small the value – should be celebrated, a VC told me on the sidelines of the Tech in Asia Conference in Jakarta.
And rightly so, as Hepmil Media Group’s recent acquisition by Publicis Groupe shows. The deal came at a time when advertising giants such as Dentsu Group are looking at selling their international business. Some of the angel investors who backed Hepmil in 2017 are now getting over 20x their returns, my colleague Melissa uncovered in her story.
And finally, I am making an exit of sorts too. I have to bid farewell to all you readers, since this is likely my last time writing this newsletter. I kept this for last, as I admit I am bad at goodbyes.
But I would like to say my returns on working at Tech in Asia and writing for you has been multifold times in value, and I will always cherish it forever.
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