Time for a new VC model in SEA?

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Hello reader,

Working for Vietnamese companies for most of the last decade has taught me a lot.

Perhaps the biggest lesson was to stop assuming that an approach to a problem that works in the West will work here, too. I’ve seen plenty of friends and colleagues bang their heads against a proverbial (and sometimes literal) wall when a solution they found effective back home produces a different result.

Once I learned to not stress out over the fact that most of my colleagues napped at lunch time and the lack of a clear distinction between working hours and personal time, I became much happier and more productive.

Today’s featured piece looks at how venture capital in Southeast Asia is struggling to provide investors with returns, and part of the problem is adopting the same approaches that have worked in Silicon Valley. Adapting to the realities on the ground here could forge a better way forward.

Today we look at:

• How VC can get off the canvas in SEA
• A US$3 million funding haul for Indian chip startup BigEndian
• Other newsy highlights such as victims of a US$234 million crypto hack in India looking out of luck and JD.com pushing its global expansion.

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Down but not out

Image credit: Timmy Loen

With VC firms in Southeast Asia struggling to provide returns to their investors, could there be a better way to back startups in the region?

Tech in Asia spoke to a venture studio and a traditional VC firm to find out how they think the situation could improve.

• Different strokes: Traditional VCs typically invest in a startup with a founding team and business plan in place, and then largely take a hands-off approach. Venture studios, on the other hand, are more involved in forming the startup: They devise the business model, select the founding team, and usually provide lots of direct support throughout the company’s growth.
• In the studio: Founding partner Ziv Ragowsky and senior venture architect Hansel Tantohari of Wright Partners made the case for venture studios. They argued that the unique challenges of Southeast Asia – market sizes and diversity as well as the relative lack of quality founders – make the region more suited for a studio approach than the VC model that works in Silicon Valley. However, they also pointed out that studios and VCs need to work together for the best outcomes.
• Adjust and diversify: Qin En Looi, partner at Saison Capital, made the case for adapting the traditional model to the realities of the market today. VCs shouldn’t be afraid to raise smaller funds to avoid being pressured to invest quickly. They should also have a good mix of equity and debt investing to hedge their bets.

Read more: VC is on the ropes in SEA. Here’s how it can bounce back

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