Why I think founders in Southeast Asia are ready for prime time

Founders Supporting Founders: Iterative is accepting applications for its next batch.

In March, I wrote a post about how Southeast Asia is the next big opportunity. The gist of the message was that a lot of the “raw materials” – founders, large markets, increase in capital, budding startup communities, among others – are already in place.

I also wrote about how my partners and I are getting into the action by starting Iterative, an operator-led accelerator modeled after Y Combinator. We invest US$150,000 into promising early-stage startups.

Since launching the program, I’ve had the privilege of talking to approximately 200 founders in the region. This is a post about what I’ve learned.

By far, the biggest takeaway for me is that founders are ready for prime time.

A “prime-time founder” is someone who’s ready to take venture capital, grow at ungodly speeds, and has the knowledge and capacity to control the organized chaos of a startup. They’re also ambitious and think big. To be frank, I was worried about the quality of founders when I first approached this market. Thank you for proving me wrong, founders.

To make it more concrete, here are a couple of observations from Iterative’s batch selection process:

• A total of 48 companies made us really think. To keep the quality of our batches high, we wanted to be rigorous with our selection process. Companies have to fill out a detailed application form then get screened separately by two partners (who would fill out a structured rubric) before they’re invited to the finals. A lot of companies passed what we initially thought was a rigorous screening test, so we had to add a final 1.5 hour interview round with all three of our partners to make our final picks.
• Half made it to final interviews, half were a difficult “no.” Partners had to fight to get a company into the finals. When the eventual outcome was a no, we kept a “good founders” label on startups that were led by high-quality founders but hampered by something that was off – either the idea for the business was too early or not well-thought through.
• We really struggled to pick the final nine startups. It took us three days of debates to make the final picks – I initially thought it would only take a day, as we’re usually a fairly aligned bunch. We decided to write investment memos for all final companies, and the partners would pitch the startups to each other. On several occasions, we had to flesh out these memos more to really articulate why we’d fight for a company to be in the top nine.

Attributes of great founders

Defining founder quality was an iterative (pun intended) process, but to help those working through their own entrepreneurial journeys, here’s what stood out to us as defining traits of great founders in Southeast Asia:

1. They knew their numbers like the back of their hands

Growth rates, conversions rates, 30-day, 60-day, and 90-day retentions, default or origination rates (for fintech firms), average loan size, revenue growth, cogs, etc. – you get the point. The best founders were able to articulate which numbers mattered the most, their strategy to rapidly improve them, and levers they could move to do so.

For pre-launch companies, these founders knew their competitor’s numbers and got this information through a combination of amazing networking skills and ninja-like resourcefulness.

2. They are realistically ambitious

Why we sometimes still said no