How to survive the Series A crunch in Singapore


By Jeffrey Paine

This post was inspired after an internal work chat around the Series A crunch and what else is holding startups back in Singapore.

It suddenly became clearer to me what is against Singapore startups operating in Southeast Asia as a market versus startups operating in a large homogenous market (factoring in lower operating costs as a positive):

1. Getting to user/revenue scale takes longer because markets are fragmented (language, business culture differences, unit economics/ARPU are lower, distribution is not as easy nor uniform).

2. Lack of risk-taking depth of Series A investors in the region. The expectations from Series A investors are not communicated enough to seed stage startups plus risk-taking capital is not so forthcoming. Hence startups do not have the 2-3 year runway luxury to “get there” over multiple financing rounds.

3. Consumers and businesses in the region takes time to trust (non-US) products and services especially when they are new and disruptive. Hence, distribution deals and revenue opportunities take a while to realize.

All this means that getting to Series A will be longer than you planned.

Tips to optimize your time to Series A:

1. Spend time on your capitalization strategy. Raise more money than you need (>18 months run way). Chances are it maybe your last round of financing with founder-friendly terms. It would be a plus if your current investors/shareholders have funds reserved for your next round of financing or are structured to offer bridge loans. Make sure you know this early.

2. Study and research the Series A investors in the region well (especially Japan — they are hungry) and shortlist those who fits your business (get to know those who takes risk early). Plan early to get to know investors in the US and Europe through or You have to start sooner than you think.

3. *Spend wisely (in a bootstrapped mode at all times) with unit economics as your foundation for decision making AND YET focus on failing and pivoting fast and getting as much distribution as possible in order to get the traction you need to position yourself for Series A or at least bridge finance. How to execute? With what resources? Which market first? How do I know if I hot product-market fit and when shoud I juice it (throw money and your kitchenn sink to scale)?

*This is the hardest part of your business, fundraising is a walk in the park compared to this. Good luck.

This article was first published on Jeff’s blog. Also check out other perspectives on Asia’s funding gap by Bernard Leong of SGE, Jon Russell of TNW, and Michael Smith Jr of Spuul.

About the author

Jeffrey Paine is the founding partner of Golden Gate Ventures, an early stage technology incubator based in Singapore. Jeff started and manages the Founder Institute in Asia where he is currently overseeing its expansion in the Southeast Asian region. Since 2010 the Founder Institute in Singapore has graduated over 60 companies.

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