It’s never too early to explore monetization: GGV Capital’s Jenny Lee

Investors are changing the way they value companies, preferring profitable ones over those seeing blazing growth, GGV Capital managing partner Jenny Lee said onstage at this year’s Tech in Asia Conference.

Jenny Lee, GGV Capital’s managing partner / Photo credit: Tech in Asia

During her session, Lee shared that it is never too early for startups to explore monetizing a product and finding product-monetization fit is a good goal.

This ties into how investors are evaluating which startups to back. They’re leaning towards companies that can break even or are profitable even if they have a slower growth rate instead of startups with a high growth rate but are burning cash to maintain it.

Lee also warned against going global immediately, unless a startup’s business model is “extremely light.” Instead, she advocates taking it a step at a time, like first winning in the home market.

“Huge addressable markets have multiple winners, though you should still find an angle where you are in first place. In smaller addressable markets, you need to be in first place,” she advised.

She thinks that the most important criterion in a tough environment is the ability of startups to have between 24 to 36 months of cash runway. “When opportunity costs are high for cash and you are the one with cash in your pocket, you can go from defensive mode to aggressive mode,” she said.

Right ones for the job

Lee also alluded to the importance for startups and entrepreneurs to retaining key talent, saying that it comes down to “hiring the right people with the right mentality who can work with you for the next two to three years.”

She noted that investors from the private market follow the talent flow as well. But that while employees who quit China for other countries will bring funding along with them, they also bring a lot of competition.

“It is not as simple as funding leaving China and coming to Southeast Asia. The US has been coming up with acts and measures to drive capital flow back, such as the CHIPS Act,” she said.

See also: These are the most active investors in Southeast Asia’s startups