Steering clear of tech startups is this Vietnam-based PE firm’s strategy

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Hi readers,

I like this quote from The Princess Diaries: “Because you saw me when I was invisible.”

Now, venture capital investors are not secret royalty like Mia Thermopolis, but one of their jobs is to identify potential startups before these companies become real stars.

In 1999, SoftBank founder Masayoshi Son bet US$20 million on Jack Ma even though the former English teacher had no business plan at the time. The Financial Times recently estimated that SoftBank’s stake in Alibaba was worth US$100 billion at one point.

But since 90% of startups fail, Alibaba is a rare case of a startup becoming a successful company. Mekong Capital, a well-known private equity (PE) investment firm based in Vietnam, doesn’t want to take such risks.

The PE firm says it only invests in consumer-driven businesses that have proven unit economics. At the time when everyone is talking about and pursuing profitability, this approach seems to be even more relevant.

However, without investors willing to bet on tech startups when their ideas are just on paper, what would we miss out on in terms of innovation?

— Thu Huong Le, journalist at Tech in Asia

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Image credit: Timmy Loen

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