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Hi readers,
There was a venture building boom in the last five years, as it was seen as a way for venture capitalists to gain better returns in a bear market. It was also a time when we saw several startup unicorns like FTX and Zilingo crash and fall due to founder related issues.
I recall many VCs at that time defending themselves by saying that except for a few board meetings during the year, they don’t look into the nitty gritty of the functioning of a startup and hence can’t be blamed for the failures of founders.
So the idea of giving VCs the control of the startup was tantalizing. The argument was that they knew the gaps in the market for tech products, plus if they had full control and transparency of the running of the startup, that would obviously equal to building a successful startup. Wrong!
If you look at Temasek’s venture building journey, you can see that it’s not that simple. In the last 10 months, we have seen the fourth startup in its network face layoffs and exits. Some of them are experiencing technical troubles too.
Take blockchain startup Partior. In July, it reduced its headcount and saw several staff, including members of the leadership team, resign. This came just days after the company raised US$60 million in a series B round led by Peak XV Partners.
The company had mentioned greater challenges of onboarding banks and “unforeseen technical hurdles.” In addition, Partior’s losses have been mounting with very little to zero revenue in the last three years. This is due to the huge staff costs as they hire some of the topmost talent.
Most corporate-led startups have big money backing them from the start, unlike founder-led startups that begin small and face severe cash crunches from the very beginning. Founders may not even take a paycheck in the initial few years and solely run on their vision, beliefs, and motivation to reach their goal. This, to me, is where the key difference lies.
But that doesn’t mean every startup from a venture builder will fail. We have seen several successful startups emerge from Rocket Internet. There are effective ways to venture building, provided you keep a few rules in mind.
— Collin Furtado, journalist at Tech in Asia
Top stories this week
Image credit: Timmy Loen
1️. Temasek blockchain startup trims team amid technical troubles
Partior faced onboarding hurdles and performance issues with its cross-border payment product, sources told Tech in Asia.
2. Investors dragged as Beam hit with fraud allegations
The company allegedly deployed “phantom” e-scooters for rent in Australia and New Zealand, which some say was a way to boost revenue.
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