How these 2 VCs decide where to invest

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This is a Discuss post, where we feature short but insightful opinions from the Asian tech community on startup, entrepreneurship, and tech topics.

How do investors go about deciding where to invest? Is it even possible to predict where the next big thing will emerge?

We asked Nikhil Kapur from Gree Ventures and Adrian Li from Convergence Ventures to give a few of their pointers.

Editor’s note: Answers have been edited for clarity.

Nikhil Kapur, principal at Gree Ventures

As pan-Asian investors, we have the luxury to see various themes play out in different markets and then apply some common patterns in Southeast Asia. If you look at Indonesia, for example, the startup ecosystem there follows the sectors and businesses that do well in India and China.

Regardless of whether a sector has done well in another market or not, we try to focus on big macro markets in the country. We then dig in deeper to understand the sector, find problems existing in the market, and then find solutions targeting these markets. Again, taking Indonesia as an example, it’s a big aquaculture hub with a lot of exports. We already mapped out all the large-scale problems in that sector and are now trying to find companies that will solve these problems.

When picking a sector to tackle, we look for those that are large and highly inefficient, contributes significantly to the development of the country, and hasn’t seen much technology adoption yet. For each geographical market, these sectors differ and, as a result, our sector focus varies for different markets.

Our fundamental belief is that every sector will eventually adopt tech; the only difference is in the business models and the right team to tackle each sector.

Using this methodology in India and Indonesia, we are currently focusing on agritech, healthtech, and logistics. In Singapore, we are focusing on global-scale companies with significant tech advantage that leverages existing corporate networks in the market.

Let’s discuss