A VC’s advice for startups looking to take the next step in their growth journeys

Launching and managing a startup is difficult even in the best of times, let alone during a pandemic. After idea validation and success in their home market, every startup founder eventually has to answer the same few questions: When is the right time to expand beyond their home market? How do they fend off competitors? At which point should a startup look at raising funds?

During a session at the recent Tech in Asia Conference, Willson Cuaca, co-founder and managing partner of early-stage venture capital firm East Ventures, talked to Tribecar co-founder Adrian Lee and Catch Me Up CEO Haifa Inayah to find out about the businesses they’re building and the challenges they’re currently facing. Both companies are bootstrapped, have found their respective niches, and are ready to take the next step in their growth journeys.

Look closer to home for answers

When should a company consider fundraising? That was one of the questions Lee asked regarding his car-sharing firm.

While startups typically look for funding for strategic reasons – they might be aiming to scale up operations, establish an advantage over competitors, or challenge the incumbent market leader – Cuaca suggests taking a step back in the decision-making process.

“Basically, to fundraise or not has nothing to do with the market situation,” he said. “It depends on yourself and your aspirations – is this something you want to do?”

With Tribecar’s operations currently based solely in Singapore, Lee and his fellow co-founders had also begun wondering when they should start making plans to expand into other markets. Cuaca’s advice: make sure to take care of home ground first.

“If you haven’t done that and go overseas, someone will come to your backyard and eat your lunch,” he cautioned.

Leverage on existing tools to create a network effect

As a daily newsletter service targeted at millennials, Catch Me Up’s core strengths are in content creation and strong organic engagement. Cuaca recommended, however, that it should also look into distributing its content across different platforms and channels such as Instagram, YouTube, Twitter, and Facebook.

“[Besides being able to] reach out to a wider audience, the network effect will kick in more effectively,” he advised, referring to the phenomenon in which larger numbers of participants improve the value of a product or service.

With most of these social media platforms being free of charge or relatively inexpensive to use, leveraging them is key to driving growth and engagement for young media startups like Catch Me Up, which is still only a year old. After all, investors are primarily interested in seeing a big return on their investment – and for startups in the media industry, that means finding ways to get a lot of clicks and engagement.

“During this pandemic period, with many people staying at home, media consumption is increasing significantly,” Cuaca said. “What’s important is to focus on how people engage and spend more of their screen time with you. That’s the case for any media business.”

Never forget what you’re good at

In any industry, there are rivals to contend with. For Tribecar, the concern is over larger overseas competitors potentially making a move into Singapore and threatening its position in the market. To this, Cuaca recommended zeroing in on the fundamentals, getting to know the startup’s core capabilities, and making the most of its knowledge of the local landscape.

“You have to understand your capabilities and what you’re good at – what’s your competitive advantage? Try to multiply that and build your capabilities, thinking about how much money you need to do so,” he advised.

More importantly, Cuaca said that a balance needs to be struck between defending market share, growing the business, and being able to produce good return on investment for investors.

While Catch Me Up is in a very different space from Tribecar, a similar fundamental approach can be helpful for the company. It can reveal insights into a startup’s capabilities or even the identity of its not-so-obvious competitors.

The media and content industry, for instance, banks on audience engagement. With people only having 24 hours in a day, Cuaca said, any company that takes away that time or attention can be seen as a competitor – not just other newsletter services. In this regard, Catch Me Up may need to expand its horizons and be more ambitious, thinking beyond the newsletter channel to capitalize on its core capabilities of content creation and engagement.

“When we think about it this way, I would say that [Catch Me Up’s] competitors are companies like Instagram and TikTok because these are the things people spend time on,” Cuaca advised. Fundraising for the media startup, therefore, should take into account how much it will cost to develop its content and channels so it can compete with these players.

Ultimately, self-awareness plays an important role in a founder’s decision-making process. For example, the decision to fundraise or not – and how much to raise – depends on their appetite for expansion and an honest assessment of the startup’s strengths and weaknesses. Truly understanding oneself will help light the way forward for even the biggest decisions, regardless of prevailing market conditions.

Find out how East Ventures helps early-stage ventures in Southeast Asia and Japan grow and find success on the East Ventures website. Disclosure: East Ventures is an investor in Tech in Asia.

This content was produced by Tech in Asia Studios, which connects brands with Asia’s tech community. Learn more about partnering with Tech in Asia Studios.