The rapid rise of SEA’s founder-VC mafia

Experience, so goes the mantra, is the best teacher. Some of the world’s best VCs, like Andreessen Horowitz’s Marc Andreessen and Lowercase Capital’s Chris Sacca, exemplify this slogan.

So do a growing number of startup investors based in Southeast Asia. Plying through publicly available databases, Tech in Asia counts at least 111 startup founders-turned-VCs (founder VCs) across the region. This figure is a conservative estimate, as it only includes individuals who currently hold or have held investment roles in VC firms based in Southeast Asia.

Why do founders choose to become VCs? For Monk’s Hill Ventures managing partner Lim Kuo-Yi, the opportunity for him to do so presented itself when Singapore’s former Media Development Authority (now the Infocomm and Media Development Authority) invited him to run a VC fund. Lim previously founded SportsHook, a social networking and event management SaaS startup for the sports community.

He also attributes his career switch to a mindset change. “The key inflection point for me came when I felt satisfied enabling somebody else to be successful, as opposed to me being in the driver’s seat,” he explains.

Others, like Vinnie Lauria, transitioned into a VC career to simply tackle what they felt was another problem in need of a solution. The lack of venture funding in Southeast Asia, coupled with the region’s digitally savvy population and high mobile penetration, convinced the co-founder and former chief product officer of community platform Lefora to launch Golden Gate Ventures in 2011, where he serves as managing partner.

This pattern of founders becoming investors isn’t new. But in Southeast Asia, slightly over 75% of the founders listed above transitioned to a VC career in just the last half-decade. That closely aligns with regional funding trends – more than 90% of total VC funding occurred between 2016 and 2021.

See also: Revisiting a decade of VC funding in SEA

Interestingly, the number of native founders becoming VCs steadily rose to a record high in 2021, while non-native founders crossed over to the other side of the deal table in less consistent numbers.

That said, significantly fewer founders have made the switch this year. As economic headwinds intensify, the barrier to entry for aspiring investors has also risen. “Generally, fundraising as a new VC is significantly more difficult today,” observes Lauria. He adds that founders who have raised funds before are likely to understand these difficulties “more clearly.”

But alternative pathways for founders looking to break into a VC role are still open, notes Lim. “There’s significant early-stage capital still waiting to be deployed in Southeast Asia,” he says.

Might the current macroeconomic environment shake up Southeast Asia’s founder VC scene? According to Tech in Asia’s analysis, 40% of founder VCs established their own firms. A minority, like Golden Gate Ventures portfolio growth partner Angela Toy, worked their way up to become partners from analyst or associate positions.

The rest became part of existing VC firms, though it’s unclear if the companies they joined had previously invested in their respective startups.

Credits