Over the last four years, with the rise and fall of Chalkboard and building up the startup of my family for my wife and daughter, I have taken a break from investing and am in a portfolio management mode. After a year of corporate career and setting things up proper for my family, I have decided to get back into angel investing but building on a different model that provides me with the least hassle of dealing with paperwork but at the same time, the most enjoyment of angel investing: working with founders of a startup and helping them to succeed. One major philosophy change I am going to have is to write about the why, what and how I will invest here. Like my recent articles, I will make modifications to this document.
Why do I want to do angel investing?
Essentially, I look at the big picture of the entrepreneurial ecosystem as a whole. I like to see startups grow and succeed, though most of them will fail. I only like to do three things: make a small investment, help the founders out in their product development and initial growth hacking, and helping them to make it to the next round. Obviously, I have to start as small as $5K and gradually increase that stake as if I get better.
I do not believe in big fat changes but live with a philosophy of pragmatic idealism that growth can be achieved in a series of small steps till a tipping point come and change the game. Besides, I am an early adopter (or sucker) to new technologies, and always getting my hands on them as early as possible. Last but not least, I want to make some money but I don’t expect truck loads like the venture capital firms or founders of a company do. So, I am realistic about what I am doing.
Why don’t I start a venture capital firm?
I will only do that when I have succeeded as an entrepreneur with a company growing > US$30M revenues. My goal is a US$50M fund for Southeast Asia and US$200M for global. The venture capital model I want to see happening is centred on an operator based VC model like Andressen Horowitz. That’s my pipe dream of course. Honestly, we have too many investment bankers who have no clue about investing in startups, and it’s better to go in the direction of operator based models. In Southeast Asia, series A is non-existent and we don’t have a crunch. Eventually, someone will come out and do exactly that, and I will give them my full support. I respect folks who do a proper series A and not the lousy ones I have seen here who are series C/D masquerading as early stage.
What about your day job?
Obviously, I will maintain my day job. Everyone has to do their financial planning properly, but taking care of family and personal needs comes first. For me, angel investing is a luxury.
What is the investment model I am going to use for angel investments?
I am trying a model in angel investment that is currently ongoing in Silicon Valley. It’s based on the party round model but with a lead investor. Basically, I will work with a group of angel investors who can write small cheques (minimum ticket of S$5K) to raise a total of S$50-100K. Among the group, only one investor is represented legally to the startup, and the rest of us will have an internal legal agreement with the lead on decisions pertaining to exits, liquidations and other nuances which I do not foresee.
Obviously, there are people who do not like my model and will criticise such that nothing will work. I want to work with people who can write cheques without being a douche bag and focus on helping the startups succeed, and not being a jerk when they fail. I do also agree with valid criticisms on the party round model.
I have already started talking to various angel investors and looking at a few deals at the moment. So, if you want to know what I am up to, just connect with me via my email.
Are you investing alone or with others and what’s the geography?
To have impact, you have to work with people who agree with your philosophy. So, I want to work with others, but I have worked out a list of people who I do not want to work with. If you fall into one characteristic of that list, I will prefer to walk out rather than having my time wasted in unnecessary hassle. My preference is to work with angel investors who are first founder-friendly and good operators who don’t like hassle as well. I have no time with people who are retail investors, bean counters or misers, and if you are not with me in how I think about investments, don’t waste your time.
For the time being, I am going to limit it to Singapore and if I get something really interesting, I might consider Malaysia, Indonesia, Philippines and Thailand.
What do you bring on the table to the startups you invested?
Mentorship, a little cash and spreading the word. I do speak to the investors in the early stage investing scene a lot. For mentorship, I only focus on three things: product management and development, initial growth hacking and giving you advice (which the entrepreneur may or may not agree) like why you should not do this because it’s the road to failure.
I have helped a couple of companies through my role as an entrepreneur-in-residence in INSEAD Business School. Please check in with people who I have worked with.
How do you evaluate a startup for investments?
Anything that will gives me a reason to excited about in mobile, web and I am not dogmatic about consumer or enterprise. No Rocket Internet clones please. If you don’t hear from me within 3 days, treat it as a no. The best way to get me interested to get an introduction thru my friends in the space. Cold calls don’t work.
Completing your 100 days with JFDI.Asia is a good place to start and you have to be data driven.
I have adopted a philosophy which I like startups to think about this quote from me about survival and success in Southeast Asia:
“If you want to win in Southeast Asia, you have to be revenue-first, period.”
If I do not invest in a startup, does it mean that it will not work?
It just means that I am not excited about the startup or I can be totally wrong about the opportunity. In my own words to entrepreneurs who I told them that the idea do not work out, “Please go ahead and start it to prove me wrong. I can be totally wrong.”
If you follow this startup advice, you are sure to prove me wrong.
What are my criteria in evaluating a startup?
Show me the prototype and early metrics you have developed, and let me know how much you are raising. No NDAs for me.
Since you are in Singapore, why are you not working with government agencies with so much “free” money?
Here’s what people don’t know about the “free” money. It comes with a lot of bureaucratic hassle. Take the angel investment scheme, I will end up wasting a few hours on the paper work and that amount of time I can devote to building a prototype or setup meetings for the entrepreneur with the private companies.
Unless the relevant government agencies reduce the “free money” application down to a A4 page and processing time of 1 month, I am not going to bother about any of them.
While I totally respect that they have best intentions to help, their operating mode and metrics are not aligned with the private sector and can only make my life more difficult.
What’s my experience so far in investing?
For those who have known me, I have done earlier angel investments through a seed stage fund called Thymos Capital years back. As a track record, I have made 10 investments and 7 failed. The 3 who made it were Eteract-Lunch Actually (which raised their next round of funding and still running on their own as a business), iHipo acquired and Padlet (formerly wallwisher) but landed in YCombinator.