It’s almost unsurprising to see successful entrepreneurs investing in up and coming startups. But what makes them tick? Three successful entrepreneurs who invest in their peers and young upstarts share their thoughts and experiences with us.
Lim Der Shing
Lim Der Shing is best known as the founder and CEO of the JobsCentral Group, that-all-too-familiar career media platform that reaches 10 million people in South East Asia – many of us probably would have spent some time using its services at one point or another. Acquired in 2011 by CareerBuilder, Lim then became a Venture Partner with Jungle Ventures. He also manages his own family portfolio of investments.
Lim’s roles as a Venture Partner at Jungle Ventures and as an independent Angel Investor are perfectly complementary to each other, and offer many windows of opportunity. “When I see a company I like, I’ll refer it to Jungle Ventures. Sometimes, I’ll co-invest – that is what I did with iMoney. And in some cases, Jungle Ventures will pass on them, and I invest directly,” he said.
For Lim, it was a natural progression, as he felt that entrepreneurs are by nature, curious about all types of businesses. “It is quite common for those with spare cash to branch out into other businesses or to invest in other companies. We started investing in tech companies even during JobsCentral days back in 2010 or so,” he said.
The motivation has not changed since then. Lim hopes to use his experience in building JobsCentral to help his portfolio companies to succeed. Of course, there is also the incentive to make good money when these companies come good. He feels that his experience helps him relate to startup founders, identify talent types in the industry, evaluate the time needed to grow the market, as well as spot scale-up issues.
Having been an entrepreneur himself, Lim learnt a valuable lesson in understanding that growing a business usually takes more time than we think, and learnt to plan the fund raises, manpower, and projections accordingly. And of course, you must be willing to get your hands dirty and have that ‘pushy’ edge.
There is a downside however.
“Where it does not help is that entrepreneurs tend to be optimists,” he mused. “That is not always good when evaluating startups. You need some skepticism to choose properly.”
But it’s not just optimism that drives him. Lim believes in ‘giving back’ to help nature the startup scene here: “Once you have made enough money, it is good to give back by sharing and by investing some money. I advocate between 10-20% of your net worth – enough to pay attention, but not so much as to take an undue risk.”
Lim does not see himself as a mentor figure. Rather, he sees it as sharing his experience and leaving it up to the founder to make his or her own decisions. But he acknowledges that it is important, and that most startups have him on board for his views, speaking as a fellow entrepreneur, rather than just an investor. And having someone who is able to see both sides of the coin and identify each other’s needs is invaluable.
“Communicate expectations both ways before getting in bed together; things like operation involvement, regularity and format of management reports etc. And (you must) communicate regularly post-investment.”
Leslie Loh is no stranger to the startup scene here. A General & Limited Partner at Red Dot Ventures and at Extream Ventures, he’s also the man behind Lithanhall Academy, an education provider that caters to working professionals. Loh made his name with System Access, which he turned from a one-man outfit to a publicly listed global banking software organization with 10 offices and 500 staff, before it was acquired by SunGard Data Systems, a leading global financial services software provider, for S$120 million.
For the last couple of years, Loh spent most of his time as a ‘coach’, advising promising startups that he as invested in on strategic issues. That will change as he intends to spend a little more time on Lithanhall Academy as it prepares to revamp itself and its services.
However, Loh’s motivations are the same, regardless of whether he is entrepreneur or an investor: a desire to learn and a willingness to turn every circumstance into a positive lesson. Not to mention the thrill, of course.
“As an entrepreneur, the pace is so fast, so exciting, it’s almost like you’re on a roller coaster day in, day out. If they put you somewhere else, you’re not going to get used to it. I said to myself, do I want to do another roller coaster ride? I said, no,” he laughed. “Do I like the excitement of that roller coaster ride? Yes. So I thought that being an investor – angel investing particularly – probably allows you the best of both worlds.”
Loh isn’t quite as keen on venture investing beyond Series A financing, because he feels that at that point, the company is already ‘on its way’. “Everything is predetermined,” he says. Loh feels that at an early stage, his participation and his contribution can make a difference in the entire development process. Instead, he has an affinity for early stage companies. They offer less risk – a typical seed amount of half a million that he’s prepared to write off – and he enjoys the smorgasbord of ideas, opportunities, and passionate founders that he meets. “I call that entrepreneurship without the anxiety; because you have all the excitement of (being) almost like an entrepreneur, yet you don’t have the stress of losing sleep on the weekend, because you feel that if it doesn’t work out you can afford to lose that money; so be it. But at least you have all the excitement that comes along with it,” he beamed.
He believes that it’s a must that investors at this stage should have entrepreneurial experience to give insight, as opposed to corporate experience, which he feels comes into play in late stage investment when the company is sizeable. And course, it helps to be experienced enough to understand how to work with young entrepreneurs and how they think.
For Loh and many successful entrepreneurs like himself, it is hard to quell their raison d'etre . As such, the decision to enter the field of angel investing or venture capitalism wasn’t a laboured one. Or rather as Loh explained, it was for a lack of choice.
“Actually, we don’t have a lot of places to go, to be honest? We can’t go and work for somebody else, and we can’t sit around not doing anything. For this, we can make a lot of money, so that’s part of the excitement. Even if we lose, we won’t really lose much – it won’t kill us. Either we start another business, or we become ‘coaches’; there are only two things we can do,” he said wryly.
“We always look for an opportunity to be doing something else again, but it takes time. But in the meantime, we’ll just invest. Maybe through investments, sometimes we get into companies that need us to be involved. Then we get to become an ‘entrepreneur’. That’s all it is.”
Ong Peng-Tsin has a long storied history in tech, having founded and served many illustrious companies early in his career, and his CV is impeccably decorated.
Of his many venture and adventures, his most visible work was Match.com, which was created during his at time Electric Classifieds, a company that he co-founded. Ong also founded Encentuate and Interwoven, two highly successful tech startups that were acquired by IBM in 2008 and Autonomy (subsequently by HP) in 2009 respectively.
Entrepreneurial success aside, Ong has also been heavily involved in venture funds since 2006, having worked with Infocomm Investments, GSR Ventures, and Jungle Ventures in various capacities. His latest project, which he founded last year in 2014, is Monk’s Hill Ventures, a S$100 million fund focused in Asia.
For Ong, venturing into this field is a natural progression of what entrepreneurship is about. “If you are looking at building up people, building up teams, as an entrepreneur and a VC you’re still doing the same thing… As a VC you broaden your number of companies and teams you affect and you work with,” he said. As far as he’s concerned, there is no clear line, as essentially the elements of both fields are the same – grooming and investing in people. And as these are essentially tech businesses, at the end of the day, it is a very similar forum.
Ong adds that despite the similarities, being a venture capitalist is fundamentally different from being an entrepreneur, and many entrepreneurs go through a phase in making the transition, usually as venture partners. “If you see the title venture partner, it’s typically they’re trying to figure out if they want to be a VC,” said Ong. The biggest distinction is in skillset: “You’ve got to learn portfolio management, game theory, portfolio reporting; all kinds of things that you didn’t expect to be important as an entrepreneur, but these become important as a venture capitalist.”
On the question of whether prior entrepreneurial experience is mandatory for VCs to be productive and successful, Ong was slightly amused. “This is simple right? If you build companies, it’s a lot easier to look at other people who build companies and figure out if you know what they are doing.” But he also expresses later that Singapore does need more in terms of experience. “How many people can you think of that can build a tech company in Singapore or in the region, and either sold it or took it public? It’s only a handful. That’s the expertise gap we have between ASEAN and the US,” he pointed out.
There’s also the issue of scale. Amongst the things that most significant tech ecosystems in the world share, one of it is having a large hinterland. “Silicon Valley has the US, Beijing has China, Mumbai and Bangalore have India, so what is our hinterland? But the problem is in Singapore, entrepreneurs and tech folk are not very familiar with the region. That needs to change,” he said.
Interestingly, while Ong has over the years, actively helped to shape our startup landscape, he doesn’t expect entrepreneurs ‘give back’ by helping to grow the ecosystem; although that speaks volumes about his pragmatic nature: “If you have the expertise it would be good to share the expertise, but if you keep the expertise to yourself, that’s also fine. That’s your choice.”
It’s not hard to see why seasoned entrepreneurs invest in others – the combination of opportunity, married with the thrill of the chase that they have experienced throughout their career, makes it second nature to them. Lim, Loh, and Ong don’t consciously make a marked distinction between being an entrepreneur and an investor. It’s effectively an extension of what they do; which can only be good news for the local startup community. Their vast experience is an invaluable resource that we as a nation cannot do without.
By Justin Choo / July 30, 2015 11:30AM GMT+8
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