One might be a sore point with the Asian mentality: the willingness to embrace failure
Silicon Valley’s enormous impact on global tech trends has long served as a model of aspiring startups worldwide. Many eager to replicate such success stories back at home.
In a panel discussion at the Kauffman Fellows’s Southeast Asia Venture Capital Summit in Singapore on Monday, five venture capitalists — drawing from their own experiences — candidly talked about how startup founders and investors in Asia can contribute to the growth of the tech ecosystem.
The panel, moderated by IDA Executive Deputy Chairman Steve Leonard, consisted of five VCs:
1. Jason Green, Founding Partner, Emergence Capital
2. Justin Kan, Partner, Y Combinator
3. Jeff Clavier, Founding Partner, SoftTech VC
4. Rob Coneybeer, Founding Partner, Shasta Ventures
5. Alexander Lloyd, Managing Director, Accelerator Ventures
Here are seven bite-sized takeaways from the discussion:
1. Passion and experience matter more than qualifications
Attaining degrees and PhDs are important and useful, but paper qualifications do not produce tangible results, experience does.
Clavier said that expertise is gained through the result of experiencing both successes and failures. For him, when determining whether a founder is a good founder/market fit, he sees whether the Founder is passionate and understands the workflow of the startup culture.
2. Don’t be afraid to pivot
Your original idea may not be the best idea; iteration may be necessary.
Kan said that all founders must work on the product themselves first. Many big companies started off with crazy ideas, but succeeded because they eventually narrowed their ideas and pivoted, he said. He cited Airbnb, which started out as a service renting out air mattresses in houses, before pivoting to listing whole homes for rent.
3. Creativity accelerates growth
To truly stand out, you need to be creative about the conceptualisation of your solutions.
Lloyd has a rather abstract answer to how creativity should work in tech. He begins by saying that there is a connection between art and fear. Society needs to lower the ‘fear’ bar so that people will feel more free to be creative.
In the art world, he explained, the bar of what can be considered art is constantly changing. This dynamism approach should applicable to the tech world because it is always evolving.
“Take a risk and build things for the future, people will be better off,” said Lloyd.
“Celebrate entrepreneurship. Create a hero culture of entrepreneurship. Failure is a badge of honour,” said Green.
Because when failure is acceptable, more people will take greater risks, and they may pay dividends in the end.
4. Investors need to coach founders and build trust
More than just being a source of funding, investors need to actively coach startup founders to build the best product.
Clavier said that back in 2004, SoftTech VC was founded with the goal of helping founders strategise, fine-tune their product, and help with the marketing and hiring process.
“Money is just part of the equation. Super angels need to deliver value-add to the founders and share their expertise,” he said.
This means that VCs need to aid emerging entrepreneurs in bolstering the ecosystem.
Entrepreneurs of today will become models for the next generation of entrepreneurs, said Green. VCs also need to focus on the few exceptional entrepreneurs and make sure that they feel that they have been helped.
“The glue that holds the entire ecosystem is trust, and the willing suspension that this person could build the next important company,” added Green.
Clavier also said that entrepreneurs need to be willing to pay it forward if they want to see the ecosystem grow.
5. Building networks is critical
Sometimes who you know can determine whether your startup succeeds.
Kan said that at Y Combinator, it felt like a mini-Silicon Valley network. A lot of people moved in the same house, collaborated together, introduced each other to angel investors.
In fact, when Airbnb was in debt, Kan recommended it to US-based seed accelerator Y Combinator and its Co-founder Paul Graham. In turn, Airbnb brought in fledgling bitcoin startup Coinbase into the fold later.
6. Leverage on emerging trends
To build the right product for the right market, you need to keep abreast of emerging trends.
Green said that right now, horizontal Software-as-a-Service (SaaS) startups are in vogue because they require little capital to launch, and are not location-restricted. Combined with Asia’s high smartphone penetration rates, startups should leverage this and SaaS to disrupt enterprise (or legacy) solutions.
Coneybeer said that the biggest adoption wave now is the Internet of Things (IoT). He touched on the emergence of new technology such as virtual reality (VR) and augmented reality (AR). He said that VR headsets are getting better and that entertainment, healthcare and education are helping to drive innovation in this area. This, in turn, will lead to more commercial applications.
“Figure out which areas you have competitive advantage [in]…think about the areas other countries are not comfortable exploring…and build on the strengths,” he said.
7. Normalise the building of startups
Building startups take a lot of risk and aspiring founders need more support from corporations and governments.
Kan said that in the US, starting tech companies is becoming more normal. Growing talent in relevant fields such as engineering also needs to be a priority.
The moderator Leonard chipped in and said that universities, corporations and governments need to unite to grow the tech ecosystem, because it is not about chasing returns, but rather tackling real world problems such as an ageing population and transportation.
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