The value of an accelerator program like JFDI Accelerate comes from its mentors. Their advice counts because they’ve been on the front line themselves. As an entrepreneur and investor in the Southeast Asia Region, Michael Lints has been actively looking for startups solving real problems in the region, writes David Ongchoco
Golden Gate Ventures Venture Partner Michael Lints gave a mentor talk to the JFDI 2015A Accelerate startup teams. After his mentor office hours, we got to chat with him about trends in Southeast Asia and what he looks for when evaluating startups.
What are trends in Southeast Asia that you are seeing?
I think a few things. The marketplace and fin-tech space have become pretty popular for several obvious reasons. With the bank population in Southeast Asia, it seems like disrupting the banking system is a good business. If you have only 30% people who have an account and a credit card but are engaging online and mobile marketplaces, it seems like it makes sense to have digital payments and encrypted currencies to use and other methods to define.
If you’re a startup company and you want to sell something online, how will you go about it? Cash and delivery isn’t the answer of companies. Gradually, we will shift into a fully digital way of doing payments.
Marketplaces have been obvious because of the big population. We are seeing a lot of people coming online. People have stuff to sell and stuff they want to buy, and creating an online marketplace is a really easy way to match buyers to sellers. Since the biggest C2C marketplace eBay is fully focused on the web and doesn’t have a good mobile play, the market opens up for guys who do mobile and focus on helping people buy and sell stuff online using mobile.
What metrics do you look for in early-stage startups?
When you’re evaluating early stage, you don’t have the luxury of really looking at the revenue. One of the things I like to see is how are these companies building their community and how are they retaining their users.
If they’re doing a C2C marketplace, how are you building your community and how does your community stay engaged in your platform. So I would say it’s more than just putting buyers and sellers together, it’s all about the before and after the sales are done, how do you engage your customer? Do you have regular emailing? Do you have events? Do you have an added service you provide?
I will also look at how do you structure your company, and how do you structure your finances. How are you using the funds you have in place? Are the funds used in making the technology better or is it used for user acquisition? If it’s being used for user acquisition, how smart are you spending that money? Are you spending it on Facebook ads? What are you focusing on in spending your money, are you spending it on your organization or your users?
What would you advice startup founders?
What I’ve learned is put the customer first. Putting the customer first means you’ll spend every single dollar making sure that your customers are happy, and will come back to your platform. It’s all about spending it on your market then spending it on internal issues. Put the customer first. When I go through the financial model, I look at where does every single dollar go in terms of your customer?
What do you see is a common mistake of startup founders?
One of the startups asked me to advise them on how to draw management fee from their seed round. That’s the wrong question you’re asking. As management, you’re last in place. But you can’t really blame people for this mistake because it depends on their background, and where they come from. As an investor, I would get nervous if somebody asks me that question.
Another mistake is over spending on marketing, and believing it would get more users. You have to first know what your users want. For example, if they want a better user interface, it’s wiser to work on making your app run smoother and making it more lean if that’s what your users wants.
In terms of spending, I would say, learn how to spend your dollars and in that case, learn what your customer wants then once you understand it, I will have more trust investing in you guys.
What are some of the advantages you’ve seen being in Southeast Asia right now?
The founders are able to solve some real local genuine problems and I haven’t seen that so much in other markets. So for instance if transportation and logistics are issues, then all these founders have the ability to solve this issue for a lot of people. I like the way in which founders of the region are able to solve a real problem as opposed to building an app for the sake of building an app.
Second, because it is so mobile centric in this region, it gives you a new way of thinking. For me, I grew up with a computer then went towards laptops and feature phones before smart phones. While now, a lot of people have the smartphone as their first computer and that makes the founder think about new ways to acquire their user because a website now has to be responsive in mobile.
Because the market is so big and there are so many different markets, it really helps you rethink how to manage different countries and different languages. Myanmar versus Singapore versus Indonesia, they’re in the same area, but they’re so different. The founders in Southeast Asia have to be more creative and focused on solving the local problem as opposed to doing something that is cool but is not a necessity.
What’s your advice to founders on the best way to expand to other countries?
One thing I’ve learned myself treat is to treat every single country, even cities within a country, as a different and a new market. When you’re trying to expand your company from Singapore to Indonesia, I would definitely take the time to research how does the market look like, how does an Indonesian customer look like. Do I approach this customer with a local partner on the ground or will I move part of my team or will I hire people and start a new team?
One of the things I would definitely advice is to treat each country and city as a new market and define how you will build up your strategy. One of the things I’ve learned is to build local partnerships. It’s all about being able to build partnerships and get connected to the local system because you’re going to need people on the ground.
How can we build a startup ecosystem in underdeveloped countries?
One of the things Singapore has shown and has done really well is government support. While there’s a debate whether it’s too much, at least their support has brought in foreign capital and helped the venture capital market. Because there’s a venture capital market, it helps other startups grow into other markets as well.
What would you need? You would need a strong government. Like it or not, it’s definitely necessary to have strong government because you will need regulations to change, and you will definitely need some funding and grants to help out these entrepreneurs do their first startups.
A strong government is definitely essential in the startup ecosystem. I think it is way too easy to say that we don’t need the government. But I think, when it goes hand in hand between the public and private market, when there’s a partnership, it would definitely help the local ecosystem.
David Ongchoco is a content marketing intern for JFDI Asia. He currently studies at the University of Pennsylvania and runs an international nonprofit called YouthHack, which has a goal of helping students learn more about startups, technology and entrepreneurship. He also contributes for top publications like the Huffington Post, Technical.ly Philly and the Philippine Daily Inquirer.