Randolph Hsu, Founding Partner at Ondine Capital, believes that startups in SEA need to ramp up for the incoming wave of Chinese VCs.
In the first edition of KrASIA’s webinar series “Venture Matters” on Thursday evening, Hsu told Host Vivian Chang that he receives phone calls and messages from Chinese investors every day, inquiring for his travel schedule and itinerary. “They want to tag along to explore opportunities in Southeast Asia,” he said.
“I made an observation in Shanghai. There are so many Chinese VCs trying to address this market, just waiting for the travel ban to be lifted,” Hsu said. “Once they can travel to Southeast Asia, they will.”
“Update your fundraising deck.”
Hsu was wondering how many entrepreneurs were listening in. “When you are here, update your résumé, business proposal and fundraising deck, because there is new money from China, from the US, looking for opportunities to invest in Southeast Asia.”
Ondine Capital is an investor in startups within Greater China and Southeast Asia. The portfolio encompasses a wide breadth of industries, including advanced tech (5G, IT, big data, IoT) and consumer tech (retail, edutech, logistics, TMT). Co-founder Yen An Cho, with solid experience in M&A and IPOs, helped establish JD.com in Indonesia and Thailand, so both know the region well.
In the webinar, Hsu talked about two of the portfolio companies he’s very happy about. One is Carsome, the biggest used car trading platform in Malaysia. “We love the company, they deliver good growth, although they are currently offline, as the inspection site had to be shut down,” he said. Hsu appreciates the transparency towards shareholders, when it comes to their numbers. “We know what’s happening, we know how we can help.”
The other one, is Snapask, the online learning platform with strong presence in Southeast Asia, Hong Kong and Taiwan. “They are doing good; they’re actually benefiting from the crisis. We like them a lot!”
Integrity is the main attribute
Hsu looks at three main aspects when valuing startups. First is being global. He considers it a big plus if the company operates in more than one country. “They have experience and the ambition to go beyond borders, beyond their comfort zone.” Second is the way they approach capital; he appreciates when startups are sensitive to their numbers and deliver growth. Lastly, which appears to be the utmost important, he wants them to be honest and have high standards of integrity.
“We don’t really talk about business when meeting new people,” Hsu explained. To him, the “right chemistry” and future partnership outlook is much more important.
Hsu is also asking himself how his own firm can best contribute to this complex ecosystem, aside from funding. “We try to pass down our experiences,” he said. “We tell startups how the business in China works, so that people here can avoid the mistakes that happened in China.” He is also willing to introduce experts to the teams if they run into problems.
So how is the COVID-19 crisis affecting the startup world? For VCs, it’s an opportunity within itself to see how entrepreneurs are pivoting under pressure and how resourceful they can be. “People are reacting differently,” he said. “In good times, everyone is doing great, everyone has great ideas, but bad situations like this will tell you who you really are, how hard you really work.”
Startups should above all take a closer look at their cash flow, to make sure they can survive for at least 6 months, or even better 12. You can watch the full interview above.