Startup Unicorn GDP Per Capita Time Machine & VC as Olympic Coaches - E531

· Podcast Episodes English,VC and Angels,Startup

“What’s happened is that high interest rates have triggered a global venture capital slowdown. This impact has rippled across the U.S., the EU, China, and the rest of the world. Southeast Asia’s slowdown over the past few years isn’t a local issue—it’s part of a broader global trend, primarily driven by the U.S. central bank and the U.S. economy. We’ve seen this reflected across various asset classes. For instance, recent stock market rallies in Southeast Asia were fueled by expectations that U.S. interest rates may drop. I won’t dive into macroeconomics now, but the point is that investors see opportunities tied to currency shifts and other factors. The key takeaway: venture capital today still depends heavily on U.S. capital from LPs.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast


“VCs constantly have to ask: how do I maximize my win rate and correct pick rate, while minimizing bad move selections? This requires careful consideration of heuristics and biases, which manifest in various contexts—socioeconomic class, education, prior wins, professional experience, gender, and majority versus minority dynamics. These factors influence decision-making from multiple angles. As a result, VCs must conduct thorough assessments, often following a sequential process to evaluate opportunities effectively.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast


“If you're a founder, your focus should be on building a great business—rallying the right resources, creating a solid company, and generating revenue. That’s the foundation for success. As a VC, if I only invested in deals where everything was obvious—great team, great traction, great pitch—then what’s my job? An AI could do it, right? I’d just follow deals like Sequoia’s DNA deal and try to get in. But you can’t beat Sequoia on brand, differentiation, or financial firepower. The only way I can compete is by identifying under-the-radar, high-potential founders before they become obvious to everyone else.” - Jeremy Au, Host of BRAVE Southeast Asia Tech Podcast

Jeremy Au referenced Asia Partners’ report predicting a surge in Southeast Asian unicorns based on macroeconomic fundamentals, and discussed the GDP per capita “time machine” phenomenon where Chinese and American founders enter Southeast Asia to replicate proven business models in frontier markets. He also shared an LP’s perspective on Southeast Asia's underperforming VC funds, questioning whether it was due to fund selection or broader market dynamics, e.g. Vietnam’s struggle to produce a successful tech IPO and high U.S. interest rates that have constrained regional Series B/C capital. He compared VCs to Olympic coaches, explaining that top investors prioritize 10x teams, product, and defensible economics—but competition is fierce for the best startup teams, e.g. Rewind AI receiving 170 term sheets via a Google form auction as an extreme case of a bidding war where VCs fight to get into the round.

(00:00) Jeremy Au: Last week we talked about how unicorns are a startup worth over a billion dollars and how it's about a hundred million dollars revenue at a roughly a 10X.

software, revenue to valuation multiple. And so what we talked about was that based on this count, we see that the United States and China are having a lot of unicorns and there's a big debate about the rest of the world. So United Kingdom, the rest of Europe, EU, like Germany, as well as France and Switzerland and Sweden, obviously we're talking about Southeast Asia where Singapore, Indonesia are emerging in terms of unicorn count.

And this corresponds roughly to the market capitalization of these unicorns. So unicorns worth more money. So roughly the charts are roughly the same. And what the claim is is that Asia Partners have written a report saying that this is the age of the Southeast Asian startup, that there's going to be a lot more unicorns that will emerge because of what we're seeing happen in China and Japan and South Korea, but also USA and China.

And so this is a great time to do so. I literally just met and had a meeting with an LP today. And his perspective was like, (01:00) hey, I've invested. in about 10 VC funds in Southeast Asia and they're all not performing. So he's like, maybe I shouldn't invest anymore into Southeast Asia VC. So that was a little bit, because what we're talking about is the DPI, right?

So he's been watching these startups grow for a while under the portcullis of these VC funds. And from his perspective, those, even though we're waiting towards the end of the fund, they don't look likely to return cash at the end of the day, even though the book value is high.

So we'll talk about this, but then the question that we had a debate about was, is this because of the fund is underperforming? Is he picking the wrong funds in Southeast Asia? Or is it Southeast Asia problem? Or is it the right strategy within Southeast Asia that's a problem? So these are the things that you all will also be doing your group work and simulating these VC funds.

And a lot of people recently completed their AGMs last week because of F1. So, you know, the LPs weren't in town, so they decided to hold their general meetings during this time period as well. And so what we saw was that in China, there were many IPOs. A lot of (02:00) people made a lot of money USD denominated funds.

And again, we talked about how fundamentally this was stacked by Asia partners roughly from bottom up. A nice way to think about it is foundational and fundamental technologies working its way up to. The most service oriented and the most consumer oriented is based on fundamental technologies.

And so the claim that Asia Partners has made and positioned is that in Southeast Asia there are a lot of IPOs that are waiting to happen because they have not yet created these billion dollar companies in the same developmental path, the same developmental fundamental infrastructure. And as a result, we have noticed this trend of time machine founders.

So U. S. A. Asian Americans travel back to China to build Chinese companies. Chinese companies are traveling to Singapore and Indonesia to build companies that they feel like they have an understanding because they've seen the future that's played out in those countries as well.

And so we talked about how in general there are about four major clusters of unicorns of high value companies. We have Singapore regional. And so what we (03:00) saw is that. Grab is a great example, where it's in Singapore, it's in Indonesia, it's in Vietnam. And then, recently Gojek was only in Indonesia and in Vietnam.

And so they were pushing for a regional story, but they recently withdrew from Vietnam because they have spent hundreds of millions of dollars and not getting much profit. In fact, they're still losing money in that business unit. So they call a spade a spade. And then they exited. But guess what?

Indonesia is big enough. If they can make Indonesia work, there is still a story for the Gojek story to continue. And then obviously we see that VNG group. So it's a classic example of a Vietnam company that is a basically effectively a conglomerate with multiple arms across payments, gaming, et cetera.

And they were recently rid by the Vietnamese police over the past one to two weeks. So we still don't know what's going on here. But basically Vietnam as of now, that's not yet have. Unicorn, go public, because these are Vietnamese founded companies servicing the Vietnamese market.

And then they have to do similar China style. They have to create a parallel structure and all of this in the U. S. (04:00) And VNG was supposed to be the first, and supposed to demonstrate that Vietnam ecosystem can generate unicorns that can exit. And we will talk about exits as a process, in terms of a management process, in a future class.

So Vietnam is as unproven yet as a public tech market. But of course we hear, and I met another VC who is focusing on early stage investments that are focusing on M& A or dividend place. And then lastly, of course, the fourth cluster of unicorns that we have here is what I call virtual unicorns.

So, you know we see a lot of crypto companies, we see a lot of other companies where the founders are based in Singapore, but they're just working from here and they are servicing maybe a global market or infrastructure play or whatever it is. And then basically what we said was that as a result, what has happened is that high interest rates have caused a global venture capital slowdown.

And this happened across the US, this happened across the EU, China. And the whole rest of the world. So I think Southeast Asia's slowdown over the past few years is not a Southeast Asia issue only. It is a global issue and it's primarily being driven by one (05:00) primary action, which is the U. S. Central Bank and the U.

S. economy. And of course we see this happening across all kinds of different asset classes. So we recently saw stock market rallies across Southeast Asia because U. S. interest rates look like it's coming down. I'm not going to make it to the macroeconomics class right now. But basically people are like, there's a pickup opportunity because of currencies and blah, blah, blah.

But the key thing to hear is just that. Venture capital as of today is still very much driven by a lot of U. S. capital in terms of LPs. And so we talked about how even though there's a case of a slowdown, we still see that the total number of deals continue to grow regularly. And so we see this almost like you zoom out, even though there's ups and downs, we see the number of deals continue to go up.

Even though the total quantum has much more cyclicality. And the reason is because the core investment stack is still steady for the early stages, pre seed, seed, series A. But we see that there's a lot of swinging capital for series B, series C, series D. So where are the Americans to come with their large dollar denominator funds to do the growth (06:00) rounds for our companies?

So that's really kind of the question that people have. And so, as a result, what we can see here is that your local funds in Southeast Asia that have been invested in by local high level individuals, but also maybe U. S. institutional capital they have continued to deploy. And so in terms of time and supply, if you look at it, the valuations have not dropped tremendously because they're still active, they still have to deploy.

But if you look at Series B and Series C, those valuations have dropped a lot because a lot of the supply of capital. Was primarily driven by funds that are based in the and so as a result, because they're no longer really active in Southeast Asia, so we see a large drop in valuation because when you have lower supply, then demand is continues to being the same, then the price goes up.

In other words, the valuation goes down because you can get a larger ownership percentage with the same amount of check size. And so as a result, we talked about how top VC funds are really investing in about the 1% of the startups they see. So this is quite representative of a (07:00) VC fund. In Southeast Asia, you're tracking 5, 000 startups, you qualify them, you prioritize them, you do a deep dive where you actually do a financial analysis on 100 of them, and then you present about 50 of them, so there's about one startup per week, and then you make sure you only make an investment in about 10 of them.

So this is actually quite a common funnel, and actually if you look at Southeast Asia, you look at, this is actually probably not the best practice. If you look at global funds, for example they're doing global deals. They will probably have AI bots. They will have lots of associates, analysts. And their entire job is to scrape.

And I've worked with those data engineers. They scrape the internet. And then if you go on LinkedIn, and if you type in you change your status today to founder, and the company is stealth. You will get an email from a VC probably tomorrow because there's a lot of bots that are all scraping, trying to figure out all these founders as they emerge.

And so every great VC has to do this process and we're kind of walking you through this process. But first, you have to source the companies. Then we talked about selecting those startups, but also (08:00) getting into the startups,

then eventually in the next class, we'll talk about how. Startups fail and how VCs can support those startups is part of the portfolio management process. And then eventually how to exit as a company for each individual pod call. And so as a result, sourcing deals is mission critical. You have to be able to see deals.

You have to be attractive. And so as a result, we have to understand it because startups are aggressive. They move quickly and the best founders move even more aggressively. Private information is private and if you're smarter than everybody else, you're faster than everybody else, then you have an edge against other VCs where it's really dog eat dog.

And so as a result, VCs are always doing inbound marketing. So they do thought leadership, letters, LinkedIn. They also do outbound, they do emails, they will reach out to you. And also there's difference between public information, which is comparables, multiples, you know, who's out there, what's your LinkedIn versus private information, how good is the founder.

Is the idea good or not? What's your actual financial (09:00) numbers this month? And so investors do refer deals to one another. So recently this week I got a VC recommended a startup to me and I said doesn't really look like a good fit for me.

Let me refer it to this other person who does healthcare. So I think you just had to be thoughtful about that because then I'm not competitive, so therefore I'm not fighting on it. But yeah, there's lots of deals where I see a good deal and I'm not gonna talk about it to my friends. So that's something to be thoughtful about.

And so where we kind of left that off at is that VCs do judge based on three major metrics, and I think that's how I should think about it for your deal memo. In many ways, the metric that you should be looking at is, is this person a 10x team? Is this person a 10x product? Are there 10x defensible economics for this team?

Now, somebody was asking me, it's like, Okay, Jeremy what is the trade off between, do you rather have 10x team or 10x economics? And I always tell people, it's like, you know, at the end of the day, you know, VCs are kind of like Olympics level team coaches. Their job is to source the best athletes, (10:00) to select them, then to train them, and then help them win the gold medal.

And so if you ask an Olympics athlete coach, for a swimming coach, for example, then you can imagine, right, it's like, okay, what do you look for in an Olympics athlete, in a swimmer? They'll be like, well, the person must be good at swimming, must be hardworking, right, and humble, and has the,

x Factor. We can see the future where they can continue improving. We see a future ahead for them, for example, right? And then you ask the coaches, for the Olympics gold athlete that you candidate that you're trying to source and select and train, you know, because you have a portfolio of swimmers to choose, which one's more important?

Well, the Olympics athlete would say. I want all three, right? You know? So because no Olympics athlete is gonna be like, this is not like junior varsity league, this is not like primary school, this is not my infant and toddler swim coach, right? You know, like where you teach anybody who pays you the money.

Your job is to find winners. And so you want to find people who as much as possible hit all three, right? So you can imagine a new memo you want (11:00) to be like, this person is 10x team high, 10x product high, 10x economics high. That being said, I do acknowledge that in general Even though we look at 10x team, 10x product, 10x economics, probably team is probably first among equals.

So I think you want a startup that's all three. But if you had to pick two out of the three, I'd rather have a 10x team and 10x product rather than 10x economics, for example. And if you ask me which was the number one I'll pick, I'll probably pick the 10x team out of the three, right?

But I'm just saying that in terms of investments some VCs have a strategy where they're going for companies that are obviously winners in all three, right? 10X team, 10X product, 10X economics. I'm willing to pay top dollar, and I'm happy to be the number one bid, and we'll talk about it soon.

And I'm willing to pay high because I believe there's definitely a price appreciation in this asset, right? Versus there are other VC funds that are not as competitive financially, don't have as much firepower, and so they have to look for the diamonds in the rough.

The company may only have one of these three. So maybe it's high for (12:00) 10x team, but they don't have a product, they don't have economics. So let's make the bet early before the other people come in to outbid me on this competition basis. So I think you just have to be thoughtful about this. I think these are three criteria, and if you look at Amazon today, obviously everybody will say, Amazon today is 10x team, 10x product, 10x economics.

But if you look at the first angel investor who made an investment in Jeff Bezos as a person, there was no product, there was no economics, there was only a business plan, so probably he was investing based on who he saw in Jeff Bezos. So I think this is kind of like what we need to be thinking about.

And so I think one way to think about it is that this is a decision tree by a company called Next View Ventures,

one of the VC funds that backed my last startup. And so they've created this chart. I'm not saying that this is the chart that everybody has, neither am I going to say it's this linear as well. But I would say that I think this is a nice way to at least try to systemize it. So for example, the GP is saying is like, Hey Is this an exceptional founder?

Is this a fantastic person? If the answer is yes, which is on the left, then does this person (13:00) know the market they're going after? Do they understand that founder market fit? And the answer is yes, then they keep going on yes, and then they're interested and keep meeting. First coffee, then second coffee, they keep having coffees until the deal is made, right?

But if for example it's a great founder, attractive market because it's a good market to go after. But they're not really the I mean, they're a great founder but the market is not that attractive. But this is not just a constructional founder but it's like. one out of like 10, 000, right?

There's like super duper, and if it's yes, then get second opinion from his other teammates, from research, and then if the other partners are like, eh, not really that great, then go back to where it's like, can we get more data, right? And then they get more data to keep going, right? So versus, you know, is.

Not an exceptional founder, you know, it's not an attractive market. Say no, right? And then there's some permutations in between. But I think what I'm trying to say here is that this is a logic model. I think that many VCs, I think kind of like, I would say it's like (14:00) 80 20, like this model is a pretty decent summary of how VCs would probably think about this process.

But obviously, when a VC meets a founder you know, your brain is a neural net, right? So in a sense that you're probably processing all of this in parallel, right? So the first one minute, the first five minutes, the first half an hour, the first one hour, that meeting, you're probably processing all of these factors in parallel as a VC.

So it's more of a pattern matching and intuition rather than a true linear logic model that you might expect more from a computer. So I think basically a VC probably walks away from a meeting and be like. You know, at the end of I met you for coffee and it's like, do I want to meet you again?

Versus meeting somebody, other founder, versus talking to my LP, versus supporting my existing founder, versus hanging out with my kids. You know, it's a stack rank, right? And then, so to some extent this is the logical model, but there's an intuitive model which is, do I want to keep meeting you, versus do I want to stop meeting you.

So what you have to be aware of is that these heuristics are great but they can become biases when unsupported by data, right? So, (15:00) for example, you as a VC, you have experience in healthcare, you're a healthcare founder, you're meeting healthcare startups, you can make those decisions faster.

Versus if I am primarily a banker who became a fintech VC, and now I'm meeting a healthcare financing play. Then I kind of slow down, right? Does it make sense? Because I don't have the prior experience. But experience can also be a bias, right? Because I think FinTech's amazing and I'm totally crushing it.

Healthcare has sucked for the past five years, so I don't care about healthcare. So the professional experience can be a crutch or it can actually be a handicap. Obviously a lot of VCs have, some of them have won so their prior wins. And so they start the patent match against that. So they're like, okay.

Uber is a win. Therefore, I'm looking for the Uber for massage, the Uber for acupuncture, the Uber, like, so if you have a win, then you kind of keep going it. And so that prior win creates an anchoring, right? So it creates an anchor where everything else is like, I had that one company, and then you see those VCs, they keep talking about that one win they had all the time.

They can't break out that mental model. (16:00) Yeah, so professional experience, right, just to clarify a little bit more is, so, you know, the, the bad version of this is that, let's just say you're a consultant, you're also a consultant, I'm like, wow, you're so amazing, you talk exactly the way I want you to talk, you know, explain the business the way I think about the business.

So similarity can be a bias, but it also can be a local bias, so for example, you'd be like all my work experience is in Singapore, I'm meeting an Indonesian team, I don't understand the Indonesian team, and then instead of saying, I don't understand the individual market and I should consult somebody.

You say, this team sucks, right? And you see that a lot because people get biased by their local experience, right? And then lastly of course is your speed and info access. So VCs are highly competitive and so they need to make decisions quick because they have many stories of the rabbit that got away, right?

And so they need to move quickly. And also they have information access. So they kind of, like, they're grabbing information and they may have to say yes before they say fully get the information. And so there's a lot of stories. For example, in Southeast Asian emerging markets, we have VCs that say yes to a team, they give a term (17:00) sheet.

And then they do due diligence and they find out that there's something bad about it. Maybe the founder fraud or accounting fraud or whatever it is. And those VCs end up pulling out of the deal. And of course, the tech news will report it as, this VC totally reneged on the term sheet. What bad form, you know, it is.

And I'm like, well, that's kind of true in the US. But, you know, if a VC after due diligence says, And don't get me wrong, there are bad VCs that renege on deals, and so those are bad news. But a good VC should be able to say yes, but trunch the risk so that they're able to say no if they find more information that isn't likely to be.

Which is super irritating for the founders and the previous investors. But the bad thing is that if you're fighting for speed, you're working on partial information, guess what, you can be overloaded. So you kind of get overloaded, and then you just I had to say no because he's just too busy.

And many stories, we'll give you examples in the future. But (18:00) literally a Bessemer VC was like, he had two meetings to go for. He was double booked, because his flight and everything got whatever. He had two companies that he had to go to. He couldn't make one of them.

So he flipped a coin and he went for one meeting. And it turns out the other company was the one that became a billion dollar company. I have to find I forgot the exact name, but I'll pull it out for you. So great case study of a guy who got overloaded. Missed the deal, right? But also a lot of people become overconfident.

So one of the big issues and we talk about poker all the time, but, you know, sometimes you have to make information. I was watching this poker, you know, Magnus Carlsen versus this other guy, the other, you know, they're all, both are playing pretty bad hands. And then Magnus Carlsen wins the pot because the other guy all ins, blah, blah, blah.

But what was interesting was that you know, you know kind of like what's in front of you. And I think a lot of VCs are very clear about what information they understand about a company. But they often are unable to incorporate the fact that they don't have sufficient information. So some people will look at, I have insufficient information about this deal, and some will say, I cannot do the deal because it's a bad deal.

And some of them will say, I (19:00) have insufficient information and it's a good deal. But the best VCs are able to say, I have insufficient data and my job is to get more data or acknowledge that I don't have that data to make that call. And I will make that call with partial or incomplete information. So I think that's actually a quite tricky piece because what will happen is that, and there's some interesting research that I'll also share, but bad VCs will tend to be overconfident of their data, if that makes sense.

So they overestimate the information they have to make the right call. And so bad VCs not only miss good deals, but they tend to pick. Worst deals on average, right? So it's an interesting dynamic that you think about all the time. So VC's always had to be like, how do I maximize my win rate, my correct pick rate, but also how do I.

lower my bad move selection rate. So this is something that you have to think about for heuristic and biases. And that shows up and so it comes up in the prism of many things. It comes in the context of socioeconomic class. It comes in the context of education. It comes out in the context of prior wins.

It (20:00) comes out in the context of professional experiences, gender, majority, minority. So it shows up in all these different angles that we have here. And so what is the result is that VCs have to assess, And it is often a sequential process in that sense. So, they often meet the founders and they're making an assessment about the founders.

Then they're making an assessment of the strategy, like, does the approach make sense? So, for example, I mentioned like, this guy wants to put NFTs for concrete blocks. And I'm like, I didn't even see the pitch. I was like, that makes no intuitive sense to me. I had something else better to do with my time. I could be wrong, and he may be building a unicorn right now.

But to me, I just said no, and I didn't look at the pitch. And then after that, but for other companies, I move forward into the pitch process to understand them selling me and giving me the data to make a fine decision. That being said, great founders will often do it the other way around.

So great founders will often prioritize traction, then trust, then pitch deck. So it's almost the other way around. (21:00) So if you are a founder, you need to build a great business. And so rallying the right resources, building a great company, generating revenue. This is the stuff that is a really good stuff because the truth is as a VC, I am paid to either look for, I mean, if I was only investing in deals that everybody was like super duper obvious that this guy is a great team, great traction, great pitch, then obviously, then what's my job?

I mean, the AI can do my job, right? Because I just had to be like, Wow, Sequoia's DNA deal? Okay, let me try to go into this deal. But you can't beat Sequoia because Sequoia has so much firepower. So you can't give a better price than Sequoia in terms of brand, differentiation, firepower. So the only way I can compete as a VC is I need to look for great founders who Sequoia is like too much hair on the deal.

This company is not ready yet for us. So I need to make a decision in it before. And so my job is even if you're, if you are a founder and you have bad (22:00) breath, horrible, whatever, massive, like everybody's discriminating against you. But you're building a 10 to 20 million revenue business over the past three years with zero revenue.

Then I will get paid to find that deal. I will be rewarded to find a deal that's underpriced by the capital markets. And so I'm incentivized structurally to eliminate my biases as much as possible. So the best way is that founders should focus on building a company, right? And then.

The second thing that you do is they build trust. So a lot of them, you know, you see a lot of like news. It's like, this is the pitch deck that raised 20 million, blah, blah, blah. But actually a lot of it is built down to trust, right? Which is, and, and trust is a function of your professional reputation, your brand, personal brand in that sense, whether you have high integrity, low integrity.

So if you are a great founder and You are excellent, but it's well known that you are low integrity. Then no one's going to be like, you know, wants to hang out with you and nobody wants to find you because they're worried about getting (23:00) screwed by you down the road. So building trust is a really key piece and I think it's an underrated piece.

And I think the great founders that we'll talk about later. Often build that trust over the course of their professional work experience their first investors. And then even as they execute a business, they continue building trust with their board and so forth. And lastly, of course, is the pitch deck that is the encapsulation of strategy and all these other things.

But it's the final packaging of the piece. So great founders really to prioritize that in that sequence. And so What I'm trying to say here is that savvy founders, now what I talked about was the VCs who are selecting. But the truth is that we talked about founders that are underpriced.

But the best founders who are not overpriced, but they're highly competitive, right? And the switch from this process to this can be a function of like a week, a day, right? And there's so many stories and I've seen it for myself, right? So I'll just use the public market examples.

The best founders who are really good or they have great traction or they get priced by the market or everybody kind of starts ending. (24:00) they start kind of dogpile and create an auction where there basically becomes a bidding war where multiple VCs are trying to come in. So for example, BenchSci, which is a small example, they received five term sheets in three weeks in that process.

And one of the investors was the Gradient, which is Google's corporate venture capital AI fund. Later on in 2023, which was last year, they raised a 70 million check, new capital, series D round. You just have to be aware that this is the kind of competition that can happen.

And obviously a more insane version of this has literally just happened earlier last year. But Rewind AI is basically this AI belief that we can create that your personal data, my computer, everybody should have a personal AI companion. So I shouldn't be using OpenAI. I should be using Rewind AI because I'm going to give them my computer.

I'm going to give them my phone. I'm going to give them my life. I'm going to give them my memories. Everything about me should be in my personal secure data locker to create a super AI that's Jeremy specific, right?

Everybody has a totally separate AI model that's totally trained to them. (25:00) And so this company, with Series A 2023, they received 170 term sheets, okay? And basically, he was like, Fuck it, let me create a Google form. And he says, submit me. Please, instead of doing this Google form, your bid.

Literally an auction, right? Because he's like, I'm that good a position, right? Because the market's hot, he's a strong founder, he's got good play. The strategy can't make sense, you know what I mean? And so he just threw it out there. Imagine a, Google form. everybody's doing research.

He's like, okay, what number do you want to put in, right? And so, in the end, NEA, which is very good fund. basically won the bid. Or maybe they overpaid, but basically they bidded 12 million cash for a 350 million valuation. So basically this is only about you know, 3 percent of ownership of this entire company.

So, you know, it's kind of an interesting piece but, you know, I think we have to be thoughtful about this process. So what I'm trying to say here is that you know, I've seen that for myself. So, you know, I was working for a company, I've been coaching this (26:00) guy for two years, I'm helping him. And then he likes me a lot, and blah, blah, blah, and everything.

And then, I see the deal, I'm pushing the deal, but the deal's very slow on our side and everything. And then, you know, I finally get it across the finish line, but guess what? He also gets a term sheet from another Tier 1 VC in Southeast Asia. And then suddenly I'm like, man, if my boss had let me make this deal three months ago or one month ago, I wouldn't have to compete against this guy, right?

Does that make sense? But now I'm competing this guy, and then now we have to talk about it, blah, blah, blah. And of course, the other bigger VC can spend more, so they can give him better financial terms. It's a slightly better brand name. So even though we're promising like, Oh, you know, we're better. We're more personal, blah, blah, blah.

But that, you know, that guy was like, You know what? I like you, Jeremy. I like blah, blah, blah. But this guy's offering me more money and has a better brand name. So thank you very much. And after that, I stopped talking to him for like six months because I was like, so frustrated, right? You helped (27:00) this guy for two years.

And then suddenly you're like, peace out. You know, you didn't, you know, you didn't get to win the deal, right? But of course, my learning from that is that if you're a VC and you're a lead VC, you better make the decision fast. Because the only way to have really won in a competition was give that term sheet like one month before, and then have a deadline for that term sheet of one week.

And then so that this guy who was taking that pro time, but kudos to them, I mean, they move fast as well. So I'm not saying they're slow but I'm just saying that this is the situation that we have. And so the savvy founders will try to do that. They'll try to put the slow VCs up front and they'll put the fast VCs a bit later.

Does that make sense? Because they want everybody to come in at the same time to fight with each other to have that bidding war. And so as a result, the great VC founders,

so I tell people, it's like, if you have zero term sheet, you don't get a pick. If you only get one term sheet, you also don't get a pick. But if you get multiple term sheets, then you get a pick. So that's the game, that's the mandate for them. When I'm advising a founder, I say, get multiple term sheets to pick. As a VC on the other side, my job is to get in (28:00) before. Other people come in so that the founder doesn't get to pick. So these are two different plays, right? And so as a result this is a survey of what are the factors for founders when partnering with a VC.

Caveat up front is I think cash is number one. The amount of cash and the valuation, I think still, and maybe some of the control rights associated with that is still, I think, the number one pieces. But I do think it's pretty important. And so founders were normally rated as.

Personal chemistry. Do I like the person or not? Or is the guy an asshole? is this person going to add value to me because I experienced the piece? Are they fast or not in getting back to me? And then in terms of network, which is, can you add network? So does that. Founders, VCs, things like, oh, it's about the brand of the VC fund, which is different, right?

So VC fund, for example, the difference, for example, would be a VC would be like. Open Space Ventures, for example, right? So Open Space Ventures is the brand of the whole VC (29:00) versus personal chemistry, you'll be saying I care about the personal chemistry with the GP called Hien Goh or with the GP Shane Chesson, right?

So this is the difference, right? So VCs tend to self evaluate that brand is important. Then personal chemistry is number two, so not that far off. Then three is speed so they're quite agreed. And then everything else is pretty there. Length of relationship yeah, so, you know, turns out, yeah, I'm probably here for two years.

Who cares if you have two years of relationship, right? I think synthesizing all of it, I'm just trying to give you a sense of the different factors because all of you in your VC fund decks are talking about what differentiates your fund, what makes your fund good.

Is it speed? Is it because you have a great team, GPs? Is it because you have great sector expertise? Because you understand the geography like Vietnam? Or because you, I mean, there are different players that you have here. So you need to be aware that there are different views. Point of view is I think speed is number one, if you ask me.

Because if you have a deal term sheet now, And it's exploding in one week versus theoretically term sheets in the future. I think speed is (30:00) number one. Obviously, don't be an asshole that people know you're a bad deal. So I think, you have to be at least not shit. You have to be average or above average.

But I don't think being a great VC comes in three months after everybody else is probably not the way. So I think speed is a big one. And then within the speed bucket, I think financials, the economic rights. And the economic value associated, the control rights effectively will probably be bundle number two.

Then number three probably be the, you know, individual relationship with the person. So that would be Jeremy's point of view, but it's very intuitive because I think the survey has its own issue because, you know, it's like people are remembering what happened to them in the past, et cetera. So I think that's gonna be the key here.

So on that note that is the last questions. Let's start with Tunlat.

Yeah. So yes I think VCs do care about that quite a bit, but I would say it's a little bit down the road. So it's just like, are you a great founder? Does this great product happen? And (31:00) then whatever. So for example you know, we, we built the companies together and everything.

And then we were looking at Perplexity, which is some of you are using Perplexity, which is a. AI search engine. And so we were like discussing, should we buy secondaries, this company? Because, we both actually really like the product. So I think it's a great team. I think it's a great product.

But we did actually spend a lot of time debating which is, Google can co integrate AI into Google Engine and they have Android, right? And then Apple is quite slow of AI, but they have Safari, and they have the Apple device. So we're kind of saying like, You know, like, they're going to embed it directly, natively, into the hardware, so that you don't go through the extra step, right?

We don't, you know what I mean? Like, you don't download the Perplexity app, like me, and then you go into the Perplexity app to search when Apple can try to do one step beforehand or So there's a bit of a debate, which is, do they actually have a moat or not? And I think, for him and I, we said no for this current price of the secondary.

We don't think there's value. So we said no to doing the deal. (32:00) And I feel like this is one of those deals that I might regret. But, you know, I just said, but also I said there's other information I don't know. There's a lot of information I don't know. So I said, you know, I don't know, I don't have too much incomplete information to make a good decision on this part.

So better for me to say no than to say yes. But yes, I think a lot of VCs will consider competitive mode for that.

There are a lot of companies today that are now no brainers for people, right? And so because of the competition to get into these no brainer deals, people can get aggressive in bidding and counter bidding. Also I think psychologically there is a tendency to overbid. So, you know, in auctions, there's something called the winner's curse.

So what that means is that the winner of an auction generally overpays on average. It's just human psychology, right? I mean, from a seller's perspective, that's what you want. You want people to overpay. So if you look at oil field exploration, there's normally land rights, and land rights would normally, they have an auction process.

So basically, oil companies have to bid for the right to drill because they believe there's drilling, right? And what we find is (33:00) that if you look at a systematic analysis of that structurally, what will happen is that on average, Oil companies will tend to overbid especially for the best oil well rights.

And some companies are happy with that strategy, they just have to play to their strengths, and then they have very low costs in their, you know, search. They save money in other ways, but they focus entirely on financial firepower to find the most likely oil rigs. And then there's a group of oil exploration firms, which will make their money looking for undervalued that nobody's bidding at, and they buy it cheap.

But they have a better edge than everybody else. So, in fact, there's a new startup that's come out. They're looking for rare materials. And so, basically, what they're saying is, literally, they're going to find metals, and they're going to use their AI, blah, blah, blah. They're basically saying, we can find oil better than everybody else.

We can find gemstones, and you know, titanium, and all this other stuff. We can find all this stuff better. So we're going to make sure that we always bid for the underpriced bids. so I think that's an interesting piece, which is in competitive auctions, (34:00) if you're overbid, you're more likely to have overpaid.

so I think that's why people complain about herd effect, right? So FTX would be a good example, right? the article came out, and then he was pitching to X company VC fund, and then he was League of Legends. And then because he raised so much money, everybody's like, wow, amazing, this guy is so smart.

He's playing League of Legends, wow, whatever. But then you take a step back and you're like really? Is that the kind of founder you want to back? I mean, because it's showing that this guy is not being detail oriented. He's not conscientious, right? He's not treating it seriously, right?

And then he didn't have a board, right? So he didn't have a board of directors. So again, people were like, wow, he doesn't have a board of directors because everybody's so hot, because it's a no brainer deal. Let's all get in on this. The fact that he has no board shows that he has big balls and he can do whatever he wants, right? But of course, if you take a giant step back, you're like, wait. But he has no board, then there's a high risk of failure, of fraud of this, because this is well known, like, you know, every public company has a board because turns out that if you give a person too much money and too much power, they tend to go sideways.

It's like a tale as old as time. So that's what all these financial legal controls (35:00) are for. So I think what I'm trying to say here is that that's why sometimes founders have something what they call a reality distortion field. Like you enter that field, the bubble, and then everything sounds amazing and everything sounds great.

and so that's why founders that have very strong reality distortion fields can really get a lot of bids really quickly. So the question is, in the best case scenario, going back to Avishai's question, which is, Apple is a perfect example, right?

You have Steve Jobs, who had a reality distortion field, great salesperson, pretty good at product, T shape, and then you have Steve Wozniak, Who was really good at building, actually delivering what he had. So that would be a very good team, right? Somebody who is good at selling, and somebody who is very good at building.

For example, that would be a dream combo, so I think that's something to be thoughtful about.

I think of Indonesia in terms of tree phrases.

I'll probably think about it as. Emerging tech market and all the problems that come with it and all the opportunities that come with it. And then the second thing I think about it is that the large demographics and economy, structural economy and that piece is probably some of the more Indonesia, Southeast Asia specific uniqueness to it.

So Indonesia is 300 million (36:00) people. There is enough people to build a large company fundamentally. So whether that's basic fundamental telco or whatever it is, you can build big companies. So I think there's that.

Of course, here's all the structural macro issues that he has in terms of the GDP growth rate. If the GDP growth rate was negative, there's no startup that's gonna come out from the ecosystem, right? Because if your economy is straight recession for 10 years, then obviously there's no, you know, sort of rising tide lifts all boats.

So I think Indonesia and its growth rate has those structural places. So if GDP growth rate is five to six percent, it's different from the proposed promise of eight percent. And if it's around eight percent, then obviously you're going to see a lot more startups have a rising tide, lifts all boats.

So for example, the big issues that we see for Indonesia right now is that the middle class is shrinking. A lot of debate but by the official definitions, it has shrunk by a significant percentage and I literally told my teammates and I was like, we have written many. investment thesis on the thesis that there is a growing middle class (37:00) because the growing middle class will want more consumption, will want more packaging, will want more Yeah, I mean, there's a lot of stuff that they want to eat more chicken, they want more cold chain because they want more ice cream, you know, things that are cold.

So, so I said, We are writing this thesis and it turns out that by their definition, it's shrinking. So, so I think it goes back to the fundamental economy, right? But Indonesia is big enough, 300 million people, but I think that's the fundamental economy. So that's one. I think the second piece is that the tech ecosystemI think it's emerging markets and almost all emerging market startup ecosystems good and bad.

Angels and VCs are stupid and they destroy value instead of creating value. Like, these are all known things that happen in emerging markets, and this is going to be true in any emerging market that's out there because it's a new and emerging startup ecosystem.

Whereas, Singapore is a little bit ahead. Because it's been growing. It's a bit more history is of influx and migration from the U. S. And now China of these VC professionals. But obviously, Silicon Valley, which is the most (38:00) competitive, the most experienced, the deepest pool, you know, three to four to five generations of leadership in VCs and founders as well.

Like they have more professional norms. So, for example In the U. S., fraud exists. Obviously, we saw theranos. There's another one. I can't remember, but this lady was Forbes 30 under 30. She also did fraud, and she sold. So there's fraud, but I think it seems like a smaller percentage, if that makes sense.

Versus, I think, in emerging markets, we tend to see bad accounting practices, which I think are ignorance, which is Hey, you know, they're running agriculture, so they don't know how to label contribution margin, which is totally fair. And so, the job of a Singapore or US VC working with them is to make that accounting better, all the way to, I've seen a lot of material misstatements of accounting because.

People just feel like they can get away with it, right? So I think that's the emerging market ecosystem. And now, of course, I think the third piece that I think about Indonesia, of course, is all of the various quirks of Indonesia that make Indonesia, Indonesia, right? So I think, for example, many islands that are around the place.

So in the US, it's a (39:00) contiguous place. So logistics can make sense. But logistics across Indonesia is really island by island. And we actually see that also in Philippines as well. So what I'm trying to say is you can't build a land base. Transport parcel system because in the Philippines, for example, literally, this island has its own entrenched incumbent transport system, logistic system.

Then the ferry is also its own entrenched system, and then this island is this thing, and then your airport is another system, right? And so, in order for you to build a logistics company instead of America, where you're like, okay, I just get this, and then my FedEx goes there, one shot, now you're suddenly negotiating with One, two, three, four, five sets of stakeholders or competitors.

And I think we see that in Indonesia and Southeast Asia, like, you know, the island states obviously there are cultural quirks as well in terms of the demography, in terms of the age profile, in terms of their faith and demographic consumer preferences as well. So for example, I have a friend, he's working as a.

Executive at Muslim Pro, which is the (40:00) world's number one Muslim app, And so, he's here based in Southeast Asia because a very big percentage of it is in Southeast Asia and Middle East. So, I think there's different aspects that make Indonesia, Indonesia that differentiates it from, say, Vietnam, which, for example I think there's a perception that Vietnamese parents tend to over allocate spending towards education as a percentage because of the Vietnamese.

History because of Chinese cultural Confucian teaching practices because of communism that has focused on science and engineering because of the current economy that gives a lot of jobs to engineers. So as a result, Vietnamese parents tend to be spending a lot more per capita.

than say you know, Philippines, for example, in terms of education. But actually, even different ethnicities within countries actually also spend more or less on different baskets of goods as well. So I think we just have to be thoughtful about that. So I think to me, those would be the three things.

I think there's Indonesia as an economy that will be comparable to Singapore, Vietnam, America, 200 million kind of like emerging market, (41:00) ex GDP, great growth, et cetera, times. Emerging start up ecosystem challenges, but also opportunities. Because if you can find the right company, again because of the time travel machine, you can find a cheap deal that's underpriced, and the founder doesn't really speak good English, but this guy is really building a great business, and nobody else is around.

Wow. Yes, five million dollars, you know. So that's the opportunity of the emerging startup ecosystem, but there are also quirks for that ecosystem. So for example, you can get it wrong. So I've met Chinese founders that got it wrong. So they came to Indonesia and they were like, oh, I'm going to build it this way because the Chinese way works.

And it turns out they didn't adjust for how the local Indonesian manufacturing supply chain works. And so it failed and then they had to pivot and do something else. So. And I always remember that, yeah, the first pitch they were like, we're gonna hire 80 percent Chinese and 20 percent local. And then that company failed, right?

And then the second company now he's like, okay, now I'm gonna hire 90 percent local and only 10 percent Chinese, right? So that'll (42:00) be an example of a because he's trying to say like, I need to localize for the I had but I need to really localize and really understand the Indonesian market for what it is, right?

So there's all kinds of other quirks, right? So Indonesia has nickel mines which allows them to do batteries. Which allows them to do EVs, but probably motorcycles and not cars, right? We're very weird where Singapore has no mine, no nickel, no natural resources.

So it's very sad. And so Singapore is quite horrible to be an electric vehicle manufacturer because he has the worst of all worlds, right? He has no materials, no, no domestic populations and so on and so forth.

So I think trust is always probably it would be like reliability, delivering what you promise, length of relationship. So for example, the longer you're with someone, the better your trust. If you say, I'm going to give you, I'm going to hit a million dollars of revenue this year, and you deliver a million dollars of revenue this year.

That builds trust. So I think there's an equation I can share with you. But I think founders will, (43:00) basically obviously, if you're an 18 year old and nobody knows who you are, It's hard to have trust.

But then of course people tend to use proxies like, oh, you went to Stanford and I know your parents and, you know, you come across as very smart. But it is quite incomplete versus when you meet a founder who's like 43 and there's a lot of 43 year old founders. Then these guys have 20 years of experience in a workplace.

Then everybody kind of knows who they are and whether they're good or not, right? So for example, we recently had an interview with. Dito. Right now, he's building an electric motorbike startup called Maka Motors. he was an early employee for Gojek, and then he got promoted several times to become chief transportation officer for Gojek.

He built the pricing algorithm, from the manual way to the whatever. So imagine this guy goes out and says, I want to build electric motorcycles. And everybody's kind of like, yeah, I can trust you. I guess you worked at Go Jek and you're trying to build Go you're trying to build motorcycles that are electric.

It's not exactly the same, obviously, but it's closer, right? Whereas if he was at Go Jek and he was (44:00) like saying like, my next startup I want to build is satellites, right? Then people are going to be like, okay, I trust you as a person. I trust that you have high integrity. But I don't necessarily know that you can build a startup, right?

So I think there's that piece to it.

I think if you look at Southeast Asia they are actually all have roughly the same waves of unicorns. So, for example, one of the unicorns in the Philippines is a talco, right? So, globe, and so, so forth.

I think there's so there are two parts to it. The first part is, it goes back to that time travel machine that I talked about, right?

China versus Southeast Asia, right? So I think we're starting to see data center unicorns emerge in Singapore and Malaysia. These are like joint companies basically. We're saying Vietnam as well. But I think Vietnam is emerging. I don't think they have unicorns yet that run data centers.

Not that I'm aware of.

But the ultimate beneficial owner of this so far is like Singapore, Malaysian, probably Singapore Malaysian, Chinese people building data centers aggressively. And so I think that we're gonna see data center (45:00) unicorns emerge because of this time. Vietnam is further out because they have only loosened the regulation on data centers. previously data centers required a lot of JVs. They were not allowed to have a certain amount of foreign ownership in data centers. In Vietnam. they recently loosened that regulation the past three months.

if we loosen it further, maybe you can imagine 10 years time, there may be a Vietnamese only data center. Unicorn? I don't know, right? so I think there's a chronology piece that's for the technology ladder, the Arab boys climbing. Singapore does have logistics unicorns.

It has Ninja Van, which is competing with China's J& T, which is also a unicorn, you can imagine that, eventually, there should be an Indonesian logistic unicorn, or maybe gets eaten by Ninja Van, we don't know. But, I think there's a certain ladder of tech skills that's there for that.

But there are unique aspects of each place, right? So Singapore has some unique aspects because it's a hub, for example, for (46:00) port. So you see a lot of maritime start ups are based in Singapore. So they're doing container tracking and shipping logistics because the flow of trade is happening through the container.

So there's a company called I think that was in the list of the 40 startups, but they're doing container tracking and shipment tracking. So it's a good company to be based out of Singapore because a lot of companies have their logistic centers based in Singapore for the HQ. Whereas if you are in the Philippines, it's probably a little bit more difficult to do a maritime SaaS software targeting regional HQs, right?

Versus we talk about Indonesia has nickel mines, which has given them. the ability to slowly, vertically integrate as a technology ecosystem around electric vehicles, And then because America is trying to reduce its reliance, and Europe is being pushed by America to reduce its reliance on Chinese raw materials,

they want to build or invest in Indonesia on this electric vehicle skill ladder. The Chinese are also coming to Indonesia to partner up and JV (47:00) on this because they're like, well, it's okay. We can, again, Chinese engineers, Indonesian materials, JV. We can make it happen and we can still export to EU, for example.

Vietnam obviously has electric vehicle industry under VinFast, but they don't have the same level of raw materials that Indonesia has. So, you know what I mean? So those are the quirks that each country will have. So I guess you go to each country and you say like, hey, what are you really good at, right?

Singapore is pretty bad at agri tech startups. I met a lot of Singaporeans who say they want to do farming, but they don't really understand farming. But for example, if you look at Malaysia, Aeonic. is a Malaysian agricultural drone company. And they use a lot of Chinese hardware, but it's only vertically integrating and getting better building their own drones.

And they work primarily with agriculture. Malaysia actually has a very strong agricultural conglomerate and plantation economy, which is quite similar to the rest of Southeast Asia, for example. So Malaysia is good at building agri tech it's probably a bit easier for founders to understand agri tech than it is for Singaporeans to understand agriculture.

There are some (48:00) specific country by country quirks as well. But Singaporeans really love education tech. So there's a lot of education tech founders in Singapore. In fact, Asia Education Tech Summit is happening in a few weeks time, and it's in Singapore.

And a lot of people from there are flying to Singapore for a holiday at the same time, right? Just to, you know, so, but I'll say Singapore is the hub for education tech probably across Southeast Asia, right? So, there are different hubs that will be specific.