Of Vietnam, Iced Coffee and the New Future

Ca Phe Sua Nong.JPG

Photo credit: Wikipedia

I talked about Vietnam “Pho” in one of my older post (click HERE if you want to feel hungry). So I am going to do it again and this time and talk about Vietnamese Iced Coffee. I was never a great fan of coffee or any form of coffee products, I am still not a fan of coffee and I don’t think I will ever be. But there is something different about Vietnamese coffee that I don’t mind having more than any sane person should whenever I am in Vietnam.

Vietnamese iced coffee, also known as Cà phê đá or cafe da, is made using medium to coarse ground dark roast Vietnamese-grown coffee with a small metal Vietnamese drip filter. After the hot water is added, the drip filter releases drops of hot coffee slowly into a cup. This finished cup of hot coffee is then quickly poured into a glass full of ice making the finished Vietnamese iced coffee (Thanks Wikipedia!). The very first coffee tree was brought into Vietnam, according to online sources, in 1857 by the French. The beverage quickly became a major contributor to the economy when Vietnam rose to be a strong exporter of coffee.

This is not a post about coffee but the history of coffee in Vietnam shows how the beautiful country is benefiting from the government and the people’s openness to collaborate with external parties. A very valid example – Vietnam’s third largest lender, BIDV together with FPT Corporation, one of the country’s leading conglomerates and Dragon Capital are working with South Korean conglomerate, Hanwha Group in running the country’s accelerator program known as Vietnam Innovation Startup Accelerator (“VIISA”) (For more coverage: Dealstreet Asia). This was officiated during the a recent conference held in Hanoi which was hosted by the Vietnamese government and other foreign and local partners.

with-big-boss

With the DPM of Vietnam and Chairman of FPT

My interpretation: Vietnam is progressively opening up the local ecosystem by welcoming more foreign participation and more importantly this is done in a collaborative manner i.e. foreign friends work with local friends on big big things. What I expect to happen is that there will be more and more of such foreign-local collaboration as the government has set the precedence which in turn will encourage similar arrangements to happen at different or all levels within the country. An official welcome from the government is like a VIP or a rock zone ticket to a Celine Dion (this doesn’t reflect my age) concert and you get to sing with her on stage. Not only you get to watch the show, but you get to be a part of the show with a key role. How did I come to this conclusion? The Deputy Prime Minister of Vietnam stayed from the start til the end of the event as well as a closed door VIP lunch, and even moderated a session during the event. (I know this is rocket sciene!)

Main takeaways from the session:

  1. The government – To continue working on gaining recognition and acknowledgement of Vietnam as a great hub for startups. As the environment continues to improve, there are now about 12,000 new SMEs being registered per month; this is much more than the previous number of 5,000-7000 per month.
  2. Technology as catalyst – To develop innovative startup ecosystem through IT and technology. This is not just about the technicality, but also about how to be innovative and creative in business and commerce. Especially for SMEs/startups that are going through commercialisation.
  3. Awareness and startup culture – The government recognises the need to encourage more Vietnamese to get onto entrepreneurship bandwagon and that startup culture is no longer just a jargon. Startups as a community is no longer just a tool for pushing the unemployment figure down, but also as means to push the boundary for the progression of the country. The country needs to learn to accept failure and risks. What is more exciting is that the government is starting to learn that social objectives and economic benefits can be reaped indirectly from an active and vibrant startup ecosystem.
  4. Role of central government and local authority – To build an information hub and supporting centres as well as to allow access to finance and credits. Regulators and authorities are to build frameworks, policies and mechanism for angel investors, venture capitalists to play a structured role in supporting startups. Banks and credit lenders should also have a clear role on how to get into the game. However, the most important element of all these is to allow the market to adjust itself and follow the market principles. This is a very important point because it is a sign that the government realizes that interfering the economy might not be a good thing after all.
  5. Risky community – Ministries hope for startups to take more risks, cooperate and form a community on its own. The ministries acknowledge that sharing and cooperation is key to overcome and address risks. Investors and startups  are also encouraged to proactively propose ideas to government as the government now has an “open-ear” policy for the industry and willing to take in good input from market players.

So, now tell me – why aren’t you looking at Vietnam yet? Not only because of the food (and coffee), but also the overwhelming energy level when you talk to any Vietnamese friends.

If you are looking for more “evidence” for the vibrance in Vietnam, check out the latest co-working space that has been setup by a group of high energy level young entrepreneurs – CirCO.

Now, that was a long. Til next time.

 

 

Advertisements

Beyond the heat

Priceless art piece

Priceless art piece

Behold – the master art piece that you rarely get a chance to see. Observe the realistic fire that depicts the current “temperature” of the e-commerce space, opening an array of opportunities to what will be coming next. The fiery fire is hot, yet people are attracted to how much it is shinning. Seems like a realistic representation of how e-commerce has been a hot space for a really long time, yet entrepreneurs and some investors are still chasing after the dream of creating the best of same kind.

Ask any VCs, a lot of them will tell you that they think e-commerce has become too “hot” over the last 2 years. “Hot” meaning too expensive and too many. Hence, VCs are generally more picky and skeptical when a founder brings along an e-commerce idea.

To illustrate my point on the ecommerce market being too saturated, here is a list of some e-commerce ventures in South East Asia (I might have missed a lot more in the market!)

Country

Domain
Brunei 365eStore (http://www.qqestore.com/) Malppy.com (http://www.malppy.com/)
Cambodia SnapyShop (http://www.snapyshop.com/) FanNow (http://www.fannow.com/) SHOP168.me (http://shop168.me/) Gladmarket (http://www.gladmarket.com/) Ecamshopping.com (https://ecamshopping.com) Little Fashion (http://www.l192.com/)
Indonesia Bukalapak (http://bukalapak.com) Sportdio.com (http://sportdio.com) Cipika Store (http://cipika.co.id) Alatproyek.com (www.alatproyek.com) RALALI.com (http://ralali.com) Gudangsofa.com (http://www.gudangsofa.com) Sportkita (http://sportkita.com) Traveloka (http://traveloka.com) RajaMobil.com (http://www.rajamobil.com/) LOJAI.com (http://lojai.com) Tokopedia (http://tokopedia.com) The Icon Art Painting eCommerce (http://theiconart.com) Tiket.com (http://tiket.com) Tombolife Herb Online Store (http://tombolife.com) ORORI (http://orori.com) trivi teknik (http://triviteknik.com) Seroyamart (http://seroyamart.com) Libby Brownies (http://libbybrownies.com/home.php) Realtyrumah (http://realtyrumah.com) Chandra Karya Furniture (http://chandrakarya.com) Kucari.com (http://kucari.com) Bilna.com (http://www.bilna.com/)
Laos Kopnoi (http://kopnoi.com) Laos Flower.com (http://www.laosflower.com/)
Malaysia Blip (http://blip.my) Fruits Paragon (http://fruitsparagon.com) Favechic (http://favechic.com/) Lelong.my (http://www.lelong.com.my/) FashionValet (http://www.fashionvalet.com/) LuvClo.com (http://luvclo.com/)
Myanmar Shwe 99 (http://www.shwe99.com/) Myanmar Online Store (http://www.myanmaronlinestore.net/) Yangon Online Store (http://www.yangononlinestore.com/)
Philippines Sister Secrets (http://www.sistersecrets.com.ph/) Shop This Easy (http://www.shopthiseasy.com/) Galleon (http://www.galleon.ph) Ametech US (https://www.ametech.us/store/) Hallo Hallo Mall (http://hallohallomall.com/) Magpalitan (http://magpalitan.com/)
Singapore Tate & Tonic (http://tatetonic.com) DRESS A PETS (http://dressapets.com) Swimfie (http://swimfie.com) Clozette (http://www.clozette.co/) Bellabox (http://bellabox.sg/) NoQ store (http://www.noqstore.asia/) RedMart (https://redmart.com/) Kwerkee (http://www.kwerkee.com/) Luxola (http://www.luxola.com/) GoFresh (http://gofresh.com.sg/)
Thailand Central Online Shopping (http://www.central.co.th) invadeIT (http://www.invadeit.co.th) Follow’s Me Shop (http://www.followisme.com) Pomelo (http://pomelo.com) Wishbeer (http://wishbeer.com) WearYouWant (http://www.wearyouwant.com/en/)
Vietnam

cungmua.com (http://cungmua.com)

XDEAL (http://xdeal.vn)

thegioididong.com (http://thegioididong.com)

123Mua.vn (http://www.123mua.vn/)

FOREVA (http://foreva.vn)

This is an intriguing scenario because some might ask – what is next?

With the many e-commerce companies in the market, the competition becomes much more intense and I can’t emphasize enough on this. This competition will be a battle of strategies and differentiation. The team that can bring in the most value add on top of the products that they are selling will be the winner in this fearsome battle where entrepreneurs will have many hair-pulling moments trying to figure out how else to make their customers happy and improve the metrics that they are being measured against. What this means is that there will be more opportunities for new ventures or ideas that exist to serve these e-commerce giants and dwarfs.

An area of interest for e-commerce companies would be on conversion ratio i.e. the probability of a lead being converted into actual sales dollars. Opportunities to pitch to these e-commerce companies will arise for analytics/intelligence ventures. E-commerce sites would want their visitors to be looking at items/goods that are most relevant to the characteristics and preferences of the unique visitors so that the chances of sales is higher. E-commerce sites would also want to know their customers better and be able to project the purchasing behavior, hence improving their inventory management protocol. In short, increasing chances of sales (so to increase revenue) and better managing inventory (so to reduce cost).

Another area of value add e-commerce sites would want to bring to their customers through improving payment and delivery experience as well as the fulfillment process. Payment has always been a key for e-commerce companies, especially when online buying is still a new habit for most countries in this part of the world. Deliver experience is also one area where a lot of customers complain about. Given the geographical condition of the region, it makes it more challenging for logistics company to tackle this issue.

To summarize my thoughts, beyond e-commerce we will see a lot more opportunities for entrepreneurs in this region to create a viable solution. As such, I believe investors should be more active in covering the space that I mentioned.

That’s all for this round. Til next time.

P/S: All the above are merely my personal rant and shall not be taken into account  reaaaaalllyyy serious decision making.

2014

You have probably seen the infographic by Tech In Asia on the biggest Series A in Asia (see link).

What it means for me:

1. Ventures for South East Asia is relatively cheap as compared to the larger Asian player(s) i.e. China;

2. There is huge disparity in terms of valuation between the rest of Asia and South East Asia – China could be a little too expensive for the time being and potentially funding would spill over to South East Asia;

3. The South East Asia story is realizing – international VCs are starting to explore into the “road less taken” e.g. Vietnam;

4. No clear correlation between market sizing (in terms of population) and valuation – ventures are less geographically sensitive.

So, what is so intriguing about this?

1. Will this trend continue?

2. Will valuation in South East Asia go up since there are observations where more funding are after ASEAN ventures?

3. At what price will VCs stop investing?

That’s all the ranting I have for now. Till next time.

FanFic: Uber X MyTeksi (aka GrabTaxi)

THE CONTENT OF THIS POSTING IS MERELY A PERSONAL SPECULATION, a speculation I made simply because my mind keeps running around the excitement of seeing more money invested into ASEAN companies.

We recently heard about the Series C funding that was closed for MyTeksi (also known as GrabTaxi). Over the last 12 months it has raised a total of US$90 million from its Series A, B and C round. So this is where I begin to think – what is next for MyTeksi (besides the huge expansion plan they have)? How will its investors, which includes Vertex who went in at Series A and Tiger Global Management who recently joined the party, exit and get the multiples they are so looking forward to? I am quite sure not many knows the answer and we will have to wait for the big announcement when it is the right time.

As I was saying, I am supposed to do a bit of speculation here, so this is what I am speculating – MyTeksi be acquired or merge with Uber.

Before ellaborating further let’s take a look at the funding rounds of both Uber and MyTeksi:

Uber X MyTeksi

Source: Crunch Base and various tech articles online. I do not own the data!

Without going into details of the comparison between Uber and MyTeksi, what I am seeing here is that:

  • both Uber and MyTeksi has been winning their investors’ hearts, in large amount of $$$
  • MyTeksi has been more aggressive in their fundraising plans, considering that all 3 rounds of funding happened in a single year.

From the observations above, I extrapolate that MyTeksi could be in the game of valuation chase so that they can be acquired or go through a share swap at a price that is lucrative for the investors. The follow on question should be “Who will be the buying party?” – my guess is Uber.

I believe all that is happening to MyTeksi will somehow benefit Uber, mostly on pushing up the valuation of such business models. So at the end of the day, we are not only seeing competiton between Uber, EasyTaxi, MyTeksi, Taxi Monger etc. But this is also a form of “collaboration” through you-up-your-valuation-so-I-will-up-mine approach.

A couple of reasons why I think Uber would love to join forces or acquire MyTeksi:

  1. MyTeksi is still ahead of Uber in conquering ASEAN, whereas Uber is strong in ex-ASEAN markets, so this provides inorganic growth to Uber;
  2. Uber can then include Taxis into its fleet, joining the expensive cars that they have been using – creating a GIANT taxi company;
  3. Given the recent government pushbacks of some ASEAN countries, it would make more sense for Uber to acquire/work with a local player such as MyTeksi.

So here you go, my speculation based on my imaginative brain. Again, all speculation without serious research nor inside information. In short, just another rant from me.

Til next time.

Peach..I mean Pitch

peachzdfgad

Do you know that peaches are native to China from where they spread to rest of the world via ancient silk route? Peaches travelled across ocean to get to the other regions, and this is what we hope our pitches can do too (not literally over the ocean, but to get our messages across).

Many times when I engage a founder, the founder would be most engrossed in talking about their idea, vision and how different and unique the concept is. While this is an important sign that a venture capitalist would love to see in the founder, it is also important not to overdo it. Otherwise it would seem like the founder is trapped under his/her own bubble world (of course, this is just my personal opinion).

Some of the questions a proper pitch should address are:

  1. What problem are you trying to solve?
  2. How do you plan to do that?
  3. How far are you in building this solution?
  4. What are the characteristics of your target customers and users?
  5. Who are your competitors and who are the stakeholders in your supply chain?
  6. How do you monetize?
  7. How does your financial projection look like?
  8. How much investment is needed and what instrument do you prefer?
  9. How will you and/or your investors exit?
  10. What is the next step?

There you go, the perfect 10 slides! Of course, this is just my personal opinion.

That’s all for today. Til next time.

The Price Tag

Since the ancient time of venture world, valuation a.k.a. the price tag has always been one of the key investment considerations for both the venture capitalists and entrepreneurs. Most of us get hyped up by the news of funding acquired by ventures around the world and the valuation that are signed on the term sheets.

Nutanix raises Series E on a valuation of $2 billion”
Square raises $100 million at $6 billion valuation”

So here is my first question – are these real valuation or simply just another bubble that is taking longer to burst (compared to the Dot Com crisis era). Blessed with the opportunity to hear from the lead venture capitalists from the States, it seems like most of the voices are suggesting that this is not a bubble, but there could be a correction in the near future (maybe very near). Now back in South East Asia, it does seems like nobody really cares whether this is a bubble or not. Everyone who has a regional play is still riding the wave of the inclining valuation. So here are my observations:

  1. No one wants this to be a bubble. If can, most people want to see prices going up.
  2. In our part of the world, we say we don’t care but we actually care when entrepreneurs come to us with a price tag that could choke us

So where will we be heading to? I say probably a few more years of uphill until one of these big companies who have been funded by the large venture capital firms start to collapse due to whatever reason.

But this thought led me to my second question – are we getting too obsessive with the price tags? I think there should be different types of price tags for different type of startups. If you are a running a business that is focusing on local problems, use a local currency based price tag. If you are a regional setup that has customers across countries, then the valuation should be a price tag that makes you comparable to your peers throughout the region/continent. The point of having such price tag, my humble opinion, is so that you know how far you have progressed relative to the rest. As for venture capitalists, I do think more focus should be on the fundamentals rather than overweighing the valuation factor. Especially for early stage funding rounds – do we even know how reliable are these valuation figures?

Anyway, that’s all the ranting from me today. Til next time.

Risky Martin

ricky martin

Nope. Not about Ricky Martin. This picture is used to attract more attention. I know, I know. Probably not very effective, but hey, can’t blame me for trying right?

Anyway, my rant today is about another Martin. Martin is a startup founder who is raising his Series A funding. He approached this particular venture capital firm (let’s name the firm MMYB, which stands for “My Money, Your Boss”). To cut the story short, the only feedback that Martin got is “We do not take business model risks”. So Martin went on his way and ended up with funding from another prestigious VC firm and exited with millions of return.

So what is my rant about? I do not agree with how some VCs think that they can actually leave out business model risks when managing portfolio risks or assessing a new deal. Essentially, when a VC looks at a deal you are looking at the possibility of scaling the business and approaching the problem the right way. However, this expansion process often require the need to pivot (pardon me for the overused term). As such, a VC can’t statically assess a venture’s business model risks.

The moment you think that you are not going to take business model risks, you are going to miss out on opportunities where capable founders would be able to adapt and reconstruct the business structure. At the end of the day, the best bets are usually on the entrepreneurs. Not the idea itself.

Something that I always believe – all ideas can work, business model can be structured to fit into the right market segment, but not every VC can come across good founders who would do what it takes to give you the multiples.

That’s all for today. Til next time.

Funding a Marriage

This crossed my mind this afternoon when I was dealing with a case where relationship between the entrepreneur and my venture capital firm has gone sour. In essence, entrepreneurship and venture capital both are businesses of relationships. So there is no other way better than using a typical stages-of-relationship process chain to describe an investment into an entrepreneur’s idea.

Funding a marriage 2

So when you are trying to get your idea funded, you are actually trying to get into a relationship with the venture capitalist of your choice, vice versa. Choose wisely.

Black Swan

the_black_swan_by_galen_marek-d67j4alImage by Etienne-Ripzaad

 No. This post is not about Natalie Portman. Even though you can call her a black swan. Rare and hard to come by.

What I am addressing is the likelihood of a Facebok, Uber etc. in the west; Ali Baba, Wechat, Jobstreet, My Taxi etc. from the east. As much as we might categorize these firms as black swans, the sizes are different. We don’t yet have a billion dollar venture capital backed firm in the east, and yet everyone is trying to build the first few billion dollar firms in Asia.

But if you take into account of the number of successful ventures from Silicon Valley, black swan doesn’t seem so black after all. Bubble or not? That is a question that venture capitalists are trying to figure out. Let’s take a step back and look at our basics. When Nassim Nicholas Taleb developed the black swan theory, he defined black swan events as events that:

  1. causes huge impact
  2. are unable to be explained by scientific method
  3. are unforeseen or unexpected due to psychological biases

Any successful venture would obviously tick the first check box of having a huge impact. If we take a step ahead, we can extrapolate and do up a hypothesis that says “existing or previous successful ventures are making the function of a successful venture more explainable by scientific method and less unforeseen due to the changed psychological biases. With Uber being a case of success, there is less doubt that firms like My Taxi could be very much successful as well. The key is implementation and that depends on the people who implements the strategies. My point here is that as these black swans are becoming more of a white swan, the traditional methodology of defining a black swan may no longer work. Given such, the expensive valuations that venture capitalists are paying may be justifiable at the end of the day and it may no longer be called a bubble, but more of a higher-cost-of-living kind of scenario.

I believe valuation should come fourth in ranking when a venture capitalist evaluates a deal. Instead, the more scientific methodology should be:

  1. Concept evaluation
  2. People and team dynamics
  3. Sustainability of chemistry of the two points above
  4. (Finally) valuations and agreements

At the end of the day, percentage of ownership is not the main concern if what we are trying to do is just to get into a good deal.

Done with my ranting and two cents.