Being at the forefront of the Southeast Asian venture capital scene, our summer internship in Insignia has been truly eye-opening. What began as a foray into the world of VCs turned into three months of 360-degree exposure, from sourcing all the way to portfolio management.
Our takeaways from those three months
- Find the best startups by looking at the stars.
- Founders are the pulse of venture scene.
- The real grind for VCs happens post-money, working with unstoppable founders to build great companies.
Finding the undiscovered by looking at the stars
VC firms make money by investing in companies they believe to be poised to make exponential returns down the road, but how do they find the ones that will truly shine amongst all the companies out there? It was amazing for us to witness the sheer amount of companies the team is exposed to on a daily basis, with all the calls, meetings, and events. While there isn’t any fixed formula, sourcing is much like stargazing.
Broad market trends are useful in identifying emerging opportunities in the region. If you’ve ever gone stargazing, one of the first considerations viewing the night sky is knowing where you are stargazing from. In the same way, it’s important to be familiar with the environment we’re in — Southeast Asia — vis-a-vis other markets like the US and China. For example, the payments ecosystem in Southeast Asia is still largely cash-dominated, and thus ripe for disruption by fintechs.
Aside from the bigger macro trends, drawing parallels between successful models in mature markets — the star innovators in their industries — and potential investments in Southeast Asia is a good way to gauge the latter. That being said, comparisons require a deep understanding of the region, down to the finer cultural parlance and social behaviors of each country. In this regard, it helped that we worked with colleagues from every major economy in SEA.
A large proportion of a VC’s typical day is spent sourcing for potential investments, and there’s always a race against time to find companies that may one day evolve into the region’s next unicorns. With so many ideas shooting by, sourcing requires VCs to think on their feet and act fast. This rhythm contributes to the fast-paced learning environment we found ourselves immersed in at work.
Founders are the pulse of the venture scene
Connections and networking can bring you to the best deals. At the same time, an early-stage investment in a company is akin to investing in the founders. The strength of the founding team can make or break the business. What makes good founder material? There is no one-size-fits-all description of what an ideal founder should look like, but there is one key trait all great founders have – the “do or die” mentality. In the start-up world, ideas matter, but execution matters more. The best founders waste no time hesitating getting their hands dirty to bring their ideas to life.
The real grind happens post-money: working alongside unstoppable founders
What happens post-investment is a huge part of the VC scene. The best VCs work alongside founders to build the best companies. Regular calls with founders, hours in the meeting room brainstorming strategies for portfolio companies is a common sight. Our time in Insignia shed more light on the common challenges start-ups founders face daily.
Hiring tops the list of challenges founders in Southeast Asia face, whether the company is a seed-stage securing the first few employees or a post-Series B scaling up to a 100 people. From searching for a co-founder to expanding the team across markets – hiring the right talent for the right roles is key. This is where VCs internal networks come into play to connect founders to these top talent. For tech talent in particular, Insignia also has in-house tech team to support portfolio companies.
As aspiring start-up founders, our main takeaway is that venture capital is not just funding going from investor to portfolio company; it’s a concerted effort to build great companies. Just as VCs invest time in their portfolio, so do founders invest time in finding and working with the best VCs as well. After all, spotting the next unicorn isn’t as simple as answering “Who do we invest in?”, but asking — “How do we build the next unicorns of Southeast Asia?”
Interested in answering this question?
Join us at https://career.insignia.vc/position.