3 VCs Weigh In on Venture Building
2021 was a busy year for Headline Asia. We rolled out our official rebranding to Headline Asia in May, announced the close of Fund 4 at over US$100 million ends of July, and partners of Headline Asia founded Infinity Venture Crypto (IVC) in September. The world of venture capital move quickly, and to stay in the race, VCs need to think on their feet.
Three venture capital partners, Matt Cheng (Founder of Cherubic Ventures) Jamie Lin (Founder of AppWorks), and Joseph Huang (Partner of Headline Asia) recently shared their thoughts on intriguing five questions from this month’s “AppWorks Media MeetUp: Business Tips for Successful Venture Capital,” a monthly media event for the industry, that happened on January 10.
Investing up to 20 deals a year, AppWorks closed its Fund 3 last summer with US$150 million. In the AppWorks Accelerator’s network, there are 435 active startups and 1402 founders. Cherubic Ventures also made historical moments with their portfolio companies last year: two IPOs and one acquisition out of 200 portfolio companies.
Our Partner Joseph Huang talks with Matt Cheng from Cherubic Ventures and Jamie Lin from AppWorks about growing startups.
How do you describe the relationship between venture capitalists and entrepreneurs and what is your rationale?
Matt Cheng (Cherubic Ventures): As we focus on angel-stage startups, I would say we are always in two roles: one is being a sounding board for founders to bounce off their ideas and the other is a go-to guide. Because we witness businesses from zero to one, [that’s when] founders need advice, insights, and feedback.
Joseph Huang (Headline Asia): It’s [akin] to the process of dating and marriage. You need to look at what they want and what we want, then try to make sure this works for both sides. Founders know what they want when they come to us, so we do our best to provide things they need, such as support for the Japanese market.
Jamie Lin (AppWorks): It depends on startups. As Matt mentioned, you need to spend time with startups in going through their early stages. As Joseph said, a startup and a VC are like a couple. For several years, you cannot stop anytime you want after you invested in the startup, just like it’s hard to [get a] divorce.
How do you evaluate startups and decide whom to invest in? What is your proudest investment in the past few years?
JH: We invest in founders. The founder of Kiwibot who started a food delivery robot is a problem-solver. He is able to overcome hardships and realize his ideas.
MC: I explore the stories behind startups: why this is an important market and why this founder stays here for this problem. During the time Calm started their business, no one ever heard of mental health care. But I know this is the guy who is going to stay forever because of his passion.
JL: Blocto creates a very user-friendly product and it’s a global solution for daily use. Taiwan did not catch chances in Web 2.0, but now we’re riding the trend of Web 3.0 and spreading it to the world.
What are the suggestions for entrepreneurs in terms of mindset, timing, and other preparations before fundraising from VCs?
JL: First of all, high return is very important. VCs expect 50 percent or even 100 percent because two-thirds of portfolio companies' businesses [have a] hard time surviving. Second, VCs are different. You need to know which one fits you. Third, you must understand, you will be with your VCs for five to 10 years. Be responsible and be ready for a long-term relationship.
MC: First, do not reach out to VCs only when you’re fundraising. People value how we get to know each other. In Silicon Valley, founders send updates to VCs even [if] these VCs are not interested in investing in their businesses. However, when VCs see your company is growing, they become interested in you.
JH: VCs’ advantages and expertise are different. It really helps if you understand what the VC is good at and align yourself with the VC. For example, you need to reach $1 billion to IPO in NASDAQ, but if you want to go to Japan, things might be easier and totally different.
How do VCs manage their brands to attract startups to accept their investment? What kind of help can you offer to startups? Are there any similar methodologies or systems to help new entrepreneurs and start-ups?
JH: As I mentioned, Headline Asia has a great advantage in Japan market. We have a strong network in Japan from IVS, one of the biggest tech conferences in Japan. In Asia, Japan is the best market, and we’re the best if startups are targeting Japan.
MC: Cherubic has two features. First, we are founder-friendly. Our consistency helps us build a reputation in our community. Second, we are able to teach the ropes and share experience from our portfolio companies in a different market with different products.
JL: AppWorks Accelerator has a strong ecosystem. Echoing Matt, the founder-first concept also helps us build up our reputation in the startup community.
How can entrepreneurs or start-ups make good use of the resources of VCs once they become a portfolio company? Or what kind of assistance can a portfolio company ask for?
MC: Do not regard [the] VC as your boss. Feel free to ask for resources. For example, Silicon Valley entrepreneurs send monthly updates to VCs and thank them at the beginning of the email. This actually puts pressure on VCs if they don’t see their names in the monthly update.
JH: You can always talk to your investors. We’re here to make sure you succeed. When 17Live entered the SEA market and didn’t work out, we suggested and helped them go to Japan.
JL: I agreed with Matt and Joseph. Additionally, startups can ask VCs for help before their investments. Just like why people live together before they actually get married. You’ll know what it looks like when you work together.
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