In this month of Stories of an Investor, we caught up with Kuo-Yi Lim, Managing Partner of Monk’s Hill Ventures, one of the leading Venture Capitals in Singapore and Southeast Asia. Kuo-Yi gave his take on market timing risks, how should founders expand into the fragmented & non-homogenous SEA market, and the trends he is closely observing moving forward.
Hi Kuo-Yi! Thank you for taking the time to do this sharing! Starting off with a little about your background, how did you make your way into the world of early-stage investments?
Kuo-Yi: I am trained as an engineer with a specialization in nanophotonics, though my early experience with the internet was in the early 90’s when I worked as a campus helpdesk consultant to help pay for my university studies. After meandering through research and management consulting, I was drawn back into software and spent more than a decade in 3 startups. This paved the way for my first venture investment role as the CEO of Infocomm Investments in 2010. Infocomm Investments – a predecessor component of SGInnovate – was a growth-stage fund fully owned by the Infocomm Development Authority (IDA) of Singapore. We co-invested in the likes of Twilio and Quid with other top VC’s around the world.
I then started and co-founded Monk’s Hill Ventures in 2013 with my partner Peng T. Ong, whom I have collaborated with since 2002. Monk’s Hill Ventures is a venture capital firm investing in early-stage tech companies, primarily Series A, in Southeast Asia. Our vision at that point was to build a venture platform that brings on founders and operators like ourselves to fund and support founders in SEA. We continue to build towards that vision today, and have the good fortune to be working with some of the best founders in the region.
With better and more quality startups and founders in the ecosystem, how can startup founders cut through the noise and find the right investor for their startup?
Kuo-Yi: Fundraising is as much an exercise of founders selling their ideas to investors as it is them looking for a match with the right investors. It is important for founders to align themselves with investors that share the same values in building a company and vision for the business. I believe it is important to be upfront and transparent about the opportunities AND challenges in the business. Early-stage investors should be able to size up the ambiguities and risks, build conviction in the team and go into an investment with a realistic view of what the next many years may entail. Founders should not overly sugarcoat the realities that they face, though they need to communicate their excitement about the opportunities.
How do you assess market timing risk when evaluating start-ups?
Kuo-Yi: We take a first-principles approach in making investment decisions at MHV. We break down ideas and business models to understand the fundamentals. We then spend time understanding the team’s values, motivations, purpose, and ambition. We enter into conversations with founders with a lot of humility and a fundamental curiosity about why the founders are motivated to devote their life and energy into the venture. By building conviction around these elements, we then seek to partner with the founders if they would allow us. None of this is about timing – building a lasting significant business takes a long time and it is quite impractical to ‘time’ the market.
Kuo-Yi Lim, Co-Founder & Managing Partner of Monk’s Hill Ventures:
“Early-stage investors should be able to size up the ambiguities and risks, build conviction in the team and go into an investment with a realistic view of what the next many years may entail.”
How is MHV doing due diligence in the new reality amid Covid-19?
Kuo-Yi: Since the founding of MHV, we have systematically and purposefully built out a team of investment professionals located across the region, with presence in Singapore, Jakarta, Ho Chi Minh City, and Bangkok. Our team members are typically familiar with the ground and the communities. This approach has been immensely helpful during the pandemic.
Given the long-standing relationships we have with many founders and ecosystem players in various countries, we continue to engage companies and are actively investing. Due diligence is still done very much on a local basis. We have not done any investment purely through Zoom; there has always been in-person contact between our team members and the companies. In short, it has pretty much been business-as-usual when it comes to the due diligence of investment opportunities.
Given the fragmented and non-homogeneous SEA market, how would you advise Singaporean startups looking to scale regionally?
Kuo-Yi: It is a given for Singaporean startups with any ambition to become significant to start thinking about expansion early, whether regionally or globally. Thinking hard about building organizations and cultures, oftentimes including processes, that scale well beyond borders.
Network aggressively. Start building a wide reach of associates, contacts, and potential future hires. Leverage folks from the headquarters to launch new markets, but hire locally to run the businesses over the long run in each local market. Focus on leadership development within the team; a group of smart, motivated, self-driven, and relentless leaders is the best asset one can have.
Ending the session, “New Normal” is a phrase being thrown around a lot lately. In your opinion, which industries/ trends are you bullish about in the “new normal”?
Kuo-Yi: The pandemic has accelerated and normalized a lot of behaviors, e.g. video conferencing and online commerce. Technology companies have benefited from these and almost all economic sectors are now looking hard at how technology plays a role in the future. We are optimistic that digital-first companies will begin to emerge and challenge across all verticals, particularly those with unreasonable margins and laggards in adopting new technologies.
At the same time, we also believe that a lot of ‘old normal’ will return with a roar. For example, we are bullish about travel – we are certain that when the borders open up again in the not too distant future, people will return to travel in a major way. No amount of virtual or digital experience can replace the emotions of physical travel.
