Koichi Saito, Found & General Partner at KK Fund

Koichi Saito, Founder and General Partner at KK Fund

Back in March, we reported on the launch of new Singapore-based venture capital firm KK Fund. While the seed-stage fund headed by Koichi Saito — formerly a Director at IMJ Investment Partners — still hasn’t disclosed its exact size, Saito did share some exclusive goodies with e27 when we caught up with him over coffee yesterday.

US$250K into Malaysia’s Be Malas — the rise of “chatty commerce”

At the end of May, we commented on the “sprouting up” of Magic clones across Southeast Asia. One of these, which only recently launched, is Malaysia-based Be Malas. Saito revealed that he had been looking to invest in something in this space for some time now, and ended up leading the seed round of US$500,000 into the startup.

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“The reason why is that ‘chatty commerce’ is becoming a trend,” Saito said. While these style of apps are typically referred to along the lines of ‘SMS-based, on-demand delivery services’ (ala Magic and Operator in the US), Saito likes to keep it simple: “I just call it ‘chatty commerce’.”

LINE is also making moves in this area with the launch of LINE Pay, and Facebook isn’t wanting to be left behind with its new payments features for chat. Snapchat also moved into the space with its Snapcash service announced back in November 2014.

US$200K into Malaysia’s service marketplace Koadim

While the US$550,000 seed round into Kaodim was reported back in February, led by East Ventures and with participation from a number of other VCs including 500 Startups, Saito chose to keep KK Fund out of the limelight at the time. But now he reveals that KK Fund was in on that round — US$200,000 in, to be exact.

“This is a clone business of… proven business models [in the US]. They have a first-mover advantage in Southeast Asia, and actually after our investment a lot of competitors are coming up,” Saito said. This was in fact KK Fund’s very first investment, even before Saito officially announced the new fund to media the following month.

A third undisclosed startup investment

KK Fund has made a third investment, but is not yet ready to announce. According to Saito, the founder wants to stay under the radar, sneakily and quietly proceeding towards a Series A. What he did reveal was this: “Malaysia, marketplace.” Yes, it appears Saito is super keen on the Malaysian ecosystem and the kind of startups coming out of it this year.

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While Malaysian startups that have a first-mover advantage and want to scale quickly often take VC money, Saito’s observations have been more bootstrapping on the fin-tech side. “They have a very global mind,” he said of Malaysian founders, adding that past success stories including Patrick Grove’s Catcha Group and Anthony Tan’s GrabTaxi have “really inspired Malaysian startups”.

Why have all three of KK Fund’s investments so far been in Malaysia? “Coincidence,” Saito says, but admits that “I like Malaysian founders,” and compliments them on their excellent command of English and reliability.

“Coming very soon”: Indonesia and Philippines deals

KK Fund’s next investments will be into Indonesia and the Philippines, Saito revealed. All we have to go on for one of them is that it’s a marketplace for furniture, and the second one is in the finance space. Both deals have been signed already.

Understanding the mind of Koichi Saito

Saito graduated with a major in Economics in Japan before working as a moneylender to SMEs. From there, he moved on to investment banking and private equity. His philosophy is that there’s little point congratulating an investor on making an investment — “Anyone with money can invest” — because what matters is how, and if, you get to the exit.

“The timing of the exit is much more important than finding good startups. Maybe that’s slightly different than other investors,” he said. That’s not to say he’s impatient for exits or only looking to invest over the short-term. His typical investment period would be somewhere around five years, but it “depends on the economy and the market situation”.

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“Nowadays what’s happening is after Series B investment a lot of startups are facing problems getting to Series C. If they got US$10 million funding at US30 million or US$40 million valuation, after that who’s going to buy the startup? In the current situation, the number of buyers who pay US$100 million for acquisitions is very limited in Southeast Asia,” Saito said.

So, the founders and investors should closely look at the exit situation. However, I expect there will be more buyers who will pay more than US$100 million in five years in Southeast Asia,” he added.

During his previous life at IMJ Investment Partners, he was mainly investing in startups with proof of traction and performance, whereas now he says that has changed. With KK Fund, he’s looking much more at teams without the same degree of proven metrics.

“Now, I really care about the founders background and the space more than when I was in IMJ,” he concluded.