Kuan Hsu, Principal, GREE Ventures Asia, is one of the four people behind GREE Ventures, having established the fund’s Southeast Asian presence since 2012. GREE Ventures was initially founded as the investment arm of Japanese mobile and e-commerce giant GREE Inc.
A native of Taiwan and having resided in Singapore for the past five-odd years, Kuan led investments in Indonesia-based price comparison site PriceArea, and saw the said company get acquired by Korea’s Yello Mobile for an undisclosed seven-figure sum.
I met Kuan at Raffles City Shopping Centre’s Costa Coffee — a usual hangout for the investor whose office is situated in the building above the cafe. It was my second time meeting him at this particular coffee shop, where he seemed to be rather chummy with the baristas. Most of the interview was conducted in English, with the occasional Mandarin in between replies.
Kuan reads across genres and even dabbles in photography, but like most shutterbugs, he prefers to be behind the camera. He has an extensive knowledge of pop culture references, and would possibly win in a Breaking Bad, Game of Thrones or The Matrix trivia quiz.
You’ve got to give it to Kuan, who in fact managed to reference Morpheus, a fictional character from The Matrix, during our interview. Morpheus, for those who are unfamiliar with the trilogy, is a mentor-type character to Neo and the other protagonists. More than just a mentor, Kuan likened himself to a sparring partner for the entrepreneurs under the firm’s portfolio. “I’m there to get into the ring with them,” he said.
To date, GREE Ventures has invested in 15 startups, including Singapore-based cosmetic startup Luxola, Philippines-based mobile rewards startup YOYO, and Indonesia’s fashion e-commerce site BerryBenka. Not a single investment is in the gaming industry, which is strange, considering that GREE Inc itself is famous for its gaming offerings. “GREE Ventures does not invest in games. We feel that to invest in games, we should just let the experts at GREE do it,” he clarified.
According to an official document, GREE Ventures is focussed on verticals such as consumer internet, mobile, software and cloud services. In May 2014, GREE Ventures raised its second fund which is sponsored by the Japanese government and Japanese corporates. The fund will invest US$50 million, and target startups looking for Pre-Series A or Series A investments.
Given that GREE Ventures’ investments have mostly been in the ‘Series A’ realm, it is surprising that the investment arm is now looking to help startups with Pre-Series A rounds. “My hypothesis is that if a good team has a good founder, it has a good founder no matter which stage it is at,” said Kuan. “Why do you need to wait until Series A? It’s also in our advantage to identify good teams in the process.”
The firm will continue to look at co-investment opportunities. “We don’t see ourselves as lone wolves,” he said.
In a given year, GREE Ventures meets about 800 startups. Which startups make the cut, and which doesn’t? Kuan emphasised, “Team is still the most important factor,” explaining that for many startups, business models can be adjusted. A pivot is nothing to be ashamed of, if it is well thought out and can be justified. He continued that so far, the investment arm has not experienced any sort of pivoting from its portfolio companies.
That, however, does not mean that opinions about where the company should be headed were always the same. A good case in point would be Indonesia-based Bukalapak, which received an undisclosed amount of investment from GREE Ventures. Kuan shared that the founders of Bukalapak had wanted to work on a number of ideas, instead of focussing on the original product.
“There was a difference in opinion on direction,” he said. From the investor’s perspective, working on one idea would allow the team to show growth and traction, and grab its next round of funding. As far as he was concerned, putting time and resources into too many baskets would mean that the team would not have anything to show for any of the projects it was working on.
Kuan said, “We did not force them (founders of Bukalapak) on anything, but rather allowed them to experiment. (We provided) coaching along the way but because they are a great team, they quickly saw their judgment error and were mature enough to recognise their failure and turned course. (They) followed our advice and are now kicking butt in all their KPIs (key performance indicators). Fail fast, and fix course faster.”
Achmad Zaky and Muhamad Fajrin Rasyid, CEO and CFO respectively, Bukalapak added, “Even though we have had our differences, Kuan stood by us. He was stern yet patient, always helping us to keep our eyes on the most important ball.”
A great team usually starts with a great leader. Kuan said, “The entrepreneurs we look for are people who are confident in themselves and can elicit confidence from others.” Additionally, he cited Darwin: it is not the survival of the fittest; whoever that can adapt to the fast changing world of technology and startups will win. The willingness to work with other people and being coachable are also attractive qualities. He also shared why he invested in certain companies. For Luxola, he said, “Alexis (Horowitz-Burdick) has previous experience. When we interact with her, she has a clear idea of how she will make money, who the competitors are… We want founders who have a clear idea of the overall big picture and how they fit into the big picture.”
Horowitz-Burdick also shed some light on a venture capitalist’s most important role — helping a startup in subsequent fundraising efforts. “Kuan was one of the very few VCs who understood my vision when we were raising Series A funding,” she said. “He believed in us, funded our Series A round and subsequently leveraged GREE Ventures’ strength to help us raise a successful Series B round,” she added.
Pet peeves, on the other hand, include entrepreneurial myopia. Founders who do not understand the seriousness and the size of the problem that their product or service is trying to solve should think twice before pitching Kuan. Not understanding the competitive landscape of your product or service is another pitching no-no.
“On the other hand, startup founders also need to be selective about which venture capitalist to receive funding from. Be discerning,” he shared. Founders should talk to other entrepreneurs, and find out if a particular venture capitalist will be a good fit. Chances are, the best startups to talk to are the ones in the venture capitalist’s portfolio.
One example is YOYO Holdings. Yosuke Fukada, Co-founder and CEO, YOYO, told this author that every week, he would update Kuan with the team’s progress. But it’s no one-sided relationship; Kuan would often send him information and suggestions about target markets, management and other subjects. “As you know our company’s founders are all Japanese, and he (Kuan) knows Japanese very well,” he added.
On average, GREE Ventures aims to have an investment decision within three to four weeks. Paperwork then takes a bit longer — about four to five weeks if all goes well. YOYO is a good case in point, given that it announced raising US$1.3 million from GREE Ventures, CyberAgent Ventures and Incubate Fund in less than two months of meeting leading investor GREE Ventures post Echelon Satellite Philippines 2014.
Going forward, Kuan shared that the firm is looking at other markets such as Malaysia and Thailand. The firm’s CEO, who is based in Japan, recently scheduled a trip to capital cities Kuala Lumpur and Bangkok respectively to meet with startups, venture capitalists and other organisations in the ecosystem. He added, “There are many interesting teams in Thailand. The place is definitely heating up.”
“It matters less where the startup team is based than what the team can do,” concluded Kuan.
All photo credits: Joash Wee