This is one of the articles belonging to e27’s Meet the VC series, where we chat with venture capitalists in the startup space to find out more about how they do what they do.
Meet Chua Kee Lock, Group President and CEO, Vertex Venture Holdings, and President and CEO, Vertex Venture Management.
Chua joined the Singapore-based venture firm Vertex Venture Holdings in 2008 to grow the company’s portfolio in Greater Asia and the US.
Vertex is a wholly-owned subsidiary of Temasek Holdings, an investment company owned by the Government of Singapore. According to its official website, the former’s investment focus includes these fields: clean tech, communications, consumer and services, electronics and semiconductors, healthcare, and software, Internet and media.
Over a brief phone call, Chua tells e27 about how he unwinds after a day of meetings and speaking with potential partners and entrepreneurs located all over the world, and what he looks for in potential investments.
Here are edited excerpts of the interview.
How did you get involved with venture capital?
I got into venture capital through a combination of accidents and some kind of choice. I started getting involved in venture capital in 1985 when I was working for NatSteel, a Singapore company which has established its small venture firm; in fact, one of the earliest venture firms in Southeast Asia. They have an office in the US, and I was sent to the US to be based out there for a period of time. So that’s how I got in.
Subsequently, I got involved largely through Vertex because Temasek wanted to rebuild its venture activity; they asked me to come in and help put it together — that’s how I got involved the second time.
In between, together with a few friends, I co-founded a company — Mediaring — which is a VoIP company based out of Singapore, providing Voice over IP way before Skype, way before everybody. So that was my entrepreneurial experience.
What challenges did you face when you first started investing?
As an early day venture capitalist, you need to figure out where your networks are because unless you have the network, you can’t find certain opportunities. Unless you have the network, you can’t really call upon people to get help to brainstorm or talk about some of the things you’re trying to do.
You’re trying to invest in innovative and disruptive technologies or companies — which are usually brand new or different. So, how do you know if this is the right one? Sometimes, it’s useful to talk to a few people — people who have done different things, and you know, have different kinds of perspectives, and from there, you can form a better idea or educated opinion, and come to some conclusion about what is best — what makes sense and what doesn’t. In the early days, the hardest part was to build a network of contacts and friends — people you can talk to and discuss things with — and at the same time, having a network is a way for you to help the company after you have invested.
After investing in the company, you sit on the board, you need to help the company, right? Unless you know enough people, it’s very hard to help the company in some way. That’s something you have to do over time, so that’s the hardest thing when starting out.
How has the startup ecosystem changed since you first started?
In Southeast Asia or in Asia? If you talk about Southeast Asia, I think clearly it is improving — it depends on which market.
Singapore is, of course, making steady improvements over years largely because of many of the encouragements from the government and the support from agencies.
Indonesia is making a lot more improvements in the recent years, partly because we’re seeing a lot more returnees and a few more successes. Being a big market, everybody believes that this could be the next China, so there’s a lot more VCs spending money, people willing to try.
Beyond that, the rest of Southeast Asian markets are still in very early stage development; they need more things to be done in terms of investors, entrepreneurs, etc.
Of course, in Asia, India and China are the two big ones — China is much ahead than India in terms of VC funding, venture capitalists, entrepreneur circles, players. India is catching on behind China, but I think because of the recent successes in India, people are much more bullish now; so you can see more people going to India aggressively.
What sort of startups do you invest in? Why?
Vertex as a group, besides Singapore, larger South Asian market and China, also has a team in Israel and the US. Hence, we focus mainly on two sectors. The bulk of it is in the information technology sector: this could be enterprise software, mobile-related, some energy technology hardware, any information or ICT-focussed thing, where we are more of an early-stage investor.
We also have four or five people focussing only on the healthcare sector i.e. pharmaceutical or medical device sector, looking for early-stage ideas and opportunities that they can make or improve — technology in healthcare and treatment.
Walk me through a typical day for you. What time do you wake up? What happens next?
For me, typically, I come in to work at about 7 AM or sometimes earlier. Typically, this is the time nobody is in the office. Sometimes, I have a conference call with the US — partners to talk about some ideas. Then around 9 AM, we spend some time looking at companies and meeting entrepreneurs.
Sometimes, there will be board meetings or calls — it depends. Sometimes, we have lunch or coffee with potential entrepreneurs or business executives who have retired, or people with some suggestions about certain things. There are a lot of times where we meet people — be it for a deal or opportunities or even networking. Sometimes, in the later part of the afternoon, there will be occasionally a phone call between us and our Israel colleagues to discuss opportunities.
After finishing everything, I go home and have dinner. Then I sit down and do some reading or surf the net. In terms of exercise, I go running, listen to some podcast — try to see what is going on. Other than that, I used to play a lot of golf, but I don’t any more. I also go out for dinner with friends or family to catch up.
What are the traits you look for in founders and what are those that you absolutely cannot stand?
I guess, generally, what we look for in the opportunities boils down to the people. Try to understand what he’s trying to do, understand if he has the conviction, if he has what it takes to ride through the journey. In any startup, especially early-stage startups, it will take six, seven or eight years before what you do becomes successful. So, the initial three to four years are always very challenging. So, the group of people need to have passion and conviction. They also must be able to accept, at some point in time, that they are not perfect. They need to have people to work with them. These are the things we try to make sure that the founders or the entrepreneurs understand. They need to have the willingness to accept certain discussions. For us, it is to see that the person is willing to listen. We may not be right, we may not be wrong, but at least there’s some perspective that the person is willing to keep an open mind and come to the right conclusion.
We usually spend a lot of time trying to understand the person, understand the team and what they’re trying to do. Ultimately, whatever the idea is, it’s all about execution. The person must be able to execute.
What we dislike… I guess whatever that’s not in that category is what we dislike.
Are there deals you regret missing out on? What’s the reason for missing out on those deals?
For Vertex, in the very early days, we were shown a deal called YY. Somehow, we just couldn’t see what the company’s potential value could be. So that’s one company I wished I had a different conclusion.
Are there deals you regret being involved in?
For every one that did not pan out, I guess we always wish we had learnt more. It always turns out that the entrepreneur or the company was not as entrepreneurial as we like, and when things change, they somehow were not able to adapt to that change. There are many such examples, unfortunately.
Image Credit: digitalpimp./CBD view From Chinatown.