Dusk had just arrived on a typical Singaporean spring day just over one year ago. JFDI Co-founders Wong Meng Weng and Hugh Mason were walking through the Istana Park, having just come back from the Presidential Palace. Frogs were croaking.
The two were leaving the Founders Forum 2015 — it was a suit-and-tie event, waitresses were serving satay, Singapore’s Prime Minister Lee Hsien Loong had just given a speech supporting the tech ecosystem (displaying the Sudoku puzzle he wrote with C++), Facebook Co-founder Eduardo Saverin had some nice things to say.
“It was really quite a poignant moment, we walked down from the palace, right to the gate on Orchard Road, waved to the security guard and walked out. We thought ‘wow, that’s the end of an era. It is like startups are mainstream now,'” Mason told e27.
“It is like when your grandma joins Facebook and you think, ‘oh! things have changed’. And that’s OK, that’s the way life goes. That’s cool,” he added.
The two were right. Entrepreneurship has gone mainstream, revealed more than ever just last week by the resounding support for the Series A raised by Glints, a company started by a founding team of college dropouts.
In this different environment, JFDI has made official today a company pivot that will result in the permanent shutdown of the accelerator programme — widely considered to be the pioneering accelerator in Singapore’s startup community.
JFDI will now be co-venturing with corporations to try to marry the agility of startups, and the speed at which they can deploy risk capital, with the scaling potential of multi-national corporations.
The team is hoping to help the multinational supertankers connect with little speedboats that can go off and find the opportunities and add agility to the massive corporations.
Mason said JFDI was investigating the Southeast Asian market, an intriguing region with a large market of about 600 million people — but one with a scaling disadvantage because, unlike China or the US, there are many countries, currencies and languages within an equivalent geographic area.
“Multinationals have already solved that problem, they’ve already got friends in each country. So we thought to ourselves, if we can connect startups to multi-nationals then there is a potential for [the startups] to scale and achieve regional scale which is what we need,” said Mason.
JFDI is partnering with corporates like Bosch and Mediacorp to “give startups a very different deal from a typical corporate accelerator”.
Mason says he compares what JFDI will be doing the job of a music talent scout. There are two options, the ‘pub search’ strategy and the ‘kpop method’.
In a pub search, the scout spends a ton of time visiting local undergrounds in the hopes he or she stumbles on the next Rolling Stones or Bob Dylan. Then the agency changes their hair a bit and puts them on stage.
This is what a traditional accelerator does; finds a potential startup, puts them through a ‘carwash’, and they come out the other end shiny and ready for investment.
JFDI will be following the kpop strategy, which means pinpointing the attractive individuals, putting them together and hoping the result is the next Girls’ Generation.
“So we are bringing together a corporation — with a distribution channel, presence in a market, capital — but what they don’t necessarily have is a product or service that is right for a market,” says Mason.
Mason says it creates opportunities for the right type of people, which Meng calls ‘Professional Entrepreneurs’ to run these companies. The profile JFDI is targetting are people who have been Management Consultants (or a similar job) straight out of university, get their MBA and approach JFDI looking to get into startups.
Mason will stay on as CEO of JFDI but Meng will spend the 2016-2017 academic year out of Singapore developing his SaaS service Legalese.
The open source startup is run on a mission of “drafting legal documents the way programmers develop software”. It is helping startups looking to raise a Seed or Series A round with all their legal paperwork.
An early project for the new JFDI is launching a joint venture with Bosch that is a combination between a piece of hardware and a financial service — but Mason could not go into further detail.
The revenue problem of JFDI
JFDI never truly managed to solve the puzzle of finding a steady income for the accelerator.
The company’s revenue model is dependent on the eventual exits of its alumni. And in the Silicon Valley, this works because of a culture of rapid acquisition.
In the US, it is fairly common for an alumni to get acquired after 18 months or two years. When that happens, investors get two to three times their investment, making them happy. This starts a cycle in which the investors roll their dice again and re-invest in the accelerator.
However, this business environment might be unique to the US. In most places across the world, it can take seven to eight years for startups to grow into acquisition-ready enterprises. Then, when they do sell, it is at a lower valuation and the amount of money generated makes it difficult to keep an accelerator going over the long-run.
But any person in Singapore will push back and say, ‘but there are accelerators popping up all over the country’. The difference is that they are publically funded or corporate accelerators. So they have a large investor providing a safety net, which Mason says is actually a problem.
“Everyone is fishing in the same pool, which creates a really bad dynamic. Weak teams with me-too ideas get recruited just to make up the numbers. Startups start playing accelerators against each other for who will give them the most money, instead of the best mentoring, which is really what they need to make their own money,” he said.
The churn-out of sub-standard companies will eventually lead to a bubble popping in Singapore, something many people have been predicting for awhile now.
“And maybe that’s all part of growing up,” said Mason.
Entrepreneurs never have to be lonely again
While the JFDI pivot is far from a negative development, it does mark the end of an era, and like when any chapter of life closes, it elicits reflection, and often feelings of sadness. It is time to move forward and the office in Block 71 is now a fond memory.
“I feel like I’ve made a load of friends. I feel awed sometimes that people recognise this little frog,” said Mason.
“I really miss our space at Block 71. A lot of people tell me how much they miss it. It felt very authentic, it was built by the community for the community. It wasn’t a fabricated space, it wasn’t built by a landlord, it wasn’t built by a fund. It was built by the community. I guess things change don’t they?” he said.
JFDI made a huge impact, but at the end of our interview, Mason mentioned a profound change that nearly made yours truly cry.
“We were having one of our open house events, and I remember this Uncle just standing there looking a bit lonely, so I went up to him and I said, ‘how are you doing?’ And he was almost in tears, this guy must have been about fifty. And he said, ‘I wish I had this, I wish I had this, it was so lonely'”.
The Uncle’s father had told him was going to fail, his mother said only rich men start businesses and his brother said he would have to feed his kids once the Uncle failed.
It reminded Mason of the respect we should have for the entrepreneurs of the previous generation because they had it incredibly tough.
Mason said that man, and the others like him, when they started showing up at JFDI events, Mason knew he had done the right thing.
“And I think what we did was to start creating a community here. For the first time we created a physical space where people came together, and at the time that was super important. Because [entrepreneurship] is incredibly lonely,” he said.
Meng has a line that may sum up the impact of JFDI better than any 1,400 word article.
“Entrepreneurship will always be difficult, but it doesn’t have to be lonely.”