First Dollar into SEA’s biggest startups
Examining how companies like Grab, Gojek and Carousell got their start
The tech press tends to report mega funding rounds which is generally interesting to read about, but not actionable for most of us who are raising their first round to get kickstarted.
I couldn’t find a comprehensive list anywhere so I compiled my own. Whoever has info to add or correct, I’ll be most grateful to include and share with the larger community.
I’ve kept this regional specific because our funding environment is very different from the US or China in terms of valuations, the type of company that gets funded and fragmentation of the ecosystem.
The following is a list of how SEA’s biggest startups got their first dollar to get started:
Takeaways
6 out of 13 on the list were bootstrapped, if you include Anthony Tan’s mother, it would be 7/13.
Sequoia India was very familiar with Zilingo’s CEO, having employed her previously, while Carro’s Aaron Tan being an angel himself probably (would like verification here) contributed to the round. Carousell’s grant from NUS was a relatively low bar as compared to raising external capital from professional investors. If you factor this in, only 3/13 companies raised a round without showing any traction in the beginning, and interestingly, all 3 are in Indonesia.
For most ideas, you don’t need to start with a lot of money. Gogovan started with ~2,560USD split amongst their founders, while on estimate, 6 companies started with under $50k USD split amongst their founders
Each company can be categorised as ‘Close to the money’, people who essentially were very close to people with money. ‘With money’ People who had already made money prior or were born into wealth and could afford to self-fund and ‘Sloggers’ who had no money nor were they close to people with money and had to be scrappy for long periods of time before they found their first investor, typically at not the best valuations or funding amounts.
Most Venture Capitalists invest in traction above all, more so than teams.
Through my network, it seems like a number of startups in this list and not but are now valued >100m USD were turned down for government grants. Perhaps it’s either not worth speaking to government people who don’t understand startups or being turned down by them is actually a badge of honour! ( Would love to get more data on this)
Exploring Further:
Close to the Money:
Key Question: Which of the 3 F’s (friends, families & fools) can I tap that have enough faith in my abilities and can afford to lose this investment given the high risk nature of startups?
Grab
“But none of it could have been possible without one particular investor – Anthony Tan’s mother, Khor Swee Wah. Tan, who had worked as a marketing director for Tan Chong Motor before starting Grab, first brought the idea for the taxi-booking app to his father, who dismissed it and urged him to stay in the family business. His mother, wanting to be supportive, put in ‘several millions’ to help Tan get things off the ground and accompanied him to investor meetings in the early days.” - SCMP interview, 2018
Zilingo
“Zilingo, an online marketplace application that connects long-tail sellers across Bangkok, has raised $1.88 million in seed funding from Sequoia India, Beenext Ventures which is founded by Teruhido Sato. Along with them, founders of FreeCharge – Kunal Shah and Sandeep Tandon also invested in this round.
The company was founded by former investment analyst at Sequoia India – Ankiti Bose along with her friend Dhruv Kapoor, who was working at a gaming startup in Bangalore.” - The Tech Portal
Quick Take
For most of us who aren’t so lucky, I’d recommend that you look at tapping whatever network you’re part of, be it being part of a brand name school’s alumni or a social club with the right crowd. It helps to invest your time networking over the years, not in the awkward networking event sort of manner, but in relationships with people who have common goals and are inclined to help each other reach them.
If you’re not looking to raise money from your parents, ultimately, people will need to have confidence in you at this stage of the game, so be mindful of that as you go about building your network.
With Money
Key Question: Should I run this as a side venture like Nadiem from Gojek? Invest heavily like Shing? Or quit my job to focus on my venture. The answer probably lies in the level of confidence you have in your idea and your financial commitments at the time.
Gojek
“It appears that between the founding of Gojek in 2010 and 2014, no outside capital was raised.”
By 2014, the call-center was handling about 200 drivers and was mostly a manual matching process between riders and drivers. At this point, Gojek raised money from a few investors, including Sequoia Capital.” - Ryan Rodenbaugh's blog
It’s also worth noting that founder Nadiem Makarim was a management consultant at Mckinsey and Managing Director at Zalora Indonesia, which probably gave him the ability to fund the offline version of GoJek before he sought funding for the super app.
Lalamove
“Shing: Then a few months into the ventures, I knew that I needed a lot more than that. I put in $10 million Hong Kong. And then I realized, literally one day I thought, “10 million [honmondeez 22:18] No, I need $10 million US.” And that’s why, now, I started to go out fundraising. And now, obviously, I knew that $10 million US is not enough. I need $100 million US. And that’s how I go at it again and raise money.” - The Jay Kim Show
Klook
The founders invested their own money to start, outsourced the development of the first website which took 3 months to build - Startup Grind HK interview
The original founders were investment bankers prior to Klook which probably gave them more than enough capital to invest in the business and not take a salary till the A round.
Ninja Van
“Weeks later, the trio were up and running, pooling their savings to buy a second-hand van and leaving behind stable jobs in finance and engineering to create a technology-driven delivery service.” - CNBC 2020 interview
Carro
“Singapore-based used car marketplace Carro announced on Wednesday that it has raised S$1 million (US$716,000) in a seed funding round led by undisclosed angel investors.” - e27
Co-Founder and CEO Aaron Tan has been making money since his teens building software and subsequently as a private investor through various private instruments. It’s probably not a stretch to assume that he contributed a portion of the 1m SGD raise which gave the other investors confidence to invest alongside the founder. - Straits Times
Propertyguru
The 2 co-founders bootstrapped the company till they managed to find a few angel investors willing to invest - Startup Grind Singapore
Quick Take
If you’ve been a senior executive for awhile or have been successful in a previous venture, you probably fall under this category. The founders in this category have invested a significant amount of their own capital into the startup. With Shing having invested 10m HKD (~1.28m USD) on the high end of this category.
The advantage of being in this category is that you probably come with a good resume, and by investing a significant amount of your own capital, you not only give investors confidence but have built up enough traction (hopefully!) to show your investors what you will be raising the capital to build upon.
Sloggers
Key Question: Do I have an 18 month personal runway to bootstrap this thing? Can I get to profitability fast? Is there a way to start making money from day 1?
Carousell
“After receiving an initial US$35,000 university grant to kick-start the business in 2012..” - CNBC 2019
Traveloka
“The first funding that we got was from [Indonesian early stage investment fund] East Ventures in 2012. I was happy to get to know [East Ventures co-founder and Managing Partner] Willson Cuaca. He was the person who helped us in the early days and also the one who has believed in us until now. I think we convinced him early on that our team consisted of people who had strong backgrounds in software engineering, and shared a mission to solve real problems with technology.” - Prestige Online
Bukalapak
“My first proposal was 10k USD. I started looking for investors who can fund us because I didn’t have money anymore at the time, so I started fundraising. One year after that, at the end of 2011, we got funding from a VC finally. It just kept going afterwards. - Achmad Zaky, GGV Next Billion interview
Tokopedia
When we first raised $100,000 we find to fight eBay and Rakuten. When we finally raised one million dollars, we need to fight with SK Planet Eleven Street. They are putting 33 million in Indonesian market - William Tanuwijaya, Your Tech Story
In 2009, PT Tokopedia received initial seed funding from PT Indonusa Dwitama of IDR 2.5 billion. - Wikipedia
Gogovan
“So they pooled together what they could — 20,000 Hong Kong dollars (about $2,560) — hired what Lam described as a “shoebox” office in Hong Kong’s Kowloon district, and took on their first two employees: A technical engineer and a designer.” - CNBC 2018
Quick Take
This category tends to comprise of young and scrappy types. Looking at the above, you either have a good resume like Ferry Unardi of Traveloka (HBS) or the Gogovan founders who show grit and pool together what little resources they have to build enough proof that they are worth investing in.
If you happen to fall into this category, while you probably don’t have much to lose, the chances of success is probably lower, given that you have less resources to start with. Which is why you notice that the companies in this category tend to be category creators, if not an entirely brand new category, a category that’s new to the country. It’s only when no one else, be it founders with more resources or large companies with a huge head start is competing with you that you can be free to play unencumbered.
Carousell and Gogovan were category creators. There wasn’t a marketplace for used goods that was native to mobile prior to Carousell. The UI back then was entirely fresh, intuitive and more importantly, tailored for the mobile experience. There also wasn’t an Uber for commercial vans prior to Gogovan. The advantage of startups is that they can enter a space with fresh thinking and not be tied to legacy priorities. On a product level, for Ebay to entirely redesign their product for mobile would require a lot of political will internally which is the problem with most big companies. The exact same situation is the case for a DHL to have created Gogovan before Gogovan. After Gogovan succeeded, Lalamove managed to catch up because of a single minded founder that had enough resources for him to catch up.
Traveloka / Bukalapak / Tokopedia were started during a time when Indonesia’s internet ecosystem was in it’s very infancy stages. Logic would determine that Ebay / Taobao / Expedia would have come in to eat their lunch a long time ago. Which is why experienced executives at the large companies didn’t think it was worth investing in, despite how obvious it looks in hindsight that local problems need very local solutions.
If I were a young inexperienced founder starting out today with little resources or domain expertise, I’d look at spaces which the experienced and ‘smart’ senior executives aren’t looking at because they think that their experience has taught them not to do so, but in reality, that very experience has created a blindspot that only a pair of fresh eyes can see.
In Summary
Most of these startups were bootstrapped and showed traction before raising their first round of external capital
If you’re close to the money - Think which of the 3 F’s (friends, families & fools) can you tap that have enough faith in your abilities and can afford to lose this investment given the high risk nature of startups?
If you have money - meaning that you’ve had a high paying job for awhile or have had success in previous ventures, think if you should run your venture as a side venture like Nadiem from Gojek? Invest heavily like Shing? Or quit your job to focus on the venture. The answer probably lies in the level of confidence you have in your idea and your financial commitments at the time.
If you’re a slogger - meaning you have little to know money because you’re a fresh grad or just don’t get paid very much, think Do you have an 18 month personal runway to bootstrap this thing? Can you get to profitability fast? Is there a way to start making money from day 1? What’s the fastest way to show traction?
Final thoughts
VCs almost never invest without some form of traction, especially in today’s (2021) environment where competition is so stiff and getting started is cheaper than ever.
It might be worth working for a few years to learn an industry or how to build a startup in general, build up some capital before venturing out on your own.
Building a network and showing competence early in your career is a huge advantage
Young and inexperienced founders should look at spaces where their advantage is coming in without any prior bias and they can either create a brand new category while no one is looking.
I have an interest in all things tech but with a particular interest in AI, the creator economy, and NFTs. If you’re working in the space or starting something new, I’d love to chat, my email is zishuang.cheng@gmail.com
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This is only my second piece, if you’d like to read the first, check out How the biggest consumer startups in SEA got their first 1000 users
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