Kuan Hsu, co-founder of seed stage venture capital firm KK Fund, shares his thoughts on market opportunities, what makes good startups and the best way for startups to work with investors.
“We’d ask them to grow faster every single day,” Kuan Hsu joked light-heartedly when asked about the firm’s post-investment interaction with its portfolio companies.
On a more serious note, Kuan revealed that they keep a close working relationship with startups they invested in.
“We are on WhatsApp. We communicate every week if not every other day. When they have questions, they’d come to us. When we have information about the market, we’d share with them,” said Kuan, who co-founded the seed stage venture capital firm, KK Fund, together with Koichi Saito.
Based in Singapore, the firm is focused on investing in consumer-facing startups in four key areas: marketplace, fintech, logistics, and media & entertainment. KK Fund has thus far invested in 13 companies, with more than half of them based out in Malaysia and the remaining ones from different Southeast Asian markets.
Rising Opportunities in Hong Kong & Taiwan
“We are looking at Southeast Asia, Hong Kong and Taiwan as our target markets,” shared Kuan, who also happens to be from Taiwan.
“Why do we look at Hong Kong and Taiwan? They are very different from Southeast Asia, and from each other,” Kuan elaborated further.
Startup ecosystems in Hong Kong are starting to grow. However, according to Kuan, it needs some time to develop as the market in Hong Kong is still relying heavily on traditional businesses which are mainly driven by China. But things are definitely looking up with increased government initiatives and more interests pouring in from various startup players.
There are potential collaboration opportunities between Southeast Asia, Hong Kong and Taiwan in the near future.
On the other hand, in Taiwan, things are a little bit different. As the country houses many big, traditional tech companies, it naturally has an easier transition in moving towards the development of tech startups. Nonetheless, the funding landscape in Taiwan is very challenging as many local startups tend to focus only in Taiwan, which has a small market size.
Despite the differences in market dynamic, Kuan believes that there are potential collaboration opportunities between Southeast Asia, Hong Kong and Taiwan in the near future.
“We do think that there may be interesting startups (from Hong Kong and Taiwan) that can access the market here (Southeast Asia). And we are starting to also see some of the startups here (Southeast Asia) going over to Taiwan or Hong Kong. We are starting to see a little bit more of that. We think that this could be interesting,” Kuan added.
Malaysian Founders — Naturals in Market Expansion
When discussing about cross-border opportunities, Kuan said that based on his observations, many founders from Malaysia seem to have a knack in expanding their business to different markets.
More than 50% of KK Fund’s portfolio companies come from Malaysia. On that note, Kuan expressed, “It may look like we are targeting Malaysia, but we are not. We are looking everywhere but it just happens that Malaysia has great founders. Grab (a ride-hailing and logistics services startup) would be a good example.”
Good Startup Gets Things Done
Good startups are hard to come by, and probably not easy to identify, especially in the early stages. One of the most reassuring traits most investors look out for is: the team’s execution capability. But how do we tell if a startup has good execution capability?
If you have one or more founders, you are more likely to have complementary skill sets
“We look at the team. Obviously what the team has done before is always a good indicator on whether or not they can execute and get things done,” Kuan shared what he looks for when identifying a potential startup.
“We also look at the team members, hopefully there is more than one founder. If you have one or more founders, you are more likely to have complementary skill sets. That is usually a good sign,” Kuan added.
Another important aspect of founders, as Kuan shared, is their ability to attract good, strong people to join the team. “That’s key. If you are building from a small startup to a big startup, your ability to hire good people will usually determine how quickly and how well you can grow.”
“It is definitely not about the money. If you give a bad team a lot of money, they don’t know what to do with it. If you give a good team not enough money… well, it would be challenging, but at least they would be able to do a lot with what they have.”
Be Very Picky in Choosing Your Investors
On the topic of money, Kuan shared that “it is probably good for founders to look for investors (angel investors, seed investors, etc) who have good reputation with later round investors.”
Startups should look at investors who can help in some ways, especially in getting the next funding
Kuan continued to explain that, in the case of angel investors, many founders make the mistake in prioritising the investors’ job titles, neglecting to consider what kind of value the investors can bring in.
“Startups should look at investors who can help in some ways, especially in getting the next funding,” Kuan advised, “Startups must be specific on why you want certain investors.”
Communicate Your Problems
“The best way to work with investors is help the investors help you, which is to be very clear about the challenges you are facing and what kind of help you need or want from the investors,” Kuan offered an advice to startup founders.
“If you are very vague or afraid to share, then the investors may not be able to understand fully,” Kuan emphasised on open communications between investors and startups.
In conclusion, Kuan expressed his excitement moving forward, “Thanks to the investors who believe in us. We have investors like Incubate Fund, which is a big VC from Japan; Taizo Son, who is the younger brother of So Bank’s Founder; Sega Sammy, a public-listed video gaming company in Japan; and many more.”
“We have investors like that who look to us to give them ideas about Southeast Asia — on potential companies to invest or to buy,” Kuan said.
Moving forward, KK Fund will continue to source for more investment opportunities across Southeast Asia, Hong Kong and Taiwan.
For more details about KK Fund, you may log on to their website: www.kkfund.co.