Interview Investor

It’s Time That We Talk About Exits — Seriously

We sat down with Thoo Wee Meng, Head of Investments of VC firm Leonie Hill Capital, to discuss what they have in plans to help clear the path for more exits in Malaysia and Southeast Asia.

“We want to make Southeast Asia a good exit haven. There are so many early stage startups now. In three years to come, we should have a good amount of exits so that this region can demonstrate to investors that this is the place to invest and do business,” says Wee Meng.

Wee Meng has spent more than 15 years in the tech industry, mostly working for multinational companies from the United States looking to proliferating technologies. He had spent his time in Hewlett-Packard (HP), Sun Microsystems, VMware and, most recently before he came into the fund management business, NEC. Wee Meng helped the companies look at the Asia Pacific market, playing key roles in product management, sales organisation, and profit and loss management. In those years, he developed a deep expertise in enterprising technology business, which is a key experience in today’s innovation sector for many startup companies had failed to scale or secure a successful exit because of their inability to enterprise their business.

Building a series of enterprise class companies

“Enterprising the business is not just about creating a product. It is about how you build organisational excellence, create partnerships, build your products and services offering, work with distribution channels in multiple markets, and then bring these values to your customers,” Wee Meng explains.

Leonie Hill Capital typically invests in late-stage companies and plays an active role in organisational restructuring for companies that are ready to scale up. Combining Leonie Hill Capital’s funding capacity, global network and the team’s strong operating experience, the firm is set out to help build a series of enterprise class organisations in this region. This is a much needed undertaking to fill the late-stage funding gap and ensure there is a continuity in the entire value chain of the tech industry.

“The current liquidity level has not allowed many exits for startups in Southeast Asia as many VCs are currently centred around the early stage companies, helping them start up and incubating them. “For Leonie Hill Capital, we are looking to provide funding for late-stage companies to help them scale up,” Wee Meng says, “we are looking to build an ecosystem based on a private-public model to ensure there is a continuity of capital funding flow, not just to help companies start up, but to help them scale into multiple markets, and therefore generating more exits down the years where these buyouts can be coming from foreign-based companies.”

Preparing for the upcoming waves of M&As

A lot of M&As today are driven by the needs to acquire more customer base. However, with the emergence of more new innovations in this region, Wee Meng observes that large corporations from the US and Europe are constantly on the look out to acquire local-based innovations to help them grow their Asia Pacific market share. He believes that the ecosystem will see more of such M&As trend in the next few years across sectors.

Chinese investors are not excluded. Wee Meng also foresees that in the next 12 months, more Chinese investors will be investing in Southeast Asia’s tech sector, mainly motivated by their investment projects having an interest to grow their business in this region and they are coming here to acquire some companies to help them consolidate their portfolio.

Wee Meng is working closely with government agency like Malaysia Digital Economy Corporation (MDEC) to unearth potential companies that would like to move to the next level. “We like to work with the government sector mainly because they have done their due diligence. When we come together to invest, we are looking at a more private-public kind of partnership to help companies becoming more successful. That is what I call ecosystem build up. It is not just among VCs looking at deals. We must work with stakeholders like the government agency to jointly help build the whole sector.”

Wee Meng (second from right) speaking in a panel at MDEC’s Ideas Exchange alongside (L-R) Khailee Ng, Managing Partner of 500 Startups, Dato’ Yasmin Mahmood, CEO of MDEC, Dato’ Wan Kamarulzaman, CEO, Malaysian Retirement Fund (KWAP), Zainal Izlan, Executive Director of Securities Commission Malaysia, Dr Finian Tan, Chairman of Vickers Venture Partners, and Raja Hamzah – Managing Partner of RHL Ventures.
A group photo of the panel and Norhizam Abdul Kadir, Vice President, Growth Ecosystem Development of MDEC (far right). The panel discusses how to take full advantage of the Malaysian digital economy’s transformative potential, and establish Malaysia as a tech hub in the ASEAN region.

“The Malaysian Government is doing a very good job. MDEC has been been very active in promoting technopreneurs, and with the Digital Hub initiative and Global Acceleration and Innovation Network (GAIN) programme, we see that there will be more companies from Malaysia that can make a very big presence in the regional and international market. We are looking forward to create more awareness and help oversee this kind of progress. It is also our aim to see more late stage investors coming into this country,” Wee Meng says.

Acting as a catalyst in attracting more late-stage investments

Wee Meng believes that one of the best way to attract more late-stage investors is to have one start making lead investments; and Leonie Hill Capital would like to catalyse this approach by leading some investments and showing results so that they are able to give other investors the confidence to start investing in Southeast Asia.

“We are starting to look out and we have been talking to VCs, looking at how we can co-invest. We also want to talk to more corporate ventures to see how we can help them invest so that we can invest into companies in alliance rather than working in silo,” Wee Meng remarks, “late-stage VCs need to play a more vital role in taking the lead as lead investors to invest in series A and above. We can then get corporates to come in. Corporates, in my opinion, like this model because they know that they are working with investment specialists. It gives them the confidence in the investments.”

Leonie Hill Capital has been in the industry for more than 10 years but their activities were mostly centred in the US. However, two years ago, the firm started looking intensively into the Southeast Asia market. “Our shift was motivated by the growth in Asia. It is going to continue to grow in the next five to ten years. There are benefits for us to start investing. The technology startups are of better quality. Innovation is getting better with young entrepreneurs understanding what problems they are trying to solve. There are more incubators and accelerators in the market to mentor them. We see a more constructive approach in building the startup ecosystem. Therefore, we are coming here to give them another boost by bringing in late-stage funding capacity.”

Wee Meng hopes that Leonie Hill Capital’s initiative is able to help encourage more foreign-based late-stage investors to look at Southeast Asia as a viable market for them to bring their funding as well as their domain know-hows so that this part of the world will see more successful exits in the near future.

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