Startups vying for the attention of Venture capitalists (VCs) - part 4

OOI Boon Sheng, founder and chief executive officer of Web Bytes Sdn Bhd, was fortunate to have found a good match in Chok Kwee Bee, managing director of venture capital firm Teak Capital, when he set out to look for a partner to help his retail management services company grow to the next level.

Venture capitalists (VCs) play a unique role in the entrepreneurial ecosystem.

They provide startups with funding in exchange for equity in the company. In addition, VCs are often given a say in how the company will operate and grow.

Ultimately, the goal of such partnerships is for VCs to make a profitable exit at a later date either through the sale of their stakes or an initial public offering.

Chok, who sits on the board of Web Bytes following Teak Capital’s investment in the startup, takes an active interest in helping Ooi develop the company’s product.

As Web Bytes grow with the guidance of Chok, so does its value, allowing Teak Capital the chance to make a profitable exit in the future.

Somewhat like angel investors, VCs have a wealth of resources, expertise and network that startups can tap into.

However, VCs tend to fund early-stage startups that have already gained some traction in user base and revenue, but are still new enough to be considered a risky investment for traditional banks and debt funding.

In identifying suitable startups to invest in, VCs are naturally drawn to early-stage companies with technologies that have the potential to generate high returns. Ideally, products developed by these startups are not in overly saturated markets.

VCs also analyse the market to ensure that it is robust enough to support the entry and growth of a startup.

The startup’s management team is also taken into consideration as VCs typically look for a team that is passionate, persistent, experienced, dedicated and organised.

According to Chok, having the right people is as important as having the right idea as the right people would be needed to make the ideas work.

“We have seen more than 1,000 companies since our formation in 2008 and only invested in less than 10, with an average investment of RM2mil to RM3mil.

We look at the team, the product and the market potential,” she said.

Startups are encouraged to build a good working relationship with VCs, not just for the funding element but also because investee companies will be spending a lot of time with mentors from their VC partners.

Many startups, like Web Bytes, have indeed benefited from the active participation of their VC investors. Among Teak Capital’s portfolio of startups, Web Bytes has seen tremendous growth after a year of active mentoring.

But the venture capitalism in Malaysia is still in its early days.

Malaysia Venture Capital Management Bhd (Mavcap) chief executive officer Jamaludin Bujang noted that while there is an increase in demand for capital, there are only a handful of VCs in the market.

Currently, about 60% of VC funds come from Government sources, with only nine private VC firms in the country.

Jamaludin says VC firms should look at pushing out more Series-A funding. Series-A is the first significant round of funding for startups that have progressed beyond the seed-funding stage and have started generating revenue of between RM200,000 and RM1mil. With things heating up in the local startup scene, both Jamaludin and Chok agree that more needs to be done to encourage more entrants into the field of venture capitalism.

“The startup scene is picking up. And a lot of them are actually going to Singapore for funding. So I think we need more Malaysian VCs in the market,” said Chok.

By Lim Wing Hooi

  Related post3:

• Playing angel to startups as some successful Malayian entrepreneurs made it big part 2 & 3

• Brewing a startup - part 1

5 Technologies to change property and real estate

In its latest Global Cities 2015 report, real estate firm Knight Frank has highlighted five technologies that will likely change the property sector.

It is remarkable to think that just five years ago no one owned an iPad (launched in April 2010), illustrating how quickly new technology becomes taken for granted today.

This is an example of a technological advance that has accelerated changes in how we work, shop and spend leisure time, with implications for commercial real estate. Some, who previously shopped regularly for books, CDs, DVDs, and video games, now access all these products through their tablet computer.

This has contributed to a reshaping of retail property, and sparked a wave of office-based start-ups that produce apps. Similarly, the popularity of e-shopping has buoyed demand for warehouses. New technology undoubtedly impacts the property market, raising the question, where will change come from next.

Office robots

Development has begun on telepresence robots, whereby a remote worker can log into a droid, traverse the office, see what is occurring, and speak to colleagues. Cleaning robots at home have already taken off. An office service robot that cleans, reloads printers, and performs basic security duties, could be a future extension of this technology. Future office buildings may need storage, recharge and service areas for these droids.

The internet of things

This is where everyday appliances are connected to the internet, so they can be controlled remotely or intelligently monitor how we use the device. For instance, a fridge could monitor its contents, and send the homeowner a suggested shopping list to his mobile phone with a ‘buy’ button. This would add momentum to the rise of e-retail, increasing demand for logistics property. Internet-linked machinery could also result in smart office buildings that partially manage themselves.

Drones

When Amazon rolled out plans to deliver small goods by drone helicopters there was initially a sceptical reaction. However, other firms quickly announced they too were testing drone delivery. In the future, logistics properties may come to resemble mini-airports, as drones come and go. EasyJet, the airline, has plans for its maintenance crews to use drones for aircraft inspection. Similarly, the property industry could use drones to inspect buildings.

Driverless car

A computer driven car, using wi-fi to communicate with other vehicles and receive traffic reports, should improve traffic flow and speed up commuting. The result will be a better quality of life in office districts, as efficient traffic movement allows more streets to be pedestrianized, improving public areas and passing trade for retailers. The city will become a more pleasurable experience encouraging people to work, live and shop there.

3-D Printing

3-D printers are being used more often for producing components, but those parts then need to be assembled into a working product, which will require quality control testing. This requires a factory. However, in R&D and specialist manufacturing, 3-D printing is having an impact, bringing down costs on short production runs. Consequently, we could see a wave of ‘start-up’ manufacturers offering bespoke or specialist goods, generating more demand for light industrial units.

For more information: http://www.knightfrank.com/global-cities-index-2015/specials/real-estate-technology/#sthash.l9ozavde.dpuf

By Andrew Batt, International Group Editor of PropertyGuru Group.

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Playing angel to startups as some successful Malaysian entrepreneurs made it big - part 2 & 3

How successful entrepreneurs can give back to their younger counterparts JUST as it takes a village to raise a child, it also takes ma...

Playing angel to startups as some successful Malaysian entrepreneurs made it big - part 2 & 3

How successful entrepreneurs can give back to their younger counterparts

JUST as it takes a village to raise a child, it also takes many different players in an ecosystem to raise a successful startup.

And one of the most valuable players in the startup ecosystem are those who have walked the path of an entrepreneur and succeeded in their own right. These players have a wealth of experience and expertise as well as capital to plough back into other budding startups.

Most times, they invest in the capacity of an angel investor.

By definition, an angel investor is an affluent individual who is willing to invest in a company at its earlier stages in exchange for an ownership stake, often in the form of preferred stock or convertible debt.

They typically fill the gap in startup financing between seed funding, likely provided by friends and family, and formal venture capital funding in later stages once the startup has gained some traction.

Angel investors are usually entrepreneurs themselves and have successfully cashed out of their ventures with deep pockets to spare.

Over the years, scores of entrepreneurs, who have tasted hard-earned success, have increasingly been giving back to the ecosystem by reinvesting their time, money and knowhow into other startups.

Unlike other sources of funding such as government grants and venture capital funds, the angel investors’ involvement in startups is vital given their experience in building successful companies.

This would enable new startups to tap into their network and expertise, giving them a higher chance at succeeding.

As some entrepreneurs note, “one entrepreneur betting on another is a great validation of the idea.”

Some Malaysian entrepreneurs who have made their mark in the startup scene have sowed back into the ecosystem. They include the likes of Azrul Rahim, founder of application launcher for PalmOS, Facer, and Mark Chang, founder of JobStreet. com, who recently expressed interest in backing entrepreneurs from underprivileged backgrounds.

Notably, like every investment, there are risks involved when investing in early stage startups.

To recap, startups are experimental by nature and therefore are meant to fail several times before they succeed. As such, it is important that angels understand that a high percentage of the startups they invest in may likely fail.

However, as with other types of investment, angel investors should have a portfolio of high growth startups to invest in. And in that basket of startups, a gem or two will return a big reward.

Take Berjaya Group’s Tan Sri Vincent Tan, for example, who is known to make quite a few bets with budding companies.

While not all of them have been known to be successful investments, Tan certainly uncovered a jewel in MOL, which he bought for US$3.2mil (RM10.5mil) in early 2000s and listed on the Nasdaq this year. He reportedly pocketed a cool US$200mil from the listing exercise.

The government is also increasingly encouraging more early-stage private investment in startups with the introduction of the Angel Tax Incentive, which is administered by a unit within Cradle Fund Sdn Bhd.

Angels who are eligible for the incentive are high net worth individuals with total wealth of more than RM3mil or high income earners with gross annual income of more than RM180,000.

Angel investing is indeed becoming more visible and formalised with the formation of networks that connect entrepreneurs and angels.

Most recently, local entrepreneur-turn-investor Khailee Ng, who co-founded GroupsMore and SAYS. com, was made managing partner at 500Startups. Through the fund, Ng has invested in multiple companies across the region.

The local startup scene can indeed benefit with the involvement of more angel investors. Entrepreneurs who have achieved their milestones should think of investing in the future and giving back to younger entrepreneurs.

Entrepreneurs who have been there understand the satisfaction of nurturing another venture.

So if you have succeeded with your company, perhaps it is time to consider investing back into the ecosystem by sharing your expertise and resources as angel investors.

Malaysia has more successful tech startups than many people realise

Investor interest: MyTeksi has managed to raise a total of US$90mil in funding over the past 12 months.

Much has been said about this being the best time to launch and grow startups due to the availability of funding, infrastructure and an accommodating environment.

Additionally, mergers and acquisitions suggest that there is much value to be derived from startups. Foreign corporate moves include the US$966mil (RM3.1bil) price tag that Google paid to acquire navigation app Waze and the US$22bil takeover of messaging app Whatsapp by Facebook.

No doubt, many budding entrepreneurs aspire to follow in the footsteps of these successful startups. In a globalised market, the success of startups is not limited to those with connections to or within the vicinity of Silicon Valley.

With the right experimentation and innovation, a startup can succeed even in a risk-averse culture. It is not impossible for startups to grow rapidly and achieve high revenues in a short time.

But budding local entrepreneurs often lament that there are few local heroes to look up to in order to benchmark the ability of the local startup scene in producing successful ventures.

Although they are few and far between and are generally below the radar, there are some local gems that have scaled up very quickly, attaining regional success in just a few years, and have caught the eye of internationalinvestors.

One such company is MyTeksi Sdn Bhd. The Internet-based taxi booking service provider, which was launched in 2012, has already established a strong presence in Singapore, the Philippines, Thailand, Vietnam and Indonesia under the brand GrabTaxi.

The MyTeksi app has reportedly been downloaded onto over 2.1 million mobile devices with more than 400,000 active monthly users in six countries and more than 25,000 taxi drivers registered with the network.

Most notably, the company has managed to raise a total of US$90mil in funding over the past 12 months, counting US-based Tiger Global Management, GGV Capital and Vertex Venture Holdings as some of its investors.

One of the key reasons for MyTeksi’s success, says co-founder Anthony Tan, is its focus on solving a real social problem. In this case, providing an efficient and safe platform to match taxi drivers and passengers.

Another homegrown startup that is shaking up its field is banking solutions company Juris Technologies Sdn Bhd.

When the company was founded in 1997, co-founder and CEO See Wai Hun said its main agenda was to market a data mining system. But See quickly realised that no one was interested in data mining because people were reeling from the shock of the financial crisis.

Thankfully, she was equally quick at spotting an opportunity to create software for bad debt recovery which would help financial institutions manage their workflow with their litigation team.

Juris was set up with the help of an angel investor but See noted that the company eventually bought back its shares within a few years of incorporation. The team has grown from 10 people when it started to a staff strength of 80 today.

Its product range has also expanded from just a component of the debt recovery software to software for debt collection systems, loan origination systems, credit scoring systems, conveyancing and loan documentation systems.

To-date, 11 banks, 900 lawyers, 200 collection agencies and 100 property valuers are using its systems and See is expecting revenue to hit a high of RM30mil this year.

Most recently, Juris joined the ranks of Endeavor Global Inc’s global network of high-impact entrepreneurs, being the second Malaysian company to do so.

The achievement gives Juris access to global investor network and partnerships that will enable the company to scale up for regional expansion.

Malaysia has seen other startups, including the likes of iMoney, Softspace, FashionValet, Piktochart and TextbookAsia, take flight and achieve success in various fields.

Local entrepreneurs can take heart that some of the action does take place on our home ground. It is possible to nurture the local startup ecosystem to provide startups with a good platform to thrive and contribute significantly to the growth of the country.

With the right combination of policy, infrastructure, funding facility and mentoring, the local startup industry could unlock another key growth driver in our economy.



By Joy Lee  



Related post:

Brewing a startup - part 1

Brewing a startup - part 1

In a 10-part series, the Malaysian Global Innovation and Creativity Centre (MaGIC), in collaboration with The Star’s Metrobiz section, explores what it takes to make a great startup ecosystem, beginning with an understanding of what startups are all about.

The Father of Modern Chemistry, Antoine-Laurent de Lavoisier once said that it is vital “to submit our reasoning to the test of experiment, and never to search for truth but by the natural road of experiment and observation.”

A startup’s journey is not very different, in that it is meant to run a series of experiments before it hits a growth path. According to Steve Blank, a Silicon Valley serial-entrepreneur who developed the Customer Development Methodology, “A startup is an organisation formed to search for a repeatable and scalable business model.”

But what is a business model?

A business model describes how your company creates, delivers and captures value. An entrepreneur is supposed to create a vision for a product that solves a real problem in the world, with a series of assumptions about all the pieces. Who are the customers? How do you sell to them? How do you price and position the product? How do you build and finance the company?

An entrepreneur’s job is to quickly validate whether the model is correct by seeing if customers behave as predicted. Most of the time they don’t. So entrepreneurs are supposed to tweak that business model until they find enough traction to grow into a sustainable company.

Once on a growth trajectory, a startup decides to enter new markets or create new product lines and eventually exits favourably, providing significant returns to investors or venture capitalists.

Like science experiments, a startup is meant to fail several times before it succeeds. It is important that we understand this in order to support local entrepreneurs who are looking to push the boundaries of innovation.

Jack Ma’s e-commerce company Alibaba Group Holding Ltd’s recent US$25bil (RM80.7bil) initial public offering on the New York Stock Exchange, which is the largest in history, proves that Asian entrepreneurs and markets are just as competitive and innovative as those in the US.World largest IPO: Alibaba shows ...

Another revered Silicon Valley figure, Y Combinator startup incubator founder Paul Graham describes a startup as, “a company designed to grow fast.” He goes on to explain that a startup does not have to be newly founded to work on sophisticated technology or to take venture funding. He emphasised that the only essential thing for a startup to achieve is high growth.

Without high growth, a company is categorised as the more common small- and medium-sized enterprises of mom-and-pop shops, professional services firms, manufacturers, brick-and-mortar businesses, or resellers. They typically grow at a steadier rate, require physical locations, more up-front capital (usually bank loans as opposed to private investments) and are not as scalable (can only serve a limited number of people based on human resource capacity).

The new startups of the 21st century are also admittedly different from the old-school startups of the 1970s, back in the early Microsoft, Oracle and Apple days. Today’s startups are a new breed that leverages the Internet and technology to scale across borders very quickly.

Startups such as Facebook, Airbnb, Dropbox, Pinterest, Uber and Spotify have all achieved billion-dollar valuations in a matter of three to four years.

This signifies that we are in a new era where entrepreneurs are able to very quickly create global products that permeate our daily lives. And these entrepreneurs can come from anywhere, not just Silicon Valley, which is typically the benchmark for startup and innovation ecosystems around the world.

Startups are the main job creators in the US economy, and similarly, it will become the primary growth engine for Malaysia as we seek to become a high-income nation by 2020.

As a nation that is trying to push its own innovation boundaries, we should come together and support our young entrepreneurs and enable them to solve some of the toughest problems in our country and beyond.

Next week: Some of our local startups who have made it big.

By: LIM WING HOOI

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MaGIC sign MoUs with Stanford U. and UP Global CYBERJAYA: Prime Minister Datuk Seri Najib Tun Razak tonight witnessed the signing of memorandum of understandings between the Malaysian Global Innovation and .http://rightwaysrichard.blogspot.com/

MaGIC, Malaysian Global Innovation and Creative to spur entrepreneurship?

KUALA LUMPUR: Prime Minister Datuk Seri Najib Razak has announced the establishment of the Malaysian Global Innovation and Creative Centre or MaGIC in Cyberjaya to encourage entrepreneurship among Malaysians.

http://rightwaysrichard.blogspot.com/

How To Launch A Startup Without Writing Code

There is an unspoken rule: to launch a startup, you need to build a product, and to do that you need someone that can write code.

Whether that means chasing down a technical co-founder, learning to code, or even building that "Lean MVP" - the conventional wisdom is that without tech abilities you're nothing more than a dude (or dudette) with a Powerpoint.

A growing number of startups, however, are quietly disproving this assumption.

They're getting their first customers with minimal technology, and often no code at all. Instead of building fancy technology from the outset, they're hacking together inexpensive online tools such as online forms, drag-and-drop site builders, advanced Wordpress plugins, and eCommerce providers.

They're jumping right in to serve customers in any way possible - heading right for their first paying customers.

Most importantly, unlike the majority of their peers, by the time they start building a product, they already have a humming business.

How are they doing it?

Focus on Serving Customers Instead of Building a Product

Successful founders all know one thing: it's more important to serve a customer than it is to build a product.

This is the mindset you must get into when you start out. Most entrepreneurs are narrowly set on building a product that they lose sight of the real goal - to solve a problem for a customer.

Or, as Ben Yoskovitz eloquently put it,

"Customers don’t care how you get things done – just that you get it done and solve their pain."

Replace Technology with People

Think about the hardest part of the business you want to build. The part that would require the most complex development - the true innovation that no one else does.

Can a real person perform these tasks manually?

For many startups, this was the secret to massive success:

David Quail is a super talented software engineer, with one exit already under his belt. He wanted to solve his ultimate annoyance: scheduling meetings over email.

David's original idea was to build an artificial intelligence tool that could read an email chain and automatically schedule the event. But this would take months if not years.

His shortcut to launching a business ASAP? He simply set up an email address for his customers to "CC" that forwarded to him, and did the work manually at first to prove that customers were willing to pay.

Over time he automated more of the service - but not before he already knew there was clear demand and was making revenues.

Another example - a marketplace:

Tastemaker is a marketplace connecting interior designers with homeowners for small design gigs. They started by contacting interior designers and building a physical list of those interested in extra work.

They then asked their network who needed help with interior design - and made the connection, processing payment themselves.

The Tastemaker founders used pen and paper to solve their customer's needs and prove the market. They then built their online platform in parallel (which eventually became their core business).

You've probably heard many famous stories like ZenLike and Tastemaker. They range all the way from companies like Groupon or Yipit (raised $7.3M), to Aardvark (acquired by Google) and Diapers.com (acquired by Amazon).

What did they have in common starting out? At the core of many businesses, instead of fancy algorithms, you would have found the founders themselves, like the "man behind the curtain" in the Wizard of Oz, working hard, acting as the secret sauce.

Use These Off the Shelf Solutions

While your core tech might in fact be a service starting out, you can wrap it with an online presence, digital interactions, and the administration of a true technology business.

In short, you can act, look, and smell like a fully automated online company that employs a posse of software developers and an in-house graphic designer.

* Use e-commerce services to accept payments and even subscriptions using "hosted payment pages" - requiring zero code.

* Let your customers interact with you through sophisticated online forms you can publish (and brand) using drag-and-drop editors.

* Build a support knowledge base and community forum with Zendesk, Uservoice, or GetSatisfaction

* Use copy-paste widgets from around the web like contact forms, Skype buttons, live chat, etc.

* Use simple-yet-sophisticated website creators to publish your central website and glue together all the tools into one presence. Strikingly and Unbounce are great for beautifully designed landing pages.

I could go on listing these forever (well, I did here). As you can see, the web is full of tools that let you conjure entire features with the click of a mouse.

The key is to always search for what you want before reinventing the wheel. Chances are someone has already thought of how to make your life easier.

The Hidden Treasures of Wordpress

To most of us, the Wordpress brand connotes a free blog, or a simple way to create a content website for non-technical folks.

But the true magic of Wordpress is the ability to extend its functionality to create many kinds of web platforms - while keeping your hands (mostly) free of code.

Wordpress itself is free, and you can purchase inexpensive plugins that automatically transform your website into a membership site, ecommerce portal, social network, and even daily deals site.

Instead of spending thousands on a designer, you can buy a high-end theme for around $40 and customize it to your brand. If you have a bit more saved up, you can hire a local Wordpress expert for a few hours of their time for small custom tweaks and a personal tutorial. And, if you don't want hosting headaches, you can use WPEngine (hi, Jason!).

Wordpress is one of the most incredible tools on the web for non-technical entrepreneurs. There's a bit of a learning curve, depending on how you want to use it, but definitely a faster option than finding a developer or learning to code.

It puts fate into your own hands.

Put It All Together

Go back to that core customer need, and think of how to satisfy it by any means. Now how can you make that solution accessible? What would the process be for finding you and reaching out? How can you charge and provide support?

Chances are good that you can pull it all off yourself. If not, consider starting a bit smaller than you originally imagined, if only to start generating revenues today and fund your development.

Once you have your first few customers, you'll have a very good picture of where your business is going, and what technology you absolutely need to build - and very clear motivation.

Does working this way pay off?

Tech companies started this way have sold for between $50-$540 million, or have gone public. They are growing at double digit rates. And they launched in a matter of weeks or months - not years.

If this approach makes you uncomfortable - that's great. It's a sign that you're learning to think differently. However, entrepreneurs presented with this approach often have similar gut feelings:

What Will Investors Think?

They will think you are clever, resourceful, flexible, persistent - and know how to focus on the right things.
To quote one of our investors, Len Brody, on his portfolio: "I call them the workaround culture... [they] just work around anything - and you have to."

If for any reason they are put off by your creativity and resourcefulness, then you're not talking to the right investors.

What About Scaling?

This is a very understandable fear. It's a scary situation to think, "Great, we got our customers, and now we're going to disappoint them."

Don't let that thought paralyze you. Growth is rarely if ever a black and white, rocket-ship-spike. It's a steady process that leaves you plenty of time to transition between solutions.

In other words, there's a spectrum between do-it-yourself and full-robot-revolution. You might hire a few people in the meantime (with the revenue that their hire would naturally generate) while also developing a scalable technology.

As most entrepreneurs will tell you the way you get your first 50 customers certainly won't be the way you get your first 5,000.

For those of you feeling held back by your lack of technical skills - or deep in development muck  - ask yourself, what can you do *today* to get your first customer.

Give it a shot. In contrast to paying a developer, you don't have a lot to lose. Do whatever you need to do to get your business going.

Remember: you're not here to build a product - you're here to solve a problem. And you certainly have the skills to do that.
***
Want more specifics, examples, and tools? Check out my newest Skillshare course, How to Launch Your Startup Without Any Code (use code ONSTRTPS for %15 off)

This is a guest post by Tal Raviv.  He is the co-founder of Ecquire.

Posted by Dharmesh Shah 

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Mental Exercises For Battling "It Won't Work" Syndrome

Every company has ideas that come up (sometimes frequently).  And, based on the stage of the startup and the degree to which the idea is unconventional, there are always good, rational reasons why the given idea can't possibly work.  There are also bad, irrational reasons too.  The problem is, it's hard to tell the difference.

Here are some of common reasons why something won't work:

1. We've debated this several times before and have decided it wouldn't work.
2. We've tried this before, it didn't work.
3. Doesn't really fit our sales model.
4. It's not appropriate for our industry.
5. It might work for tiny/small/large/huge companies, but we sell to tiny/small/large/huge companies, and it won't work for them.
6. Our investors/board would never agree to it.
7. It might work, but we can't afford the risk that it won't.  (Note: When someone says “it might work…but…” they're almost always thinking: It won't work)
8. Our team/plan/pitch-deck is not really setup for that.
9. We could try it, but it's a distraction.  (Note: This often means “I've already decided it's not going to work, but I can tell I need to convince you we shouldn't try it…”)

There are many, many more reasons why any given idea won't work, but the above are a sufficient sample for this article. Oh, and by the way, I have at various points in time made all of these very same arguments myself (“I have met the enemy” and all that)

2 Mental Exercises To Try

Now, here are a couple of mental exercises to try when you or you or your team is stuck.

Exercise #1: What if I told you that it's working really, really well for XYZ Company?  How do you think they made it work?

The idea here is to assume the idea is good and has worked for a company very similar to yours.  Then, ask yourself (or your team):  Now that we know it worked for them, what do we think they did to make it work?

What this does is mentally nudge you to think about how to work through whatever the obvious limitations to the idea already are.

Example: I know that nobody in our industry uses a freemium model because the infrastructure/support costs are just too high.  But, we just learned that XYZ Company is launching a free version.  What do we think they did to make it work?

Exercise #2: What if we had the proverbial gun held to our heads and we had to do [x]?

The idea here is to assume/accept that the decision to implement the idea has already been made — presumably by some higher authority.  Now, assuming that, what would you do to make the best of it?

Example: Our major investors just told us that before they can agree to funding our next round, we need to build an inside sales team.  They think inside sales teams are the bomb.  We can't afford not to listen to them — what do we do to make the best of the situation?  If we had to build an inside sales team, how would we go about doing it?

Note:  In neither case am I suggesting that you mislead your team (or yourself, in case you're like me and have conversations with yourself late at night).  These are meant to be mental exercises, just to help drive discussion and analysis.  Though I'll confess, there is a small part of me that wonders what would happen if one did make the hypothetical seem real (at least for a short period of time).

What do you think?  Any mental tricks or tactics you've used (or thought of using) to help break-through conventional thinking?

Posted by Dharmesh Shah

Singapore start-ups struggle to woo investors, failure to launch

Singapore's decade-long push to become a hotbed for entrepreneurs is stuck at stage one.

The city-state of 5.3 million people ranks No. 1 in the world in ease of doing business and fourth in starting one, according to a World Bank study. It offers low taxes, easy-to-obtain seed money to start a business, and a well-educated, English-speaking workforce in the gateway to Asia.

It just takes one day and S$315 ($260) to register a business in Singapore. Yet, the country has struggled to attract international investment money for its own start-ups.

Venture capital firms are put off by the small size of the market, lack of big ideas that can be a global success and an uncertain exit strategy. Only 50 out of 301 venture capital firms based in Singapore are interested in local investment, according to the Asian Venture Capital Journal Research.

Of the 70 high tech start-ups the government has invested in over the past two years, just 10 received follow-on private funding from investors locally and abroad, according to the National Research Foundation, the government arm responsible for research and development.

"There is a real shortage of venture capital firms investing in Series A in Singapore," said Leslie Loh, an entrepreneur-turned-investor, referring to the first round of funds raised by start-ups after seed capital.

"VCs are looking at countries like India and China where there is a larger domestic market."

Only 2 percent (about $15 million) of the total venture capital investment in Asia is aimed at Singapore, according to Asian Venture Capital Journal Research's data for 2012. Japan,

China and India topped the list of big VC investments in Asia.

"In the early stage there is a big push (by the government). But if you look at the whole ecosystem for helping companies grow, there is a gap in the growth stage," said Wong Poh Kam, a professor at National University of Singapore's business school.

"For a Singapore company to be able to achieve global success, it needs to have sufficient follow-on venture capital funding."

CHICKEN-AND-EGG PROBLEM

Pampered by government funds at the early stage, when start-ups can tap up to S$500,000 in grants, companies are finding it hard when they go looking for millions of dollars from venture capital firms for Series A funds.

Of the 374 venture capital investments in Asia in 2012, Singapore accounted for just 24, according to AVCJ Research.

"If there are no success stories, VCs do not think there is a compelling reason to be here," said Wong.

But that success depends on big money from venture capital firms, leaving start-ups stuck in a vicious cycle.

Andrew Roth, co-founder of Perx, which makes a digital loyalty card application, said one of the first questions he heard from investors when he went looking for funding was, "What is your net operating income?"

Roth says he would not have been asked that question if he was in Silicon Valley, where investors care more about the functioning of the product and its ability to gain scale.

"The mindset has to change," said Roth, who is currently in the process of raising a second round of funds from individual investors and funds. "It is a younger ecosystem so investors are so much more risk averse."

THE 'A' CRUNCH

Singapore start-ups are also forced to think globally right from day one as a product aimed at a small domestic audience is not going to bring them a lot of success.

Henn Tan, head of Trek 2000 International Ltd, the company that introduced the ThumbDrive USB flash drive in 2000 and ranks among the few globally known success stories of Singapore, said it is difficult for Singapore to produce entrepreneurs.

"Because fellow Singaporeans are being subjected to regimented life from early years...there are too many rules and regulations for the young generation to think out of the box without being reprimanded," Tan said.

The problem of raising funds beyond the government-created cocoon raises the question of whether its involvement in the start-up scene is actually a good thing.

Some think the government initiatives allow undeserving start-ups to get easy money, while others say the lack of private funds just proves that the government has to be active in providing a catalyst to start-ups and entrepreneurs.

The government says it needs to support start-ups at the early stage because that's where the most risk exists.

"When the landscape is one which sees the vibrancy that you see in California and where multitudes of VCs have taken root and (are) able to manage a portfolio from early stage to growth stage to pre-IPO, then we can take a step back," said Low Teck Seng, CEO of the National Research Foundation.

But he also warned against too much government involvement. "If the government funds what the industry thinks is not worth funding, then we will not be doing justice to public funds."

IDEAL ENVIRONMENT

Other than state-run or state-backed companies such as Singapore Airlines Ltd and Keppel Corp Ltd, the world's largest oil rig builder, there are only a few big home-grown companies from Singapore.

There was Creative Technologies Ltd, whose PC audio cards, speakers and MP3 players were a hit in the early 2000s, but it fell out of favour with increasing competition. The company has posted 21 straight quarters of losses and voluntarily delisted itself from the Nasdaq in 2007.

For Perx's Roth, who moved from New Jersey to Singapore to start his company, the attraction is the presence of global firms that set up an Asian base here, providing a steady stream of potential customers.

The fact that Singapore is home to high-flying business executives also helps. Facebook co-founder Eduardo Saverin invested in Perx early on. He sits on Perx's board, and meets with Roth and his team once a month, Roth said.

"It's hard for Singapore to claim to be an entrepreneur hub for (the) whole of Asia," said NUS's Wong. "A more realistic target would be for Southeast Asia." ($1 = 1.2182 Singapore dollars)

(Editing by Emily Kaiser) (Reuters)

Startups Are All About the Execution, So Tell Me How ?

When entrepreneurs come to me with that “million dollar idea,” I have to tell them that an idea alone is really worth nothing. It’s all about the execution, and investors invest in the people who can execute, or even better, have a history of successful execution. Execution is making things happen, and for startups it usually means making change happen, which is even more difficult.

Sean Covey image via FranklinCovey >>

For most people, execution is one of those things that seems obvious after the fact when done correctly, but is hard to specify for those trying to learn to do it better. Recently, I finished a new book on this subject, “The 4 Disciplines of Execution,” by Chris McChesney, Sean Covey, and Jim Huling, which seems to talk to startups as well as the corporate world it was written for.

These authors argue effectively that the hard part of executing most strategies is changing human behavior – first the people on your team, then partners, vendors, and most importantly, customers. No startup founder or leader can just order these changes to happen, because it isn’t that easy to get other people to change their ways. Changing yourself is tough enough.

Here are four key disciplines that I believe the best business leaders follow to expedite the change and forward progress implicit in the successful execution of a million dollar idea:

1. Focus always on one or two top priority goals. We all live with the stark reality that the more we try to do, the less well we do on any of the elements. Thus focus is a natural principle. Narrow you and your team’s focus to one or two wildly important goals, and don’t let these get lost in the whirlwind of daily urgent tasks and communications.
2. Identify and act on leading measures first. Some actions have more impact than others when reaching for a goal. Hold the lag measures for later (results available after the fact), and focus on lead measures first (predictive of achieving a goal). For example, more customer leads is predictive of more sales revenue later.
3. Define a compelling scoreboard. People on your team play differently when someone is keeping score, and even better when they are keeping score, and even better when they have defined how their score is measured. This is the discipline of engagement. If the scoreboard isn’t clear, play will be abandoned in the whirlwind of other activities.
4. Create a frequent forum for accountability. Unless we feel accountability, and see accountability on a regular cadence, it also disintegrates in the daily whirlwind. It’s even better if team members create their own commitments, which become promises to the team, rather than simply job performance. People want to make a contribution and win.

These four disciplines must be implemented as a process, not as an event. That means your team needs to see them as a normal and continuous focus, not a one-time push which fades in the rush of other daily priorities. The team needs to see the process practiced by the startup founder, as well as preached regularly.

Startup founders also need to realize that building and managing a company is quite different from learning to search for and solidify an idea that can grow into a company. Every entrepreneur has to navigate that personal change from thinking to doing to managing.

It’s not only the change from thinking to managing, but also the change and learning from constant iterations. Major changes, called pivots, are terrifying to a team that has put months of constant focus into executing what they thought was a great idea. If you don’t have an execution process, you have chaos.

Overall, every entrepreneur should be concerned if they don’t regularly feel stretched beyond their comfort zone, meaning mastering the art of execution if you are mainly creative, or developing creativity if you are mainly process driven. Don’t forget that the fun and challenge is in the learning, so enjoy the ride. The entrepreneur lifestyle is not meant to be comfortable.

Martin Zwilling, Contributor

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