From Startup Ecosystem Builder to Strategic Investor: E27 and Orvel Ventures with Mohan Belani
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If you take a step back and ask, right, okay, how has the last 10, 15 years panned out? The truth of the matter is that Southeast Asia has not done as well as it should have been

based on the reports and the projections that existed earlier. But also, to me, there have been fundamental flaws from a culture standpoint with respect to how the ecosystem has been shaped. And in a way, that has led to why we launched Orville Ventures, right? I think there has been too much of a mirror of what's happening in Silicon Valley and figuring out how to replicate those concepts in Southeast Asia. Whereas, if you ask me, there should have been

a better, more localised, customised regional model to suit the culture and concepts in this region. So that's the first part of the problem, right? I think we've mirrored our fundraising, our entire ecosystem to be too much like Silicon Valley. So Blitzkrieg-style model, power law-style investing, which are on hindsight, maybe were not the right approaches. Second thing is, I think there's also been an over-reliance on funding.

Welcome to Analyze Asia, the premier podcast dedicated to dissecting the pulse of business, technology and media in Asia. I'm Bernard Leong and E27 has been an integral part of the Southeast Asia startup and investor ecosystem for the past decade. With me today, Mohan Balani, CEO and co-founder of E27.

and partner at Oval Ventures to reflect and look ahead where we are really heading with the ecosystem. Of course, I also have to first disclose that Oval VC is an investor to Doge AI. So with that out of the way, Mohan, welcome to the show. Honoured to have you here. Yeah, thanks for having me. It's really great to be part of this.

Yes. And of course, I understand that the Echelon conference is coming next week. So I think let's first talk about you. In preparing for this interview, I noted that you're also part of the NUS, National University of Singapore Overseas College program in Silicon Valley. Maybe start off by telling how did that experience influence your entrepreneurial journey? Yeah.

Yeah, so the, I mean, the program was pivotal in quite a few ways, right? I think the first part is in really exposing me to this concept called Startups and

And also this idea that it's small, nimble teams with limited resources, right? And a very tight timeframe to execution that can actually solve really big problems. So the company that I was a part of, I was effectively employee number one. So it was me and the CEO the whole time. And then he had an outsourced tech team. He hired a director of engineering like a few weeks after I came in. And it was just the three of us, you know, all along. So the exposure to doing trade shows,

to doing marketing to doing BD was an amazing holistic understanding to what it was to build a company. So, NOC provided that groundwork fundamental experience of working at companies.

And then the attachment that we had on the education side was with respect to classes at Stanford, which is with a very reputable Tom Kosnick, right? And I think it was amazing to have a balance between the theoretical classroom understanding of entrepreneurship and the practical, you know, day-to-day workings, right, of starting up. And I even remember some of the other professors I had in class,

they had their startups of their own, right? So it was just a fascinating melting pot of events, learning, hands-on experience. And of course, the constant intermingling with other founders in the Valley, right, that really shaped my entire worldview of what it meant to be part of the startup ecosystem. And that, of course, led to me working on E27 and making like my entire life's career to helping work on the startup ecosystem in Southeast Asia. Mm-hmm.

If you were to reflect on your journey, what are some of the pivotal lessons you have learned and you can share with the aspiring entrepreneurs out there? On the NOC side? Yeah, maybe throughout your career and thinking through. Yeah, so I remember on the NOC side, right? Like there were two stories I like to share with people, right? The first one I remember within the first couple of weeks in the office, right? I was trying to tell my boss, his name is Anand, right? That, hey, we should really do something about the UX, right?

And he basically said, "Look, we don't have a budget for a UX person. And by the way, you know, my friends have tried out the product. The product works fine. I think it's great. So there's nothing to worry about." So I learned very quickly that in order to get support for what I was trying to push,

I decided to email like a hundred of my friends, mostly back in Singapore, right? And say, hey, check out this product that I'm part of. Give me your super honest feedback and we'll see. Like literally 99% of the feedback was just product was perfect.

bad, crap, UX was bad. And back then we still printed emails, right? So I literally printed the emails, stapled the stack of them, left it on his table the night before. And the next day he came in, looked at it, you know, called me over shortly after. He said, you know what? Okay, maybe we should, I hear you on the need to improve our UX.

I recognize the feedback. Now is not the time, but I promise you, give me some time and I'll get a UX person in on a project level. So sometimes, right, if you want to push through ideas, it's not enough to just have it from your innate self, right? You know, getting customer validation, customer feedback, or the general community to support and back what you're doing from a data-driven standpoint is quite meaningful and powerful.

The second story about opening up and asking, which I thought, which has really helped me to today, was that I wanted to go to New York to attend a conference, which my boss was going for.

I didn't have the, we didn't have the budget to fly me there. The good news is that my grandparents live in New York, so accommodation was free, right? But the ticket cost, the ticket just for the event was about 3,000 USD. Wow. Right? So my boss was like, yup, no way you're going, right? So I quietly emailed the company and I said, hey, can I, I'm from Singapore, I'm part of this NUS, NOC program, I studied at Stanford, I want to come and volunteer time and effort to supporting the event.

Organiser came back saying, "Yeah, sure, come by, meet me at the registration booth and you can do some volunteer work for us." So I was like, "Okay, problem number one solved, I got a volunteer pass."

Pass. Problem number two was the tickets, right? So that was simple, right? Because I scrambled some cash, borrowed some money from my roommates and managed to get the cheapest flight over, which had a layoff and all, but we got that done, then housing was covered. The moment I landed at the event, the guy at registration gave me a gold pass. He's like, this is our highest tier pass. Take the pass, enjoy yourself, go learn, meet great people, and I hope you have a wonderful time.

I was like, wait a minute, what the hell happened, right? So I had a higher tier pass than my boss. I was getting into the VIP sessions. I had pretty much full access. And that led me to be pitching to some of the potential clients. I had a stack of name cards that I collected, brought them back to the company a week later. And then we started doing demos with these clients, closed some of them. But it fundamentally started from me just going, hey, can I...

can I do something to support you that then allows me to get a pass that I can, you know, cover the cost of the ticket. Interesting. And I think there's this whole idea of just, come on, just ask. Right?

It was something that really opened up my mind. I would have never done that before in the past. So I guess the Silicon Valley environment sparked that whole initiative to just go out there and try things out. Yeah, it reminds me of the Jensen Huang story where he had to ask someone to pay him just before the company was about to tank. And then the video would have a different life story, you know, at it all.

If you didn't ask that question, I think the asking is the most important for all entrepreneurs. I think you totally reflected that lesson pretty well. So one thing, so the main subject of the day is to actually talk about E27 and also the evolution of the entire Southeast Asia startup ecosystem. I think maybe to help all my audience, let's baseline. Can you share the story of E27 from its origin story all the way to as an evolution of companies

as a platform for startups and investors today? Yeah. So the company originally started as a community in NUS. And it was actually originally started by a couple of other folks, Justin Lee, Bjorn Lee, and a whole bunch of individuals that are actually all successful founders today, including the founders of Zopay and MoneySpark. So if I recall correctly, there were about 20 of them that started this as a community in NUS. And when it started, I was still in the US.

So when I came back from NOC in July '07, I kind of got integrated in this group.

And the reason why it became or got registered as a company was because way back when MDA had the iGEM program, NUS was one of the incubating companies. I believe you had a fund. Yeah, we did. That was my first fund. Yeah, so NUS wanted to collaborate with this group of individuals that were very active and passionate about startups and very close to the student community. So that's how Optimatic, the parent company of E27, started. And then

And they were doing contractual work for NUS to run the garage incubator back in Prince George's Park. Yes. The bungalows at the back. That led to the investment in companies like PetSnap, Muddy Smart, 2359 Media, GoDaddy.sg and a few others, right? So it started as a community and then over the years, it was doing events, it was doing activities.

In that journey, I actually went on to work at an edutec company called Little Lives, which if you work at, if you are in a, if you are a child in the kindergarten today, it's a high chance you use the app. Yes, I'm one of the kids who use that app. Yeah, so I did the, I did the first sales to the MOE and the kindergarten events and did the iPad training for the teachers. I worked at Mic 33 for a while and then I had a gaming company shortly after that. But the honest truth is that sometime around 2011 and for most of that period, right,

Deep down inside, I really wanted to get back to supporting startup companies. The core thesis that I had in my mind, and this is a thesis that was not new because I pitched it. I even pitched it to Saeed Amidi, who was the CEO and founder of Plug & Play when I was back in the Valley. It was this concept that if you look at Southeast Asia, it is riddled with problems and also opportunities, right? Yeah.

those opportunities are not going to be capitalised by the larger companies, neither are they going to be fixed by the government.

The one core group of people that should be tackling these problems and can do them in a scalable manner is going to be founders and entrepreneurs. Right? And the startup mindset is what is needed, you know, to fix all the issues in Southeast Asia. So if we as a platform could support more startups, give them the visibility, provide them the access to the investors, give them the information that they need to better be competitive, a lot less startups would fail. Hmm.

Right? And so, 20 and 2011, I, I, Thaddeus and I, and I sat down with Thaddeus and said, hey, I'm going to do this. I want to do this. You want to be part of it. Right? We went back to the original core group of E27 folks. You

You know, restructure the cap table and basically say, look, we have a plan to bring this to another level. I brought in our first angel investor who's still on my board, Nick Lim, whose fund is called 8 Capital. Yeah. And with that first initial 25K check, it led to what it is today.

And I think from Garage, you also moved to the Block71, which is also the integral part of the startup ecosystem within Singapore itself. And then, of course, Block71 is separate. It's all over the world now. Yeah. And at that period, we were close to...

MDA and NUS to kind of like, you know, discuss the initial seedling ideas of this concept called Block71. So when it first started, we had the opportunity to be one of the, part of one of the incubators, Fatfish, on the second floor in Block71 itself. Because there were a lot of stringent requirements around what kind of company would be there. So we managed to, long story short, we managed to be part of it. And then we were based there all the way until 2018. Mm-hmm.

And then after 30 years, you got all the best, like there is INSEAD Business School, there is Fusionopolis, and all the startups are there. Yeah, it was like a startup zoo, right? Because you will have people from all over the world coming, visiting, and it was like a central hub of activities happening. Unfortunately, they didn't have much event space back then, or we would probably have done a lot more events.

But it was really like the melting pot of the early Singapore startup ecosystem. When there was barely even CBC funding. So I think that

That original opportunity, right, to be in the center from a physicality standpoint of the entire rise and growth of the startup ecosystem, we were very fortunate to be in that place. And then over time, we had our own office on the fifth floor, and then we moved over to Science Park in 2018. Oh, okay. But it's still very near to the center of all the...

I think Block 71 is still running strong these days. Yeah, yeah. I think the community is still strong. I mean, it's very professionalized in a lot of ways now. It's run by JGC. There are multiple blocks. I believe there's Block 69. Yes. I can't even remember all the different numbers. But fundamentally, I think it's really become a very integral part of the ecosystem. And it's a brand name kind of known to be synonymous with starting up. Hmm.

I guess when you think about then to now, what were some of the significant challenges you faced in those early days and the growing stages of E27? And then how did you overcome some of them? In the very start, I think a large part of the challenge was around

missing building blocks of what it had, what it needed to have a good ecosystem, right? So there was always this chicken and egg issue around funding and investors. And I remember that while the government played a really amazing role at trying to, you know, make sure that there was capital, it never felt like there was enough.

So everything we did, right, there were always bigger questions around, okay, how do you get to Series A? How do you get to Series B? Does the support system have that support of it? Rather than focusing back on really the companies and what they were doing. So I think the earlier part from maybe 2012 to 2015, that was the first part of the challenge, right? From 2015 to like 2018, I think those were the boom days. Oh.

There was capital coming in. There were starting to be really good companies coming out. I remember there was also the period where there were so many different programs to support founders, both on the capital, the talent, the market access side. And more importantly, there were also interesting projects

people with the right backgrounds from corporate that were willing to say, hey, look, I'm going to leave my corporate opportunity, jump into this startup bandwagon and raise capital. And I think there was also the early formulations of interesting ideas and verticals that had started to shape up. Like FinTech was really starting to shape up to be an interesting vertical. HealthTech was another big area starting out, but I think hasn't really fully reached its full potential yet.

the B2B marketplaces had been starting up. 2012, that period was still very consumer-centric. And with consumer comes, you know, the need for a lot of capital where, you know, and that's where a lot of the thesis would fail, right? But 2015 to 2018 was, I think, a larger emergence of B2B, right?

And I remember even at the tail end, right, you started to have sub-micro verticals around, let's say, mental health. Yeah. You had the logistics supply chain. Right. You know, it started coming up. And along with these problems and opportunities came an interesting diversity of corporate venture funds.

later stage funds, international funds. And so, yeah, I remember that. But then it also just right before that COVID period, also there's another sort of a boom between 2020, 2021. What about that era then? From that build up all the way to 2020? 18, 19, 20, I think that was a good build up, right? And 2020, 2020, I think there was a kind of major crash because everyone's just like, oh crap, what do we do now, right? But I think

Till 2020 to 2021 was when the fervour just went on another level. Majorly because of the interest rates issue and the stock markets also going all nuts and plus all the COVID money coming in, right? But there was also that realisation that certain sectors are doing extremely well. No one had a clear sensing of when the world would open up. So maybe everyone thought that we would be stuck watching Netflix or

using Zoom and consuming digital services in perpetuity. So I think there was a massive fervor. And then of course the Web3 space also started really heating up and very exciting in that period, right? Which helped also channel a different type of capital into the ecosystem.

founders and both funds were also raising at record levels. Remember, there were funds popping up every other day, raising anywhere between $50 to $300 million funds all over the region. I'm not sure how a lot of them are doing, but last I heard, I think it's been a struggle. But on the founder side, the founders that were able to capitalize on capital raises at that period, I'm sure they must have done really, really well, but they must have taken a massive hairline on their valuations from that period until now.

I think the startup ecosystem lost its sense of bearing, but then again, it also...

It was also comparing itself with the capital markets on the US side. And in that sense, I think every founder would have done what they should do, right? Which is just capitalize on the opportunity, raise capital, push hard and see what happens at a later stage. So you see from your perspective, how do you see your role being both media and also community platform where you have to support the startups through this entire process?

period, these different stages you identify, what do you feel is that is the role then

and now yeah yeah so we've always we've always played the role of ecosystem builder right media is a byproduct of ecosystem building right the the large reason why we launched the media arm was simply because we wanted to educate and inform the ecosystem not to be like uh not to not to have a journalism stance to investigate what was happening in the industry

So media for us has always been an avenue whereby we can uncover, feature interesting companies and what's happening in the ecosystem. But we also realised that as an organisation, we are not the subject matter experts in any particular field. So I think it was around 2015, 2016 is when we launched our contributor programme.

And basically, it's a glorified guest post concept, right? But what we realize is that if you're a founder in AI, if you're a founder in logistics, you've probably done enough of research and due diligence about that sector to then be a thought leader. And again, all of this was pre-LinkedIn thought leadership on

content side, right? So we were very actively engaging the entire ecosystem, founder, investor, corporate, right? To basically say, hey, can you be a thought leader on a platform? You know, create content and write about it. So the tricky part is that we had to just make sure that the content was not overly a sales pitch about what they were doing, but was providing true value to the ecosystem.

And then that funneled into our events with the way we structured the content at our conferences. A lot of our conference content is again very thought leadership driven, less about organizations or companies or a critic of their business. And I think that shaped the culture that we have. Our core value number one is respect the ecosystem.

You know, we don't believe in creating content that maybe vilifies or pushes down a particular individual or company. I think constructive criticism is important. Organizations will make mistakes, right? And you will have some bad actors, E-fishery for example. But we want to focus on the individuals that are doing good work. We want to focus on the knowledge sharing, the thought leadership content that we feel will elevate this vision.

So my question would be, from Singapore, you actually also go across different parts of Southeast Asia. Yeah. How do you find, like, say, when you go into the other different countries, say Indonesia, Thailand, Vietnam, Malaysia, or Philippines, what is the sense like when you bring the E27 kind of community platform across? Is it different? There is a different vibe or different perspective? Yeah. So in the early days,

we really had not much intention to, you know, regionalise and go abroad, right? You know, a large reason is because we did not have the resources but also the know-how. And how it started is that regional players would contact us to say, hey, why aren't you doing an echelon in my particular country? And we're like,

"Oh, do you want an echelon?" "How do we do it?" "Is there an appetite?" "Is there a market for it?" And most of the time, it'll be, "Why don't I help you out?" "And we'll do an event here." And that's how the roadshow concept came about. In our heydays, we used to have

13 echelon roadshows across APEC, including Central Asia, Mongolia, Australia, and every major city across Southeast Asia and Northeast Asia. And a lot of this was driven by partners, not by...

I think we strongly believe that in order for us to add value to the ecosystem, we need to collaborate and partner with the local communities and local ecosystem players. Whether they are investors, whether they are governments, or whether they are local equivalents of E27. What would you have done differently? Let's say you know what you know now, and then you rewind backwards and then start all over again. Or you may be the same decision all the way.

So we learned a lot by, you know, really going out to all these markets, right? I think on hindsight, what we could have done better is to be smarter in evaluating, right, whether an ecosystem was ready.

Most ecosystems were really just not ready. So when we went in, when we did the activities, right, we were basically working with founders or an ecosystem that was maybe five years behind. Right? So we might do an event, it might be extremely well, but there'll be no follow through after that.

And it's not, again, it's not about the founders or investors not doing their job. It's the ecosystem was just too early. So I think on one level, that would have been something that we should have been a bit more mindful and smarter about. Second thing is also, right, we should have figured out how to better capitalise on the platform to support these regions and not the events.

I think culturally we were always stuck, right? Are we a product company? Are we a community? Are we events company? And I think up to COVID, we were very much an events mindset organization. And the platform was just purely content and maybe to market the event. COVID was a wake-up call for us and an opportunity to be more community and platform-centric from an online standpoint. On hindsight, if we had done that earlier,

I think we could have impacted ecosystems on a much deeper and much more sustainable level. So with like the rise of new technologies, I mean, across the entire decade, right? I mean, we have mobile, then we had a bit of a crypto and then AI now. Yeah.

And also the market dynamics have changed quite significantly over this period of time. How do you think for E27, what is the thing that will make sure that you can adapt to stay relevant and also continue providing that value to the ecosystem itself? That's a really great question because in the early days, I think a lot of the companies were B2C and that evolved to be B2B. And even within B2B, there were very few verticals that made sense. Right.

maybe marketplaces, right? But over time, right, there were deeper verticals that started coming up. FinTech was a very, very deep vertical coming up. HR was another deep one. Even CXA, like customer experience was a deeper. So for us, I think what we've always done, right, is to say, look, we know that there will be a flavor of the month concept in the startup ecosystem. I remember in 2020, the flavor of the month was food tech companies.

Partly because Singapore was having an egg crisis, wanted to invest in making our food networks a bit more resilient, but there was a whole plant-based fora. Today, nobody talks about food tech companies.

We realized if we went after or chased after a certain vertical, it might be too risky for us. We need to be a bit more generic and serve the larger general entrepreneurship ecosystem. Now, we will miss out on certain areas. Like for example, if you're a fintech company, right? Singapore Fintech Festival and some of the fintech-centric organizations might provide you a lot more deeper value.

But if you look at what we're doing, the general startup landscape, the general ecosystem with some nuggets of verticalization is what we're looking at. So AI as a vertical, for example, we really cannot ignore. And to be honest, it's not so much of a vertical, but entire ecosystem-centric integration that's going to happen.

To me, in a year or two, we will stop even talking about AI because it's going to be a feature in every company. The same way social, local, mobile was something that Silicon Valley was talking about like crazy in the 2012 era and no one talks about it now because it's assumed that every company is that way. To me, same way with AI, right? But,

AI goes across the board, regardless of B2B, B2C, regardless of fintech, health tech, or logistics, right? AI has a role to play. And that's why we kind of focus a lot more on AI in the recent echelons last year as well as this year. But we want to be agnostic platform for startups.

So what's the one thing you know about the Southeast Asia investor and startup ecosystem that very few do? If I had to tell you, I'm sure you have one. If you take a step back and ask, right, okay, how has the last 10, 15 years panned out? The truth of the matter is that Southeast Asia has not done as well as it should have been.

based on the reports and the projections that existed earlier. But also, to me, there have been fundamental flaws from a culture standpoint with respect to how the ecosystem has been shaped. And in a way, that has led to why we launched Orville Ventures, right? I think there has been too much of a mirror of what's happening in Silicon Valley and figuring out how to replicate those concepts in Southeast Asia.

Whereas if you ask me, there should have been a better, more localised, customised regional model to suit the culture and concepts in this region. So that's the first part of the problem, right? I think we've mirrored our fundraising, our entire ecosystem to be too much like Silicon Valley. So Blitzkrieg style model, power law style investing,

which are on hindsight, maybe were not the right approaches. Second thing is, I think there's also been an over-reliance on funding. So markets like Philippines, right, interestingly, right, because they've not been the darling of the ecosystem from a fundraising standpoint, they've had to be a bit more resilient to make sure that they go to market faster and get revenue faster. I think that's starting to show in terms of some of the quality of the companies.

Do you see the same even in Malaysia, given that they have a much vibrant crypto companies? Yeah, Malaysia has always been a great ecosystem if you're looking to build a small, medium-sized startup, right? And again, the problem with us in the region is our obsession on Silicon Valley-like metrics for success, which is, you know, if you're not building to be a unicorn, no VC is going to invest in you.

Orville invested in one Malaysian company, and he's a good founder, he's building a great business, and he raised capital from his previous company from tier one VCs.

And when I asked him, why didn't the VCs invest in a new company? The messaging was that, oh, this does not have a unicorn potential. And I'm like, what is wrong with us as an ecosystem, right? Why haven't we learned that the power law way of investing in this region does not always work and probably will not work for a while?

So it would be fair because when you move forward with Ovel Ventures, so I want to walk you a step back and say, hey, what was the spark that inspired you to establish Ovel Ventures? I think your investment thesis is very different. And by the way, I like the way you define the origin of Ovel Ventures. Maybe you want to talk about the name, how it came about. Yeah, so Ovel stands for origin velocity, right? I never intended to start a fund.

I was, I was, you know, a lot of people casually over the last 10, 15 years have said, hey, you know, when did you start a fund, right? And for me, I, I, I,

I did not think that I am suited to be in the finance side of the ecosystem. I think I'm better suited to be on the founder side, the ecosystem building side, right? And so I rather work with and build relationships with the VCs and then, you know, use their capital to support the ecosystem, which is what we've done on E27. We have our investor portal with over a thousand investors.

the ECCO business matching activity that we do. You know, a lot of founders actually raise capital through Echelon, right? So that to me has been the right fit. In 2022, I was doing some, my usual angel investment with Milan, right? Yeah, correct. Who's now my partner at Ovel. So Milan and I, you know, caught up over a drink because I've done some deals with him and never met him face-to-face. We started with this, through the conversation, right? We started with this one question. It's like, hey,

If you were going to start a company tomorrow, who would you want to raise from? So I had my list of about three or five investors who I liked and all. Milan had his list and we were comparing notes. And as we went through the list and we were talking, right, we started to realize, look, in our current stage, you know, us being a bit more experienced in the ecosystem, us knowing, you know, how do we want to build companies, right? We realized that most VCs were not ideal for

founders of our level. That means a bit older, have done it before, need more support than pure capital. And so we started to, okay, dissect the problem, right? Okay, let's look at the founder side. What would a more senior seasoned founder need?

And through the discussions, we realized capital is something that they could very easily get from the network. And most VCs would throw money at them. But what they really, really needed was strategic networks that helped to open doors for them, that allowed them to go to market faster, improve their runway, you know, thanks to the warm relationships that a strategic investor could provide. So network-driven was one key part.

The second part was on the portfolio construction standpoint. Yeah. Right? We looked at a lot of the funds that existed today. A lot of them went in with check sizes that allowed them to have 10%, 15% ownership in the companies. And then we realized that over time, it was really hard for these funds to exit the companies because unless a very large later stage investor came in, they really couldn't sell down and return money back to LPs.

So then you needed to bet on the power law model, which meant that you would have to invest in 20 companies, knowing very well that 18 of them will either die or not return you a dime. And you hope that the final two get a unicorn 100x that will exit. So the 18 founders that you originally support will be left to die. And to me, that's the shitty thing that I felt. When during COVID, right, and I'm talking a lot about my angel portfolio,

The one conversation they would have with me, they're like, why aren't my investors supporting me now when I need them the most? And I had to tell them openly, I said, it's not you, it's the model. They are looking for that one unicorn exit in their portfolio. And if you're not that

They're not going to support you. It's not that they're mean or evil, right? It's a function of the model. The last part was on the LP side. So I've been an LP in funds. I know multiple people who are LPs in funds, right? I've had some great successes as a fund LP. I've had some not so good successes, right? And the one common theme, if you talk to any LP that invests in Southeast Asia funds, the answer is always no DPI.

Yeah. You know, like virtually no, there's virtually very little or no DPI in most Southeast Asia funds. Whereas if you look at some of the American funds and other funds that I've invested in, there's typically some level of DPI within the first couple of years. Again, there are many reasons for that, right? On some level, it's the nature of the ecosystem. A lot more M&A happens. On some level, you know, the funds are better at getting out, right? As good as they are in getting in.

So we looked at these three issues and say, okay, how can we launch a fund that tackles this problem or at least alleviate some of these problems? So we started a fund that is network driven. So the capital that we provide is up to on average 100K. Second issue is that we only take a 1% ownership. We increase that up to 3% over time. But the goal is to take very small stakes in many, many companies as opposed to large stakes in maybe 10 to 20 companies.

And more importantly, these companies at the point of investment have to be generating revenue and our valuation shouldn't be more than 20, 25x or cross margin multiples. Which means that our entry prices are not at the ridiculous level that a lot of funds get in it. So for example, let's say if a company, because AI companies are quite different, I suppose, they can get profitable.

then there is a DPI that you can still return your fund, right? Yeah, absolutely. I mean, they could do share buybacks, they could do dividends. You know, there are multiple ways to work around that, right? But importantly, right, is to not fall into the trap of investing in a tier one founder with a tier one lead VC in a really hot market and then having a 15, 20 million pre-money valuation with no real product or no revenue.

So it was making sure that we were very deliberate that we wanted to go back to investing in companies that have good financial fundamentals. They might not be unicorns, but they could be really good $100 million, $200 million companies. Yeah, you're right. And I think the ecosystem actually missed out a lot on these companies previously. Absolutely, yeah. And here's the thing. In 2022, when we were talking about this,

The truth is, we still got a lot of blank stares from investors looking at us going like, what nonsense is this? That's not VC investing. The one group of people that resonated very well with us were the founders and more so the exited founders.

And that's the first bucket of capital that we raised from. Founders that have exited, they said, look, this model, like I want to see this model work and henceforth I'm giving you this capital. But I really wish a fund like that exited when I was building my company. Do you think that your fund will ever reach the point where you could also do almost like a private equity where you can actually even roll up companies then?

Because you are looking at that kind of trajectory. You're not looking for the power law type, but you're actually looking for very sustainable, but essentially would provide a proper DPI for

in that point of view. Yeah, I think to do that effectively, you definitely need a large amount of capital and you need a team that has got the management experience with respect to either operator management or consultancy type management, right? But for us, right, we're dealing with a very, very small fund. We like small funds. We don't like funds that are more than 20 mil, right? Even from an investment standpoint, I generally don't invest in larger funds. I made the mistake of investing in one or two large funds.

And truth be told, the outcomes have not been great. So for me,

smaller funds have limited resources in terms of dry powder that they can invest, and they typically invest a bit earlier at rounds that are at a price that is a lot more pragmatic. And I think smaller funds also have a higher chance of at the very least, you know, returning their base capital, which is in my experience, the smaller funds I've invested in have done quite well in doing that.

I think so too actually coming to think about it as an angel investor myself. I'm quite curious to hear your point of view on this. What are the traits that you look out for when you invest in startup founders? Given it's such an early stage as well. Yeah, so I stopped actively angel investing but I, you know, interestingly I did one deal early this year. I really wasn't intending to but the founder reached out to me, he was an old friend of mine and

The part that got me over the line was very simple right. One is that it was a problem that he deeply resonated in and was looking for a company to invest in to solve the problem. And it's in a sector I would have never thought of which is the film testing sector. Wow, that's interesting.

If you think of sector, I think that's probably a sector I wouldn't even know even existed. A, he's deeply passionate about that sector. He has built up research, knowledge, information repository in that entire sector for many years because of his personal passion. And two, is that he's been looking actively for founders to invest in, never found one, and decided, you know what, he just needed to scratch that itch.

right and so he very like on his own dime right built a prototype got a team small team together got a very strong proof of concept that started to validate potentially what the idea looked like before he even raised the dime right so

So based on that logic, right, of, okay, I know this founder really well, and I know how hardworking and passionate he is. B, this is a sector he's deeply passionate about. He's spent many years of his life, you know, researching it and understanding it. And C, he managed to get to a level, right, whereby he has something to show the world with his own capital, and he's put a team together to support him in that process.

So for me, I think these are the kind of founders I would want to back. So if I reverse the question, what's the red flags there? So the red flags for me are founders whereby they're raising capital for the pure sake of raising capital to get their product out or to get their company going.

Like they don't seem to have any real skin in the game with respect to, let's say, putting in their own capital or at least maybe bootstrapping or working on the product for six to 12 months. And they're just purely using the investor capital to get there. Do you notice that this is actually becoming a big problem? Because I also noticed in startup founders, some of the startup founders I talked to seems to be very heavily reliant on raising more and more capital but never got to a stage where they can actually be

revenue positive. Yeah, I mean, we've all drunk the Kool-Aid, you know, raising capital and of course, it doesn't help that media platforms also glorify founders that raise capital, right? So do events, right? So, we've drunk that Silicon Valley Kool-Aid of BC fundraisers

we should be flipping the switch and going, hey, look, how do I make sure I get to financial sustainability as quickly as possible on my own? Then VC capital is a catalyst for me to get to the next level where I know organically I can't get there quickly. I think that's the missing gap on VC. So VC to me is really good for two things. One, it's good to invest in the craziest ideas that no one in the world will touch.

And the founders are deeply passionate about it and they need capital because there's maybe a deep tech-centric expertise or the market is not ready to pay for it. So that's where VC comes from. So if we look at the plant-based meat sector, I think that's one good example of how VC capital was really able to unlock that sector extremely well.

The second part is when you have something and you want to scale it, you know it works, there's product market fit. Now you need to scale it to a level that your product can get into the hands of a large number of people. This can be a big company. And the VC money is literally the fuel to the fire.

If you're using VC money to be the fire starter, that's wrong. VC money is a fuel to the fire. And in that scenario, I think VC money is phenomenal. You've seen the Southeast Asia startup ecosystem growth. I guess one question, if you were to look back towards it, how do you now perceive...

the current state of, say, venture capital, in light of, I think, the recent shifts, I think some of the funds have reached their 10-year mark. And I think you rightfully point out that the DPI problem is there. Yeah. How do you think, I'm starting to see even like there is a, there's like an empty Series B fund

slot now. I don't know whether AEC will exist. Maybe all the capital is now starting around pre-seed to seed. And I think that's the only way you have funding. And I think after that, it's probably very difficult to raise. Unless, like you said, you already have the product market fit, you can add fuel to the fire. Otherwise, having it as a fire starter will not work for you either. How would you think about

How would you think about now for venture capital within the region? Do you think that it's going to be very challenging? Or maybe it's going to be just a blip for a while? Maybe you need the fundamentals growing? I think there's some options that you look at the Vietnam market. You look at, say, for example, you identify the Philippines as well. I think Malaysia is interesting because I've seen very good crypto companies come from there. Yeah. I think later stage venture capital is going to have a very tough time.

Early-stage venture capital, if done right, with the correct pricing and entry points, I think they will not have an issue. So my question to the ecosystem is this, okay?

If you can build a company, scale it to maybe 10 million revenue and get it to like 30%, 40% of net margin, not the EBITDA bullshit, right? 30, 40% net margin. To me, right, that is a very, very good success. And with that net margin, right, you can buy out and do share buybacks for all the early stage investors. Yeah, that's possible. I think it's actually doable. Yeah, it is very doable. But most companies just don't think of growth and scale that way.

To them, I think that concept is probably a failure. The first, there are two problems here. First problem is that most companies can probably get to 2 million revenue, maybe 3, right? And then at that stage, they might have maybe 10% net margin. But for them to get to 30% net margin, it might be difficult. But this is where I think AI is a massive opportunity. Yeah. Right? With workflow automation and some level of scalability using AI agents, you can get to the 30% margin.

So if you have a company doing 2 to 3 mil with 30% net margins, then the question is now, can you scale this to 10 mil to 15 mil? This is where new markets come in, you know, expansion to other markets in the region. So you're essentially creating multiple markets doing 2 to 3 mil combined. Yeah. And I think if at the next level, you can do a 10 mil company revenue at a 30% net margin, you can buy out all the early stage VCs that came in. They will all make a multiple positive return.

And that's what the ecosystem needs. Now, some companies will get from the 10 mil to the 100 mil valuation, revenue. And I think that level of companies are only mostly companies, right, that either are deeply entrenched in this region or they will have to scale to markets like Europe or US.

Like, I mean, if we look at PetSnap, for example, right, they have already, like, started exploring the US market. Carousel, on the other hand, deeply entrenched in this region, you know, really pushing hard to get their top line closer to 100 mil level, but the net margin is always going to be an issue. Mm-hmm.

So Property Guru, another clear example of a company deeply entrenched in this region. EQT, you know, privatized the company so that they can maximize the net margins from it, right? But that to me is another, like the few great examples of companies that can get to a significant amount of revenue, be publicly listed, good net margins. But I think for most other founders, aspire to build a $2 million, $3 million revenue company with a 20-30% net margin first.

you get to that milestone, right? You can buy back all your engineering investors. Yeah. They will all make money and everybody will be happy. True. So, if you think about it, right, then what are the sectors or technology now you think will be good for, say, startups in Southeast Asia? Because,

It seems to me market penetration is one of the clear things. If you stay within this market, there's a challenge. And I think even for myself, I'm thinking a lot more about the Australian, New Zealand market, which are developed markets where I know there are clear customers there, or even the US market or European markets. Where do you think that, what kind of sector that really makes sense within this current, I guess, 2024 batch of

startups because I think it's actually a good time because the more depressed the era is actually the better startups will come out from that era. Yeah. The unfortunate truth is that we've just been depressed for quite a while. You know, everyone thought that maybe by 2024, the startup market will recover, but it's still been depressed for a while, right? So I think that's the only demoralizing part. So the country matters here. So if you look at markets like Philippines, right, what I've noticed is that consumer-centric opportunities, food-centric opportunities, local brands,

those are completely missing and I think there's a blue ocean there for companies to capitalize on. Markets like Singapore, Malaysia, I think there are interesting vertical SaaS opportunities. Yes, I think AI is also providing a bit of disruption there, but high quality vertical SaaS opportunities focus on painful manual issues.

I would say document processing, for example. So one of our OVL portfolios, right, Staple AI, I mean, they're doing extremely well focusing on, you know, document processing problems that exist in a lot of the key markets in this region. So I think deep, verticalized

AI-based SaaS kind of companies, I think still have a very, very strong fit. The third opportunity I think that we can look to capitalize on is on potentially B2B marketplaces in certain verticals, again, in markets like Philippines or Indonesia, where there's enough inefficiencies in the market that tech can come in and capitalize and make it a bit simpler and then leverage on the productivity improvement. Right.

The last one is on talent arbitrage. So one of our OVL portfolios, they provide English education talent to markets like Europe. That's interesting. Yeah, so company is called H-Tutor. So talent arbitrage, where you are selling from a lower cost base,

to a much higher revenue opportunity base are models that could work. So I think at least in this part of the world, English talent is one thing. I've seen, I heard of a company trying to provide nursing or healthcare centric talent and arbitraging it with markets like the US and Europe, right? With some level of education and retraining involved. So I think that's another opportunity to potentially capitalize on. Then you have the longer far-flung opportunities like waste management,

fintech in terms of mortgage lending and all but I think those are far and few in between like you really have to have the good set of founders that have the experience in their space the right technology and then the right relationships with the current incumbent players I think what we've learned in Indonesia is that if you are trying to completely disrupt

or go in and try to take away all the existing players, those things don't work. But if you go in, you integrate with the incumbents, you help them get more productive while you also sell your product or service, I think those are models that will make a lot of sense. So Baskit in Indonesia, Ringcast in Indonesia, those are two clear examples. Baskit being in the supply chain space, Ringcast being in the mortgage lending space, right? They have very nicely integrated with the current players.

So they don't try to get rid of them or disrupt them. And I think, you know, the results have shown that those two are doing extremely well. I think what happens with the recent sort of, I think, I call it the boom and bust in the 2021 in the Southeast Asia, they actually got a couple of high-profile failures. I think we look at Zalingo E-Fishery and probably a couple of others. What are your reflections on the ecosystem, on those situations? And do you see difficulty of actually VC firms now getting...

to actually invest in the region now? Yeah, firstly, I would say that these unfortunate incidents are not a reflection of the ecosystem at large, right? True. It's an isolated one-off case where whether the founder or the teams

have zero accountability and integrity over what it means to run a business, what it means to take investor or external capital. So I would say those are isolated. I mean, if you look at builder AI, that's another example of a global American company completely exploding.

same issue, right? Integrity issues, you know, fudging numbers and all that. So, I think, I think I would reflect that from an individual standpoint, you know, less about the whole ecosystem at large. But, the challenge is that the, so the repercussion here is that the questions are always asked in terms of what could the VCs have done

to better predict or to better foresee this? What part of their due diligence was this, you know, missing? The layer gap was not there. And so, if you have tier one investors that are aggressively investing, you know, how is it that they can, like their own due diligence or their own red flag levels were passed in companies like that and could there be many more?

I think those larger questions will need a bit more time. But the truth is, could an e-fishery have been avoided? My honest opinion is no. Because if Gibran wanted to fudge numbers and lie to his investors, he would have done anything and everything to get there.

right and i think the challenge in the ecosystem is that if one particular investor started to get really like started to try to be too deep in the dd process it would have unfortunately derailed the entire fundraising plan of the company and then you know caused a lot more problems for the company itself right so it's a it's a tricky issue right like on on on some level you want investors to be really thorough in dd but on another level

Bad founders will always figure out how to hide shit from their investors. Yeah, I think so too. And so I empathize with the VCs that invested in the company. I don't think it's entirely their incompetence or incapability that led to the situation. But I think what upsets me and pisses me off the most is the fact that individuals like Gibran and everyone else that has done this

have taken no accountability and there have been no organisations that have put them to task. I see VCs, you know, going on LinkedIn saying things like, oh, we should be moving forward. You know, this is a blip in the ecosystem but putting them to task is not helpful to a fledgling ecosystem. I think that's complete nonsense. Right? The investors should sue him. They should sue their auditors. Yeah, that's the surprise part I find it. They should throw him in jail. It's as simple as that. It

it is fraught on a crazy level, right? And I think the worst thing is that the media company should stop giving him visibility. You know, stop treating his story like a sad story of how, you know, he tried to do this for the betterment of his employees and because he couldn't figure out another way out, right? Yeah, I think from an ecosystem standpoint, we have to reflect

you know, how we want to manage these situations moving forward. So what is the one question that you wish more people would ask you? Be it whether it's E27 or Galventures. Ask me? Yeah, yeah. No, you wish more people would ask you.

Oh, wow. Okay. I actually wish people would be a bit more critical on the stuff they read, right, in terms of the numbers that are raised from a fundraising standpoint or the numbers that are raised from an exit standpoint and whether the stakeholders in all of these equations actually truly benefited. Interesting. We've seen multiple fundraising stories over the years.

where the founders celebrate chest dumping on LinkedIn, the article that you read on E27, TIA and Deal Street is a really rosy number. The insiders know that actually no one really made money. Yeah. Or there are nuances in the deal that

that is not a true reflection of what people read outside. So my tradition... Yeah, I think that level of critique is missing, right? So you wish people to ask you actually, what is the critique of the ecosystem? I think that's a very good question from my point of view. Yeah, critique what you're reading, right? I mean, a lot of companies also share fundraising stories

And it's a, like, for example, they might share that, oh, Company X raised this amount when actually it was many, many rounds over the last two years, you know, put together and now they're making the fundraising announcement to make it seem like the fundraising was a significant amount, right? Yeah. I think, I think, I think little things like that

They matter from an accountability standpoint. If founders can get away here and there on all these little things, they will start getting away on the company level, from a governance level, on the investor update level. And then before you know it, you have another E-fishery situation.

So, my traditional closing question then and looking ahead, what does GRID look like for E27 and Oval Ventures from your point of view in the next few years? So, for E27, right, I'm always aspiring to figure out how can we make a larger impact on the ecosystem. We did like our three-year plan earlier this year and we were really trying to figure out, okay, like, how do we really measure

the impact in terms of the number of stakeholders that we really impact. And we finally came up with a model to calculate that, whether it's the investors, founders and all. So our goal actually is that within a three-year timeframe, we want to be able to impact a million stakeholders across the region. And this could be again, founders, investors, corporates, governments, the like. It's going to be a mix of offline and online, but

We need to be better at measuring the impact of the programs and activities that we do and making sure that we are doing them in a financially sustainable model and a scalable model.

Which means also rethinking how many echelons that we do or rethinking where we want to make investments on the product level and also rethinking what part of the entrepreneurship ecosystem do we want to impact. For a large part of our life, we've always impacted the founder level and the investor level. And then I tell my team, there's an entire organization within a startup

that we don't seem to do enough on like people within the marketing team the product team the tech team the finance team that's why we actually started flux which is a sister brand a couple of years ago we ran one i think in april this year yeah it's a pretty good event with the ai and again the concept is like it's not large couple of hundred people we want to go vertical so at the flux event that we did was for marketing ai marketing leaders so it's like

Can we get the deeper echelons of marketing folks at an event, impact them to improve their skills?

so that they can become better marketing leaders for tomorrow. Can we do the same with product leaders? Can we do the same with HR leaders, finance leaders? So that way, right, we really truly impact the larger ecosystem and not just the founders and investors. But that's the goal for us on the E27 side. On the Orwell side, we've actually done the first round of all the first check investments, right?

Right now, we are taking a very hands-on approach to supporting the portfolio. You know, helping them figure out, okay, what kind of milestones they have over the next six months? How can we use our network to help them get there? And then that will allow us to start doing follow-on investments in these companies.

So it's really a hands-on portfolio-centric approach that we'll focus on for the next six months or the rest of the year, essentially. So Mohamad, many thanks for coming on the show. And definitely two more very short questions to ask you. First is any recommendations that have inspired you recently? Recommendations in terms of books? Anything books. Ah, okay. Books. So the most recent book I read, let me just pull out the title to make sure I get it correct. It's called the...

AI-driven leader. Wow. Yeah. So that book has been helpful because it basically changes the frame and narrative with respect to how you use AI. And I think a lot of the AI usage now is on, okay, improving workflow or helping me with my speech or my marketing content and all that, right? But the opportunity that this book provides is how do you take a step back? Like everyone says, think of AI as a really smart intern. Right?

I think this book basically says, what if AI could be a really smart advisor or board member, right? How would you use AI to sometimes also question you to see if your biases or your assumptions are correct? And how can AI give you a more strategic view of the work that you're doing on a more long-term level? So it's a very different narrative with respect to AI usage. And it's not meant to...

immediately drive outcome or make you do something, but help you basically find gaps in your thinking, identify opportunities based on strengths, or, you know, review some of the strategies that you have in place with your teams. So very different strategies

view on how AI should be used. That has been quite meaningful. So how can my audience find you? And of course, can you talk about your next upcoming Echelon event? Sure. So we have our Echelon event coming up next week, June 10 and 11. It's going to be held at Suntec City with three stages, a few hundred, a couple of hundred over companies that will be present at the event. But more importantly, right, if you want to get the pulse of what's happening in Southeast Asia,

If you want to meet who are the primary movers, shakers, the key individuals, whether is it the investors, the founders, even the corporates, right? It's a really good event to get that sensing. Like the feedback I've always gotten from people is that the moment they walk in, right? The energy and the culture around, you know, meeting people, you know, getting deals done, driving for business activity is something they don't see at other events.

And for us, every one of the platforms or features that we have is meant to drive a business outcome, whether it's to raise capital or to drive partnerships. So if this is something that resonates with your audience, I think that you definitely check out the Echelon event happening next week, June 10 and 11. I'm most active on LinkedIn. On a personal level, I do have an Instagram account and Facebook account, but I really barely post them.

I mostly reshare my wife's post. So that's typically what I do, right? It's utterly from pure laziness and my happiness to have a bit more of a private life. Yeah. LinkedIn is really the best way to connect with me. Just call Mohan Balani, follow E27 and you should be able to find me there. Yeah. Also congratulations, now you're a full-time dad too, right? Oh yeah, yeah, yeah. Very happy full-time dad. I just celebrated my second birthday, but second birthday for my daughter over the weekend. So yeah, super happy with that.

So thank you very much for coming on the show. And you can definitely find us on Spotify and YouTube. And of course, subscribe to our newsletter as well. Mohamad, thanks for coming on the show. And thank you for the 15 years, more than that, I think even 17 to 18 years of actually working with the Southeast Asia ecosystem. And definitely you're someone that actually helped to actually shepherd along this whole entire space. Hopefully for another podcast,

Two, three decades or more, okay? Yeah, as long as I can. I've always told people that it's been, for me, right, it's always been a privilege to be able to do the work that we do. And I always tell people, right, no ecosystem, no E27. And that's why I think, I believe, right, as an organization, we need to play a role in working together and collaborating with the ecosystem for the greater good of the startup and investor community.

So I'm really appreciative and thankful that you have me here to be able to share my story. So thank you for having me. Thank you.