Entrepreneurship in China is like warfare, says Ku Kay-mok, Gobi Partners

In Ku Kay-mok’s eyes, venture capital is a long term game. Even in an economic slowdown, the China-based investment firm still seems to thrive, closing new funds and investing globally including in many parts of Southeast Asia.

Ku joined Gobi Partners in 2010 as a Partner. Prior to that, he started his career with the Infocomm Development Authority (IDA), co-founded his own firm Private Express Inc in the US, and worked at Xinya Media, MediaCorp, and the Media Development Authority of Singapore.

Some of the notable companies backed by Gobi Partners include Camera360 and IAH Games. Founded in 2002, it has established eight funds so far, including Gobi Fund I, Gobi Fund II, Gobi Hitech Fund, Gobi Yingzhi Fund, Gobi ASEAN Fund, Hong Kong Entrepreneurs Fund, Gobi Zhiying Fund, and the Gobi Mavcap ASEAN Superseed Fund.

Its latest — the Gobi Mavcap ASEAN Superseed Fund — is a $14.5 million fund that targets seed-stage companies in Southeast Asia.

Based out of Singapore, Ku talks to DEALSTREETASIA about his thoughts on entrepreneurship in the early days when he started, diversity and how he looks at chaos in China.

Edited excerpts:

How would you compare the startup ecosystem in Singapore now to what it was like in the 80s and 90s?

When China opened in the 80s, and I visited China, there were Chinese graduates from Nanyang University (which later merged with the University of Singapore to form what is today known as the National University of Singapore) who had gone there too. These were the Singaporean entrepreneurs you would find there.

In the 90s, the next wave of entrepreneurs would actually be the polytechnic graduates. The reason for that is not having a degree. Once again, they don’t have the special privilege in Singapore. During that period, you’d see Creative — Sim Wong Hoo is a polytechnic graduate. They are good technically, but just because they don’t have a degree, they’re sort of discriminated against.

In the late 90s, you start to see the next batch of Singapore entrepreneurs — the scholars. All of these scholars have to serve a bond — about eight years — when they take the scholarship. When you first start work, the first eight years are the most critical. Once you’re bonded with the government for eight years, when you finish your bond, it becomes very difficult to move anywhere else. So, this wave hit the dotcom. A lot of scholars, myself included, we were all from IDA. Under IDA, there was this research lab called Information Technology Institute. A lot of us came from there, and raised funding from Silicon Valley venture capitalists. And the difference then was that the market wasn’t ready in Southeast Asia. All of us moved to Silicon Valley.

 

 

Also Read: Indonesia’s photo sharing app PicMix raises $3m Series A from Gobi Partners, others

During that phase, it was the dotcom bubble, which is no different from right now. As I was telling you earlier, it was still the early stage of Internet building, so the main beneficiary was enterprise software companies. Oracle. In fact, when you raise funding for a startup, the first thing you do is to put in a database. You buy some microsystems, computers, and there was another company that people forget. Herman Miller, a furniture company. Any startup that got venture capital funding would buy a Herman Miller chair. Every startup wave, there were guys who benefited. After the dotcom crash, you could get a lot of Herman Miller chairs for cheap.

This wave, it’s going to be the same thing. There’s a cycle. The difference is that, obviously, now there are more consumer startups. A lot of funding goes to Facebook and Google for advertising, for customer acquisition. Now, we’re in that wave where there are a correction again, but my feeling is actually… I don’t feel that bad because you need that pull back for the next wave of entrepreneurs to come in.

Over the last few years of investing, I’d say Singapore is no different from Silicon Valley. People think that Americans are creating the startups. It’s not true. The world’s creating startups in Silicon Valley. A lot of the stuff is created by immigrants. Silicon Valley has built up the ecosystem for such a long time, so if you get funding from the top-tier venture capitalists, the brand association is incredible. But I feel that the world is changing. Let’s say if you rewind to the last dotcom days, all these guys like Kleiner Perkins, we’re all trying to raise funds from Kleiner Perkins, very exclusive. But today, it’s proven that in other markets like China, you can have your own top-tier venture capital firms as well. The next wave will be coming to Southeast Asia.

If you look at Silicon Valley venture capitalists, it’s still very clubby, non-diversified. I don’t see a lot of women VCs for example. I think that has changed. We’re seeing more diversity in VCs, but I think even among startup founders, I’ve been seeing more women entrepreneurs.

What are your thoughts on diversity in China’s startup ecosystem?

China is interesting. If you think about the people who have made it, there are a lot of women who have made it in China. It’s very strange but you can actually attribute it to communism. Because communism makes it very equal. Everybody is equal.

Aren’t there fewer women than men in China?

There are probably 30 million more men than women, but it’s marginal. It’s not going to make a difference. Communism actually levels the playing field. When I go to Japan, it’s like Alice in Wonderland. If you have a chance, go to a suburb of Tokyo on a weekday. If you walk into a mall, the first thing you realise is that you feel unsafe as a man.

Why? Because the mall is predominantly only women, and only old people. In Japan, it’s a very male-dominated culture. All the men go to work in Tokyo in the day time so in the suburb, only the women are left. Which is why if you go to a mall in Japan, you’ll see a lot of business models that are unique to Japan. You see cooking studios, because these women have nothing to do after sending their kids to school, so they actually go to cooking studios in the mall. If you look at the gym, it’s only women-only gym, it’s not those that focus on training muscles, but more on yoga and aerobics — very different.

As a venture capitalist, investing is interesting but what I do learn that I feel is more useful is learning about entrepreneurship in different societies. When you ask me about diversity, you do see more women founders in China. We back quite a number of them. Japan, you don’t see a lot of entrepreneurs, so even though it’s a very advanced country. That’s because of the culture — corporate and militaristic culture. People just follow the rule. We always respect them — so orderly, when an earthquake happens, they don’t jump the queue. But if you look at it from an entrepreneurial perspective, that may not be good. When you have too much orderliness, you don’t really have creation.

China is the opposite — it’s a bit chaotic. Everybody wants to be their own boss. In China, it has gotten to the point where entrepreneurship is like warfare. Trying to kill each other.

How do you work through that chaos?

For us, it’s simple. Venture capitalists, to a certain degree, have got to take a long term view. You have to extract away all these short term messiness. The hardest thing now is… the market now is negative. You see stock market gyrations but you really need to think long-term. When you put in money, you probably won’t get it out until seven or 10 years down the road. Once you think long-term, then it’s not an issue. Then you’re trying to find the good people, trying to invest in them.

Coming back to diversity, what about Gobi Partners?

For us, at least on the Singapore side, I have a venture partner — Shaw Soo Wei. She’s familiar with the media industry. Things that are related to the media industry and women — for example, we invest in quite a lot of these women e-commerce business, I actually seek her view on that. Guys are idiots on women products. That’s our situation.

Also Read:

Exclusive: Gobi Partners deploys about $12.5m for SEA deals from $50m fund

Gobi Partners, Mavcap launch $14.5m ASEAN fund for seed-stage investments

Malaysia’s Nuren Group raises $2m from Gobi Partners

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.