Grace Yun Xia, who helped China’s Tencent scout for deals in Southeast Asia, has joined Singapore headquartered VC firm Jungle Ventures as part of the latter’s investment team, the company said Monday.
Jungle Ventures, which is among the largest VCs in Singapore and had closed its second fund at $100 million in December 2016, said the former senior director of corporate strategy and development at Tencent would help its portfolio companies maximise cross-border opportunities with China.
Tasked with identifying strategic opportunities in emerging markets, building Tencent’s overseas product ecosystem, and deploying capital, Xun Xia told this portal that in her new role, she would help companies that Jungle had invested in to learn from the Chinese markets and the business models that startups there employed.
“Given my learnings from Tencent, and my previous stint at Silicon Valley, there is a lot of value that I can bring, and therefore this is a great place to be for the next chapter of my career,” she said.
“For many of our (Jungle’s) startups, when they think of expansion, China is not the first market they think of, but it is a market that they should look up at some point. There are opportunities to collaborate with Chinese companies, and I will spend time looking at those options at Jungle Ventures,” she added.
At the same time, she stressed that her arrival would not translate to the Singaporean VC investing in Chinese startups. “For now, we are mainly looking at synergies between the Chinese market and SEA, and not necessarily to invest in China. Our investments will still be focused on SEA and India,” she said.
Tencent is perhaps the most active investor in Asia’s tech scene at the moment. In such a scenario, what makes you leave a giant like Tencent to join Jungle Ventures?
Tencent is a great company, and I’ve had almost three years there. It was a wonderful experience and gave me a lot of exposure to the tech and startup ecosystem in China and Southeast Asia. At Tencent, I was looking at Southeast Asia (SEA), and that made me realise that the opportunities in this part of the world were tremendous. Given my learnings from Tencent, and my previous stint at Silicon Valley, there is a lot of value that I can bring, and therefore this is a great place to be for the next chapter of my career.
Big picture, when you look at SEA and India, increasingly it is turning out to be a battle between the Valley and Chinese internet companies. Over the last 12-18 months, have the Chinese internet giants pulled ahead, and do they currently have a huge advantage when it comes to buying, partnering with and investing in the best and biggest startups across this region?
Both Silicon Valley companies and Chinese companies have realised the potential of Southeast Asia, which is why in the last 2-3 years they are all active here. For the Chinese internet companies, they look at technology companies in SEA from a different angle – they have a better understanding of the local market and user behaviour compared to Silicon Valley companies. That gives them an advantage.
VC dry powder in the last 12 months in SEA has touched record highs? What does that indicate – are there enough deal flows for this level of dry powder?
The fact that VCs in this region were able to raise so much capital is positive. There are definitely enough deals in this market. In 2012, Jungle Ventures looked at 250 deals a year, and in 2016, that number had gone up to 2000. They’ve been seeing a 50 per cent year-on-year growth. So far, capital formation to support deals in this region had been lagging – going forward, the VC dry powder will ensure that more companies will see that capital is available.
Everyone talks about Southeast Asia’s numbers – we talk about one big market of 600 million consumers, with very high levels of smartphone penetration and reasonably good purchasing power. But, in reality, is this not a case of several highly fractured multiple markets?
Both investors and entrepreneurs have to look at SEA from different perspectives. Entrepreneurs have to understand the pain points in each local country to target SEA. At the same time, for companies to scale up, they have to look at this region as a whole. Meaning that, if an entrepreneur can solve a problem for Indonesia, they need to see if this can be applicable to other markets in the region as well – this is the only way they can address the broader market. At Jungle, we want to invest in companies that have an innovative approach to solve local problems, and where their approach can be applied to broader market across countries. We have a lot of expertise to help them scale up.
So, when you look at the Jungle portfolio, do you think that some of these companies can expand to China? China is a completely different ball game altogether.
Yes, China is a very different ground for our portfolio companies. The important thing is to be open to see if their current technologies and solutions can be applied in China. In the near term expansion plans, China is a market where we will monitor very closely for our portfolio companies. But, when it comes to business expansion, expanding to SEA markets is of higher priority for our portfolio companies.
What is that you bring to the table for Jungle? Is it using your networks to bringing Chinese investors to look at some of the portfolio companies of Jungle Ventures, or, is it to help some of the companies that Jungle has invested in to tap the Chinese market? Or, helping your portfolio companies to expand to other parts of the world.
Given the Chinese ecosystem and tech companies are more mature than SEA, we need to look at China for a lot of business inspiration. We need to learn from the China market and look at business models there – that is something that I have a lot of knowledge about and I can help the startups that Jungle has invested in to grow. The other thing is cross-border investment opportunities between China and SEA. Some of our companies here have become leaders in their categories, but what next? I can help them expand and grow to look at other markets. For many of our startups, when they think of expansion, China is not the first market they think of, but it is a market that they should look up at some point. There are opportunities to collaborate with Chinese companies, and I will spend time looking at those options at Jungle Ventures.
For SEA startups, what are the biggest learnings from the Chinese ecosystem?
There are a couple of points that entrepreneurs can learn from China. First, how to go to market very quickly, and second, how to scale up the business. The Chinese market is so huge and successful companies need to know how to scale from zero to one hundred very quickly.
Now that Jungle Ventures has you on board, will the firm look at investing in Chinese startups?
For now, we are mainly looking at synergies between the Chinese market and SEA, and not necessarily to invest in China. Our investments will still be focused on SEA and India.
In terms of valuations, when you look at startups in SEA, how do you see this region?
This is a very broad question, and I don’t want to give a simple answer because valuations differ from country to country. In general, the demand and supply – when it comes to valuations – will find its balance over time.
How do you see the startup ecosystem in Singapore?
It is very vibrant. The government has put a lot of effort in growing the ecosystem and VCs here. Singapore is definitely a very interesting market going forward.
When it comes to exits for startups here, will they increasingly have to look to Chinese companies as potential buyers or for trade sales?
Chinese investors and companies have been very active here. But not just the Chinese – investors from across the globe have realised the potential of Southeast Asia and are active here. With foreign investors paying a lot of attention to the local market of SEA, for exits, there will be options outside Chinese companies and Chinese investors.