With USD 325 million in assets, it’s safe to say VC firm Wavemaker Partners knows a thing or two about what makes an investment successful. Peek into the inner workings of a venture capitalist’s mind with Founder Eric Manlunas as he shares his top VC tips for entrepreneurs in Southeast Asia.
A two-time Entrepreneur-turned-Venture-Capitalist, Eric Manlunas knows all about the struggle of selling an idea. “It’s a very lonely journey being an entrepreneur and the likelihood of failure is pretty high. Having first-hand knowledge in knowing that type of journey is definitely very helpful as an investor.” For Eric, it’s just that insight that has proven vital as he has built Wavemaker Partners, a cross-border early-stage VC firm headquartered in LA and Singapore with over USD 325 million in assets. Below, he gives his top tips for entrepreneurs hoping to secure some of that golden VC cash.
With a firm focus on Southeast Asia – 80% of their investments are based in the region, Eric sees his chosen market as one characterised by equal measures of opportunity and difficulty. “[The Southeast Asian VC scene is] probably 15 to 20 years behind Silicon Valley in terms of the level of maturity,” he explains. And it can be a complicated one to navigate. “Southeast Asia is not homogenous. It’s really 10 different markets if you think about it. It’s 10 different currencies and different cultures and different languages.” This requires Eric – and others like him – to have both endurance and optimism in spades. “We don’t focus on regrets; we’re forward-looking people. You have to be a forward-looking person to be an early-stage investor. You’re really using a lot of imagination versus evaluating real data.” Since 2003, their onward-looking attitude has prompted their investments from skincare e-commerce platform Luxola acquired by Sephora to tech companies such as AI-augmented 3D ultrasound platform Medo.AI – and their portfolio is set to just keep on growing.
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For the entrepreneur wanting to convince him to take that risk, Eric has some handy pointers. On the ideas side, he sees, “the hottest industries still looking on the consumer side. We’re seeing a lot of automation, analytics and intelligence platforms that are being built for large corporations. Deep tech is interesting because a lot of enterprise problems require how to get really smart with data.” And, on the founder side, it’s all about passion and approach. “What we look for, really, is the entrepreneurs themselves. They are one of the most critical parts of the evaluation – we look for relevant domain knowledge and relevant domain experience. Then, the size of the market – it’s got to be a large market for it to have a fair shot at success. Lastly, you evaluate the product or the solution that they’re building to make sure that it does fit the problem that they’re trying to solve.” And, when he finds a match? “We would typically invest anywhere from about a half a million to a million US dollars as an initial bite-size.” Read on for his rundown on how to position yourself with a better shot of earning some of that vital funding.
Top VC Tips for Budding Entrepreneurs
Identify, and identify with the problem
For Eric, the key to finding a good idea lies in finding a problem that’s worth solving. “What really impresses us is if our founders have experienced the problems themselves. We’re not interested necessarily in entrepreneurship for the sake of entrepreneurship We want to make sure that these guys really are solving it because they have a mission and purpose behind it. Show us the purpose and why you’re doing it. Understand the severity of the problem that you’re solving and understand the size of the market.”
Fine-tune your solution to location
You may have a great idea, but is it specific to the region or demographic that you’re targetting? “You have to localise the consumer-facing solutions that you’re coming up with for you to have success,” he says, especially in a market as heterogeneous as Asia.
Think big, but not too big
“The most common mistake is overestimating the size of the market,” says Eric to those keen to go global from the get-go. “Everything takes longer and everything is more expensive. It’s a rule in life, not just start-ups.”
Be authentic to build trust with your investors
“Try not to sound like you know everything because none of us know everything,” he laughs, sharing how to build that all-important trust. Being grounded, realistic and unafraid to acknowledge the time it takes to build a business is all part of building a solid relationship between the VC and entrepreneur. “You want them to trust you and you want to be able to trust them. Integrity and trust are the two things that we have to be really comfortable with before we proceed.”
Be comfortable with uncertainty
“Learn how to be comfortable being uncomfortable,” says Eric of the resilience you need to foster. And, be prepared for the unexpected because things can happen that surpass your precautions and assumptions. “Don’t think that you know what you don’t know because you don’t. Just because it’s the convention, it doesn’t mean that it’s always going to be the way things are going.”