End of 2022 Reflections
Building towards the New Year
With the end of the year comes a time for reflection and a time for planning. There has certainly been a lot of action in the VC space, and we have been navigating the turbulence ourselves. However, for us at least, 2022 has been a spectacular year in which we were able to shake off the difficulties, execute on a strategy and see real compelling results.
Marking a key 1-year milestone has included a number of highlights:
Ø Seven portfolio investments have been made to date with a set of diverse services each of which has some initial traction towards international expansion. Several of the products are “default global” that require little local sales or product development effort, while some are more localized.
Ø Each company that we are involved with has either begun entering new markets or increased revenue coming from abroad. I believe Malaysia is a great launching pad to enter global markets and this has been proving out.
Ø Subsequent funding rounds have commenced with a number of meetings and investor introductions already having taken place. 2023 will be a critical turning point as these convert to confirmed and closed rounds.
Reflections of 2022
The year did not start in the ideal manner. This was at the tail end of a 10 month long process to secure a Visa. After incredible amounts of headache and one of the most frustrating times a person can imagine, in February 2022 we were finally able to secure permission to reside and work in Malaysia.
Ø Malaysia - There is a strong desire for capital in the Malaysia market and there are quality entrepreneurs building globally competitive businesses. With a year’s track record of analyzing and sourcing opportunities, it is without question that filling a prominent gap in the Malaysia funding market has worked for Indelible Ventures. This focus area needs to be doubled down upon and continued to scale up.
Ø B2B SaaS - Despite the questionable economic conditions globally, the adoption of SaaS among enterprises in Southeast Asia continues to gain inertia. We saw companies forced to adopt new technologies to adapt to the lockdowns during the pandemic. We believed that after crossing the first threshold in tech adoption, that an inertia would build behind the digitalization force. The inertia in tech adoption has occurred and continues to gain pace, which signals the need for even further investment in this segment. This has played out even as CFOs have been tightening spending at many organizations.
What Has Not Worked?
Ø Past Impressions of Malaysia – Capital has many options, and these continue to grow. The merits of investing in Malaysian startups are very high, but the familiarity with Malaysia, or even Southeast Asia, is unfortunately low. There is an extensive branding exercise required to build the familiarity with the talent and capabilities of Malaysian startups.
We’ve encountered a barrier that works in our favor in providing an opportunity for investment, but also makes it challenging to pool capital. Locally, most HNWIs lack familiarity with startups and have an in-built pessimism as to whether Malaysia has the talent and capabilities. Internationally, there is higher familiarity with startups, but Malaysia is either viewed as too niche or there are preconceived notions.
Ø Breaking Dependency – The Malaysia startup ecosystem has a disproportionate amount of government involvement. Instead of following the Singapore model that focuses on encouraging more private sector involvement, the historic pathway in Malaysia has been focused on ownership and control. The net result has been stagnation and brain drain a result of the crowding out.
Initially we put a lot of effort into collaboration efforts. In hindsight, we over-indexed on this effort. We’ve seen more success from playing the role as an alternative.
Planning towards 2023
After experiencing success in the face of a difficult 2022, we will be looking at doubling down on what works and adjusting our going forward plans based upon what did not.
Ø Investing in tech-enabled B2B products that can scale internationally will continue to be the focus. We’ve demonstrated availability of quality opportunities, the capability for scaling international, and that the combination becomes a globally attractive investment for subsequent rounds.
Ø In 2023, we should see several important announcements from out portfolio announcing new raises. Several of these are currently in process, despite the supposed funding winter. Fundraising is never easy, but knowing what investors look for, recording solid metrics, and structuring a process to raise are recipes for success.
Ø I will focus on more ecosystem building initiatives. This builds from what hasn’t work and the need to re-invent the wheel domestically. To accomplish this, we are relaunching global pre-seed accelerator, Founder Institute. We’ll start running events in February and launch the first cohort in May. By encouraging more startups, we will create a deal funnel for Indelible Ventures, but we will also generate a virtuous circle were more entrepreneurial success cases drive more entrepreneurship which also feeds our funnel.
Ø We will supplement this community building by adding regular meetups and other events. There is a cohesion and shared knowledge benefit that comes from increasing the community component. The cohesion and shared knowledge is expected to gradual raise the bar on quality of entrepreneurs that we encounter.
Ø We’ll be continuing our content and awareness initiatives. Currently the podcast, SEA of Startups, has gained traction both inside and outside of the country. We will continue our work to highlight entrepreneurial journeys to bring attention to the market.
2023 will be a busy year and we look forward to making even greater than 2022.