Carousell and Series B

The biggest news in Singapore recently was the announcement by Carousell that they have raised USD 35 million for their Series B: TechCrunch, TechinAsia. Rakuten Ventures led the round while previous investors also contributed.

The round drew the attention of Lim Der Shing, who writes one of the more frank and penetrating entrepreneurship blogs in Singapore. He noted that this appeared to be the first time that a pre-revenue startup raised Series B in Asia. There could be other examples, but Carousell was the most recent one, and a brand that most people know.

A week before the announcement, I was at Startup Weekend 2016. Invited to give a pep talk, I mentioned Carousell (and Vulcan Post but that’s another story). Someone taped part of the speech and put it on Instagram.

By now, Carousell’s story is well-known: that they started from Startup Weekend 2012; that they renamed their original creation, Snapsell, to the catchier Carousell; that they raised their first round of funding, ie, angel, from NUS (ACE “YES” grant) and us; that they went on to raise funding from other funds subsequently.

Startup Weekend 2012 was the first startup event that we sponsored in Singapore. Being based in Beijing, I could not attend the event but asked the organisers to introduce the winners to me on my next trip to Singapore.

At that meeting, the Carousell team was not ready for fund-raising. Meeting at the Yellow Room at Blk 71, they said the product was not ready and that they wanted to focus on that.

A few months later in Beijing, I received an email from Elisha Ong, then CEO of Burpple and by then one of the top foodie apps in Singapore. Elisha re-connected Carousell and me. We arranged for a call that same night and I remember negotiating the terms with Siu Rui in the living room of my Beijing home and wiring the funds over shortly.

I got to meet the team again some months later on my next trip to Singapore. They were working two rows away from me, at the same NUS Plugin space that I also hot-desked out of. They were bootstrapping like every other startup at Plugin, eating cheap chicken rice from the old hawker centre and taking the last bus home every day to maximise their working hours and reduce the time they spend on the road. They were working long hours every day including weekends.

When Carousell raised the next round from 500 Startups, Golden Gate Ventures, etc, they offered us pro-rata. They did not have to but the gentlemen in them did.

Very honoured to have been part of the journey.

Image source: Huffington Post

QQ and why we have not moved to Slack

Late last year, we started experimenting with Slack. This was when Slack was still relatively new, and most people were using HipChat or some other group chat.

We have been using QQ for years. The Chinese (China version) of QQ is loaded with features such as screen-sharing, voice chatting, video calling and of course, plain text messaging.

QQ is free to use and, until WeChat came along, was the dominant tool for PC-based communications. Fetion, a Web SMS service from China Mobile, could not compete despite the huge base of China Mobile users. Fetion required senders and recipients to be on the China Mobile network. Each of the three telcos had their own offerings but none could compete against the network-agnostic QQ.

We use QQ for group chats. We have a general company-level group where our entire “global” team that is scattered across cities in China, in the US, in Southeast Asia, are placed in one group. Each of them download and create their own QQ UserID but when they join, group admins give everyone nicknames based on their functions. For eg, someone in the investment team would be “Analyst-NAME”.

In addition to the company-level group, we also have smaller project- and function-based group chats.

We also use QQ for voice and video calls internally. Call quality between users inside and outside of China used to be bad but it has improved significantly in recent months such that we seldom use Skype as a backup anymore. The QQ mobile app is a delight to use.

Slack is as good in all the areas above, if not more so given its rapid new releases. There is only one problem with Slack and it is significant enough that we hesitate to adopt it. That problem is we do not know when Slack will be blocked in China.

Right now, to access our mails, we either use a VPN to get into our Google Apps for Work, or, like many of us, we forward our mails to QQ Mail or 163 or one of the local email services. This also means that we forgo many of the collaborative features of Google Apps. Since VPN can be unstable at times too, we decided to have a blend of East and West — for instant communications, we use QQ; and for all other purposes, we use Google Apps. This ensures that there is always at least one way to reach us.

This has worked for us for the last three years and we don’t see it changing soon.

Startup Leadership Program in China

The Startup Leadership Program took place in Beijing today at the office of Cadwalader. SLP has been running for one or two batches before this, and being volunteer-driven and relatively new in China, had been progressing in fits and starts so I am glad that there is a new group willing to get it going this year.

Incubation/ acceleration/ entrepreneur training programs has ballooned in the last year. There are now many locally run, “foreign-inspired” programs modelled after Y-Combinator, 500 Startups, and others. Foreign-based, equity-driven programs such as Founders’ Institute has not had success coming in due to regulations around foreigners investing into or owning internet companies.

Beyond branding, there really is not much the non-Chinese programs offer when compared to the local programs. Content is very much local, and especially so in China where what we do in marketing in, say, the Bay Area, is not the same in China because of different channels. Sure, quantifiable data are measured the same way (MAU is MAU anywhere it is measured), but to listen to an “international expert” speak in a foreign language (English) and describing what they do on foreign channels (eg, Facebook) is difficult to relate. Hence, most if not all programs have local mentors, and rarely include international mentors.

We work closely with local programs but participate in the foreign ones when we can too.

This batch of SLP at Cadwalader was run by volunteers from Peking University and Startup Noodle. I participated as a mentor and heard and gave feedback on the teams that presented. The afternoon went by quickly.

Plaques and official recognitions

Official recognitions are big in China. Enter any office and you can probably find a few metallic, embossed plaques or paper certificates adorning the walls. These are usually not licenses, for eg, the license to operate an F&B restaurant. Rather, these are awards issued because the establishment met certain criteria in a campaign or best-in-class.

I was at the official award of the Beijing Youth Innovation and Entrepreneurship Centre plaque award ceremony for the Venture Cinema today. The Venture Cinema is literally a cinema in the central business district that has been converted to an events venue that hosts demo days. 500 Startups’ Dave McClure and angel investor Lei Jun have gave talks here before, as did many other investors (more than 500 individuals have done so according to Venture Cinema). Such is the scale of the ecosystem, and how old, disused venues can be re-purposed.

I sat beside Mo Weigang who was the guest of honour and gave out the award to Venture Cinema. Mo is the head of the enterprise department of the Communist Youth League in Beijing. He has been driving entrepreneurship initiatives and the community has been reacting positively to it. The atmosphere in the Venture Cinema this afternoon was palpable. The auditorium was completely filled including the stairs. I think there were more than 200 people present. Most are young graduates. Can’t imagine that happening in an old cinema in the Bay Area.

Zhongguancun taking shape

Today was the third meeting for the Beijing Committee for Youth Entrepreneurship organised by the Beijing chapter of the Communist Youth League. The CYL is famous for its alumni of political leaders who rose through its ranks to later lead China, including Hu Jintao and Li Keqiang.

The initiative to revamp and rejuvenate Zhongguancun is taking on momentum. Among the list of gripes, lack of cheap working space for like-minded entrepreneurs and investors to gather, lack of structured seed financing, and lack of training similar to Y-Combinator (or “YC” in local parlance).

The increasingly larger group was hosted at the office of Beijing Software and Information Services Exchange, a sort of clearing house for intellectual property registration, commercialisation and financial advisory services. The meeting lasted from 2pm to 6pm, followed by networking over dinner until 8pm.

This has been the most productive meeting so far because of the range of topics discussed and the depth that each important topic could be dived into because of the time we had. Dinner (and copious liquor) certainly helped to break more ice. I expect many partnerships and initiatives to come out of this committee.

Burpple and Series Seed

Burpple has announced that they have raised USD 500,000 from a group of investors including us: TechCrunch, e27, Forbes.

Burpple is more than an investment. It is symbolic of our commitment to Singapore and the larger Southeast Asia tech ecosystem,. Burpple is the flag bearer of a new wave of tech entrepreneurs, many of whom are housed at the new Blk71. The “Burpple Boys”, as they are popularly known, are key community drivers, are humble, and work hard.

We are proud to be part of this journey with the awesome team driving Burpple’s phenomenal growth in users and engagements.

Why we moved to Zhongguancun

When Quest started, we worked out of a service office in CBD and took meetings at the cafes nearby. One of our favourite meeting places was the Hong Kong cafe at Guomao before it had to shut down due to renovations by the mall.

One day, Zhaoying, our super plugged-in marketing manager, said that there was a new co-working space that was launching at Zhongguancun, and asked the company to consider moving there.

To put things in perspective, all VCs work out of either CBD or Financial Street. Only one well-known fund — Innovation Works — had located itself in Zhongguancun and even that was due to its need for incubation space as it runs acceleration programs.

The name Zhongguancun literally means Zhongguan Village. Lenovo (Legend) started from a tiny shop here, as did many hardware companies of that era. Baidu, Sina and Google had their offices there too. So it was already a vibrant tech hub in its own right. The only issue was no investors were based there as it was far away from the city center.

Zhaoying arranged for a site visit and a month later, we have moved into our new office at the Kumi Co-working Space, one floor above Innovation Works, and thus becoming the first VC we know to move into Zhongguancun.

Kumi’s layout was not optimised. Lack of full-height walls meant that our co-working neighbours could hear our discussions. But we had fantastic views of the western mountains of Beijing and we didn’t complain. Unfortunately, Kumi had to shut down within a year due to poor management (their staff were great though) and we moved next door to Virtue Inno Valley, managed by Tsinghua Science Park, and where I am writing this now.

We are now an anchor tenant at Virtue Inno Valley and the only VC based here. It’s right above the Zhongguancun subway station and in the heart of what we think will become the Silicon Valley of China. Formerly a building of computer peripherals shops, the government is planning to gradually remove these merchants and replace them with startup cafes, co-working spaces and offices. Next to our tower stand the offices of Sina, Microsoft, and Founder.

We are looking forward to the transformation of Zhongguancun.

Business model arbitrage

Participated in a panel discussion at the gala dinner of the NUS InnovFest 2012.

The moderator from Channel NewsAsia was surprised at the scale of our operations because Groupon/ Beeconomic was already huge but that was just in one city (Singapore).

Amit Anand of Jungle Ventures chimed in at one point to encourage entrepreneurs to think beyond Singapore. Indeed, the longer I stay in China, the more I consider myself fortunate to witness firsthand the scale of the challenges that entrepreneurs face, and the opportunities that come with those challenges.

The next Google will not be from Southeast Asia — deep tech is not our forte. The next Amazon will not be from Southeast Asia — we do not have the scale. The next PayPal will not be from Southeast Asia — we do not have the common market.

Our Southeast Asia is a fragmented market of different currencies, languages, regulatory systems and cultures. Each market in Southeast Asia is at its own pace of development. Therein lies opportunities for Southeast Asians.

The disparity in development means that we can conduct “business model arbitrage” — bringing ideas from other places to Southeast Asia for execution, similar to what Beeconomic in Singapore or Groupsmore in Malaysia did which resulted in them exiting to Groupon.

First fapiao

To celebrate the completion of the registration of Quest, the whole team went for dinner at Meilucun (literally, Beautiful Stove Village).

Wang Yunming had the honour of providing his namecard, which had the official company name on it, to the restaurant for them to issue an official receipt, ie, fapiao.

It was just a coincidence that it was also Valentine’s Day. What a day to remember.

Out of Singapore, into a big pond

Participated in Penn Olson’s Startups in Asia Conference today.

This was the first Startups in Asia conference and a testament to the vision of the young entrepreneur, founder and CEO Willis Wee, I met in Beijing last year. Willis did a pre-event write up.

Kuo-Yi of Infocomm Investments (IIPL) was the keynote speaker. I had not seen Willis moderate a panel before, he was lobbing hard-hitting questions, albeit respectfully, at Kuo-Yi. IIPL was an investment firm that focused primarily on US “startups”. As a government-backed investment fund, Kuo-Yi was asked what could be done further to support the growth of the local tech ecosystem.

Then it was my turn. I was asked about the Chinese tech ecosystem, how challenging it was (answer: very), how rewarding it can be (very), and what advice I have for Singaporeans (get the business out and beyond Singapore as soon as possible to avoid getting confined within its small market).

Willis asked about our impending IPO (no comment). On copying Silicon Valley ideas, I said to localise first, execute fast, and then innovate later. This was what the local Chinese giants such as Baidu and Tencent did with search and chat respectively, the first copying Google and the latter ICQ.

On China’s tech hub, I emphasised Beijing’s status as the tech center and that it would be difficult for other cities to surpass it although they can certainly put up a tough challenge. Beijing is to Silicon Valley what Shanghai is to New York, the latter group close but still behind.

Looking forward to the next Startups in Asia Conference.