Southeast Asian Venture Capitalist Discusses The "Diversity" Of Singapore, Asia's Entrepreneurial Superpower | 【東京都主催】海外進出支援プラットフォーム「X-HUB TOKYO」

Southeast Asian Venture Capitalist Discusses The “Diversity” Of Singapore, Asia’s Entrepreneurial Superpower

vol.08Golden Gate Ventures , Managing Partner

Jeffrey Paine

2018.07.20

Southeast Asia is hot right now. According to TECH IN ASIA, startup investments in the region have been on the rise since 2013, reaching their peak in 2017 when they tripled from $2.52 billion in 2016 to $7.86 billion. And over half of that sum has been invested in Singapore. Today, thanks to their government’s active support for new businesses, Singapore has become one of the greatest startup superpowers in Asia.

“Golden Gate Ventures (http://goldengate.vc/ja/)” is a Singapore-based venture capital firm that supports numerous startups in Southeast Asia. Founded in 2011, it has so far invested in over 30 companies in 7 different countries.

We’ve asked Golden Gate Ventures’ Jeffrey Paine about the present and future of Singapore, a country that boasts one of the most prominent startup ecosystems in all of Asia.


Singapore leads the world when it comes to growing startups in Southeast Asia. What do you think is the country’s main strength?
I would say that Singapore’s strengths include a low-income tax, a comprehensive system for issuing visas for entrepreneurs, and a well-developed economic and urban infrastructure like they have in Japan or South Korea. Around the late ‘90s, the government of Singapore took the advice of the country’s business sector to heart and started actively supporting startups.

I also think that the high level of diversity in terms of ethnic and age groups is representative of Singapore’s ecosystem. Today, around 1/4th of the country’s population is made up of foreigners so almost no one has any trouble communicating in English. Singapore is also a very safe place compared to other countries, which is why so many overseas companies have been setting up bases of operations there.
Is it true that many young Singaporeans are looking up to entrepreneurs?
Nowadays, around 30% of the country’s youth population hopes to one day create a startup. That being said, many other young people still want to work for a large company and lead safe, stable lives. I think Singapore is similar to Japan in that regard.
We’ve heard that the cost of living has really gone up in Singapore lately. Does this result in some young executives choosing to do business outside of Singapore?
It’s true that Singapore’s housing market is expensive but food expenses and transportation costs are relatively low. I feel like if you don’t buy a house or a car, you won’t need that much money to live here. That being said, I did hear about some young entrepreneurs moving to Bangkok etc. in order to save money.

Golden Gate Ventures has investments in 7 countries, including Japan. What sets your company apart from all other venture capital firms out there?
One thing is our focus on BtoC. We like to concentrate our investments on BtoC and FinTech services, while doing considerably less BtoB software business etc. than most other VCs.

Then of course there are our team members. At our firm, we don’t have any bank employees, people with MBAs, or members of McKinsey. Instead, we’ve built a team of entrepreneurs, investors, and PR and marketing specialists who can support a startup from many different angles.

A lot of Southeast Asian startups have very little business experience while having a lot of young personnel. They require professionals who will help grow their organizations, like digital marketing specialists, HR staff, finance people, legal advisors etc.
With so many different companies out there, how do you decide which startup to invest in?
The most important thing is whether or not they’ll listen to our advice and have the strength necessary to carry it out. Once we have that, we make our decisions based on market size, the company’s growth stage, and the startup’s competition. It’s also important for the startup we invest in to be able to excite people.

I think that it’s fine for a company to copy existing ideas and business models in the beginning. As long as their operations, targets, and worldviews are original, that should be enough to create innovation in the marketplace.
Going forward, what role would you like Golden Gate Ventures to play in the Southeast Asian startup ecosystem?
We’re aiming to become the “number 1 venture capital firm in the developing world.” Naturally, we’re not planning to stop at Southeast Asia. We want to be active in maturing markets all around the world like Africa or South America.

Personally, I’m also interested in such areas as healthcare and education. Southeast Asia is becoming known as a startup hub but that concerns only one group of people. For most of the population of Southeast Asia not engaged in startups, things like robotics or FinTech have absolutely nothing to do with their lives. We don’t want to just leave those people behind. Startups must also be actively involved in “education.” If we can do that, then the children of today will one day be able to have a greater impact on the world, sending a wave of change all across the globe.
In 2015, there was more venture capital invested in Southeast Asia than in Japan. In order for Japan to construct their own startup ecosystem, what should Japanese companies be focusing on?
Japan is a sufficiently large market. However, soon we won’t be able to ignore the population change that’s occurring in every industry in the country. Japan is struggling with population decline and population ageing while the tastes and hobbies of its young people are becoming more diverse. For example, I think that traditional Japanese TV broadcasters will soon have to abandon the advertising business model.

Also, I get the feeling that not many Japanese people are interested in starting their own businesses. Even supposing that I’m wrong, it’s a fact that Japan has many young people but very few of them start businesses after turning 30. In Singapore, however, there are many cases of businesspeople who accumulate their skills and knowledge and wait until they are 30-45 to start their own business with ease.
It might be because different cultures have vastly different attitudes towards age.
There are of course many cases of large Japanese IT companies hiring people and having them set up their own enterprises under the corporation’s umbrella. But, personally, I think that’s a little different from a startup. Those kinds of inner-company businesses already have their funding secured so they never have to worry about money. They don’t have to sell their house or car or eat cup noodles for a few years straight, haha.
What do you think about Japanese startup support programs like X-HUB TOKYO?
I think they are incredibly significant endeavors. Governments should encourage startups to challenge themselves overseas.

Japanese businesspeople are all very courteous so very few of them give any kind of tough feedback. However, by going outside Japan and having a foreigner evaluate your business head-on, you can identify problems you didn’t even know you had. I think that those kinds of encounters are incredibly important to growing Japanese startups.