With our US$516 million fundraise doubling down on our long-term dedication to building great companies in Southeast Asia (full press release), this is as good a time as any for us to have back on call our founding managing partner Yinglan Tan, who shares more about the big ideas, heuristics, and initiatives around Insignia Ventures‘ approach to uncovering ASEANnovation. Like the first time Yinglan came on the show as a guest back on Season 1 in 2020, we only have three questions:

(01:25) 1. What are the long-term drivers of Southeast Asia innovation amidst global uncertainties? What will keep drawing capital into the region?

“The next S curve that we see is in Southeast Asia, where you can combine a majority of business model innovation addressing a large market couple with some enablers of tech innovation. So I think that becomes a very interesting combination. I do see that it’s the golden age of Southeast Asia for the next 10 years, even with the background of global inflation and the US China tensions.”

(04:25) 2. How do we find market leaders and creators in Southeast Asia? What makes “great companies” great?

“The more interesting companies that we’re seeing are the new species. It is [about] finding an ASEAN-first problem, and then finding solutions around it…when you combine these two things, providing supply chain software, it’s a complex, but unsexy problem, but it is generally a high gross margin [business] and it is targeting a large addressable market…the localization challenges offered by the region make it a big moat against a more global well resourced leader.”

(22:46) 3. How do we think about finding early movers in “next decade sunrise sectors” that are still nascent and developing in the region?

“We have some analysis, some assumptions that certain sectors would be interesting given market trends, but we don’t presuppose the next big company will be built in that sector because you need a great founder to capitalize on the opportunity, right? So obviously the product market fit is very important and there are certain sectors that are more well resourced and well pursued than others. But I think founder product fit is also super important…how we find the next big company, I think the founders lead us to them.”

About our guest

Prior to founding Insignia Ventures, Yinglan was Sequoia Capital’s first hire and Venture Partner in Southeast Asia. He sourced multiple investment opportunities for Sequoia including Tokopedia, Go-jek, Traveloka, Carousell and Appier. Yinglan had also been a member of the Singapore Administrative Service, where he served in a variety of positions in the Prime Minister’s Office, Ministry of Trade and Industry and Ministry of Defence. Yinglan was also the founding Director of 3i Venturelab China, a joint-venture between private equity firm 3i (LSE:III) and INSEAD.

He currently serves on the International Board of Stars – Leaders of the Next Generation, the Singapore Government’s Pro Enterprise Panel and the Committee on the Future Economy’s Sub-Committee on Future Corporate Capabilities and Innovation. He is also a Board Member at Hwa Chong Institution and Adjunct Associate Professor at National University of Singapore. He is the co-author of 4 books – The Way Of the VC (Wiley, 2009), Chinnovation (Wiley 2010) and textbook New Venture Creation – An Asian Perspective (Mcgraw Hill 2011) and Navigating ASEANnovation (World Scientific, 2020). Yinglan was educated at Stanford and Carnegie Mellon and completed executive programs at Harvard and Oxford.

Transcript

Yinglan: Good morning, Paulo. Thanks for having me back, and I’ve been listening to all the great podcasts that you have been conducting, and it’s really breathtaking to see some of the great content and some of the great insights shared by our founders over the many episodes. Happy to be back.

Long-Term Drivers for ASEANnovation amidst Global Uncertainties

Paulo: Happy to have you back, and hopefully we can have more episodes where you cohost as well, and some more awesome guests down the line. 

But for this call, in particular, I wanted to talk about your own views of the region, with the fundraise as I mentioned, and also all the challenges that we’re experiencing at the moment in this current environment, and I wanted to kick things off with that in mind. 

The question being, amongst all the challenges and uncertainties in the current environment, what do you think will be the long-term drivers for Southeast Asia innovation? And what do you think will keep all the capital coming into the region in the long term?

Yinglan: That’s a good question to start. I must first say that I think we live in turbulent times. I mean if you look at — in the past 12, 18 months, I think you see escalated tensions has sparked uncertainties, then you have inflation. You have the pandemic that has not fully ended. And of course, you have tech valuation seeing some correction in both the US and China markets. 

So I think we have seen a lot of global turmoil or uncertainty. And I think the good news is that Southeast Asia remains a bright spark amongst the uncertainty.

In fact, Singapore has seen an inflow of capital, ideas, talent, as people flock to safety. I think this is government statistics, but I think we see that of the family offices that are set up here, which have grown exponentially, 45% are from Greater China. I do think that there is a flock to safety in Singapore that’s one factor. 

I think the other factor is also the rise of ASEAN. So especially in Indonesia, Vietnam, Philippines, I think the middle class rising and the digital economy progressing certainly has been a bright spark and inspiration for many entrepreneurs.

And if you look at where technology trends has drifted to you see the US obviously, has been a leader in tech model innovation, so deep tech and technology-based innovation, I would say. And China has been really the leader in business model based innovation.

And if you combine it, obviously the next S curve that we see is in Southeast Asia, where you can combine a majority of business model innovation addressing a large market couple with some enablers of tech innovation. So I think that becomes a very interesting combination. I do see that it’s the golden age of Southeast Asia for the next 10 years, even with the background of global inflation and the US-China tensions.

And I think if you look at Southeast Asia, it’s very vibrant, right? Not only in technology, but in the whole business community, wealth creation, capital formation — it’s very vibrant. We have been visited by an exponential number of investors, family offices, entrepreneurs with new ideas, and executives from big tech companies looking to join the next big thing, it’s orders of magnitude three to four times in the past six months, compared to a year ago. So I think that’s certainly a good trend, and I think it’s great. 

We are presented over once in a decade opportunity to capture outlier returns in Southeast Asia. I think we want to remain quite nimble and flexible in our strategy. I think the saying is, “We don’t want to invest in the flock. We wanna invest in the best bird in the flock.” And that’s always been our philosophy.

“The next S curve that we see is in Southeast Asia, where you can combine a majority of business model innovation addressing a large market coupled with some enablers of tech innovation. So I think that becomes a very interesting combination. I do see that it’s the golden age of Southeast Asia for the next 10 years, even with the background of global inflation and the US China tensions.”

8As of ASEANnovation and What Defines Great / Winners

Paulo: So a couple of themes there that actually — it’s not our first time encountering these ideas, the flock to safety, we’ve written about that back in 2019 with the whole WeWork [saga], and now that theme has come back with everything that’s happening. 

ASEAN is still strong in terms of fundamentals. A lot of digitalization that is not just financial or economic in nature, but really fundamentally changing the way people do things. And then you also talked about tech innovation and business innovation coming together here in the region, which is something that we’ve been seeing since even before the pandemic, and Southeast Asia has been of a leader in marrying the best of both worlds. 

And the golden age — people have been talking about that since 2021, since 2020, since the whole pandemic driven digitalization wave and even with the current environment, we don’t see it slowing down anytime soon, and it’s really just a matter of how long you’re staying here in the region. 

And definitely with this new fund, [we’re] doubling down on that long term commitment. So it’s great to see that things are still heading towards a certain momentum.

And I guess in that context, how exactly do we find those birds in that flock that you mentioned? If we want to find the best birds in the flock, what defines the best birds?

Yinglan: So that’s a great question, and Paulo you’ve been with me in this journey of talking to some of them as well. So I think there’s no hard and fast rule, but we try to summarize some heuristic and we summarized it in the 8As of ASEANnovation, which you and I jointly came up with full credit to you.

#1: ASEAN-First (New Species)

I think the first is really, I think we see a lot of companies trying to be the X for Y in Southeast Asia. Those have done okay, but I wouldn’t say they are a breakout success. I think the analogy is like a clone, mutant, and new species, right? 

So, the clones like Alibaba for X or Airbnb for Y have met with moderate success because you can’t really paint Southeast Asia with one brush stroke. It requires a lot of navigation and understanding of what happens in Indonesia, Vietnam, Philippines, specifically culturally, payment systems, language, and way of doing business. So it requires a more ASEAN-first and organic approach. 

When I say clones it’s essentially the copycat model, right? You replicate solutions to local problems, [while with] mutants, you have a local problem, [so] you adapt it to Southeast Asia. [But] I think the more interesting companies that we’re seeing are the new species. It is [about] finding an ASEAN-first problem, and then finding solutions around it.

I have a great example here which is a company that we’ve been privileged to partner with called Fishlog, which provides essentially software, like end-to-end software for fish farmers, all sorts of supply chain software, financing software, ERP.

And I think the counterintuitive point here is that it looks unsexy, but it’s complex. So if you look at the quadrant of where returns are coming from, there is sexy and complex. That’s probably Web3 right. So a lot of ups and downs in Web3, but I think if you look at unsexy and complex, that’s where actually where the returns are and you look at companies like Fishlog. 

So from the outside it looks unsexy because it’s a very like — you would roll up your sleeve, talk to the fish farmers, but if you think deeper like in Indonesia, the main diet is, actually you can’t eat pork, or Muslims can’t eat pork, so fish is a big source of protein. So that’s point number one.

Point number two is that Indonesia is actually made up many archipelagos. Logistics is complex, right? The whole chain is super complex. Now when you combine these two things, providing supply chain software, it’s a complex, but unsexy problem, but it is generally a high gross margin [business] and it is targeting a large addressable market. So I think that’s one example where you can’t really find these kinds of opportunities… 

Paulo: …because it’s built on top of Indonesia’s unique situation… 

Yinglan: It’s built on top of Indonesia’s specific situation where you have to have an ASEAN-first approach. And the localization challenges offered by the region make it a big moat against a more global well resourced leader. In fact, one of the global leaders looked at the company, they said, “Oh, wow, I can never navigate this country because it’s an archipelago,” and they ended up investing in the company, in a later round after that. So it kind of validates our thesis. 

Paulo: And the good thing is for our listeners, if you wanna learn more like we just had Bayu, who is the CEO of Fishlog on our podcast as well. So he really goes in depth into everything that Yinglan just shared. 

“The more interesting companies that we’re seeing are the new species. It is [about] finding an ASEAN-first problem, and then finding solutions around it…when you combine these two things, providing supply chain software, it’s a complex, but unsexy problem, but it is generally a high gross margin [business] and it is targeting a large addressable market…the localization challenges offered by the region make it a big moat against a more global well resourced leader.”

#2: A-Team

Yinglan: The second a is really “A-Team”, which is I think getting more obvious in a correction or downturn because I think in an up-market, everybody tries. The market is flush with capital. Capital efficiency generally is not talked about. It’s not too obvious who are the great operators, because they all still look like good operators. 

But I think when capital is scarce, you really see who are the more resourceful and capital efficient operators. 

I think we’re starting to see a lot of these founders coming from big tech, where they worked at unicorns, they have learned how to go from zero to one, build a thousand people teams, run operations, business units, and they have a great foundations of company building. So I think we are started to see a big wave of companies being formed by these people. 

I think the second wave is founders from other countries. I mean, one of the places that’s most obvious is China. We’re seeing a big wave for entrepreneurs from China coming here to start companies. 

And I think the third one is — I mean it’s more obvious now — is that the best and brightest to graduate from like Harvard Business School and Stanford Business School — I mean, it’s more obvious that,”Hey, now I want to come back to Indonesia to start something.” In 2011, this was not obvious, I think now it’s getting obvious that “Hey, instead of me staying in business school to join a multinational as a post MB executive, the odds of me starting a company and doing decently well are actually quite good.” And we are seeing many of these entrepreneurs emerge. 

I think we also seen some combinations of people who have worked at some of these big tech companies. Then they go to business school and then say, “Okay, I want to apply what I learned in these two places to do something interesting.” So I think then there’s different combinations, so that’s the second piece.

“In an up-market, everybody tries. The market is flush with capital. Capital efficiency generally is not talked about. It’s not too obvious who are the great operators, because they all still look like good operators. But I think when capital is scarce, you really see who are the more resourceful and capital efficient operators.”

#3: (Healthy) Acceleration

The third A is really about “Acceleration”. So I think obviously now the market is getting more capital scarce. I think there’s increasing focus on gross profit profitability, in unit economics, but I think, if you are in a tech company, one of the key drivers is still growth, right? So you may not need to grow it like 20 times or 10 times, but if you are not growing then you might as well not be a tech company.

So I think you still have to think about healthy growth. I think the focus is now healthy growth rather than growth at all costs. I think some of our companies are really able to do that by building very strong distributions at low cost.

One example is a company I’m privileged to partner with called Super, which is the leading social commerce player in second tier, third tier cities in Indonesia, which are very underserved. If you go to a first tier city like Jakarta, you have an abundance of commerce options, both online and offline, but if you go at the rural areas, which is what Pinduoduo also discovered, it’s very broken and fragmented. And it’s the same thing like what Pinduoduo saw in China, as in Indonesia.

So we see that they have been growing at breakneck speed by working with rural community leaders, mom and pop shops, and they are still maintaining pretty good unit economics, and they’re creating real livelihoods for their agents and group sellers and group buyers. So it’s great.

Paulo: Steven even talked about this even back in 2020. When he came on our podcast, he already had this mindset of really healthy growth, and that’s been foundational in terms of how Super has approached all of this as they’ve expanded so far. So it’s really important for founders to already have that mindset from the get go. Otherwise it can be really hard to sort of adjust when they’re already deep in scaling.

Yinglan: You’re right. Because it’s hard to change the DNA of a company. I think the thing about Super is that I mean the DNA of the company is very, very capital efficient, very frugal from the start. They had to pivot a few times, as a result, they are always making sure that, they are thrifty and capital efficient about how they use every dollar to produce the maximum result.

“The focus is now healthy growth rather than growth at all costs. I think some of our companies are really able to do that by building very strong distributions at low cost.”

#4: (Product-Driven) Agility

The next A is really “Agility”, which is more important than ever because I think one of the things that differentiate fast-growing tech companies and traditional incumbents is the ability to decide at nine o’clock and execute by noon, and being able to react to the market.

Just to give an example, with the news of speaker Pelosi’s visit to Taiwan there were policy shifts made by the Chinese government to exports and imports from Taiwan yesterday. The nimble companies, especially those in the logistics and food space, literally pinged their whole board yesterday, to tweak their go-to-market, and these companies were nimble enough to reconsider certain go-to-market options. 

I think the second piece is this mindset shift from pure market-driven growth by just spending money on customer acquisition to a platform-driven growth. So getting the users to be more sticky. 

So I think one example is Ajaib, which started off with market-driven adoption, with getting users to try their first mutual fund product, but now that’s blossomed into a multifaceted platform, where you can still trade mutual funds, but I think majority now use their product as a stock trading app. And then you can trade crypto. You can also deposit money in [a] bank [account]. So you can do many things — e-IPOs, margin trading, crypto trading, and the users are getting more sticky. So it’s product driven agility.

Paulo: I think you even mentioned [before] that Ajaib, although we’ve — as Insignia does with any of its investments — we look at different comparables in other markets, but Ajaib has sort of blossomed into something that’s ultimately very unique, a combination of, many different things that we’ve seen in the market.

Read more about Ajaib’s evolution here and here.

Yinglan: Exactly. I think that’s indeed the case. 

“…​​one of the things that differentiate fast growing tech companies and traditional incumbents is the ability to decide at nine o’clock and execute by noon, and being able to react to the market…the second piece is this mindset shift from pure market driven growth by just spending money on customer acquisition to a platform driven growth. So getting the users to be more sticky.” 

#5: Accumulation (of Data)

The next A is really about “Accumulation” of data. So I think we see a lot of advantages here for companies that are able to do that. 

I give you example of Carro. So just buying a car itself doesn’t give a lot of data. I mean it does give how frequently they buy the car, and obviously you can upsell insurance and loan products post that, but if you were to provide aftersales to a car, like car wash, high frequency buying car parts, car repairs and unfortunately I’m guilty of that because I’m not a very good driver.

So I tend to go to the workshop quite often for small scratches here and there. As a result, companies like Carro collect a lot of data about me. Based on my engine sound, they can infer whether I’m a good driver or not, and decide to upsell me the right policy, the right insurance policy at the right price given my driving skills. 

When the platform becomes self evolving like Carro, because it’s collected the majority of data in Southeast Asia for car sales and car driver data, they can capture whole adjacent services to the core business, because when you think about when I sell my old car the platform makes commission. I buy a new car; the platform makes commission. I buy a piece of insurance; that’s another piece of revenue. And then I borrow money to finance the car; there’s four, so four revenue streams, and a very robust feedback loop on top of strong distribution. I think that is a great model for sustainability and profitability.

There’s another one that’s interesting. And Sea Group is obviously another example where they parleyed their expertise in gaming through Garena to upsell in eCommerce in Shopee. I think that’s another classic case study where they’ve obviously [developed] a better understanding of user preferences.

“When the platform becomes self evolving like Carro, because it’s collected the majority of data in Southeast Asia for car sales and car driver data, they can capture whole adjacent services to the core business…”

#6: Alpha Wolf

I think the next A, which is a bit more interesting is something we coined called “Alpha Wolf”. I think one of the things that we realized is that [when it comes to] the best founders we used to coin the term “unstoppable”, which is to say, when they see a wall, they will either climb on top of the wall, they dig a hole under the wall, they go around the wall or they make friends with the wall, but I don’t think it quite captured what we really want to convey. 

So we coined this phrase called “Alpha Wolf”, which [means] there’s a desire and hunger. They’re obsessed about winning. That’s the feature we want to convey.

The classic example is our founding father Lee Kuan Yew. He doesn’t have a television at home, because you know he’s single-minded on making Singapore the best product it could be.

And if you look at Bill Gates, and in the early days, you [hear] stories of him taking out the radio in his car because he didn’t want to get distracted in his drive from his home to work, because he was thinking about Microsoft. I think that defines a lot of the great founders that we partner with.

And in fact, [what] we found is that for this “Alpha Wolf”, capital is always accessible to them. They don’t even raise money. Money comes to them because these are repeat founders. Usually, these are people who have a proven operating record, but beyond all that, they still have a desire to win and the hunger to be number one, and they’re pretty unstoppable. 

So in a climate like this where there’s a flight to quality you’re gonna get the best companies built by these “Alpha Wolves”. The truth is that they still select who they partner with. It used to be the case where we decide who to partner with, but I think these “Alpha Wolves” have the privilege of choosing which venture investors choose to partner with. And we certainly hope to be the partner of choice, in terms of what we can do for them. 

The one thing that we do quite well is that now we have this ecosystem of, I would say unicorn founders, that really acts as a resource channel for some of our younger founders. These folks that have built and run companies to the billions, sometimes tens or tens of billions in one or two cases, hundreds of billions in market cap. And they’re able to make introductions, and not only that — also guide them on some of the pitfalls. They’re able to provide customer channels. Sometimes they also invest. 

And for us it becomes, a big flywheel, right? Because they also refer us companies. They help us to do due diligence, and they sometimes are the customers of the portfolio’s products. So that’s been great.

Paulo: I actually remember you mentioned this in another podcast before that one of the best measures of our success is how much are our founders willing to also invest with us or contribute to what Insignia does as well. 

Yinglan: That’s right. We just did a survey [with our founders]. For this exercise, the number was around 90 to 94%. So like out of a hundred [founders] we partner with, 94% are willing and able to invest in our fund, and are keen to introduce us to their friends.

So I mean we still have some work to do. It’s not hundred percent yet. So we need to work on the 6%. I think we have been good partners generally to our founders, but we have to work on the, remaining 6%. I think that’s our next homework for Fund 3, but I do think that one of the strongest value propositions that we hear is our ability to channel resources from our vast network of global unicorn founders. That’s certainly one thing that came up. 

“We coined this phrase called “Alpha Wolf”, which [means] there’s a desire and hunger. They’re obsessed about winning…And in fact, [what] we found is that for this “Alpha Wolf”, capital is always accessible to them…So in a climate like this where there’s a flight to quality you’re gonna get the best companies built by these “Alpha Wolves”. The truth is that they still select who they partner with.”

#7: Antifragile

So I think the next A is something that is probably more relevant today than one week ago, which is “Antifragile”. As I mentioned at the start, these are turbulent times, and I do think that within turbulent times there’s a need for caution, but it’s never been a better time to build because there are limited resources, but you can turn crisis into opportunity. 

And businesses that are antifragile are able to capitalize on that. I mean, what I mean by antifragile essentially means that you have a unbreakable balance sheet, you have strong gross profit, you have strong moats, high gross margins, you have a self fueling business, and generally you’ll have a very diversified customer base, both geographically and in terms of sector. So, essentially a very strong moat and strong, market positions. So that I think is the definition, and I think you are able to, bounce back from adversity. 

I think one company that really sticks out on top in our portfolio is a company called AwanTunai. I mean, we were happy to be partners when they were doing something else, but they quickly pivoted to blossom in supply chain financing space, and during COVID last year, they grew six times, their loan book has blossomed with crystal clear, very low NPLs, best in class metrics. 

And it was a difficult time for fintech lending, and supply chain financing wasn’t a easy task, but I think companies like AwanTunai and the founder, Dino are very resilient and they’re able to overcome adversity, but also leveraging on adversity as a source of growth for innovation.

And I’m sure we’ll see, amidst all this US China tension, we’ll see some companies that are antifragile. And we would love to be partners with them.

“As I mentioned at the start, these are turbulent times, and I do think that within turbulent times there’s a need for caution, but it’s never been a better time to build because there are limited resources, but you can turn crisis into opportunity.”

#8: Assiduous

The last A is actually a simple concept, but it’s hard to do. It’s all about — maybe it’s a bit too complex the word — but really it’s all about perseverance and hard work. 

At the risk of giving out trade secret, if you want to see who are the best companies in Singapore, you just go to Block71 on a Sunday night at 10 pm and see who else there. Because building a company is hard work, and if you are not prepared to put in the hours, it’s not gonna happen. The company doesn’t get built by itself. 

So if you went to Block71, 5 years ago, and see who is there at 10:00 PM on a Sunday night or Friday night, 11:00 PM, it actually correlates with who are the top performing companies in the region. 

I just remember, I did a walk with Aaron Tan of Carro, I think at 6:00 AM a couple of times. I think we might have done one at 5:00 AM before, in the morning. I definitely have done 6:00 AM. 7:00 AM is very common [as well], and, at the risk of exposing [another] trade secret, one thing I do and Paulo would laugh because he knows is one test — I mean, I don’t do it a lot nowadays, but I still do that once in a while and it is partly because my schedule is quite quite packed — I ask the [founder], “Hey come walk with me at 7:00 AM in the morning.” 

And sometimes I’m met with an instant boom, “let’s do it.” and my admiration for the founder, will go up by one notch and then he shows up at seven sometimes, he will be here at like 6:45 and I’ll be like, “Sorry, I’ll run over.” And then usually we have a good chat. At 7:00 AM, the air is fresh. 

So I think you see a lot of hard work by founders, and we are very happy to be part of that journey. The founders deserve all the credit. We are just their resource, but we are very happy for them and cheer them on when they’re able to succeed.

“Building a company is hard work, and if you are not prepared to put in the hours, it’s not gonna happen. The company doesn’t get built by itself.”

Mindsets, Platforms, and Tools to uncover the next decade’s tech market leaders as early movers today

Paulo: One thing to note about all these 8As is that we didn’t really come up with this out of thin air. These are actually things that we’ve learned working with founders that we’ve been supporting through these past years. And just the recap for our listeners.

So the 8As are ASEAN-first, A-Team, Acceleration, Agility, Accumulation, Alpha Wolf, Antifragile, and Assiduous. and all that you can actually check in our blog review.insignia.vc or in the book actually also as well Navigating ASEANnovation. But that’s really a framework that we refer to or like to share with people when asked, how do we find — again, to use Yinglan’s metaphor — how do we find the best birds in the flock? How do we find those unstoppable founders as well? And obviously these things are easier said than done. and full credits to the founders. 

And speaking of finding founders in the next decade of innovation, and we mentioned in our press release, we wanted to look for these “next decade sunrise sectors,” and given that a lot of these sectors like web3, healthcare, climate tech, agriculture, require a lot of market education, sometimes, they can be difficult to really lay the groundwork for at times. What for you is the key to uncovering all these like early movers in these spaces?

Yinglan: I must caveat that, the best way to find out which sector to invest, you probably shouldn’t talk to VCs like us because the entrepreneurs know where to build the next big company. I think we are pretty good at finding the entrepreneurs to build the next big company rather than to pick sectors.

Founder-Product / Founder-Market Fit

Obviously we have some analysis, some assumptions that certain sectors would be interesting given market trends, but we don’t presuppose the next big company will be built in that sector because you need a great founder to capitalize on the opportunity, right?

So obviously the product market fit is very important and there are certain sectors that are more well resourced and well pursued than others. But I think founder product fit is also super important. 

So I look one of our younger companies. We have a doctor Dr. Mesty who specializes in pediatrics, combined with Garri from Tokopedia, Harvard Business School, who has obviously gained a ton of experience in Tokopedia.

They have that winning combination to capitalize on a large market. That’s the kind of thing we look for. So I don’t think we presuppose we know which sectors are gonna be interesting. 

Having said that, there are some tools that we built and actually those tools are all available on our website insignia.vc right. And it’s not a joke actually, it’s true — I used to carry a printer to places like Vietnam and Philippines, where there’s no internet access. Sometimes I meet founders, and we want to print term sheets. So if you go to our website, now you can actually print a term sheet, you can calculate cap tables, you can look at market trends of both public and private companies. You even see whether you are ESG compliant. 

So I think we try to build tools for founders, and they in turn find that we are useful somewhat, and talk to us that’s certainly one avenue. 

The origins of Insignia Ventures Academy and reacting to its early success

I think the other avenue that’s surprisingly a great success, much exceeded my expectation personally is our Insignia Academy. 

When we first started, well a year and a half or two years ago, we thought of it as, “Hey, just spinning out our in-house training program.” It really happened because we had to run classes for our analysts every Saturday morning. I remember dragging my initial cohort of analysts on Sunday mornings, they’ll be half asleep and we’ll be walking through term sheets and how to negotiate cap tables…

Paulo: …A different kind of early morning…

Yinglan: …So I remember, we’ll be in our office and we’ll be like running through case studies and sometimes we have speakers, and we say, “Hey, actually, that’s interesting. We should make it available for not just our analyst crop. How do we make it more available for public who wants to be investors?”

So I mean a couple of cohorts, this has really blossomed because we have a 7.7% acceptance rate, which is more exclusive than Harvard Business School. And nowadays 99% of applications are inbound. And we’ve seen some of our alumni blossom, like one became a venture partner of a seed fund, one has his own single family office operation. We hired a few, a couple of them joined our portfolio companies as chief of staff, etc. And we backed a couple of companies from this program. So it’s really blossomed beyond my expectation.

And we are running our fourth cohort, and it amazes me how strong knit, the alumni is and every time, there’s a lot of sparks that happen between our portfolio and IVA alarms. And kudos to you, Paulo, you have been a great contributor as well to the program, so you know how closely the alumni and the current cohort is.

Read more about the story behind Insignia Ventures Academy

Sometimes all it takes is 12 weeks or 30 minutes

And I think back to your question on how we find the next big company, I think the founders lead us to them. Sometimes the founders don’t even know they’re founders until they attend the Academy. Because they could be a chief of staff or heading a business unit at a big tech company, and they kind of want to do something, but they don’t know how to do it. Or they are not too sure whether they should do it.

But after 12 weeks they are crystal clear, “Okay. This is what I want to do. I want to be an investor. I want to start my own thing. I want to start a new tech company. I want to join a fast growing company.” I think it gives them the confidence, the clarity, and the network to do that.

And then for those who already know what they want to do, I think the other thing is our network of global unicorns around the world, which provides a very good role model. If you want to start a FinTech company, for example. You want to talk to someone who has started a $50 billion digital bank globally. I think [after] 30 minutes with the guy, you’re like “Okay, maybe I can do it too. I want to do it. I don’t know how to do it, but okay maybe I can do it too.” To start a cloud kitchen, 30 minutes with someone who who runs the world’s biggest hot pot chain. It’s gonna give you a lot of insights on that. So I think that’s the gist of it.

“We have some analysis, some assumptions that certain sectors would be interesting given market trends, but we don’t presuppose the next big company will be built in that sector because you need a great founder to capitalize on the opportunity, right? So obviously the product market fit is very important and there are certain sectors that are more well resourced and well pursued than others. But I think founder product fit is also super important…how we find the next big company, I think the founders lead us to them.”

Paulo: And I think the amazing thing is that even though IVA in particular positions itself as a VC education [program], and we talk about things from a venture capital perspective, but ultimately, we see a lot of different trajectories coming out of the program.

As Yinglan mentioned, some of the alumni even come together to start their own companies to start their own venture, and we don’t really force it. We don’t tell them, you should become a founder, you should become an angel or whatnot, and they just do it out of their own volition and out of their own personal, self discovery, as they go through the program.

So that’s really interesting and definitely excited to see what the fourth cohort brings. And again, to hammer down the point, I think Yinglan was making, VC and looking for the best companies, great companies, is really a people business of finding founders and really bringing people together.

That theme started all the way back the early years of venture capital, and it will continue on as we look forward to the next decade of innovation in Southeast Asia. 

So on that note, we’d like to thank Yinglan for coming on the show. We don’t often have these kinds of conversations where we talk about these big ideas, but glad to have had that time. As you said, sometimes 30 minutes is all it takes and hopefully the podcast can be that as well for our listeners. 30 minutes for them to get inspired to start thinking about what they want to do. And yeah looking forward to having you back on call maybe as a co-host as well.