Editor’s Note: Session recorded from the “Revisiting Southeast Asia’s Startup Fundraising Pathways in 2025” event organized by Insignia Ventures Academy and Aspire FoundersXChange community.

In 2025, Southeast Asia’s startup ecosystem is at an interesting juncture. Against a backdrop of global AI hype cycles, rising tariffs, and shifting geopolitical currents, both fundraising opportunities and exit strategies have taken on more nuance. From elusive IPOs to strategic M&As and secondary deals, how can founders and investors think about navigating this new terrain?

​Tune in to a panel discussion exploring how these macro trends are reshaping the region’s startup pathways to liquidity.

Timestamps

(00:00) What are VC and Private Debt Investors excited about in Southeast Asia?

(05:50) How do you view Southeast Asia’s venture outlook amidst today’s current macroeconomic environment?

(11:24) How have venture capitalists shifted expectations for fundraising startups in Southeast Asia amidst global investor pullbacks?

(14:05) How is a venture debt investor evolving their investment focus in a post-COVID era amidst geopolitical uncertainty?

(21:30) What is the biggest shift in mindset for venture capitalists in today’s environment?

(23:31) Should you raise Debt or Equity Fundraising? And should we worry about today’s fundraising environment?

(27:41) Q&A: Balancing Growth and Profitability

​Whom you are on call with:

Navas Ebin Muhammed is the Managing Director & Head of APAC for Mars Growth Capital and Liquidity Group. Singapore based Mars Growth Capital, is the largest growth to late stage mid-market technology financing credit fund in the region with an AUM of over USD 1B. It is a joint venture between MUFG Bank and Liquidity Group, which is the world’s largest AI based asset manager for private credit managing over USD 2.5B. Navas has successfully led transactions worth around USD 500M in startups at various stages and spread across various regions over the last 4 years with Mars Growth. He started his career as an Entrepreneur himself before moving into technology financing. He enjoys conversations and is committed to working towards the development of the technology loan market in APAC as a solution to the huge growth funding gap in the sector in SEA etc.

Yongcheng Ong is Principal at Insignia Ventures Partners. He previously spent three years at Qiming Venture Partners, focusing on growth-stage investments in Southeast Asia and India. Before that, he was a member of Sea Limited’s Corporate Development & Strategy team, contributing to the company’s IPO journey. Yongcheng also gained experience at Deutsche Bank prior to entering the technology scene. He holds a Bachelor’s Degree in Accountancy from Nanyang Technological University.

​​Thomas Jeng is Global Head of Startups at Aspire, a fast-growing FinTech company providing finance solutions to startups, SMBs, and the web3 community throughout the Asia-Pacific. Thomas focuses on strategy, organizational design, as well as commercial operations.

​Prior to joining Aspire, he held a variety of roles in the startup and venture capital space, including:

1. Leading go-to-market and customer success as VP, Head of Commercial at Gnowbe, an early-stage EdTech company
2. Leading expansion in Asia, Europe, and Africa as Head of Global Business Development at 500 Startups (now 500 Global), a worldwide venture capital firm and startup ecosystem builder
3. Building Junction, a platform for digital innovation talent, as Co-Founder and CEO

​Thomas began his career in strategy consulting at firms such as Boston Consulting Group and Gartner. Thomas holds a bachelor’s degree in International Politics from Georgetown University and an MBA from the Yale School of Management.

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Directed by Paulo Joquiño

Produced by Paulo Joquiño

The content of this podcast is for informational purposes only, should not be taken as legal, tax, or business advice or be used to evaluate any investment or security, and is not directed at any investors or potential investors in any ⁠⁠⁠⁠⁠⁠Insignia Ventures⁠⁠⁠⁠⁠⁠ fund. Any and all opinions shared in this episode are solely personal thoughts and reflections of the guest and the host.

Transcript

What are VC and Private Debt Investors excited about in Southeast Asia?

Thomas: So as we begin, startup fundraising is the sort of thing that’s a perennial topic. My experience of working with various types of founders is that fundraising is potentially the most painful thing you’ll do over the course of your journey as a startup founder and given typical VC backed models that means you’ll be going through it, substantial pain every two or three years or so.

Sometimes even more often than that, depending on what you’re doing. Every so often we get a new batch of founders who are looking to fundraise, who have big dreams and they are putting themselves through this pain. We are here hopefully to relieve some of that pain, not ’cause it’s gonna become inherently any easier.

But because we can provide a bit of guidance on how investors are thinking about the current environment and how they’re behaving as well. So here to draw back the curtain, we have two very qualified, very well-informed investors. I can continue to heap praise, but I think the better thing to do would be to let you guys introduce yourselves and talk about what you do.

Thomas: What I’d like you to do is introduce yourself. Your fund, what sort of investments you do out of that fund but also one thing that has you actually excited in the midst of all the chaos and turmoil in which we find ourselves these days.

Yongcheng: Hi everyone. My name is Yong Cheng. I’m from Insignia Ventures Partners. We are a multistage VC fund, so we invest across pre-A all the way to series B.

Ticket size is between one to 15 million USD. So from a sector perspective, we are more of a generalist fund, although historically we have done quite a bit in consumer as well as FinTech as to, what we are excited about in the next six months and all this we do feel that we’ve the advent of the generative AI era. That’s an opportunity for us to, combine “traditional” business together with AI.

For us right now, we are actually exploring business models, investing into business models whereby, it’s a little bit more traditional, but there’s opportunity for us to come in to conduct massive digital transformation to revamp the way things have been operating and all this, right?

And I guess another thing from that is that I think in this part of the world. That’s also an opportunity for us to combine AI hardware as well as supply chain as well. So we are also looking for opportunities and we do see a number of this opportunity coming from the China outbound corridor.

These are two particular areas that we’ve been trying to spend a bit more time on these days.

Thomas: What do you personally feel most hyped about? 

Yongcheng: Yeah I do feel that, the China outbound corridor has quite a lot of interest, at least from my perspective, I think, with every new set of opportunities that emerge, there’s always a certain time window whereby funds like ours can capitalize upon.

And I guess with the way policies have been run in China and the whole macroeconomic environment, we do feel that that’s a good time window for us to really egg upon and, really capitalize on these opportunities, at least with the China Abound corridor.

We are not just seeing the outflow of capital, we are actually seeing the outflow of very tier one talent. Historically, they would rather stay in China to compete domestically. Right now they’re all coming out in massive waves.

Thomas: It’s a very interesting phenomenon.

Navas: Hey everyone. My name is Navas, I’m from Mars Group Capital. Mars is an MUFG Fund. Technically MUFG is Mitsubishi Financial Group. It’s a Japanese bank, one of the largest banks in the world.

Today we manage close to $1.25 billion assets under management. We also have an equity fund, but I’m primarily on the private credit side. When startups are looking to scale their business, and grow their businesses across borders you’re looking at raising more capital and doing that in as non-diluted a way as possible.

So what’s the alternative to equity, which is the traditional form of fundraising? And that’s where people start talking to people like us. So we can get anywhere from $5 million to 100 million dollars. So we are talking about companies that are post series B, ideally raising capital from us.

We are as most players in our segment, very agnostic about the kind of businesses we can finance. Of course there are certain businesses which become more difficult for us from a KYC and other perspectives. But we’re looking at companies that generate revenue and grow their business and have some cross border element, which means they need dollars.

Obviously this is not an easy time, the macroeconomic situation is very interesting. But what excites me is the fact that, what we are seeing over the last, let’s say one week or so is that equity markets have shut down. People are not making any decisions, which automatically means we get a lot more calls of the credit side.

Because, people start wondering, “Hey, you know what I need to raise capital.” Then, you basically talk to people who are actually taking the call. But that being said, yes it’s a very interesting and tricky time, and I’ll go into details, but my thinking is that, this is the beginning at least since COVID, we’ve been having this rearrangement in how capital flows, et cetera.

Today 75% of capital is concentrated in the US’s capital markets. I think with what’s happening a lot of it, a lot of people are started thinking maybe it should move out. And that’s what excites me. Because I think, Singapore has really been positioned because of its neutrality and the fact that it’s always had this rule of law.

So this is what really excites me, that, I think there’s a scope for us to build something amazing in the next 10, 15 years. 

How do you view Southeast Asia’s venture outlook amidst today’s current macroeconomic environment?

Thomas: When we think about the current macroeconomic environment, we’ve just started coming out of a funding winter, in a way, right?

At least in Southeast Asia, we saw some month-over-month growth between February and March in terms of total capital deployed. But your view, I think, is still not looking very good—we’re still about 80% down from 2024 or something like that.

But there was, at least from my corner of the woods, some discussion about coming out of the funding winter.

Now, of course, with everything coming out of the US—tariffs, policy uncertainty, general unpredictability—how are you guys thinking about the situation now?

Navas: My view is that Southeast Asia, in general, is going through a very tough time, especially in terms of fundraising. And we should be honest about it—we should understand that there’s a problem here.

It’s also because, during the COVID period, a lot of capital was being raised. But was that capital going into companies that were really generating real value?

Unfortunately, investors—especially global or foreign ones—soon realized that maybe some of these companies were not creating the kind of value they were perceived to have. A lot of that capital either left or got stuck. And with that, there’s no more follow-on capital coming into the region.

So we were already in that cycle. Some of the larger countries that typically drive capital flows in the region—I’m not going to name names—have been struggling over the last 10 to 12 months.

Now, Singapore is definitely an exception, because it’s not just home to Southeast Asian companies, but also to companies from everywhere. From that perspective, I believe Singapore has to position itself not only as the hub for Southeast Asia, but also look beyond the region to take on a larger global role.

That probably means building a more robust financial hub, one that includes venture capital, venture debt, private credit, and so on. Then our startups can survive, thrive, and compete at a global scale.

What we definitely need is a lot more innovation. We need to decide what we’re going to focus on.

In my view, it’s not the easiest time to raise funds—but it’s never been easy outside of the US. It has always been difficult.

This is an opportunity for all the founders in the room to hit reset, slow down, and understand what investors want. Most likely, many investors will not be taking your calls in the next few weeks—not because they don’t like you, but because they don’t know what to tell you.

Even if you ask me, I don’t know what the impact of everything over the past week will be. I know some of the larger funds are getting calls from LPs asking to liquidate their illiquid positions at a discount.

When LPs pull capital, funds are under pressure. We’re lucky to be part of a very stable, larger organization, but I know a lot of PE and large funds are suffering right now. This will trickle down into the ecosystem as well.

But yeah, that’s my view. We can talk more about it afterward.

Yongcheng: First of all, I’d like to highlight that we are still open for business—so feel free to reach out to us.

Maybe what I’ll share is how funding and investment trends have shifted over the past one to two years. Once the bull cycle was over, we saw a big wave of retreat by international and regional funds. That’s influenced how VCs think about investing.

Right now, the assumption is that there’s no follow-on capital. So in the context of that, what do we invest in?

You’ve seen a flight of investments toward more profitable businesses. That’s translated into VCs, at least in the past year or two, investing more in consumer brands, and to a certain degree, offline retail businesses.

Whether a VC fund is the right setup for that is debatable. But that is what we’ve seen.

At least for us, on the portfolio side, we’ve used this opportunity—especially for companies with sufficient war chests—to really impose financial discipline. A lot of the things they couldn’t do during the bull market, because they were too caught up with growth, we’ve been encouraging them to fix now.

We’re helping them get the fundamentals right so that when the markets turn, they’re in a strong position to capitalize on inbound interest—assuming it comes back.

And I think, for us, we’re increasingly looking for businesses and models that have the potential to scale globally and regionally. Right now, the barriers to starting a business—especially a software business—are much lower. But the barriers to defending that business are much higher.

So what we’re looking for are teams with global and regional ambitions, and the ability to define what success looks like over the next three to five years.

We don’t have a crystal ball. We’re in a co-discovery process with a lot of founders. But that’s where we are today.

How have venture capitalists shifted expectations for fundraising startups in Southeast Asia amidst global investor pullbacks?

Thomas: I think both of you raised some very interesting points there. There’s been a very well-publicized pullback from the region. Global funds like Tiger pulled back quite a while ago. And even over the past few weeks, there was news about P15 pulling back, even though it was essentially founded as an India-Southeast Asia fund.

Now they’re expanding to the US, doing more in Australia, and so on. Presumably, for our audience—many of whom are based in Singapore or somewhere close to it, and may have a Singapore or global thesis—how should they approach fundraising conversations? How should they approach their overall strategy?

More broadly, what can we view as an investible asset in venture today? To your point, there was more capital going into consumer brands and retail. For me, that feels like it may not be the best match for VC as it’s traditionally perceived—I could be wrong about that.

How should founders be thinking about tailoring their business strategy—not just for fundraising, but for their overall development—given the current environment?

Yongcheng: From an equity side of things, I think fundamentally, for us, the way we evaluate startups hasn’t changed dramatically.

At the end of the day, it boils down to how defensible your moat can be. Especially if it’s a software business—these days, with generative AI—the pathway to one million ARR can be a lot faster. It’s software, it’s hyperscale, and all that.

But the ability to defend your revenue growth—that’s something that’s a lot more questionable.

To give an example, we’ve seen a lot of companies competing in the AI image editing space. Even some of the Chinese giants, like Meitu, have their own equivalents. They’ve added all sorts of AI features.

We’re seeing a number of these companies doing between one to five, or even five to ten million ARR. But the key question is: how defensible is it? Because you can have all these big giants coming in with their own features and wiping out the smaller players.

So I think how a business is built fundamentally matters. That defensibility can lie in the data, in the customer relationships, or in other aspects. But what founders should help us, as investors, understand is how they are building a defensible moat.

I think that’s really the most critical thing at the end of the day.

If you look a layer below—at the metrics and all that—it’s still the same set of metrics we’re evaluating. If it’s a more consumer-facing subscription business, we’re looking at cohorts, at stickiness, at how much it takes to acquire a customer.

All these core metrics haven’t really changed. But I do think how you convey the construction of your moat over time—and how it can be defended over time—is really important.

How is a venture debt investor evolving their investment focus in a post-COVID era amidst geopolitical uncertainty?

Thomas: Yeah. So we almost going back to basics and really thinking through the fundamentals of what the business can be. Navas, you alluded to a bit more uncertainty than I think Yongcheng did. So how do you think about what you’re looking for now? 

Navas: See, I totally agree with what was said. Right now, the considerations are still the same. You evaluate what the risks are, and of course, this is part of the environment. If you really look at it, there was COVID—people didn’t know how it would affect businesses. It was actually positive for a lot of tech businesses.

What many people tend to forget in this conversation is that there’s this whole dynamic around workforce changes. In fact, we’re seeing a lot of tech companies rethinking their workforce, especially on the development side, because AI can replace a lot of those roles. That’s actually contributing to EBITDA.

Profitability is still key. I do believe that. But the biggest question is: what is our job as people in the venture business? We are looking for venture businesses. What is a venture business? A venture business is something that grows—and it will burn money.

At the end of the day, we are open to looking at businesses that are a bit EBITDA-negative. But are we open to looking at businesses that are gross margin-negative? That’s a good question. Can we actually build businesses in Southeast Asia that are inherently not gross margin-positive? I’m not so sure.

We’re not talking about a large market. It’s not like you can capture a lot of that market and then monetize it somehow. I don’t know. But that being said, I think what needs to happen is a lot more innovation.

From a lender’s perspective—from a debt perspective—we’re always looking for companies that are generating revenue, and generating it sustainably. If you don’t grow enough, it’s highly unlikely that you’ll be interesting for either an equity investor or a debt investor.

Unless you’re building something for yourself—you can be the founder and build that business. That’s still a very good thing to do. You can build your business, find $10 million ARR, sell it for $100 million, and make a lot of money. A lot of people do that.

But if you’re building a venture business, then you have to think about optimizing growth, optimizing profitability, and thinking about who your customers are going to be.

Very recently, we had this Lightspeed report that came out, talking about the differences between markets and consumer behavior resetting expectations.

And I think you bring up such an important point. You talk about population, but population really doesn’t matter. What matters with a lot of these consumer companies is the purchasing power of the population.

Singapore becomes a very important market in that sense, but it’s only six million people. So then, do we build just for Singapore, or do we build for other markets?

We have to understand—it’s incredibly easy for a Chinese or Indian startup to come to Singapore and build for the region, rather than for a Singaporean startup to go back and build in India or China. I don’t know why that is, but that’s just the nature of business. It’s difficult.

I still believe cross-border is something founders have to build on. If you can scale across borders, that’s a real indicator of the quality of the business. That will mean anyone in the venture space will want to put more money into you.

The basics still remain the same. Forget about the risks—just keep building. You need to build a sustainable business. That’s the basis of it.

What that is exactly—I don’t know. If I knew, I’d be a fortune teller. Nobody knows. Anybody who tells you they know what’s going to be the next best thing—they’re just lying. We don’t know. We just go with what we believe will work.

There’s an element of risk. You’ll be underwriting what we call equity risk. I’ll be underwriting what we call credit risk. That’s the only difference.

Thomas: As you face this overall macroeconomic uncertainty—tariffs being just one example—how has that influenced your decision-making today? You mentioned not taking calls for a few weeks, which is understandable. But do we think this is going to be consistent behavior? How is your decision-making shifting?

Navas: So, we are a dollar debt lender, right? If you take our portfolio, a large portion of it consists of B2B e-commerce companies that are selling globally and have working capital requirements or acquisition needs.

I still believe it’s going to be a trend, although they need to be really careful. Working capital—especially for cross-border trade—is going to take a hit. No doubt about it.

There’s no point for a Vietnamese startup to keep selling to the US. Of course, they’re still trying, but they know it doesn’t even make sense at that scale. Except there’s a big question mark. Countries like Bangladesh, India—everyone’s here now.

There’s a reset in how you underwrite these businesses. Most of these businesses, especially B2B e-commerce companies, have a gross margin of around 10%. If you’re hit with a 30% tariff, that’s the end of the story.

A lot of the D2C e-commerce startups that were doing a lot of business between Asia and the US are also taking a hit. Of course, cross-border trade is going to be viewed more closely now—especially in terms of the value you bring to the table.

But there is a lot of opportunity outside of the US. That’s what companies coming out of Singapore should start focusing on.

You’re building a business—and we’ve not seen too many B2B businesses being built in Singapore, to be frank. But if you’re building something ground-up from Singapore in the B2B space, then you should be looking at corridors outside of the US, at least until we have more certainty in that space.

Thomas: What are some of the corridors you’re more optimistic about?

Navas: The Middle East. Very much. I think everybody realizes it. Everyone—from top levels of government here—is making sure to engage with the region.

There’s a natural need for consumption there. We’re seeing more consumption. The current US administration, for whatever reason, seems to be a bit more soft toward the region. That means there’s a lot of opportunity for Singapore to do business.

We’ve traditionally been very close to the UAE. Now we’re warming up to Saudi Arabia. These are huge markets—especially Saudi, which is a major consumption market with a lot of buying power.

So I think that’s definitely a big corridor.

I still believe some of the North Asian corridors are interesting, but it’s tricky. There’s also a little bit of political uncertainty in some of those countries—sometimes unusual.

But yeah, if you ask me to pick one, I’d say the Middle East.

Africa is still a question mark—it’s more of a collection of markets. Europe is also definitely interesting.

And I think what’s really interesting is that yesterday, if I’m not wrong, the EU mentioned the need to create payment solutions outside of Visa and MasterCard. Singapore has always been really good in financial services. Building these kinds of things will require a lot of financial infrastructure and solutions.

That’s an opportunity—for example, to sell cybersecurity. Cybersecurity is a big thing. These are real opportunities to tap into.

But if your startup doesn’t fit into these categories, it doesn’t matter. What matters is—do you bring value to somebody? And if you really believe you bring value, then that’s it.

What is the biggest shift in mindset for venture capitalists in today’s environment?

Yongcheng: The biggest shift in mindset is on how we think about exit, right? So I think these days, when we invest in any new company, we begin with the end in mind—which is, how do we exit the company, right? I still remember when I first started out investing in venture capital, we were always talking about US IPOs and all that.

But I think what a lot of people don’t realize is that to have a very liquid company trading on a US stock exchange, you actually need to have a sizable market cap. We’re talking about anywhere between two to five billion USD. If you work it backwards—if it’s a five billion outcome, and you’re assuming a 10x EBITDA multiple—then you need five hundred million of EBITDA. And assuming your company is a 10% EBITDA margin business, that’s how much revenue you need.

I guess the numbers change, but the logic remains. Over the years, funds have also become a lot more realistic about the kind of outcomes they can achieve within the region itself.

And I think Lightspeed has done good work with that report. With that in mind, how do we look at exits these days? Are we looking at IPOs in Taiwan, in Japan, or locally within different markets? So I think that would influence how we think about a public exit strategy.

And on the M&A front, we’re also seeing different trends. We see a lot of interest from Japanese and Chinese strategics in license acquisitions here. It may not be in the fintech space—it could be offline, maybe not retail, but clinics and so on. They do need licenses on a per-clinic basis, and a lot of these strategics are actually looking for licenses.

So would that influence how we go about investing? Maybe not. But I think that’s how we think about investing these days—we need to begin with the end in mind.

And I think there have been a number of occasions where we also tell founders, “You’re building a great business, but at the end of the day, it’s more of a casual business.” There’s no need for you to seek venture capital funding. Because with venture capital funding comes a set of baggage and expectations, which not everyone is ready for.

We don’t encourage some of the founders to go ahead with it. It’s not an easy game to be in, so you really need to have very vested interest and be able to commit—at least in the medium to long term.

Should you raise Debt or Equity Fundraising? And should we worry about today’s fundraising environment?

Thomas: Along those lines for the businesses where VC may or may not be the most suitable, under what conditions would you recommend they look at debt?

Navas: See okay, there are two kinds of debt, right? The debt that you can get in a regular business because your business is profitable. And there is venture related private credit. So our business is largely the venture focused private credit, where you’re looking at, “Hey, who are the sponsors of businesses?”

And I believe that, if you haven’t raised at least one or two rounds of equity financing, then you cannot raise capital from a player like us. It doesn’t make sense also. But that being said, there are a lot of financiers and banks around who can actually finance your working capital requirements if you have invoices.

So you can do factoring. Your capital is not locked up in with working capital, which is a big challenge for many business. Sometimes it’s inventory that locks up your your capital. Definitely there are solutions and especially in Singapore, you have a lot of solutions for that.

Unfortunately, I believe ventures have not been able to take advantage of a lot of those things because, we’ve not had the right kind of institutions and when you burn your hand, you suddenly start wondering, “Should we do this again? All startups is bad, et cetera, et cetera.”

But what I’m trying to say is that, I think as a startup very important for you to think as to what kind capital you need, especially now, and who should be your partner on the cap table. The moment you take an equity from somebody means they’re gonna come and sit either on your board or he or she’s gonna have some sort of a say in your company. So I think very important for you to realize who you are partnering up with, number one. Number two, even debt. Having a bad lender means end of story, but having the right lender means, you’re growing really well.

Sometimes especially in Singapore, I know that there is a lot of negativity around venture debt. And I want to try and understand why is that right? Because obviously when we think about debt, we think about credit card debt. No, that’s not the same thing, right? This is a different story. You are actually not taking a personal loan.

You are actually taking corporate loan, a corporate loan without any implications on yourself. But if you do it right, it can be really helpful. But I also realized very recently that there is this whole issue of personal guarantees being asked by local bank. When you raise corporate debt, which unfortunately is something that I highlighted a few times to people here, and I think we will get it sorted, but this is something that once we do that, we really can overcome some of these promises.

And I think it’s a matter of the market maturing also in terms of the appetite of the companies, et cetera. But yeah I think in general lots of things to be done. As a founder, I think you need not worry about it, you just focus on raising the capital and then once you build the right company, the capital will just come.

Because ultimately our business is to make money, right? How do we make money? We can only make money if we have good founders and good startups. Capital will keep flowing maybe at a different pace, but it’ll keep flowing.

Thomas: Okay, so one more question before we open up to the audience. If there’s one word of advice you would leave with the founders who are fundraising what would it be? 

Yongcheng: I would go back to my earlier response. Really be clear about where your moat lies. I think that’s really the most important thing.

Navas: I think, just focus on your business, build build the right businesses. I think there’s no, no one advice that fits everybody. You’re probably at different stages of your journey. If you have started a business and you’re at a stage where your business needs a push and you really have to start thinking about what’s going wrong, can I do something, et cetera. It’s always good to take the right advice and move on and build your business, never back down. That’s something that I believe, as a founder should be never back down. 

Q&A: Balancing Growth and Profitability

Audience: You mentioned that at some point the notion of like growth and like staying focused on like growth and like revenue. Are you focused more on growth per say on revenue or more growth on profitability? And at what point do you start shifting from hey, like with what means 

Navas: So I know there are some crazy theories around, 60/40, 80/20, all these things, right? But I keep it simple when you’re doing your business, especially so basic thing is what business are you building? Are you building a business where you want to exit? Just sell your business out. You don’t need any investors.

That’s a one question. Second business is the business where you are raising capital, sub substantial amount of equity, et cetera, et cetera. If you’re the second kind, which is where you need the VCs and the venture by credit people, then. You obviously need to first prove your product market fit.

Once you prove your product market fit, you need to be able to show that there’s gonna be scale in this business. Because as him mentioned, there needs to be an exit. No. When an investor looks at you, he needs, he or she needs to understand that there’s an exit here and the exit is only possible if you get to a certain scale.

So I think depending on the business that you’re building growth is important. What is, that does not translate to profitability. Sometimes it is GAC unsustainable gac. So you need to understand what is the right gap, right? And then there is [00:31:00] opex opex is going down these days. Also development cost is going down with AI and, development cost is going down.

So this is good for companies, right? So I think as long as. You have the basics right, and you’re build growing sustainably. That’s the first thing that you should focus on before really thinking about monetizing it. Where you start focusing a lot of profitability. But I’ve seen companies that used to burn $40 million a month.

I’ve seen a company that burn $40 million a month and it is now burning $2 million a month. Wow. So doing the same level of growth. So it just doesn’t make sense. This used to be an anana anomaly, right? I think people have just started realizing the mistakes. They started becoming more grounded and this is the right place to be.

Thomas: Yo for you insignia does multi-state in theory, anything from seed all the way to, to, a brand of growth. How do you guys think about the [00:32:00] transition from. Growth in top line to growth in profitability. 

Yongcheng: Yeah. Maybe to give an example, right? I think some of this when this question is being asked, you also gotta be taken into context as to how the broader competitive landscape will look like, right?

We actually have a company in the healthcare space that is growing, roughly two x year but it’s still burning, right? So the question at this point in time is should we get them to pivot to profitability? In the absence of full on funding and all this, in this part of the world, or should we get them to continue to burn, right?

So in this particular case a lot of the US comparables they have, they’re actually growing two to three x year on year, right? So if we get our portfolio company to get to profitability, they could be growing at maybe 1.5 XA year, right? So for international investor that’s evaluating these two set of companies in both regions, what would see more attractive to them?

So in this case, we’re actually telling company continue to burn, hit your minimum to exit on your growth, right? Because if you don’t do that, you will not be attractive enough for international capital to come in. There’s no formula or, to numbers earlier [00:33:00] response. Like a fixed answer to your question, right?

It really need to be, you really need to evaluate your company in the context of a broader environment and all this, right? But I guess in this case it is quite fortunate that they have direct comparables in the US but for a lot of the companies that we are evaluating that seller comparables may not be so clear.

But yeah, that would be how we look at it, right? I guess another way to look at it is that if you have a comparable that is publicly listed, I think that’s even easier, right? If your private comms is growing at, a hundred percent year on year why would an investor come in when you’re growing at 50% year on year?

They would rather take that money. And invest in a public company. Assuming their mandate would allow that. So I think that’s how we look at, balancing between growth and profitability. Yeah. So I hope it gives a flavor. I don’t, I know it’s not answering your question, but I hope it gives a flavor for you to think about.