Recently, the Straits Times reported that the inaugural Esports Festival Asia (EFA) was launched on July 18, 2019 during the Comex Technology show. The prize pool for Comex EFA 2019 is $35,000 over 4 tournaments and 6 game titles, with close to 200 participants this round. The organizer, Sphere Exhibits (under SPH) is investing $1 million into eSports and gaming.

The Singapore Esports Association has been formed in November 2018, and now, the association has nominated a team for the SEA Games (Mobile Legends) competition to the Singapore National Olympics Council. It has also been recognized as an official sport in the Asian Games (from 2022) and on track to gain world recognition. Singapore has also launched its first diploma course in eSports and game design.

Looking at the eSports startup scene, we see a couple of unicorns that have emerged from Singapore. Garena (NYSE:SE), founded by Forrest Li in 2009, has raised up more than $700 million in venture funding (angel round to Series E). Another big name from Singapore is Razer (HKSE:1337), which has raised $175 million in venture funding. Both companies went onto the stock exchanges valued as unicorns. On a global level, Niantic (the company behind Pokemon Go), was valued at $3.7 billion during their Series C. Based on all these statistics and news, I would say that there is a rise in eSports in both Singapore and the global level.

According to Tracxn, we see an exponential increase in venture funding coming into this space, with big names such as KKR, Kleiner Perkins and Sequoia Capital betting huge on this area.

Also, we start to see new VCs that are quite focused on this industry. For example, one of the newer VCs that came out in Singapore focuses mainly on 4 sectors, with eSports being one of them (the others being blockchain, AI and Fintech).

South East Asia is 2^nd in terms of eSports VC funding ($552 million), with most of it coming from Singapore.

Maybe it is time for me to look further into this industry for potential investments as well.

Peace!

References:

1. https://www.straitstimes.com/tech/comex-2019-to-feature-e-sports-for-first-time-across-4-tournaments-6-games
2. https://www.straitstimes.com/sport/e-sports-singapore-esports-association-president-ng-chong-geng-targets-three-golds-at-sea
3. https://www.straitstimes.com/singapore/education/esports-in-singapore-level-up-with-new-diploma-course
4. https://www.crunchbase.com/organization/garena#section-funding-rounds
5. https://www.crunchbase.com/organization/razer#section-funding-rounds
6. https://www.crunchbase.com/funding_round/nianticlabs-series-c–9881707c#section-overview
7. https://www.slideshare.net/Tracxn/tracxn-esports-startup-landscape

A good friend of mine recently shared with us a blog post (thanks KL for sharing) she wrote for her daughter in 2015. I went through it and I realized how much she had sacrificed for her daughter. Sometimes, the toughest part about being a parent is to see your child go through the pain of being sick, tired and grumpy and yet being completely helpless. This post also taught me many things as an entrepreneur, and I thought I would share some of them here today. (The bold points are directly copied and paste from her blog).

1. Be grateful for what you have. We are already very fortunate and have much to be grateful for. There are people in worse plights and sufferings. There are people who have risen above their life challenges.
   Indeed, many a times, we grumble about many things. As entrepreneurs, we face many ups and downs of business. Sometimes, business just doesn’t take off the way we want it to. Sometimes, our plans are completely thwarted because one guy half a world away took away everything by being one step ahead of us. However, always remember to be grateful for what we have. We are fortunate enough to have the opportunity to become an entrepreneur (we are a special breed). Rise above the challenges in business and in life, and eventually you will become successful. I’m grateful for my parents, who have treated me with so much care and concern over the many years. I’m grateful to my teachers and lecturers, who have taught me how to read, write and interpret data in order to become an entrepreneur today. I’m grateful to my dear brothers and mentors in business and in life, who have taught me all the ins and outs of business (sometimes through the hard way). I’m grateful for the founders who have allowed me to be part of your journey in your startup to provide whatever help I can to help your business grow exponentially.
2. Mommy cannot take away your sufferings, but Mommy is very proud to see you growing on this journey. You learned to face your fears, and to celebrate small achievements.
   “The highest reward for man’s dedication to excellence is not what one gets from it, but what he or she becomes through it” (Bill Britt). I remember when I was younger, I went to Japan for a gaming tourney. There, I met a Japanese friend who introduced to me this concept of kaizen (making small improvements consistently). That was one of the key reasons I became an entrepreneur, to be able to learn new things in a much shorter span of time compared to most of my peers, to push myself to become better everyday, to embody the kaizen philosophy. Remember, Rome was not built in one night, and the Apollo 11 moon mission was only on course 3% of the time. You don’t have to be perfect (because no one is), but just keep focusing on improving every day, every hour, every minute and every second of our lives and we will eventually achieve our dreams beyond our wildest imagination.
3. You can allow yourself to become an inspiration, like so many others who have suffered different ordeals. Remain cheerful. There’s so much more you can be in life…you may look different. Everyone IS different. If you cannot lead a normal or ordinary life (for now), then live an extraordinary one.
   “For every adversity there lies a seed of equal or greater opportunity” (Napoleon Hill). I’ve told the founders of the portfolio companies I invested in this many times. Allow yourself to be the inspiration. Many of us have went through the tough ordeal of entrepreneurship and starting a business (sometimes multiple times). As a VC, I always look for the growth in my founders. I try to send them for courses to improve themselves (sometimes from my own pocket, so LPs please don’t worry that I’m spending money from the fund for this). I believe in the “Law of the Lid”, which states that the business growth of the company will never exceed the overall growth of the entrepreneurs in it. I aim and aspire to grow every single moment. As an entrepreneur, you are different (as is everyone else around you). If you are willing to do what others are not willing to do, you will have what others will never have. If you cannot lead a normal life like the peers around you, then work so hard at the beginning and live an extraordinary life that everyone aspires to have.

I was very inspired by this post and it was also a punch in my stomach. I realized that I have been so out of touch with entrepreneurship after becoming a venture capitalist that I forgot what it was to be like as an entrepreneur. Time to let the entrepreneur spirit burn again.

P/s: I have started a new eCommerce business that is in the midst of planning stage now (adopting a venture builder model for my family office now). Will keep you all updated.

Peace

After selling my previous company about 1 year ago, I wanted to start my own VC fund. I joined multiple angel networks in hopes of getting some good deal flow. In one of these angel networks where I hold a membership, I met a good brother and good friend of mine. He has many years of experience in multiple sectors.

I was previously a B2B guy, all along focused on enterprise sales solutions (such as ERP, CRM, Cloud Computing solutions). He, on the other hand, was more of a B2C guy. Despite his age, he is very energetic and always ready to learn and explore new things. That inspired me so much, as I saw him as a great potential partner to work with me to grow my VC in the future. We clicked quite well (as our personality was pretty similar), and eventually decided to start our VC together with a third friend who had many years of investment banking and family office management experience.

Soon after though, he told me that he had a vision to build a company that would become a unicorn before going to IPO or going through an M&A process. However, it was something I wasn’t familiar with. For starters, it was a B2C company, which I wasn’t sure about the unit economics. After all, the B2B market has very different economics compared to the B2C market. I was hesitant at the start, since I wanted to focus on my VC originally. Eventually, I saw how having that experience would help me grow as a venture capitalist in the future. Having both B2B and B2C experience and exit would definitely be of great value for our portfolio companies in the future. As such, I have decided to keep my VC plans on hold for now (while still acting as an angel investor through the main firm).

For all who would like me to review your decks for potential investment or advice, please feel free to drop me an email at lance@lancequekcompanies.co and I will respond as soon as I can.

Peace!

Many times, as a venture capitalist, I hear entrepreneurs keep saying “This time is different” or “We will change the world with this”. With the mandate to help great entrepreneurs with interesting ideas and the new technology, I sometimes wonder if people are simply using buzzwords for the sake of it. Some come to claim that they are worth $100m even though they are pre-revenue because of all the technology they have employed in the solution. So, it comes to the question, should I invest or should I not invest?

Being a value investor in the public markets, I have been applying the techniques of Berkshire Hathaway and making quite decent results. However, after reading this article, I need to look at my portfolio differently, especially for my very growth startup portfolio piece. Indeed, value investing faces a block when we go into the case of early stage, high growth startups (hence I have earned myself the nickname “The Schizophrenic Investor” – very conservative in the public markets and yet very aggressive in the private markets).

Many venture funds in Singapore tend to invest in what I like to call “The Market”. In fact, many of my friends who run their own venture funds advised me to “invest mainly in copycats”. Venture economics aren’t predicated on easily modeled 20% gains, but the unlikely 2,000X returns — which tend to only exist on the frontier. So looking at it from this perspective, investing in the frontier does indeed have its upside (which is coupled to its risk of 99.99% losing everything – but all you need is ONE to take off to a moonshot, much easier to find in the frontier).

The rules are so much different in the frontier. Some of them don’t resemble anything like we have seen before, and others are newer, way better versions of something in a rapidly maturing market. The fundamental bet in this scenario is an immensely huge future cash flow potential in the future. Like William Janeway said, “if an investor can determine what the mature cash flows may become for the investment, it’s all for naught.”

Unfortunately, many of us fall into the trap of mixing the market and the frontier into the same picture, when they are from two separate universes. We look for safety in the frontier, hoping to limit the downsides and maximize the upside by doing it that way (which in theory is very sound, but in all practicality, doesn’t really make sense). It is definitely good that we spread out by splitting our exposure between “safer” or more established assets and playing for true volatility around the frontier, but we need different lenses when we evaluate opportunities in the market and in the frontier. Both has its strengths, the markets being proven and the frontier has the opportunity for moonshots.

I love Lux Capital‘s philosophy, where the edge is the key. The edge can come from informational, analytical or behaviorial sources. It is about looking at that information differently in a way that leads to a novel conclusion (a variant perception). The magic lies in seeking what others don’t seek, avoiding the herds and fads and having the courage to venture out into the unknown. The key edge is leveraging on information asymmetry in the frontier to your advantage. If you want to know more, you can go ahead and read this article.

Indeed, we need to know: are we playing in the Market or the Frontier? If the latter, they ought not to swing big — for the future is unknown. And up for grabs.

Time to go back and review my firm’s mandate…

Peace.

I stumbled across the Global Startup Ecosystem Report 2018, published by Startup Genome and Global Entrepreneurship Network just recently. I found a few items that I would like to comment on, so I will go global first before zooming in on Singapore.

Globally

1. We see a rise of Deep Tech startups, and along with it, of China. Software has allowed us to create disruptive business models and tangible intellectual property (IP) in the fields of artificial intelligence (AI), blockchain, robotics. It has also allowed us to accelerate the creation of IP in other sectors, such as life sciences and automotives.
2. The global startup revolution continues to grow. Global venture capital investments in startups hit a decade high in 2017, with over $140 billion invested. Total value creation of the global startup economy from 2015 to 2017 reached $2.3 trillion—a 25.6% increase from the 2014 to 2016 period.
3. In this age of what we term as the 3rd wave of the Internet, we see that the top 4 growing sub-sectors to be AI (11.5% 5-year CAGR in early stage funding deals), blockchain (32.6% 5-year CAGR), agri-tech/new food (34.2% 5-year CAGR) and advanced manufacturing and robotics (37.8% 5-year CAGR). The top 3 declining sub-sectors are Adtech (–7% 5-year CAGR), Gaming (–5.4% 5-year CAGR) and Digital media (–5.4% 5-year CAGR), all of which are associated with the 1st and 2nd wave of the Internet.
4. Of the 10 countries with the biggest growth in patent productions in the past 20 years, eight are in Asia. This massive increase in knowledge production—of which patents are only one possible measure—is particularly apparent in two sub-sectors: AI and Blockchain.
5. The highest exit value typically still come from the USA, however, VC funding in the Asia Pacific (APAC) region has increased dramatically from 2012-2017, while that in USA has dropped over the same period.
   
6. We see that the Post-IPO Revenue Growth Highest in Blockchain, Advanced Manufacturing, and AI. The figure below shows the median quarterly revenue growth (YoY) for IPOs in each sub-sector from 2015 to 2017.
   

Singapore

Our strengths lie in the fields of fintech, digital media, big data and analytics.

Demographics about the Singapore startup ecosystem are shown in the diagram below.

Note:

• Early-stage ventures (Entrepreneur Mindset): success defined as an exit within five years of starting for between $6 million and $1.2 billion. We refer to this as Startup Success.
  Business builders (Builder Mindset): success defined as scaling a venture profitably over a 10 to 15 year period. We refer to this as Scaleup Success.

What does this all mean?

We see a higher than average score in terms of founders who want to change the world and have experience in the sub-sector. However, some of our founders lack ambition to make the company a big MNC in the future. It is good that we are trained to build companies by creating a global business model. It is now time to focus on the application and get a CTO to help us with the technology portion. Also, the only advice I have regarding when is a good time to start your own journey as an entrepreneur is “Now!”

Before I got to know of Kryptoia Pte Ltd and Dunstan, I was someone who was very skeptical (to the point of “allergic-to-scams” attitude) about ICOs. From a traditional standpoint, a token holder is not technically a stakeholder in the company as he/she does not own any shares. This was further enforced by the fact that prominent investors such as Warren Buffett and Charlie Munger came out and say that it’s a bubble, and the fact that some angels are saying that token holders and equity holders are playing a zero-sum game.

However, there seems to be an increase in ICO fundraising these days. According to PriceWaterhouseCoopers, there are now 3 typical methods in which blockchain startups raise money. The first is the ICO route, where they issue tokens, with investors typically being the tech-savvy and the bitcoin/ethereum community. The second is the traditional route of fundraising, with investors typically being business angels and venture capitalists. The last one, and the most interesting one, is a hybrid of the two. They have even listed down the positives and downsides to each method of fundraising in the chart.

Now, I personally believe in the hybrid funding model, especially with the successful launch of Morpheus Lab’s ICO (which has been invested by one of BANSEA’s angel funds through equity) and CloudMoolah, which has been invested by Aetius Capital in equity and then successfully launching an ICO. Also, a project undergoing their private rounds with Dunstan is now raising equity money from angels and VCs, in which I am the conduit for (because I might be leading a syndicate for them). Best part? LuneX Ventures, a VC which does invest in tokens, was spun out from Golden Gate Ventures, who recently closed their third traditional fund of US$100m.

VCs typically put potential portfolio companies through a very rigorous due diligence process and I think it is key for us to put any company through a rigorous due diligence process no matter what kind of instrument we are investing in.

I must say that I am now more confident about ICOs, though there are still many out there which are scams. Definitely, due diligence is still key to any investment.

Screenshot from Shark Tank, Season 8, Episode 6. Courtesy of ABC

In Shark Tank Season 8, Episode 6, there was a war that broke out between Mr. Wonderful and pretty much the rest of the Sharks. At one point, Mark Cuban pointed out that “I would rather work 80 hours a week to make 50k and work for myself, than have a 75-100 thousand dollar job working for somebody else.” That struck my chord so hard.

I could really relate to Mark in this sense because I was raised in the startup scene. Ever since I was 16, I was running all kinds of startups, and this I believe is the life I want to pursue. Tried a corporate for a part-time, couldn’t take it for 2 weeks. I decided at that time that it was the time for me to start out on my own, so I felt that it would be nice to run a startup for myself. Indeed, the initial days were tough, but I enjoyed the grind and the eventual rewards. I know I would never get these rewards if I were to go into a corporate career.

I encourage many young people who want to start their own business to take that leap of faith to do so. Don’t hesitate further. But you need to be very clear of your intentions. It’s not going to make you a quick buck, but it sure is and always be one hell of a rewarding ride.

Also, if you want to watch the video, I have made a link to the YouTube version (opens in new tab). Enjoy!

Peace.

Our Angel Investing Masterclass – Photo credits to AngelCentral

Recently I was taking a course on Angel Investing conducted by Der Shing, Shao-Ning and Teck Moh at AngelCentral (who I sort of consider as my mentors in this area). I finally understand what makes angels tick and more importantly it reinforces something for me as well, “Don’t offer messed-up deals, you will screw your own name over.”

Unlike in the USA, where 1 out of 1100 persons are accredited investors (i.e. angels), in the ASEAN region, there is only 1 out of 10000 persons who are. The angel investor community is very small, and you don’t want to spoil your name in this community. Everyone knows what’s going on.

There was a particular case that was brought up during a startup pitch competition, and one of the panelist who’s an angel investor or venture capitalist (I can’t remember which is it) made an offer of $15k for 30% of the company. I find that really distasteful, and I’m really open about it (no qualms). When I heard that, I was like, “seriously?!”. As much as we as investors want to minimize downside and maximize upside, let’s not screw the entrepreneur over. After all, it is his/her blood, sweat and tears we’re talking about. Realistically speaking, I asked myself, “Is $15k gonna be enough? I don’t think so. So how is the entrepreneur going to raise the next round of funding? He/She will get screwed over by this type of investors!” This is what I call devil investor/vulture capitalist (pun implied). What if the entrepreneur took the deal because he/she really needed the money for the company’s cash flow. These are people’s lives we’re talking about here. Let’s give them the respect that they deserve, thank you.

Let us work together and create a vibrant startup ecosystem in the ASEAN region so that everyone can grow.

Peace.

As most of you know, I have started to invest in early stage startups at this age, having joined AngelCentral as a Seraph Member in June 2018. And as most of you know, I participated in Hair for Hope 2018 (HfH2018). So now you may ask me, what’s the link between the two?

For that, I think it is good to give some context. Angel investing is technically considered gambling, but we bet on founders. When we say “I’m willing to invest $50k in your company”, what I actually mean is “I’m placing a $50k bet on you succeeding”. However, unlike traditional betting, we get to help the founders in a hands-on manner. For me, with strengths in biotechnology and IT systems integration, I would naturally invest in companies in these two areas (or at least somehow related). When we make an investment, it’s letting people know that the dream of building your own business and eventually achieving financial freedom is alive and well.

When I went for HfH2018, it was to raise awareness about childhood cancer. It’s a tough journey, and I want to give the kids suffering a hope that they can recover and eventually achieve their dreams. I want them to know that being an “outlier” isn’t a bad thing, most outliers eventually become billionaires or at least multimillionaires.

Eventually, it boils down to 1 thing, to give hope. To give people hope that if they are serious, they will eventually achieve their dreams.

“The dream is free but the hustle is sold separately.”

Peace.

Sometimes, I look back in my journey as an entrepreneur since I was 16, and I realized that there are so much that I have learnt from my failures. And because of that, I understand why many entrepreneurial guys don’t want to start their own business; the risk might just be too great for them. I strongly believe that entrepreneurship will be the way to go, to be encouraged. Sometimes, as angels, we learn from the entrepreneurs as they learn from us; it is a learning ecosystem. Entrepreneurship is about figuring things out.

I was speaking with a Grab driver when I was traveling home yesterday, and he mentioned that he had a dream to start out on his own, but had too much of a risk that he had to take if he had done so. It struck a chord in me as a young angel investor/venture capitalist that such a bright (pretty young) person had been deprived of the opportunity to grow his own business. How I wished the government had not placed so much regulations, especially when they claim to be promoting entrepreneurship (as with many governments around the world).

Personal take: The governments of the world should remove Regulation D on the SFA because it reduces the entrepreneur’s ability to grow. I understand that it is meant to protect investors, but if the investor himself/herself believes that he/she can stomach the risk knowing that it is a risky move to take, then it should be a green light. The government shouldn’t interfere with how people deploy their money: it’s not the government’s money anyways. Regulations might be good to get people to think twice and evaluate whether they could stomach that investment, but seriously, Reg D deprives of so many entrepreneurs and investors of opportunities to join the ride of the next Uber, Grab, Instagram etc.

Look, let’s be honest. I have reached the point of no return. I know that I have 2 courts that I will play in (and 2 courts only): the first being entrepreneurship, and the second being investments. I don’t need the government to say “Lance, you can’t deploy your money here because we say that you can’t.” I’m not doing anything immoral or unethical, I am trying to tell everyone to keep their dreams and goals alive, and blaze a trail along the way. The worst thing that could happen is for you to do something that you love doing, and the best thing is that you could make it a big business that becomes the next unicorn. I simply couldn’t comprehend the logic behind such absurd laws, rules and regulations made by the SEC or equivalent government bodies to restrict investors who find that they have got promising startups to come in and say, “I believe in you. You can do it!”

In this day and age, entrepreneurship is going to be the driving force of the economy. If you want to promote entrepreneurship, I think you need to come in from multiple angles, one from the point of view of the entrepreneurs, as well as loosening the grip on how investors deploy their cash (as long as we know what we are doing and we are not involved in insolvency cases).

P.S. I’m going to follow Sir Richard Branson’s motto: Screw it, let’s do it.