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What angel investors look for in the SEA market, according to industry insider Jiaway Koh

Republished from Kr-Asia

Investors want dynamic startup founders, says Koh, associate director of the Business Angel Network of Southeast Asia (BANSEA).

Angel investors are sometimes perceived as a reclusive and mysterious bunch, however, in recent years, many entrepreneurs have come forward to invest as angels in startups, particularly early-stage startups. Organizations such as the Business Angel Network of Southeast Asia (BANSEA) have raised the profile of the angel investor community in Southeast Asia and as such, helped young startups get access to precious capital.

KrASIA recently spoke with BANSEA’s associate director Jiaway Koh, to know more about what angel investors are looking for in this region, and to get more insights about the startup scene in Southeast Asia. Koh was also a panelist at the recently-concluded BaseConference 2020 in Iskandar, Malaysia.

According to Koh, BANSEA, which is headquartered in Singapore, currently has 150 members, mostly based in the island nation. She added that since its inception in 2001, BANSEA’s members have invested in a total of 400 startups worldwide.

KrASIA (Kr): Tell us about the network’s members and the kinds of startups they typically invest in.

Jiaway Koh (JK): Our members are high-net-worth individuals based in Singapore. Many of them are from the banking and consulting industries, or even veteran entrepreneurs who want to invest in early-stage startups. We mainly deal with seed to pre-Series A startups.

Our angels want to come in where funding is really needed. What startups get from angels apart from the money is their expertise; they know these angel investors are well-connected in their respective industries, whether in fintech, banking, or even niche markets such as maritime technologies. Likewise, angels want to know how they can best help these startups, and not merely by injecting money into them.

Kr: Where do your members primarily invest? Is it mainly in Singaporean startups or do they invest throughout the Southeast Asian region?

JK: The majority of investments go into Singapore-based startups, only because when we run our meetings, the Singapore startups tend to turn up. We run private demo days for investors to meet startups. In terms of industry, investments are pretty agnostic. The angels are focused on what interests them. Some of them focus on trends, but this differs from one angel to another.

In terms of location, the focus is on Southeast Asia. Whether it’s on startups from the US coming to Asia, or even those from Myanmar or Brunei, most of the angels invest in Southeast Asia at the moment.

At the moment, they are investing in more mature markets such as Singapore and Indonesia. Some have been looking at East Asia as well, but to a very limited extent. BANSEA investors also want to tap into emerging markets such as Myanmar, Brunei, and Cambodia.

Kr: Historically, what kind of startups have your members invested in? What do they invest in now?

JK: I’d say mostly business-to-business (B2Bs), at one time they were looking at consumer-facing businesses. I believe this B2B trend is not going to disappear anytime soon.

From my point of view, I think angel investors are a bit more daring now. Honestly, there are no more unique ideas—the majority of startups are just copycats of each other.

And the angels always look at the business model, the total addressable market, projected revenues and such, but what really attracts them is the founders themselves—the ability to identify problems way before they happen, the ability to pivot properly, and get the help that they need. That’s why it’s important for the angels to get to know the founders—it’s the early stage and a high-risk game. What makes a startup successful is largely the founder’s attitude as well.

Kr: Which markets in Southeast Asia are investors really excited about?

JK: If you ask investors which market excites them, the answer is going to be China, India, and Southeast Asia. And I think Southeast Asia because of the kind of representation in the media. With Grab making headlines and new Southeast Asia startups becoming famous, more angels are getting excited about the region. More importantly, they look at problems that startups are solving in their respective countries.

For example, a startup in the Philippines may not solve the kind of problems that are applicable to Singapore. They are looking for unique ideas that can solve problems being experienced in a specific country. They don’t want to look at copycats, unless it’s a model that can earn revenue.

Kr: What are your thoughts on the quality of ideas from Southeast Asian startups?

JK: My personal opinion is that in general, these entrepreneurs are equipped with the thought process of breaking down one specific problem. Their product and solutions are more comprehensive and help solve a specific part of a problem. Entrepreneurs right now can do that. In Southeast Asia, that’s what entrepreneurs here are really good at as well.

Kr: Some early-stage startups say it’s hard to get funding from angel investors. What is the real issue here?

JK: It should be quite easy. The way a startup pitches to an angel is how it would pitch to a VC. Angels come in with a unique perspective and believe more in founders. No, it’s not hard to raise from angels, it should be easy. They ask the same questions a VC would. It’s about the business, but also the person running the business.

The above interview was edited for brevity and clarity.

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