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Public markets here still don’t understand tech, says Golden Gate Ventures’ Jeffrey Paine

Written by Stephanie Pearl Li Published on 

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Grab and Gojek will most likely look for a US IPO, Golden Gate Ventures’ Jeffrey Paine told KrASIA in episode 9 of Venture Matters TV.

The Southeast Asian startup ecosystem has made great strides in the past few years with the emergence of several unicorns. It has attracted a clutch of investors and VCs betting big on the region’s exponential growth, targeting a young and mobile-savvy population.

Jeffrey Paine, co-founder and managing partner of Golden Gate Ventures, was among the first-movers investing in promising companies, including GoPay, Gojek’s payment arm, Singapore-based online marketplace Carousell, and up-and-coming fintech apps like BukuWarung. Paine was the latest guest of KrASIA’s “Venture Matters TV” on Thursday night unpacking challenges and opportunities for the region’s tech ecosystem, and sharing investment perspectives.

Paine commented on recent reports that Grab and Gojek might be pushed to a merger or look for an exit. “There are a few things, one is at the shareholder level, whether combining both actually makes sense,” he said. On the other side, it might create one dominant player or monopoly, which would not be very good for consumers. “The other question is whether the DNA actually fits,” he wonders. “To me Grab and Gojek are quite different. The eventual outcome is probably going to be a US IPO at some point.”

Paine believes that regional IPO markets still have to play catch-up. “They don’t understand the tech sector very well,” he said. He thinks that Hong Kong is okay as destination for local startups to exit. The US markets and Japan are options too. “Thailand is opening, Jakarta already opened but they’re still new to it. Singapore is going to open and close, so I am not sure what’s going on.” He hopes that what is currently happening in the US “may rub off over here, so that some of the companies in the region have adequate pathways to exit.”

Bringing Silicon Valley to Southeast Asia

Paine had the idea of creating a venture capital fund when he was running the Founder Institute in Singapore in 2010, where he got the chance to meet the second generation of VCs, angel investors, and startups. He later founded Golden Gate Ventures with Vinnie Lauria, a Silicon Valley entrepreneur, and Paul Bragiel who is an experienced investor and advisor for Silicon Valley firms. The firm has since poured more than USD 175 million into investments, managing more than 45 companies across multiple verticals.

Although the pandemic has hindered investment activity worldwide, money continues to flow into later-stage startups. Investments at the Series B and Series C stages have totaled a record amount of around USD 1.185 billion in the first half of this year, up 25% from the previous year, while investments into post-Series C startups reached USD 403 million, up 7%, according to a report published by Singapore-based VC Cento Ventures.

What’s still lacking

Despite the boom, there are still certain elements that the region’s ecosystem is missing. “The talent pool is still not perfect, but it’s getting better,” said Paine. “Making sure that people don’t leave the startup area and go work for a bank or whatever.” The quality of founders has improved, but founder coaching is also critical for him. “We need coaches to understand our situation, have empathy for our situation, and that hopefully in the same time zone as us,” he explained. “Founders do engage with coaches in the US, but having empathy for emerging countries is just a different thing. I’m trying to make it happen.”

Paine is hopeful about the investment landscape. Healthcare and education are for him the two biggest trends. There are other sectors such as agriculture, digital media entertainment, and manufacturing that have great potential too. Although the pandemic has helped accelerate digitalization, he believes that digital adoption will still take some time.

Supporting founders

Paine is very ambitious in supporting local entrepreneurs, not least through the Founder Institute, where he offers mentorship and support to build a network and business. “When your ecosystem is new, founders tend to make the same mistakes. And even when your ecosystem is okay, like Singapore, fresh entrepreneurs still make the same mistakes,” he said.

While Silicon Valley is powered by “failing fast,” the Asian culture tells you to keep mistakes to a minimum. “You need to hit it from day one,” he explained. “I think if we can help founders not make the same mistakes, that’s what we are here to do.”

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