Our recent encounters with a content platform based out of Jakarta, Indonesia has a tragic ring to it.

The platform was founded and run by a group of seasoned internet executives, and growing at a stunning pace, with more than 5 million installs and close to 1 million daily active users (DAUs).

Over the last two years, at least 20 major investors from China were enquiring with us about the company, and whether the valuation they were asking was worth it.

The team chose to receive investment from a US$20 billion industry leader from China, thinking that the strategic investors would propel their growth even faster.

What happened next was beyond belief of the team.

The investor, having decided that Indonesia as a market was of good potential, launched their own platform, well, platforms. Yes, they are now running two competing services, both with substantially more marketing budget than the investment they put in the company mentioned above.

That was the beginning of the end as the founders could not raise anymore money. No one wanted to compete when a big boy comes to town – especially the big boy is also a shareholder of this startup. What seemed to be a smart move, to gain a strategic investor, turned out to be a disaster! 

You can blame the big boy as being unethical, but what has happened has happened. What are the lessons learnt?

1.  Big boys are looking for growth – they will do anything necessary

Recently we have seen more Chinese players expanding overseas and namely into Southeast Asia due to (perceived) cultural similarities. Of course, the success of Alibaba’s investment into Lazada (I mean, exit of Lazada by Rocket Internet) did not go unheard. Being a huge market of 640 million people, Southeast Asia is a sexy story for the investors who are constantly pounding the big boys for more growth in an already ultra-competitive Chinese market. 

Of course, tapping into the Chinese mindset, nothing is not for sale – for the right price. If they want to grow in a certain market, they will pay for it (in full). Thus, many startups in Southeast Asia which are mostly underfunded should be mindful that if you do not sell, your competitor will. Or worse yet, the biggest player in the industry will. There is nothing you can do about it.

2. Big boys do not care for partnership – they want to own you

There are also certain factions who think that by aligning themselves with the big boys (e.g. Tencent, Alibaba and the like) they would be better off. The truth might be the complete opposite. We have witnessed a fair share of startup founders who just ended up being an employee because their company was too small or too desperate for cash to start with.

It should be clear from the start that the many big boys are not interested in partial ownership or a partnership – they want to own everything. That should be your default thinking – and of course, when you see a big boy being nicer than this, you should assess how genuine they are in building such partnerships.


Alibaba owns 83% of Lazada as of now, and plans to up its stake to 100% in the near future

3. Build your business fast, take in smart money and cash out completely, whenever possible

For an entrepreneur to succeed in this crazy environment, it is a fact that one needs to build their business fast and take in only smart money. It does help if your investors are patient and see the big picture – some big investors are (but you have to find the right ones).

Once the business grows to a certain size and has strong cash-flow (which is not usually the case for startups), head straight for an IPO, or sell out entirely to the heavy hitters who want to enter your market. Again, timing and execution is key. These volatile markets do not allow much room for slip-ups. Also, falling in love with your business as if it was your baby is not a good idea as someone can displace you tomorrow with more money.

4. If you are starved for cash, you better be a good deal maker

If however, you really have no choice and are in need of Chinese money, you should know your value. Too often, startup founders strong-arm themselves into the deal without dotting the i’s and crossing the t’s for fear that they would run out of cash. Therefore, it is always advisable to begin fundraising earlier, and it pays to be a good deal maker. Of course, you can ignore this advice if your company does not have anything to offer to your new masters.

5. Non-compete is mutual

This is a direct extension from the point above. For the startup mentioned at the beginning of the article. One key mistake they made was in the investment agreement: the non-compete clauses only applied to them, not their investors. As a result, they could not take money from the investors’ competitors to get back control over their own destiny, while the investors were free to create their own competing products. If you see these kind of terms (before signing), negotiate them to be neutral, or out completely. If your investors are not willing to budge, this is a big big red flag for you.

6. In a gold rush, if you can’t run faster than others, sell shovels (and jeans) instead

The sub-heading here is self explanatory. You might know at Momentum Works, we consult, we invest and we build as well. Part of the rationale for our structure is exactly this.


We spoke with the team of the startup twice this week – while they are giving up their two year old baby, they remain optimistic. “We have learnt a hard, but very useful, lesson,” they said. “Our next venture will be more successful than this for sure!”

All the best! We mean it.

Thanks for reading The Low Down, insight and inside knowledge from the team at Momentum Works. If you’d like to get in touch with us about any issues discussed in our blog, please drop us an email at [email protected] and let us know how we can help.


Thanks for reading The Low Down (TLD), the blog by the team at Momentum Works. Got a different perspective or have a burning opinion to share? Let us know at [email protected].


Previous articleHow to tell impostors and bullshitters from real startup/tech experts
Next articleChicken and egg: how OVO solved its mobile payment problem
He has worn many hats in the past - selling advertising space, banking services, and even trading stocks. In 2013, longing for a change of scenery, he joined Rocket Internet’s (now Alibaba’s) Lazada as a online marketer in Bangkok, where he experienced first hand life in a startup. He never looked back since - landing lead roles at Rocket’s EasyTaxi (Singapore), Rocket’s MEIG (Dubai), and Bamilo (Tehran). After that, he launched (and ran) the Thai venture for one of Singapore’s biggest cross-border ecommerce. Last year, Chong put his expertise to work, helping an SGX-listed company relocate to and run operations in Thailand. Nowadays, he’s just chilling by the countryside.