It is the end of the year again – where tired people catch up for the last drink before heading off to their respective (and well-deserved) family time. We have been involved in more such discussions since Momentum Works now has a dedicated investment team (We are not a GP, however, and do not intend to be one). 

As for the Chinese investors who are doing the rounds in the region (some since Q2, but maybe since August/September), the discussions are often on the challenges they have encountered communicating with founders in Southeast Asia. 

One of them, after diligently meeting close to 200 founders in the region, attributed this to the difference in context and exposure. “Too many of these teams are building on models that have already been proven NOT to work in China.”

“But this is not China – the markets have different nuances, which might make a model which failed in China work here?” Our colleague contested. 

For example, Meituan, Alibaba and JD have all aggressively ventured into point-of-sale (POS) space for merchants, making it impossible for independent or venture-funded POS players to survive. In Southeast Asia – a few POS players (such as StoreHub in Malaysia and Hong Kong-headquartered Aigens) have recently raised money. 

Or take the example of Flash Coffee, a coffee chain founded by a German in Southeast Asia, which is often benchmarked against Luckin Coffee, the much more sophisticated venture-backed OG. Chinese investors find it hard to pull the trigger on Flash for this reason. However, is scruffiness here a minus point or signifying more adaptability to the actual market conditions? 

However, people’s understanding and cognition are almost always shaped by their experience and exposure. In the book “Seeing the unseen: behind Chinese tech giants’ global venturing”, Professor Guoli Chen and I described at length how the hyper competition in China shaped the psyche of Chinese tech leaders. 

The same applies to investors in that market, who have to mentally deal with the fast iteration of business models. Even as a huge percentage of the 1st generation of venture investors are actually Singaporeans, the mindset can be decidedly comptemporary Chinese. 

The differences and nuances in Southeast Asia, or other markets, are difficult to grasp unless you have abundant facts or personal experiences/observations with the markets. Facts are scarce, and often unreliable (hence why Momentum Works is producing our own Insights reports); personal experiences/observations take time and commitment to build – multiply that by six if you are evaluating a Southeast Asia regional opportunity. 

So for Southeast Asian founders to pitch Chinese investors more successfully, the game might be the reverse: the founders need to really understand the evolution of equivalent or adjacent sectors/models in China well, and articulate the market differences clearly

A lot of the tech evolution, including the ups and downs, rises and falls of business models, have been well documented in the public domain by armies of observers and commentators (some very well informed and intelligent). It is not that hard to figure out the reasons for Miss Fresh’s downfall, as well as Hema’s challenges, if you are building a quick commerce startup; it is likewise fairly easy to understand that Pinduoduo’s core strength is not its cheap price (which is a result of that core strength). 

Founders (or CFOs) who want to pitch to Chinese investors should do that homework. 

However, a potentially more fundamental question here: why should a good Southeast Asia founder pitch to Chinese investors anyway, since regional VCs in Southeast Asia have raised $300m, $400m, or even $800m in their latest funds? They often have more dry powder than many Chinese GPs loitering around the region. 

Regional and local investors have the same market exposure and should theoretically understand your business models better. Besides, they do have the pressure to deploy and have been often more trigger-happy compared to their battle-weary and cynical Chinese counterparts. 

Back to the Chinese investors. They will bemoan the expensive valuation of startups already backed by regional VCs, while hesitate to put money into startups “which even the local VCs did not invest’. 

In this game anyway, only the extraordinary make extraordinary returns.


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].


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Jianggan Li is the Founder & CEO of Momentum Works. Prior to founding Momentum Works, he co-founded Easy Taxi in Asia, and served as Managing Director of Foodpanda. The two years running Rocket Internet companies has given him a lifetime experience on supersonic implementation, and good camaraderie with entrepreneurs across the developing world. He holds a MBA from INSEAD (GMAT 770) and a degree in Computer Engineering from Nanyang Technological University. Unfortunately he never wrote a single line of code professionally - but in his first job he was in media, travelling extensively across Asia & Europe, speaking with Ministers & (occasionally) Prime Ministers. Apart from English and his native Mandarin, he is also fluent in French and conversational in Cantonese & Spanish. He tried to learn Latin (for three years) and Sanskrit (for six months) as well. In his (scarce) free time, he reads, travels, hikes and dives. Pyongyang, Tehran & Chisinau are among the interesting cities he has been to.