KUALA LUMPUR - Southeast Asia's most successful entrepreneur Patrick Grove has drawn up a five-point list that will guide people considering investing in start-ups.
His 5Ps are people, problem, passion, pivot and perseverance, said Mr Grove who last year sold his online property portal iProperty for S$750 million to Australian property firm REA Group.
"Find people who are passionate about what they want to do. At the same time, they must be flexible and able to pivot or tweak their business model if the previous one doesn't work," Mr Grove said, speaking at a two-day start-up conference called Wild Digital on Wednesday (Jun 8). "Lastly, look for perseverance. The entrepreneurs must able to keep going despite coming up against challenges."
As an example, he cited the video streaming service called iFlix which he started two years ago. "I met more than 150 investors before I found someone willing to invest US$30 million to kickstart iFlix. My team and I really had to persevere, we believed in what we were doing, we just had to keep going on until we find a breakthrough," said Mr Grove who is co-founder and chief executive of Internet business firm Catcha Group.?
Catcha Group, headquartered in Kuala Lumpur, has organised Wild Digital - Malaysia's premier start-up conference. Singapore-born Mr Grove is one of Southeast Asia's most successful start-up entrepreneurs.
At a panel session on the areas investors want to invest in, Tengku Dato Sri Azmil Zahruddin of Malaysian sovereign wealth fund Khazanah said one big trend was the use of mobile phones and devices for different industries.
Mr Tan Ying Lan, venture partner of Sequoia Capital said another business trend was the delivery of services over the Internet. Called software-as-a-service, it is a multi-billion dollar business which is just beginning to take off.
On the question of how investors consider start-ups like AirBnb and Uber which come up against government regulations, panellist Mukul Chawla, managing director of Temasek Holdings said there should be a distinction between breaking laws and the laws not catching up.
Citing AirBnb as an example, he said that although he knew co-founder Brian Chesky for many years, Temasek did not invest in the start-up until last year when it was among 12 investors who participated in a US$1.5 billion funding round raised by the home rental service.
Singapore investment company Temasek did not invest in the early years because the bulk of AirBnb's revenue came from New York. Since then, the start-up has expanded globally with revenues coming from all over the world.
"So it's not about the breaking the law. We need to invest and our decision is based on whether the risk is disproportionate to the reward. Four to five years ago, there was a much higher risk. Today the risk has been mitigated," he said.?
Do investors have sentimental attachments to their portfolio companies? Apparently not according to the three panellists.
Said Tengku Dato Sri Azmil: On investing, you've to be dispassionate. No matter whether you like the founders and the technology, the business must be able to make money that is commensurate with the risk. When you get it right in front, then you can make the acquisition or merger work and still remain friends with the founders.?
Sequoia's Mr Tan said: We are long term investors and we want to see start-ups grow. If an initial public offering or an acquisition is necessary to attract talent and for business expansion, then it is part and parcel of building an enduring company.?
Wild Digital conference is a two-day event held at the Le Meridien hotel in the Malaysian capital. About 500 attendees were at the conference. This is the second year that the event has been organised by Catcha.
Correction Note: This story has been updated for clarity.