Golden Gate lets in first round of investments

By Gabey Goh December 18, 2012

Golden Gate Ventures announces addition of TradeGecko, RedMart and Coda Payments to portfolio
Has an aggressive outlook for 2013, with plans for more than 10 investments in the coming year

Golden Gate lets in first round of investments GOLDEN Gate Ventures (GGV) has announced its first round of investment in the region since opening its doors earlier this year, adding TradeGecko, RedMart and Coda Payments to its investment portfolio.

GGV, with offices in Singapore and San Francisco, is a US$10-million venture fund and operates a seed investment program for digital start-up companies that have already launched a product and achieved market traction.

The investment decisions were based on more than a year spent researching the region, meeting start-ups and hosting events across a dozen cities.

“While e-commerce is a strong thread through our first investments, it is only a starting point. We are actively looking across content sites, apps, and B2C (business-to-consumer) services and we are looking in places that other funds are not represented," said GGV founding partner Paul Bragiel.

"Many people I talk with in the valley think Asia is just China and India, but we see a huge booming market across the region. We are really excited to be at the heart of it,” he added.

The investment in TradeGecko is part of a strategic partnership with JFDI.Asia (the Joyful Frog Digital Incubator). The Singapore-based startup was founded by three entrepreneurs from New Zealand in January 2012 and makes inventory and sales management software for small- and medium-sized businesses.

It was selected for, and accelerated through, the JFDI-Innov8 2012 Bootcamp program, where its team received intensive mentoring and the business attracted substantial investor interest.

RedMart is a Singapore-based online grocer that enables Internet users to buy everyday home essentials online and have them delivered to their homes.

Coda Payments is a micropayments startup active in Indonesia and Malaysia, and headquartered in Singapore. Its solution enables customers to make purchases online using their pre- or post-paid mobile accounts, while helping mobile operators manage a sophisticated margin differentiation program that allows better monetization of their direct billing capabilities.

It also caught the eye of recently launched venture fund GMO VenturePartners which included the company as one of its first investments in the region.

Disclosure of investment amounts for RedMart and Coda Payments is expected to be declared next month alongside other announcements. For TradeGecko, US$650,000 has been invested in the venture from GGV, with WaveMaker Labs leading the round of funding.

GGV founding partner Vinnie Lauria said the companies were selected for two reasons: First, for their strength as high-growth start-ups that are already impacting regional buying and selling behaviors positively, and expanding e-commerce in Asia; and second, the companies plug GGV into a market of more than half a billion people.

“South-East Asia sees 650,000 new Internet users come online each month. Smart mobile devices are the future in this part of the world and our portfolio puts us right at the heart of the mobile space,” he said.

GGV has seen a big bump since 2011 in the number of new entrepreneurs pitching quality startups, and expects that trend to continue through 2013. It has an aggressive outlook for 2013, with plans for more than 10 investments in the coming year.

No Malaysian-based startup made it to the first round of investments by GGV, however Lauria shared that the team is currently in active discussions with one of the startups currently under Cradle Fund’s Coach & Grow Program. “We hope to have some good news to share when we make our next announcement.”

Golden Gate lets in first round of investments GGV founding partner Jeffrey Paine (pic) said with so much activity in the region, he finds himself constantly on the move.

“I’m meeting inspiring entrepreneurs every day and that gives me the energy to keep moving forward. South-East Asia is brimming with smart, talented, and self-driven entrepreneurs. Mix that with double-digit growth in the region and the stage looks set for us to create a number of breakout successes over the next few years.

"It reminds me of what China was in the early 2000's. It seems quite fortuitous that we launched our fund in the Year of the Dragon!” he added.

Finding the right start-ups

Since Golden Gate Ventures, based in Singapore, launched earlier this year co-founders Lauria, Paine and Bragiel have clocked up quite a few frequent flyer miles travelling around the region.

The GGV founders have met with over 400 teams, built a community of over 1,800 individuals and logged over 500,000 kilometers, sometimes covering three countries in the same week.

This research has given GGV a clear picture of grassroots market opportunities and challenges across South-East Asia. Speaking to Digital News Asia (DNA), Lauria said he believes the process has allowed GGV to get a good cross-section of talent and ideas.

He shared that the bulk of the meetings with start-ups has come through referrals, queries via its website, and people encountered at various start-up events hosted around the region.

“Many start-ups think they have a fresh idea or fresh take on a problem but reality is, I’ve heard it pitched like five times already before they get to me,” he added.

However, Lauria said that he has found quite a number of quality start-ups in South-East Asia, more than he initially thought the team would be able to uncover.

“As an investor sometimes you feel like you could be missing out on something big. But there are a rising number of good ideas coming out of the region so even if investors do miss out on one, there are others to look at in the next wave,” he said.

Lessons learnt in South-East Asia

Golden Gate lets in first round of investments When asked what differences he has observed during his time with Asian startup eco-systems, Lauria (pic) noted that a large section of the population believe that they need to raise money first before building anything.

“In Silicon Valley it’s well understood that you bootstrap first, get a product out into the market to gain some traction, before going out looking for money,” he said, adding that he has met a fair share of bootstrapping companies, which fit with Golden Gates’ own criteria for potential investment.

Lauria also shared that the mobile space is much more important in Asia compared to Western or matured markets.

“Especially in Indonesia, where the phone is essentially someone’s computer because that's the only device they have to access the Internet and communicate or work with others,” he added.

In addition, the emphasis of social networking platforms such as Facebook and Twitter, in addition to the use of search engine platforms such as Google to promote or market start-up offerings, is much higher in Asia.

He added that Sillicon Valley attracts the top 1% of the world’s talent, making it a high density hub with plenty of investment options. However when approaching startup eco-systems, especially in South-East Asia, it can become something akin to “finding a needle in a haystack.”

“The region doesn’t have same density, so you need to build relationships. The whole process is a lot more meetings, and not just within a few weeks which is a lesson learnt as relationship-building takes a long time,” he said.

Lauria also observed that the “culture of pitching” is a new concept for the latest generation of entrepreneurs here in the region. “College kids here didn’t absorb such skills when they were younger, so when they start their own companies it’s a gap in the skillset.”

When asked if he has adjusted to this style of doing business, which is predominant in South-East Asia, Lauria admitted that it is a marked contrast to Sillicon Valley norms.

“In the Valley, two people can just meet and say ‘okay this is what I need and this is what you have’ and proceed from there. It’s very much a business transaction and is expected,” he said.

“I think I’m one of the lucky ones as I love traveling and making friends is one of my assets. I’ve been in Asia for over two years now and have been able to plug right in,” he said, adding that the building of relationship is also in line with GGV’s practice of investing in people and teams.

“It does take time to build up relationships but I know that the ones I’ve made I’ll have for the rest of my life no matter what. I now know, I’m always tied to Asia, because the relationships I’ve build here are stronger.”