Thomas Clayton has started and run numerous high-tech startups in Silicon Valley. He is currently CEO of Bubbly, a social media startup backed by Sequoia Capital, SingTel Innov8, and JAFCO. The company is one of the largest VC–backed startups in Southeast Asia, having raised over $60M in funding.
We’ve asked him to give us some insight into starting, building, and funding a company across Asia. This is the final part of a four-part series.
The final piece of my four-part guide to expanding a business into Asia is tailored more towards local startups and a big issue that affects many of them: raising funding from investors.
The process of raising money in Asia is very different from raising money in Silicon Valley and, frankly, it’s not nearly as easy. Asia has far fewer VC firms and institutional investors, each of which invests a far smaller amount of capital. Moreover, the fundraising process is not standardized like it is in the Valley, and that is not going to change anytime soon.
Many Asian entrepreneurs tell me that they want to raise funds from Silicon Valley firms because they perceive the valuations to be higher. But the problem with this is that most VCs in the Valley, especially early stage ones, only like to invest in companies that are within driving distance from their offices. They are highly unlikely to invest in companies based outside of the Valley — much less in another country 8,000 miles away!
I try to emphasize to them that they’re simply wasting their time in trying to court the Valley VCs from all the way over here. The only Valley VCs that’ll invest in Asia startups typically are those that have a presence here in the region (e.g. Sequoia, Accel, NEA, etc.). However, this primarily applies to businesses within China and India, where these big firms reside, as they rarely invest in startups outside of those two countries.
If your business is based in Asia, despite a potentially tougher hill to climb, you’re still much more likely to be successful raising funds locally.
In order to help those looking down this path, I’ve mapped out what startups should expect in the process and how to come out on top.
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