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DEI in a Tech World

The term ‘DEI’ is not just a buzzword but a strategic imperative that goes hand-in-hand with Environmental, Social, and Governance (ESG) principles. As businesses navigate the complexities of a dynamic and diverse world, fostering a workplace culture that values diversity is a moral obligation and a key driver of innovation, resilience, and long-term creativity.

Diversity, Equity, and Inclusion (DEI) have increasingly been recognised as pillars for organisational success and sustainability, especially in Southeast Asia (SEA). The cruciality of DEI in organisations in SEA has been highlighted repeatedly across various cases, which is a particularly critical topic to be addressed in a highly diverse region of 680 million people - comprising over 1,500 ethnic groups, subcultures and 1,000 languages and dialects.

As of 2023, data states that Southeast Asia’s e-commerce sector has grown rapidly, with a projected $175 billion GMV by 2028. In a digital-led consumer world, this helps facilitate better tailoring to the diverse communities and positioning their corporate social responsibility to resonate with these consumers.

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Path to Partnership: Insights from Joe Zhang, Partner at TNB Aura

Recently appointed Partner at TNB Aura, Joe has played a pivotal role in shaping the firm's trajectory over the past four years, leading numerous research initiatives and driving investments into emerging leaders in the tech industry across Southeast Asia.

Having realised the need for localisation and the gap in early-stage funding, Joe decided to explore opportunities with Southeast Asia-native funds dedicated to helping early-stage startups.

Joe has a diverse background, spanning engineering, tech consulting, and growth stage investments. Joe joined TNB Aura as an associate after graduating from the NUS MBA programme and has since played a crucial role in TNB Aura's growth over the past four years.

Vicknesh R Pillay, Founding Partner of TNB Aura, acknowledges Joe's impact, stating, “Congratulations to Joe for being an essential part of TNB Aura’s journey; Joe’s contributions to investments, particularly in key endeavours such as our Series A/B investments, have played a pivotal role in shaping the success of our venture.”

Promoted to Partner, Joe's leadership is anticipated to guide TNB Aura through the evolving venture capital landscape. In an interview, he shares insights into his journey, challenges faced, and the future vision for TNB Aura.

Interview with Joe Zhang

Q: What are your key contributions to Southeast Asia's startup landscape?

A: I’m very humble about this, and I think I will have a much better answer in 2-3 years. However, alongside my team, we progressively influence investors and founders with our high conviction, top-down, and research-driven approach. We aim to consistently prioritise strong business fundamentals and emphasise the importance of exits rather than chasing higher valuations.

Q: As someone who's become a VC partner, what advice would you give those aiming for a similar role in the industry?

A: In short, working with the right people at the right time. I was fortunate enough to join an outstanding team from the beginning, and we grew the fund together.

To those who wish to enter the VC industry, I would emphasise the importance of internships. My experience in the venture capital world began with the NUS MBA programme, where I joined TNB Aura through a collaborative recruitment initiative. Over four years, I steadily progressed from an associate to a partner.

For those aspiring to carve a similar path, I'd stress the importance of gaining hands-on experience through internships. It provides a practical understanding of the industry and serves as a stepping stone to building lasting connections. My diverse background before entering VC, has proven beneficial in navigating the complexities of the industry.

In essence, be proactive in seeking internships, leverage educational collaborations, and embrace a multifaceted skill set. These elements have been instrumental in my journey to becoming a partner at TNB Aura.

Q: What are your insights on the market, and could you give us a glimpse into the industry trends that TNB Aura is keenly exploring or anticipating?

A: We have been using our top-down and research methodology to guide our investment thesis. So far, we have completed over 30 sector research and made over 20 high-conviction bets, which are mostly the top players in their respective markets. After backing later-stage startups in Singapore and Indonesia, we see the potential for the same/similar playing out in Vietnam and the Philippines next, such as Social Commerce, AgriTech, Direct-To-Consumer and Automotive. On top of that, we also see sectors uprising, such as EV Infrastructure, Renewable Energy, B2B FinTech and Web 3.0.

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Inside the Mind of a VC: In conversation with Vicknesh R Pillay

Vicknesh R Pillay is the Co-founder and Managing Partner of TNB Aura, where he heads up the group’s sell-side and buy-side initiatives.We spoke to him ahead of his session at SuperReturn Asia, about how he find the right companies to invest in, where the opportunities lie and much more.

What are you looking for when assessing investment opportunities?

We believe that opportunities in Southeast Asia are wide but shallow, and there are only specific business models which can give investors a unicorn outcome in Southeast Asia. The key is to evaluate global trends and precedents which have already played out successfully in markets with similar demographics to Southeast Asia, such as China and India. We then identify high potential sectors and winning business models through canvassing the market in Southeast Asia – which are relatively shallow in terms of the number of players – and back the best team able to execute this business model in the country / region.

What’s the most important question to ask a start-up in which you’re considering an investment?

It is impossible to have a single most important question, as multiple criteria need to be fulfilled before we decide on an investment. This begins from the analysis of the business model, the market, the management team, as well as the company’s ability to create defensibility in the long term.

Which regions and areas do you see the most opportunities and what strategies and regions are you actively investing in?

TNBA invests across Southeast Asia – and it is important to be a regional investor as Southeast Asia has multiple countries with its own local nuances and regulations – unlike countries such as China or India. Similar to how business models could be more applicable to one country over the other, the key markets in Southeast Asia such as Vietnam, Indonesia, Singapore and the Philippines are also in different stages of maturity in terms of the venture capital ecosystem.

For example, TNBA looks at the precedent models in China and India and applies these learnings to Southeast Asia as there are many trends and insights which can be gained. Under the E-Commerce category with B2C marketplaces being the first mover, the next vertical to emerge would be Social Commerce, based on what we have observed, with the emergence of Pinduoduo in China.

In Southeast Asia, we have seen the similar emergence of Social Commerce players who have hit critical scale such as Super after the emergence of Lazada, Shopee, and other B2C marketplaces. We have yet to witness any Social Commerce player truly executing the ‘Tier 2 and 3’ model in markets like Vietnam and Philippines. Therefore, we see many horizontal opportunities yet to be played out in markets such as Vietnam and Philippines, whereas we see new industries such as Energy and IoT, as well as many vertical plays in categories like FinTech and E-Commerce emerging in Indonesia.

How do you conduct due diligence to ensure minimal risk and high returns?

Minimal due diligence is usually done when a VC is investing at the Seed stage, as the focus is to achieve product-market fit, traction and many other elements of building a company at that stage. As a Series A investor, it gives VC funds an opportunity to minimise risk by conducting proper due diligence across Legals, Financials, Tax and Commercial. Risk and returns are naturally correlated, though as an investor, we try to mitigate any unforeseen red flags via stringent due diligence processes before investing. Here are some other tips we consider to de-risk many of our investments:

Sourcing: VCs adopt either an inbound approach (predominantly relying on network, events, inboxes for deal flow) or an outbound approach (where we pick a specific industry, sector and business model we like and proactively reach out to founders who are executing these business ideas).

Risks can be minimized by adopting an outbound approach as we will be able to conduct clearer competition analyses and approach the market in a methodological manner, as well as understanding business models better before making an investment decision.

Reporting and Portfolio Management: It is critical to set up the right reporting metrics and governance prior to investing in a company so that all expectations in terms of reporting are established in advance. It is also crucial to set up value creation activities to continually value add to the company in addition to quarterly and annual meet ups.

What are the biggest challenges the LPs and GPs alike are facing in venture capital?

Exits. Naturally, exits create a ‘refresh’ in capital to allow founders and investors to invest back in the ecosystem. Southeast Asia sits in an earlier stage of VC ecosystem where clear exit paths are not created, though they are in the works in the various Southeast Asian countries. As investors, we have seen this mature over the recent years with investors at different stages as well as secondaries offerings emerging.

We expect the exit climate to drastically improve over the next 12-18 months, in comparison with the past 6-9 months of slowdown in public as well as private markets. We received term sheets for a full trade sale for at least 20% of our portfolio companies in 2021 and early 2022, indicating a clear interest for global companies to enter the Southeast Asian market, as well as a clear uptrend for Southeast Asia as one of the most attractive investment destinations globally due to the strong fundamentals behind many of the Southeast Asian countries.

How are you expecting the market to evolve in 2023 regarding venture, fundraising and start ups?

Days of ‘exuberant investing’ are behind us, when fund managers with large portfolio companies adopting a ‘spray and pray’ approach had expectations for the market itself to create exits for their portfolio companies.

Naturally, with a more hands-on approach, exits can still be created in a deliberate manner. With public comps impacted by the macroeconomic environment, generating exits have taken a back seat for several companies with long enough runway. Similarly, founders have placed less focus on gaining market share and more focus on achieving profitability and getting their unit economics positive.

Moving forward, we expect the companies emerging out of this recent slowdown to come back even stronger than ever and attract top tier investors due to their strong fundamentals.

What advice would you give to a founder pitching to a VC?

At TNB Aura, we like founders who are thoughtful. Great ideas are a synthesis of science and passion. As much as founders should be passionate about their businesses, we look for leaders with an analytical mind and a strong focus on their short-term, mid-term and long-term goals on their key financial milestones. Lastly, we have a strict no bull**** and no ***hole policy for founders.

https://tnbaura.vc/insights/inside-the-mind-of-a-vc-in-conversation-with-vicknesh-r-pillay/

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TNB Aura's Perspectives on Zipmex and the financial revolution

The TNB in our name, stands for The Next Billion, users specifically, which is an aspirational nod to where we think the Southeast Asian ecosystem will grow to over the next 10 years.

Against this backdrop, we believe that rather than an emphasis on market disruption, which has been the calling card of VCs across the world, our view is that for selected industries, sectors and specific business models in Southeast Asia market creation is the name of the game.

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Let's create something together

As a thesis-led, high-conviction venture capital firm, we use data-driven methodologies to identify and invest in select companies