I’ve often been asked how we built up Alpha JWC Ventures to where it is today and how we have come to build strong partnerships with our founders and portfolio companies.
In the same vein, I have also been asked why we have sometimes chosen to invest in a startup (an underdog, in my view) that others have seemingly steered away from.
What exactly is our investment approach in a startup or, more accurately, in a founder. Contrary to many beliefs, venture capitalism is not just a numbers game. To us, venture capitalism is a confluence of heart and science.
Changing for the better
The venture capital ecosystem is in a more mature stage compared to circa five years ago. Valuation and such were not as meaningful and robust as it is today. There is also more capital available to founders these days, and it is easier (than before) to raise money for seed funding.
Also Read: Searching for gold in the silver economy: A venture capital perspective
But people have changed, and so have ideas and ideals. Founders’ missions are not just to drive revenue but to also make a lasting impact and drive positive changes in their societies.
This means that founders’ expectations of VCs have evolved accordingly; they are now (rightfully so) more demanding of the quality of the VCs they partner with and what value add they bring. That inadvertently also shapes how we make investment decisions and connect with founders.
The science of investing
Data and numbers
Before investing in a startup, we need to determine a sound valuation of the startup by looking at growth, financial feasibility and product-market fit.
We do this by looking at many data points and tapping into our deep market understanding and experience in the Southeast Asia landscape to assess if an idea would succeed.
Founder evaluation
Next, the most important part is assessing the founder(s). The idea is important, but the founder is critical to the company’s success. We emphasise the founder’s clarity of thought and the ability to maintain it in all situations to achieve key goals and lead a team.
In the startup journey fraught with changes and challenges (some expected, some not), the founder’s vision, finesse in taking action and making tough decisions will make or break the company.
A great founder or leader will naturally attract a high calibre and inspire the team to back them up throughout the journey.
The heart of investing
Now comes the hard, or should I say ‘heart’, the part where every VC is guided by their values and motivations.
Values and trust
Our firm’s values are critical in guiding how we engage with founders and how we can build a relationship of trust with them. When we hold ourselves to a high standard of integrity, we become trustworthy to all our stakeholders.
Only when there is trust can deals be made with confidence, speed, and at a low cost. Case in point, we recently closed a deal in two hours (between three meetings) because of mutual trust between the founders and us.
Focus on founder over numbers
At Alpha JWC, sustainable growth is crucial to us. We focus on the long-term fundamentals of the business rather than short-term vanity metrics.
In addition, we also care about how the organisation grows, and we understand that the founder is the key factor for the company to flourish. That is why our prerogative to be a trusted partner helps founders become even better leaders.
Also Read: The world is flat, but SEA is a (growing) bowl of venture capital and startup talent
Don’t get me wrong. The performance of our fund is very important. But we believe even more strongly that if we take care of our founders and stay committed to them through highs and lows, it puts them in a better state of mind and emotion to lead the company confidently. In short, we do well only when our founders do well.
Every end is a new beginning
It is not all wins and successes, of course. The ‘heart’ part also comes in when things don’t work out. We treat our founders with as much integrity and dignity when the startup needs to be wound up.
We think about how to help them end the journey, support their team who will be displaced, and how we can learn from the experience. The startup may end, but not the relationship. And we have (and will continue to do so) reinvested in some of these founders.
Conclusion
We enjoy and believe in what we do at Alpha JWC because we greatly respect our founders for the sacrifices, time, and heart they pour into their startups.
We are excited to work every day, knowing we have a part to play (however big or small) in supporting our founders in their endeavours. So is it more heart or more science in venture capitalism?
To me, it is equal parts. I believe logic needs to guide our passion and obsession with our founders. In short, the science needs to validate the idea, and the heart needs to support the founder.
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