An exclusive interview with Tan Yinglan, founding managing partner of Insignia Ventures Partners and ex-Sequoia venture capitalist, on closing his most recent US$120 million funding round
24 Feb, 2018ASIANSCIENTIST.COM
If a startup company is an athlete, then a venture capitalist is a coach looking to groom a future ‘most valuable player’ or MVP. Tan Yinglan, a 36-year-old Singaporean venture capitalist and founding managing partner of early-stage seed capital firm Insignia Venture Partners, is on a hunt to find the next big technological MVP in Southeast Asia.
“Like a world-class athlete requiring coaching in nutrition and fitness, fast growth technology companies need help in various areas and we help build the fitness of companies we partner with and increase their velocity of growth,” said Tan, in an exclusive interview with Asian Scientist Magazine. “We don’t think of ourselves as an investment firm but a platform for early-stage technology companies with network effects.”
The establishment of Insignia represents a growing interest in seed to Series B funding in Southeast Asia, an up-and-coming startup hub. Insignia recently closed its maiden fund at US$120 million—the largest ever maiden fund by a venture capital firm in Southeast Asia. This strong opening places Insignia among the ranks of other leading venture capital platforms operating out of Southeast Asia, such as Vickers Venture Partners, which closed its fifth round of funding at US$230 million in pledged capital in October 2017, and Vertex Ventures, which raised US$210 million in its third funding round last year.
In his five years as a venture partner at Sequoia and based out of Singapore, Tan led investments into Indonesia’s Tokopedia and Go-jek, Singapore’s Carousell and 99.co, South Korea’s DailyHotel and Taiwan’s Appier. He was also a World Economic Forum Young Global Leader from 2012 to 2017.
Now at the helm of Insignia, Tan’s first move was to invest in Indonesia-based co-working chain EV Hive. Co-working spaces have sprouted in various Southeast Asian metropoles like Manila, Bangkok, Singapore and Jakarta where startups and freelancing are quickly gaining traction.
The scene is competitive, with the world’s largest co-working chain, US-based WeWork, announcing in August 2017 that it would invest US$500 million in Southeast Asia and South Korea. Tan sees this trend as an opportunity for investment.
“Co-working caters to the current rise of millennials, by replacing the age-old office concept with its new age co-working space model,” Tan said. “EV Hive replaces the capital intensive and high commitment office leasing models with its short-term and flexible co-working membership plans. They are currently the market leader in the co-working space in Indonesia.”
Along with investments from Intudo Ventures, East Ventures and SMDV, EV Hive was able to collectively raise US$3.5 million in September 2017.
Even as the dust settles on the EV Hive investment, Tan has already made a second investment in Indonesian software-as-a-service platform provider Stoqo Teknologi Indonesia. The technology solutions developed at Stoqo enable businesses in the food and beverage (F&B) and hospitality industry source for supplies from major manufacturers and distributors at competitive prices.
Tan’s passion for entrepreneurship goes way back to when he was a graduate student at Stanford University in the United States. In 2003, he co-founded an online dating site, LoveMatch, raising angel investment and later selling the startup.
As a serial venture capitalist, Tan is known to have a discerning eye for viable startup investments.
“Investing in technology is also like buying fine wine. The question is not so much ‘How much is this today?’ but rather ‘How good will it be tomorrow?’” he said.
He emphasizes the importance of market readiness of a product or service, nothing that even good teams usually lose in markets that are not ready, whereas an average team in a good market has a chance of success.
“When a great team meets a great market, something magical happens,” he added.
Tan said that market readiness is especially important for scientists and engineers who may want to take their product out of the laboratory. Often, they misunderstand this concept which can lead to failure.
“Too many startups begin with an idea for a product that they think people want. They then spend months, sometimes years, perfecting that product without ever showing the product, to a single prospective customer. They don’t know whether the product is market fit or not. When they think they have perfected the product, they then ask customers and the usual response from customers would be they don’t care about the idea. This is how most startups fail,” Tan shared.
He suggests that aspiring entrepreneurs first identify whether they are in a good market with a product that can satisfy the market, and upon satisfying those criteria, to then identify what gaps need to be closed on the product side to ensure a better fit with the market.
“The question is not ‘Can this product be built?’ Instead, the questions are ‘Should this product be built?’ and ‘Can we build a sustainable business around this set of products and services?’” Tan said.
Prior to joining Sequoia in 2012, Tan was head of projects at the Singapore National Research Foundation, a department within the Prime Minister’s Office that sets the national direction for research and development.
Tan received two bachelor’s degrees (in Electronics and Communications Engineering, and in Economics) from Carnegie Mellon University, and a Masters in Management Science and Engineering from Stanford University, before carrying out post-graduate studies at Harvard University.
Aside from being a venture capitalist, Tan has also written three books, namely, The Way of the VC: Having Top Venture Capitalists on Your Board, Chinnovation–How Chinese Innovators are Changing the World, and New Venture Creation–Entrepreneurship for the 21st Century.
But what Tan considers as his greatest investments, where he has “long-term capital injection and long gestation time,” are his three children with his wife Belle Yeh—whom, by the way, was his co-founder at LoveMatch.
This article was first published by Shai Panela on AsianScientist