Asian Silicon Valley a hard sell: Cradle
Business Times Singapore published these pieces following a recent interview with our very own Johnathan Lee, co-chair of ABAF 2012.
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PUBLISHED MAY 02, 2012
ASIAN SILICON VALLEY A HARD SELL: CRADLE
Risk averse mindsets and investors hinder its reproduction here
BY AMANDA EBER
AMID the hype about Singapore becoming the “Silicon Valley of Asia”, there is one man who stands apart from the crowd.
Jonathan Lee, vice-president of commercialisation and ventures at Cradle Fund Sdn Bhd, feels strongly about his belief that Asian cities should create their own start-up scenes, rather than simply emulating Silicon Valley.
“I don’t think Silicon Valley is something that can be reproduced. It took 30 to 40 years of evolution for it to become what it is today,” he told BT in an interview last week. He pointed out inherent differences in mindset as a key barrier to producing an Asian clone.
For example, entrepreneurship is seen as a “taboo” career choice in Asia. Most people prefer to join an existing business rather than start their own. This stands in vast contrast to the US, where a strong culture of innovation breeds fleets of fledgling start-ups.
Asian angel investors tend to be similarly risk-averse. They often invest in familiar areas such as real estate or brick-and-mortar businesses, instead of the emerging high-growth tech start-up scene.
“Investors in Asia do not really understand tech start-ups,” said Mr Lee. He also stressed the importance of awareness to create a more conducive environment for angel investors and start-ups alike.
“The one goal that all investors share is that they want returns,” added Mr Lee.
Rather than dreaming of becoming the next Instagram, whose US$1 billion takeover by Facebook last month made waves worldwide, he advised start-ups in Asia to focus on monetisation instead.
“We have success stories like JobStreet and Nuffnang,” said Mr Lee. Although their valuations are not as high as Instagram’s, they are generating revenue and doing very well, he observed.
In any case, South-east Asia’s unique geography could also serve as stimulation for pioneering practices in the region.
Mr Lee highlighted the short travel time between countries in the region as possible motivation for cross-border angel investments, which would be the first of its kind in the world. Not only that – he also believes that the time is right to introduce syndicated investment to the region’s angel investing scene. Although popular in the US, syndicated angel investments have yet to take off here.
“With syndicated deals, investors have higher purchasing power, a lower risk of failure as well as an increased chance of success,” he said. Most importantly, it also lets investors mentor and learn from one another.
What’s more, previously “protective” Asian investors might be more inclined to share their knowledge and embark on co-investments in the future, he said.
Mr Lee will be in Kuala Lumpur this month for the Asian Business Angel Forum (ABAF), of which he is also co-chairman (off for ABAF 2012)*. It hopes to increase awareness among potential angel investors and cultivate the start- up scene in Asia.
“We want to be trailblazers and we hope that the ABAF can be part of the solution to these problems,” he said.
“The way ahead is here in Asia.”
*ABAF additional note for clarity