S1E1 | Building An Enduring VC W/ Kee Lock Chua, CEO Vertex Holdings

You might know of Vertex Ventures as a successful VC in South East Asia and India. But did you know that it had a troubled start? So how did we then go on to becoming one of the top VCs in the region with investments in Grab, Nium, and PatSnap and what is our secret recipe for identifying the kinds of founders that build unicorns? What are the hard truths about building an enduring VC? Learn about these and a lot more directly from Kee Lock Chua, founder and CEO of Vertex Holdings, South East Asia and India.

Discussion Topics: Building an Enduring VC w/ Kee Lock Chua

• What’s top of mind for Kee Lock
• Kee Lock’s most memorable deal
• How Vertex tries to evaluate founder passion and the example of Nium
• Challenges Kee Lock faced in the early days of Vertex
• Lessons from Kee Lock’s father that still hold good today
• The key ingredients for work life balance
• What female founders most need
• Words to live by

Transcript: Building an Enduring VC w/ Kee Lock Chua

Elise Tan: Hi, I’m Elise Tan, and I’m your host for this episode of Hard Truths by Vertex. Hi, Kee Lock. I’m excited to have Kee Lock, on our show today. So Kee Lock is someone who needs no introduction as he is a successful and accomplished investor and entrepreneur. At Vertex, Kee Lock holds four roles, he is Managing Partner at Vertex Ventures, Southeast Asia, and India. He is CEO of Vertex Holdings, Chairman of Vertex Growth Fund. And last but not least, Non-Executive Chairman at Vertex Spec. So Vertex, as has grown a lot under your leadership Kee Lock, there is a lot going on at Vertex. So last year, we had Grab, which has gone public. And we have not one but three portfolio companies that have become unicorns, namely, Licious, Nium, and PatSnap. Now we have six unicorns in the portfolio. So I wanted to ask you, what’s going on in your life and what’s top of your mind these days?

Kee Lock Chua: Well, I guess for me, the three things that come to mind first and foremost, are continuously looking out for good people and talented people to join us, and being passionate about what we’re trying to do. And then always strive to do a better result. And also keeping these people challenged to even do better every day. Second, is, constantly rise above our competition, and stay ahead of our competitors. And that’s a very important factor that we always must remind ourselves that this is important. And then last but not least, of course, it’s about success, not letting success get to your head. You know, we have been successful so far. We do need to remind ourselves to remain humble, not to be complacent. And at some point in time, we probably will stumble. And at that point in time we have to focus on the challenges and issues ahead of us and not to be distracted and to solve the problem systematically and then strive to even bring the company to greater heights.

Elise Tan: I like what you share with us and I think especially the part about not letting success get to us being complacent. And I realise from talking to so many of our Vertex colleagues, that humility is such a strong factor in I think most people and I find that really refreshing because a lot of them are so accomplished and so intelligent. So to me, how they remain humble is something I admire. And the same goes for our founders as well. When I interview them, I also see that they are so capable in what they do, and yet they are still humble and still willing to learn. So just curious, Kee Lock, you have been in VC space for quite a while. I’m just wondering, what’s the most memorable deal for you?

Kee Lock Chua: I think there will be Grab, there will be a company that despite all the challenges they encountered in the initial days, the team, especially Anthony, was able to overcome many of them, and successfully execute their plan and their vision and eventually build a great company in this region.

Elise Tan: Tell me more about Grab, because there’s a lot, I guess, under the radar, tell us about maybe a story of how they have overcome a huge challenge.

Kee Lock Chua: For many of us, who probably may not remember, Grab started originally as MyTeksi in a couple of cities in Malaysia, together with Vertex, you know, funding and coming together, believing that this region, Southeast Asia, there are many cities requiring or needing such services and the Grab, we named itself to Grab and from MyTeksi, and then expanded these services to the region. This unfortunately caught the attention of a larger player called Uber, which came from the US and Europe. This is a company that is much better financed at that time, much larger in scale, has a lot more, I guess, resources for themselves, and that attracted Uber into our market.

And with the finance and cash they have and many of the predatory actions they took against Grab and initially a big challenge for the team. But I think credit to Anthony and his team, realising that what is important is localization, what’s important is to build a strong team, what is important is to build a good quality offering in the product, and quality offering product in each of the market and ultimately they are able to win more customer and overcome all these initial hurdles and eventually they acquire Uber. And of course, Uber exited the market totally.

Elise Tan: I think that is such a great go-live story. Thank you for sharing with us. But you also mentioned about being passionate. But how would you be able to test for passion because oftentimes, we only meet the founders for a short while before we need to make a decision to invest?

Kee Lock Chua: What is something that’s the hardest part of our business I think as you mentioned early on market products in financial modeling are not difficult to figure out. Ultimately, what is the most important factor is the team and the founding team member, and the leadership, how we assess that this is critical. So we actually spend a lot more time with the founding team and the founders trying to understand what is motivating them, what is their attitude towards certain things, and how they go about greater building companies over time, and in the event of challenges or issues, how are they able to focus on it together.

And I think I may share with you this story that when I was a Logitech, Independent Director many years ago, Logitech was a Swiss company. And they had the R&D centers in Lausanne EPFL campus, and then they have this staircase, whereby from the first floor to the second floor, there’s this small little poster, we three simple liners there and that basically says, ability, motivations and attitudes and it describes ability is what you can do. Motivation determines what you’re doing, and attitude drives, how well you do something. So, I think for us, ultimately it is assessing ability, assessing motivation is fairly easy, but ultimately is trying to figure out what is it the attitude, you know, how do they go about doing certain things is equally important.

Elise Tan: I really like what he has shared because he kind of summarises what we have covered so far. So, we have talked about the ability to execute. So, we talk about passion, and now you mentioned attitude, and I think that attitude is definitely a super important factor, whether it is in terms of a founder or someone who wants to be successful in life. So, do you have an example of a founder who has displayed the kind of attitude that you like?

Kee Lock Chua: I guess, in the most recent example of the Neom, project in our early days on set decided that he wanted to build a technology platform solution, allowing the facilities to make it easier for consumers to remit cash over different borders. And after building the technology demonstrating this is able to do this through many, many different countries. He quickly discovered that while the technology works, while this is a possible business proposition, the path towards profitability will be very challenging as a C to C model. And as a founder, obviously, he was able to recognize this issue and pivoted and adjusted its business model transforms himself to today where he is in terms of providing a mobile payment solution, versus trying to just purely be a remittance company.

So in so doing even though the technology platform solutions are similar, you actually adjusting your business plan and when you’re doing that, over a period of time investors or even some of the supporters will start questioning whether or not you are doing the right thing, and then sometimes even at times even you see some very negative things about what they’re trying to achieve. So I think the project credit to him, he was able to stay focused and he was very determined about what he was trying to do. He ultimately is the correct thing, and then continues on this path and transforms himself and the company. And today of course is global mobile payment solutions, our online payment solutions to many different countries around the world. And that transformation is through his determination and his positive attitude and that’s not an easy thing to do.

Elise Tan: Yeah, I cannot agree more that he is such a person with a great attitude. And yes, so humble. In fact, our colleague and venture partner wrote an article after Prajit and Neom became unicorns. So the story was ambitious yet humble, a note of NEOM becoming a unicorn. So the story was actually about how 18 months before he became a unicorn, how his business was affected badly by COVID. And later on, in order to make sure the company stayed alive, he took a severe cut in his pay. And the same goes for his leadership team as well. So really kudos to him, you know, having that drive and determination to push on. So I also want to really go into the part of turning around business because I think that part is very important as well, because business, we don’t expect it to be successful always. Because something that we can’t control is environmental factors. Do you know about a company that has a great turnaround story?

Kee Lock Chua: I guess, probably the best example is ourselves. So for many of you probably familiar Vertex started off in 1988, originally as a corporate venture of Singapore Technologies under the leadership of Mr. Lee the company grew, very well and delivered good results. But unfortunately, Vertex was hit by the dot com bubble. And subsequently, the company was a tremendous challenge and had to be restructured, and put under Aranda as a wholly owned subsidiary of Temasek. And immediately start hibernated for a period of time until 2008 when I was brought on board to restart Vertex, initially with about $200 million or so call remaining portfolio and a bit of cash from Temasek to restart this initiative, but later do we know at that point in time that restarting the plan, and the idea was great, immediately, we’ll discover that 50% of people don’t quite believe that we are restarting Vertex was such a good idea.

They believe that whatever happens just forget about it. And then the other 50% of people, of course, thought that restarting Venture Capital is a good idea because technological innovations are happening. Unfortunately, this 50% of people, however, decided that it’s a good idea, but they don’t think that the team that is deployable, especially me, is the correct person to build these opportunities. And so the journey was treacherous and there were many hurdles, and unfortunately many obstacles. But we were fortunate enough that we were able to bring on board many good people to join us initially, and we were able to focus on the matters at hand and delivered strong good results, and subsequently, in 2014, further transformed ourselves to today’s network of six partnerships. We’ve over 6 billion US under management and continuously delivering good results. And in a way that we came from the near-death experience to today’s growing global network of $6 billion of our venture capital portfolio, and that by itself is a long and interesting and long story.

Elise Tan: Yes, thank you for sharing this. And I think this is something that many people didn’t know as well, because you look at Vertex today, and you think that we have always been successful. But this is not the case. I’m also curious to know what led you to accept the role at Vertex, and then also accept the challenge of diversifying the LP pool. That is really, to me, super impressive, because you have to convince people, and quite a big percentage of the fund is to be invested by external LPs.

Kee Lock Chua: Well, when the business plan initially then was a single LP focus with Temasek owning 100% of Vertex Holding, providing capital for us to invest in technology and disruption that was the initial business plan, which I think is still continuing. The idea was that technology is disrupting many businesses. It’s important for us to be active participants in that to understand where the trends are, and where are the opportunities at the same time to make some good money out there. So that was the initial idea. What changed along the way was in 2014 when there was a major turning point whereby recognizing that, in order for us to scale further and faster, better is to have this current management of network fund, whereby the majority of the capital is raised from external investors, with Vertex holding as a holding company providing anchor funding to each of the partnership, and then each partner must be able to contribute on personal capital to the fund and grow the business themselves.

So of course they are at that point in time looking at today, of course, we all have been able to raise multiple funds since then, but initially, the hardest thing is to convince people, especially the first LP, why should they give you the money, why should they believe in what you’re trying to do is makes a lot of sense. So that is our biggest challenge that at initial first very first LPs is a critical factor for Southeast Asia and we always appreciate their very first investor LPs who invested in us and then LPs are always very important to us.

Elise Tan: Yes, totally. and I think in 2014, the fund is already generating results. So maybe people will be thinking if it’s doing so, well, why do you want to let other people come and share in the pie, I think overcoming that feeling is difficult. I also want to know, what is the hard truth there, you know, in terms of diversifying the LP pool? I imagine you have gone through a lot during that period.

Kee Lock Chua: Yeah, I think the basic principle still boils down to, unfortunately, the member I mentioned about the 50% of people believe that past failure was a problem. And so that 50 percent drive some of the commentary and somewhat perceptions, while we were able to very quickly from 2008 to 2013, deliver very strong results. They’re still concerned at that point in time, whether this is going to be sustainable, whether is this just a matter of short-term, temporary gain, eventually, you may come back to the same problem that happened before. So therefore, there are many concerns, and whether or not you know, how do we create a structure that is sustainable, how do you create a structure in the interests of the investment professional that is aligned to the investors or investor at that point in time single investor.

So then, after many rounds of discussion, it appears that the best way is to create a GP LP structure, which is the standard formula from the venture capital industry, or you must give each of the team members the ability to put their own money into the fund, and then align their interests with their LP. And if they’re able to do that, and convince more people to put capital with us, naturally, at the mercy of vertex holding they will be able to similarly match that amount and not recognize that there’s a validation going on, by the other people. And so that created that structure that continues for a long time.

Elise Tan: Thank you for sharing that. Kee Lock, you know, childhood is something that successful people sometimes don’t talk a lot about. So I want to actually go there because I want to know better about you because I think that childhood has been something that definitely shaped you into someone you are today. Would you like to share a bit about childhood?

Kee Lock Chua: Well, I guess, growing up, you know, one of the things I always remember is the Sunday my father, I mean, just as a background, my father, and my uncle came from this small island called Kinman, or Golden Gate or Golden Doors. It is the smallest island in Taiwan. And they came to Singapore in the 50s wanting to have a better life for themselves. And then of course, my father married my mother and gave birth to three of my older sisters, myself, and my younger brother, and as a businessman, in those days, they essentially what is known as nine nine six starting from 9 am in the morning, work until 9 pm every day for six days a week, and the only rest is Sunday and for Sunday, even though rest day, as a businessman that you are always worried about your business.

So we have to wake up on Sunday, and we will have brunch or lunch, and then early lunch, and after lunch, my three older sisters, of course, they have their own activities. And my younger brother and I will follow my father and my mother. And my mother will bring my younger brother to go and visit my aunties and spend time with them. And I, being the oldest son and up with my father, who he will bring me to his office on those days, was in the street. Today, all these buildings are conservation houses.

And the businessman, essentially, the arrangement is that the most senior guys are sitting inside the building, and tables are lined up in front of them. And right in front at the doorsteps, there will be samples of products because they’re in the trading business, commodity trading business, there are samples of corn, samples of green beans, or whatever or some rice that they were selling there’ll be all outside them. And then it’s even on Sunday afternoon, you will be seeing people either walk in or people making appointments to come in to have a discussion. And then I was a young boy, at the time, I’ll be sitting on this table at the end of the room, you know, writing or reading or whatever I was doing, and I was watching him talking to people in front at the entrance, sometimes 30 minutes, sometimes 45 minutes, and discussing whatever matters of interests.

And at the end of it is the interesting part. He will then after finishing that discussion, or conversation with the people that he spoke to, I would see him standing, most of the time, he found out that his table giving a summary of his discussion with the people he just met and ultimately boils down to assessing the situation he’ll be describing to his staff or his colleagues that what were the discussion and his assessment of the person that he just met, you know, be his reading of the body language or his reading of the situation, he’ll be giving a conclusion why he thinks this is for real, or this is just a bunch of I guess, waste of time. And what sort of learning for me is, is about reading people and assessing situations and that is something still so important today.

Elise Tan: Now, I know why you’re so good at analysing people. And I love to hear how your father has actually been such a great teacher to his staff, spending the time to reassess the situation to them so they had to learn over time. And I realised that at Vertex, we often do that weekly or at our Wednesday meetings as well. And I really enjoy all the learnings that our senior partners so kindly share with us. And that is something we can’t learn from reading books, or just going online to search about it. So this is really valuable. And I’m still curious about your family life, your private life, you might share with us and because I think, one of the most difficult things about being someone who is high in a position will be quite the hard truth, you know, about balancing work and family.

Kee Lock Chua: I guess as you move out of the hierarchy, the hardest thing as an Executive is not to bring your work back home. And you will have problems in the office and quite often than not, it’s very difficult for many of us, including myself, not to bring that part of the work home and you can’t help it. So in order for you not to create problems at home, you need to have an understanding spouse and a wife, who understand that they appreciate what you’re going through and then be able to assess that you go into a difficult day not to make it harder.

So I was fortunate that my wife actually we were married for many years understood, many of these things that I sometimes encountered. And when I came home, she somehow was able to figure out that today must be a tough day. She discovered that, and she will try to bring out some lighter topics and sometimes stories to tell me so that sort of distract me from whatever was bothering me in the office and so that helps. So, I think, you know, as they always say in front of every successful man there is a very important percentage which is their wife or their spouse at home and I think this is important.

Elise Tan: Thank you for sharing that. I hear of people who say compartmentalising is a good team. But you agree with that. Do you have other secrets to share for balancing family and work well?

Kee Lock Chua: So I guess compartmentalization is important. But I don’t think many of us can.

Elise Tan: It’s not foolproof.

Kee Lock Chua: It’s not foolproof, I don’t think most of us can do this well, and we are human I mean, we are emotional, and we will let things affect you. And however we try not to do this, still somehow will be affected, you will be down, you’ll be a bit more, less talkative, and you’ll be distracted with some of the things that you’re trying to work on. So I think while you try to compartmentalise it better, I think it’s never easy. I think that there is never an easy thing to do.

Elise Tan: Yeah, when I see people when they feel certain emotions, be able to hold it in, be able to channel that out later, I see that person being someone who has cultivated himself, well, and it is not easy. It’s all about, you know, really a journey of personal growth. So Kee Lock, just now you also mentioned that behind every successful person, there will be a supportive spouse. So these days, I think that there’s a lot of discussion about diversity, equality. And specifically for our South Asian India fans, we have quite a few female founders who’ve been back. So we have, by now, back at least nearly 20 female founders. So can I also understand from you what you think female founders need internal support so that you will be able to do well?

Kee Lock Chua: I guess, the most important part of it is, a lot of times, for every successful founder, it’s actually a mentor. I think, fortunately, or unfortunately, men have a lot more pool of mentors available. So that naturally gives them a lot of better opportunities. So I think what it’s important for female founders is, especially those successful ones to make themselves available to help some of the younger emerging female founders, be helpful to them because they need important coaching, like what you mentioned, a lot of things we can really learn from school, is a lot of times the experience is important that when you have a problem, you’re able to go to somebody a mentor that you trust, then they’re going to judge you, you’re able to share what was troubling you, why are the things that you’re trying to solve and this mentor, he or she is able to say, okay, you know, this is the problem, this is what we have done, and may not necessarily be the correct answers, but at least you have somebody to talk to the points.

So I think, the reason why we’ve seen a lot more successful male founders so far is I think that network of mentorship has been one of the important factors. And I hope that over time, with more female founders becoming more successful, they are able to more actively help some of the younger female founders or co-founders, which will create a bigger pool of successful female entrepreneurs over time.

Elise Tan: I think that you’re probably right, and I see that our colleagues have been very active in terms of mentoring females. And this also helped that there are quite a few female investors in our team as well because I imagine that female founders will feel more relaxed reaching out to someone of the same gender who understands their communication style. So I think that’s important for female founders who are successful to come back and really help others to succeed. Before we end, I want to ask you, what is one quote that you love, that you want us to know?

Kee Lock Chua: I think I may have shared with you that many years ago, I was invited to give a commencement speech in the National University of Singapore and US Graduation and at the end of my speech, I quoted this poet I think, French poet, who, in one simple sentence sort of summarises many things that we have been discussing today. And it goes something like this: to accomplish great things you must not only act but also do, not only plan but also believe. So I think this summarises everything that we are trying to do and we are trying to achieve.

Guest Profile: Chua Kee Lock

Chua Kee Lock is CEO of Vertex Holdings and concurrently Managing Partner of Vertex Ventures Southeast Asia & India as well as Chairman of Vertex Growth Fund.

Prior to this, he held senior positions in Biosensors International Group, Ltd., a developer/manufacturer of medical devices; Walden International, a US-headquartered venture capital firm; NatSteel Ltd., a Singapore industrial products company, and Intraco Ltd., a Singapore-listed trading/distribution company. Mr. Chua co-founded MediaRing, a provider of voice-over-internet, which was later listed on Singapore’s stock exchange.

Mr. Chua was appointed by the Singapore Government as a Non-Resident Ambassador to the Republic of Cuba and the Republic of Panama in 2020. He currently serves on the boards of several companies, including Yongmao and Credit Bureau Asia, which are publicly listed.

Mr. Chua graduated with a Mechanical Engineering degree from the University of Wisconsin and an M.Sc. degree from Stanford University.