XA Podcast 016 | XA Network And The South East Asia Angel Investing Landscape

What do successful angel investors look for in South East Asian startups? What are they advising their investees to do in the current market environment? And how does an influential angel network like the XA Network help with business growth and sustainability?

Find out in this episode with Alap Bharadwaj (Director, Google), Tony Zameczkowski (VP, Netflix), and Belinda Ong (MD, XA Network), members of the exec committee of the XA Network, SE Asia’s premier angel investing network.

They are interviewed by Bernard Leong, founder of the Analyse Asia podcast and an XA member himself. This episode first appeared on Analyse Asia and is being cross-posted on the XA Podcast.

Discussion Topics: XA Network and the South East Asia Angel Investing Landscape

• Role of an angel investor
• What angel investors look for
• Early-stage startup valuation considerations
• Clarity about the business problem
• About the XA Network
• How the XA Network can help startups
• South East Asia’s startup ecosystem
• Key trends in the post-pandemic world
• The crypto wave in Southeast Asia

Transcript: XA Network and the South East Asia Angel Investing Landscape

Bernard Leong: Welcome to Analyse Asia, the premier podcast dedicated to dissecting the pulse of business, technology, and media in Asia. I’m Bernard Leong and in the Southeast Asia ecosystem, the rise of Angel Groups provided start-ups not just capital, but expertise and experience. And XA Network which I’m part of full disclosure is a significant player in this space given there is a key aggregator of key tech executives, entrepreneurs, and operators in their region.

With me today, I have three guests Alap Bharadwaj, Tony Zameczkowski, and Belinda Ong from the XA Network to have a chat on the current Angel Investing landscape and where we are headed given the recent downturn in the stock market. And crypto went through the market as well. Alap, Tony, and Belinda are welcome to the show.

Belinda Ong: Thank you.

Tony Zameczkowski: Thank you for having us Bernard.

Bernard Leong: So before we start, let’s just do a quick introduction of yourself. And what are you currently doing in your professional lives and within the XA Network?

Belinda Ong: So my name is Belinda Ong, I’m the Managing Director here at the XA Network. What that means is that I’m basically in charge of well, everything from investments to operations, and I’ve been part of the XA Network for three, almost four years now. Thank you so much for having us.

Alap Bharadwaj: Hi, everyone. My name is Alap. I work at Google, I have now spent the better part of the last 10 years with the organisation and currently, I lead our innovation and creative go-to market efforts across the Asia Pacific. But alongside that, I’ve been working with Belinda and Tony as part of the XA Network alongside Bernard as well. I find that the Southeast Asia region is one of the most compelling internet ecosystems globally. And therefore I’m a very active Angel investor, I look forward to working with start-ups and backing them both with capital but with expertise, and advice as well. So that’s a bit about me,

Bernard Leong: Tony, how about you then?

Tony Zameczkowski: Hi, my name is Tony Zameczkowski, and I’m the VP of Business Development at Netflix for the Asia Pacific region. I have been with Netflix for about six years. And previously I was with Google for nine years. I’ve also been an active Angel investor for many years and am very excited about this region, I strongly believe it’s at an inflection point now.

Bernard Leong: So I’m going to go straight into the topic. So first, to baseline, our audience, I want to start off by getting a definition of what constitutes an Angel investor and their impact within the start-up ecosystem. Maybe Alap or Tony you want to take it out first.

Tony Zameczkowski: Happy, to take it, Bernard. I mean, it’s very simple Angel investor is a high net-worth individual who is investing typically in early-stage companies, and most of the time tech companies and the added value he or she is bringing to the founder, typically an Angel investor at the carrier and strong expertise and that can be leveraged with the founder.

Alap Bharadwaj: What I would add to that is, and I think Tony hit upon it is that every angel investor’s impact has to be disproportionate in nature. Yeah, often the smallest investors within the start-up, but in the early days, are the ones that are helping start-ups unlock or get to their next level, with things such as expertise, connections, and the ability to see around the corner that maybe start-up and product builders who are deep in their work might not be able to see. So I think that’s one of the things that end up becoming a very important unifying theme for an angel investor, which is that their impact, by definition, needs to be disproportionate.

Bernard Leong: So I’m very curious to ask. Maybe I also include Belinda as well, given that she also started off as an angel investor within a network, how did all of you decide to become angel investors?

Alap Bharadwaj: Yeah, for sure. My route is quite interesting. Now prior to Google, I spent a significant amount of time in my career in investment banking. And I came across the wonderful world of start-ups because of their capital raising needs working with the venture capital ecosystem, and private equity players as well. But for me, it became a reality when in 2016, I had an opportunity with Google to co-author and publish the Google Temasek Economy 2025 report.

If you haven’t read it, it’s a report by Google Temasek and is now being published every single year about the strength of the digital economy in Southeast Asia. And back in 2016, I had a very simple question for myself once I wrote the report, which was that look, if I believe in the region to such an extent that I’ve done this piece of work, why am I not backing the people who make the region so exciting? The founders, the builders. And so I started angel investing back in 2016. And it just came about because I had a bit of self-realisation that I deeply love this region, and that I wanted to partner with people who were helping build a better future for the region.

Bernard Leong: How about you Tony?

Tony Zameczkowski: I started when I was living in Hong Kong back in 2013. And it was almost by accident, I had lunch with one of my former colleagues. And he told me to look, I’m running an angel investment group in China, and why don’t you come and join us and start angel investing at that time, I had no idea whether or not I would enjoy investing. But I started and made a number of mistakes. Of course, it’s part of the learning curve and I really enjoy it.

Obviously, the start-up ecosystem in this part of the world was not very mature. So after a few years, I paused my Angel investing activities, and I restarted when I moved to Singapore, and actually, I realised that an ecosystem was forming there with very established VCs coming and with more angels coming, with the quality of founders becoming better and since then, I never stopped. So I’ve been investing significantly in Southeast Asia now.

Bernard Leong: Belinda how about you, what’s your journey like becoming an angel investor?

Belinda Ong: Sure, so I’ve been in the direct investment space for the better part of a decade right now, I started off in an institutional fund followed by a family office, looking at everything from the Angel stage up to $100 million growth equity cheques, but I would say talking to founders and Angel investors day in and day out, I come to realise that it’s a very different looking at later stage versus an early stage company. And I get the most energised talking to founders especially when I find that product market founder fits. And it’s really, really difficult, I guess when talking to these really high-quality founders to not get excited and to also back them.

Bernard Leong: So how has angel investing evolved in maybe Southeast Asia, or even Asia Pacific as a region? Tony, because you started relatively early about 2013. And you look at different ecosystems, whether it’s Hong Kong or Singapore for different regions, what are your thoughts in terms of their evolution of them?

Tony Zameczkowski: Angel investing has significantly evolved in the past few years, initially, it was something that was kind of amateurish, but now, it’s really professionalised with more establish investment networks such as the XA Network, but also some Scout Programs, where basically you have some established VC firm, that is working with angels to source deals. So there are a number of Scott programs in this region from Sequoia Capital, Sezon Capital, and Monkseaton. So it’s really a recognition that angels are part of the ecosystem and can really provide value.

Bernard Leong: How about you Alap, how do you think about it, since the report that you do now is the annual report for Google and Temasek to have the report of about all the different things that’s happening in Southeast Asia is almost like the state of the internet, but for the Southeast Asia region itself?

Alap Bharadwaj: Yeah, I think it’s a true testament to the strength of this ecosystem that we have so many participants, as Tony mentioned. I believe that more participants, more points of view, and diversity of thought, are really the core key ingredients that move us from zero to one, one to hundred, and then beyond it. Now, Bernard, you know that we’ve had these five companies, six companies who have gone public, I think that in and of itself is a great indicator of the strength and towards the evolution that Tony mentioned.

But remember, all of those companies probably had angel investors at the start. And the thing that gives me the most confidence is that every major start-up that I meet these days, always builds a round of funding around both institutional investors and individual investors, because there’s a deeper appreciation for the fact that both of these players play a significant role. But they play different roles and both are needed.

So I think from an evolutionary standpoint, I feel very strongly about the fact that more participants, more diversity, and more evolution is always a good thing. So I’m even looking forward to what comes next. Because if we are to be the most dynamic Internet ecosystem in the world, we need to now start to create opportunities for younger folks to participate in Angel investing for certain communities that have historically been left out of angel investing to bring them in as well. And if we get there, I think we will be one of the healthiest ecosystems in the world.

Bernard Leong: So pretty curious now. And I think, as an angel investor, what are the indicators that you look for investing in a start because it’s so early at the stage and you are actually bearing a lot of the risks as well? I think a lot of people do not appreciate that most angel investors actually bear a lot of risk by being so early in investing in companies as such.

Tony Zameczkowski: Maybe I can take that I mean, typically an angel investor is investing at a very early stage sometime before product before any revenues. So you are left with basically assessing the founder and assessing the size of the market. The founder, I think probably the most important thing you need to get to know the founder, you need to see whether this founder has clarity of thought, resilience, but also storytelling skills and that is very important.

Because you want to be sure or to make sure that the founder has the ability to pivot if something goes wrong. You also want to be sure that the founder has storytelling skills so that he can raise capital and can effectively hire people. The other thing as well, that I’m looking at personally, in this part of the world is founders that are solving local challenges. So I believe that start-ups that are successful are start-ups that are solving challenges from Southeast Asia.

Bernard Leong: Alap, what about you then?

Alap Bharadwaj: Yeah, it’s very similar to what Tony mentioned, but I’ll start from scratch. For me, there’s an element around founder problem fit, that matters a great deal. And what I mean by that is, I think we’ve all heard of product market fit, what founder problem fit is, is this founder uniquely positioned to solve the problem that they’re going after. And oftentimes, the way you can see this, is this founder tried solving this problem before, has the founder really gone through what say Andreessen Horowitz, and the group over there calls the idea maze, have they chased down every single angle, and you get to know this when you spend time with founders.

The second thing that becomes very important to me is capability, we might say that there’s not much that has been built out at the early stage. But I always like to see a technical co-founder paired with a business co-founder. I think, when you have two technical co-founders or two business co-founders, I worry, that is an orange flag that sort of goes up for me. And I think there is a Darwinian survival of the fittest sort of angle to it, when a business person and a product or an engineering background person kind of come together, they understand that the other person fills gaps that they have, they’re willing to trust each other, and they’re willing to go from there and build something that’ll change the world.

The last thing that I really look for, to Tony’s point, is on solving local problems yes, if they’re building a business in Southeast Asia, they must be working on a Southeast Asia-related opportunity. But even more, so I would say that they need to be working on an opportunity that has a large addressable market.

The reason for this is it gives you more short-term goals, and thereby probably reduces your risk going forward if there is any such thing, and I say this with the caveat that, as you rightly said, it is a very, very risky thing to do. But you have to try and pick out a few things that will try and diminish the risk as the arrow of time moves forward.

Bernard Leong: If I reverse the question, what will be the red flags you will look for as well?

Tony Zameczkowski: There are a few, one of them is part-time founders, founders that are not committed they are basically doing two things at the same time, don’t have the focus. The second piece is I’m trying to understand whether their location is a competitive advantage or liability. So if a founder is based in Singapore, and trying to build a global company, I believe it would be better off in another location where basically you have better access to data and better access to capital.

On the flip side, if he or she is based in Singapore, it’s a great location to solve Southeast Asia problems. So it has to be a competitive advantage.

And the third piece, I try to look at founders that are not too diluted at the early stage, because you want to make sure that when you invest that the founders are incentivized to give everything they have to the start-up, so I’m looking quite closely at a cap table when investing.

Bernard Leong: Alap.

Alap Bharadwaj: I think I mentioned it before, I like to see a mix of co-founders with different skill sets. I think if that’s not the case, that is a red flag to me. The second thing is around, I want founders to have thought of their problem and solution set to such a degree that they’re able to paint a vision and that vision needs to have stepping stones to it. So if the vision is sort of all over the place, and the route to that vision is also all over the place that’s a bit of a red flag to me.

Finally, I really want to say that when founders are unable to exhibit a level of hunger and a level of self-awareness, these two things are critical for me. So when these two don’t come together if it’s only hunger, it’s a problem, if it’s only self-awareness, but that sort of endeavor is not present in how they’re going to market, how they’re executing, I think that becomes a red flag. So it’s in this zone, Bernard. So that’s kind of how I think about it.

Bernard Leong: So I have this question that I want you all to comment on, what is the mental model for valuation when it comes to investing in early-stage start-ups as angel investors? Maybe I’ll start with Belinda first, what’s your mental model?

Belinda Ong: I think the model depends if it’s a Web 2 versus a Web 3 company, if it’s a Web 2 company, of course, there’s always revenue multiples they can look at, and there’s some comparable. But if it’s a Web 3, one, then, and if there are tokens involved, then you have to start considering what’s the demand and supply like in an economy.

So that’s a very, very different animal. One more thing to consider as well is to be cognizant of the market conditions. So the numbers that we’ve seen the valuations we’ve seen in the past couple of years are no longer going to apply in the next few months, especially. So I guess the only thing I would say is just be cognizant of that, as a founder when discussing valuations.

Bernard Leong: Alap, what about you, how do you think about valuations as an angel investor?

Alap Bharadwaj: Yeah, So if I sort of try and unpack your question, Bernard, what I’m guessing you’re actually getting after is the fact that you have a company that has barely a product, no revenues, almost no traction. How do you value an entity of that sort? And so in my estimation, I think this exercise or being too rigid around a mental model can actually trip angel investors up. What I often look at is, how much are you raising?

Well, that is a fixed and finite number. And from there, you can back out what percentage of the founder would like to dilute, and what is a healthy dilution level. And from there, you can back out of the evaluation. That’s kind of how I look at it. But I will also say something controversial here. Belinda has made a great point that market conditions are very important. But I also want to say that my personal investing strategy is that I am fairly valuation insensitive. Because there is a power law, when it comes to Angel investing or VC investing, one company will return the same amount of proceeds as, say, the next 40 companies.

The biggest myth is the false negative, the company that actually becomes a unicorn. So being very fussed about things like super early-stage valuations is probably the wrong way to look at it. What you should be optimising for is one of the best founders that I can back, even if I have to pay a little bit more to back those founders. And I think that’s something that’s stood me in great stead over my angel investing career. And it’s a slightly different way to think about how to think about valuation I guess,

Bernard Leong: Tony, what about you? What do you think about it?

Tony Zameczkowski: I would definitely echo what Alap, just said, the only thing I would add is of course, you can justify a higher valuation, when you already have a product, you have a team, you have a CTO, you demonstrate a beginning of attraction, that can justify a higher valuation. But yeah, if you have none of that, what I’ve been looking at is also the track record of the founder, whether or not those founders are repeat founders, and whether they had success in the past that can also justify a higher valuation.

And of course, you need to look at the market condition and whether or not there is a lot of competition for that particular investment. And that can also drive the valuation up. And to add up the spine, you have to be pragmatic. If you truly believe that this is the right team to solve that particular problem at some point, the valuation is less important if you want to be part of their journey, regardless of the valuation. Of course, it has to be reasonable. But I think what is important is backing the right founder to solve the right problems.

Bernard Leong: This is pretty aligned with the point that Belinda made just now about market conditions. And probably now I think we’re up to three valuations that are going to be down to ground level because of the recent downturn. And given that Y Combinator and Sequoia Capital sent out the memos to founders, there will be a liquidity crunch, you better start having runways of 12 to 24 months. Now, let me ask you this, if XA were to send a memo, or you write a memo to your start-ups like what I do, which I put in a three-pointer and send it out, what would that memo look like to the Southeast Asian founders?

Belinda Ong: Yeah, sure. I think I’ll focus on two. As a founder, you need to have clarity on the problem you’re trying to solve. And the second point is the resources that you are applying to solve that problem. So for clarity, focus on your monetization model, ensure that you have a sustainable business, and get to product market fit if you don’t already have it as quickly as possible, right, stop running expensive experiments. It doesn’t make sense, resources are finite so definitely be super resourceful. Revisit your budget, revisit your hiring plans, and ensure you have enough runway to survive. And if not have those really honest conversations, especially if you’re early backers, because they can help. They can help in many different ways.

Bernard Leong: Tony, what would you write, let’s say you’ve given a chance to write a memo to start-ups that you invested in.

Tony Zameczkowski: If I have to go to Winston Churchill, he said that never waste a good crisis. And I feel that a crisis, like what we are going through now, is a great opportunity for founders to be laser-focused on solving the right problems, being scrappy, and also those kinds of crises are driving innovation. Because when there is less capital available, and you need to innovate, you need to find opportunities to be highly efficient. So that’s why we’re back in 2008 and 2009 you saw great companies emerging from those crises. Companies like Uber or Airbnb emerged right after the credit crunch. So I honestly feel it’s a great opportunity. Of course, the founder should be mindful that it’s a difficult environment. But I feel that an amazing company will emerge from that.

Bernard Leong: So Alap, what was your memo to your start-up founders now?

Alap Bharadwaj: Yeah, I think it’s going to be a mix of what Belinda and Tony have said, I think they’ve made excellent points. The way I would just put it across is I think, Y Combinator, Paul Graham, they have this very pithy way of putting it across to get to default alive. If you’re wondering what default alive or default dead means I would Google this, it’s one of the best things you’ll read about start-up investing and start-ups in general. So our founders get to default alive.

The second is to Belinda’s point around, really lasering in being extremely focused on your core, this is the time where you put not more wood behind fewer arrows, you have one arrow and you put all the wood behind that one arrow and that’s the path you take on. I think if this can be done, you will find that there are investors who have liquidity in this market, there’s a ton of capital that got raised over the last four or five years, and clarity, alongside good unit economics being default alive rounds will get raised, not to worry, rounds will get raised.

So I’m quietly confident that that will be the state of affairs going forward. But the age of wasteful expenditure to maybe Belinda’s point around unexpansive experiments, I think that is probably well and truly behind us, it will return. And the last little point I’ll make Bernard, is that this is not a bug. This is a feature of economies, economies inflate and deflate. We are in that period where it’s going to be a little tough. We need to go through this period so that we all emerge to form enduring companies, to form companies that actually change the world.

So I love the way Tony put it across, which was never a waste of a good crisis. This is that crucible moment. Sequoia has just recently put out the deck which calls it the very same and it’s time to build. I think that’s the way to look at it.

Bernard Leong: So I’m gonna pivot a little and just talk about the XA Network in general, maybe I’ll just go with Belinda, given that you have been doing the day-in-day-out for the network itself. Probably the first thing I also understand is that XA originated from being Googlers first, before being open to everyone else in the tech ecosystem to join. Can you talk a little bit about the rationale of that, as well?

Belinda Ong: Sure. I’m happy to talk about what inspired the creation of the XA Network. So every founding member that came together to form XA, they all have a different reason for joining. But the common thread across all of them is that we recognize that there was a lot of capital sloshing around in the Southeast Asian region, but a lack of what we like to call smart capital, which is that mix of highly relevant network and expertise that can help unlock the next level of growth for start-ups.

So we’ve already seen this power of Smart Capital and other start-up hubs across the world, the most famous example is probably the PayPal mafia in the Silicon Valley region. And I think what we’ve come to realise is that it’s a natural artifact as a start-up hub matures. So like the senior leaders that have been in the region for so long, they’re unlikely to leave. But they want to do something purposeful, and help the next generation of founders and these senior leaders, these individuals, they have successful track records.

And so they’re uniquely qualified to do that. And in fact, like, talking to founders in this part of the world, and explaining how we all came together, and the origin resonated very strongly with these founders. And they’ve actually set aside allocations specifically because they recognize the type of value that we can bring as the XA Network.

Bernard Leong: I think one interesting question I get sometimes from people via emails via LinkedIn messages is, how do you get into the XA Network? What are the criteria to evaluate? Maybe you can enlighten us on that Belinda.

Belinda Ong: Sure, no problem we get this all the time. So our membership criteria are actually on our website. But at a very high level two things. One is, of course, to be an accredited investor and this follows the Singapore definition. And the second is that they need to be a tech leader because we are tech leaders helping the ecosystem and how we define a tech leader is either they are a senior executive from a tech company that has more than a billion-dollar valuation, or they are a founder that has created a company with more than $100 million in enterprise value.

Apart from these quantitative type criteria, we also try to assess whether or not this prospective member will be able to contribute to XA in terms of growing the number of quality founders and members that we welcome into the community because we really want to support and engage the ecosystem.

Bernard Leong: So fast forward to that, can you just highlight a little bit about some of the key achievements for the XA Network itself?

Belinda Ong: So right now we have about 140 members spread across the Southeast Asian region. This gives us a great advantage in terms of member and founder sourcing because it gives us a local boots-on-the-ground understanding and the founders really appreciate this when they approach our members for help and advice. On the founder side, we’re backed by more than 120 founders from almost 60 companies. And these companies range from FinTech to e-commerce, even Web 3 and alternative protein companies.

40% of the companies that were backed to date have actually gone on to raise more than half a billion dollars in follow-on capital from funds such as insight partners, Tiger Global, Sequoia, and many other top-tier funds. I guess one other thing I also wanted to highlight is that we’ve also launched a collaboration with Dash Await. It’s a matching program, which enables us to further increase the amount that we can invest and back to founders that our members believe in.

Bernard Leong: Is their investment thesis within the XA Network?

Belinda Ong: So I think it’s very similar to the thesis that Tony and Alap mentioned earlier in the call, which is we’re backing founders solving Southeast Asian-specific challenges. And we’re really interested to understand how establishing the business in this part of the world is part of the company’s strategy and competitiveness.

So for example, I wouldn’t actually highlight specific verticals except say that we are very interested in technology companies or technology-enabled companies. But we’re interested in start-ups focusing on digitising SMEs, because SMEs are the backbone of the Southeast Asian economy, and they represent 60% of the GDP in this region. So that’s what I would say in terms of verticals and segments.

Bernard Leong: So what was the process like for start-ups to engage the network and seek investment from the angels there? There’s actually a process.

Belinda Ong: Yes, there is a process and we get this question all the time. So we’ve actually put it on our website on the how to partner with us page, but at a very high level just to help recap that once we receive a pitch deck from founders looking to raise more members, the deck actually goes to our review committee, which comprises of some of the most active members, some who are, of course, senior tech leaders, others who have actually run venture capital funds before.

And if it goes through, then we actually set up two separate chats with members of the review committee. And if those chats also go through, then we would set up a one-hour Ask me anything call between the founders, as well as the members that are keen to partner with them. So this whole process, really only asking for three hours from the founder is extremely streamlined because we really, really value and I’m very conscious of how time-strapped a lot of founders are. So we want to be as founder friendly as possible.

Bernard Leong: Maybe this is the last question relating to the network itself. How do you help the founders and start-ups once the angel invests in them?

Belinda Ong: We get this question all the time. It can range right from very high-level and strategic to something very tactical. At the end of the day, we want to help the founders as much as possible at that particular point of their growth. So for strategic help, what I’ve heard from founders is that some members have actually sat down for hours-long workshops with them, to discuss how to prioritise markets to expand to maybe even talk through GTLM pricing and how it needs to be localised from country to country, which is really important.

For tactical help, some examples that I’ve heard, for example, a portfolio company had issues with fraudulent reviews and one of the members actually knew the head of that particular app store. So call them up, and we got that resolved within 24 hours. The great thing about the network really is that our members have a wide variety of expertise. They come from all sorts of different functions. So if I were to categorise the types of functions that our members can help with, it would include things like business development, talent acquisition, product development, fundraising, policy regulation and governance, engineering consulting, and so on and so forth.

Bernard Leong: I just want to read back the composition back from XA Network. And also one thing, because we’re all Angels as part of this network, as well and so I wanted to hear each one of you talk about some of the interesting start-ups that you have invested within a network maybe Alap I get you back to talk a little bit about, which are the most interesting start-ups that you have invested in?

Alap Bharadwaj: Yeah, for sure. And this is the part I always love discussing. Look before I say, I think it’s just a real privilege that these founders allowed me to invest, I always have to really acknowledge that they choose us. It’s not that we choose them. And just to be on this journey to see this sort of hard work, but also technical prowess that’s been deployed is such a deep privilege. And let me start with one of the points that Belinda made about the SME ecosystem in Southeast Asia. We are in Southeast Asia, and we are one of the most productive ecosystems right to Belinda Point, over 60% of the GDP in our region is coming from SMEs.

So what becomes very important is building a software stack that helps digitise their operations, that helps them step into this new world that most of us in tech are fairly familiar with, but that they’re just taking their first few steps on. And so here is one of my most, I would say the investment I’m really proud of is a company that was formerly known as Bookoo Cas, that today is known as Lumo. This, by the way, is a company that has multiple products, but it’s seeing multiple percentage points of Indonesia’s GDP actually flowing through its apps in terms of throughput.

They make a wonderful bookkeeping product called BookoCas, they make a phenomenal Shopify product for SMEs called Lumo Shop. And just to see the product management and UX expertise that sort of went into solving the problems for wiring owners, SME owners, it’s been one of the most heartening things for me. Now, this theme continues for me, I’ll give you another example. One of my favourite investments is in a company called Autoflex. And they very similarly are also trying to digitise the automotive aftermarket for auto workshops in Indonesia.

Again, you can imagine that this is a secular theme that can exist across multiple verticals. And so finally, I’ll probably just end by saying that the last company I’ll mention right now, is focused on spend management for SMEs. And it’s a company called Spenmo, that’s based out of Singapore, but it’s targeting the entire Southeast Asia and probably even beyond. It’s a company that is allowing SMEs to access financial services and spend management through digital cards, debit cards, and so on and so forth.

And seeing some of those NPS scores from the SMEs is really sort of what makes our day here. So just looking at each of those three, it is very clear in terms of solving for Southeast Asia, solving for opportunities in this vast and diverse region. And just being part of these journeys is one of the things that gives me some of the most satisfaction when it comes to my personal life.

Bernard Leong: Tony, how about you? What are the most interesting start-ups that you have invested in?

Tony Zameczkowski: I mean, all of them are interesting. But there are, I’ll just mention a couple of them. One that comes to mind, which actually emerged during COVID is a company named Intellect. So this company is essentially a mental health start-up based out of Singapore and created by a founder, who is actually Singaporean. And we came out from NOC, and basically, his thesis is that in Asia, and particularly in Southeast Asia, people are facing a lot of issues with mental health. And some of that has been triggered by COVID, and they definitely need help, but they are not necessarily taking the first step in order to see someone.

So basically, using an app is lowering the barrier in order to get some help and assistance from someone on your mental health. This company has been very successful, and they attracted millions of users. And they’ve been backed by top venture capital firms. Y Combinator has been backing them and has capital insignia. So very proud of what this company has achieved and particularly trying to solve a big problem that we are facing. The second one I like is a company that is focusing on parenting e-commerce. It’s a company called Adama, based out of the Philippines, and now doing extremely well. They’re also branching out directly to customers by launching their own brand. And their attraction has been truly amazing, but of course, has been accelerated with COVID.

Because more and more people are buying products online, they’re doing extremely well. And I’ve been quite excited to see more interesting start-ups coming out of the Philippines because when I started investing in Southeast Asia, most of the start-ups came out of Singapore and Indonesia. So now more from the Philippines and more from Vietnam, as well. And hopefully more from Thailand and other countries as well. So I’m particularly excited about that.

Bernard Leong: Belinda, what about you? What are the most interesting ones?

Belinda Ong: It’s good to have the two super angels in this conversation, highlighting those companies.

Bernard Leong: I’m going to zoom out of the region. And I think this is something that you all have seen a lot of start-ups in the country, what are your perspectives on the Southeast Asia ecosystem, specifically when it comes to thinking about geographic expansion, and also different macroeconomic conditions? I mean, Singapore, I would consider it an advanced market versus the emerging markets around or maybe if I think of, say, Cambodia or even __ (36:00 inaudible) is like a frontier market. How do you all think about the entire region when it comes to thinking about things like market expansion?

Tony Zameczkowski: Southeast Asia, as I said, is at an inflection point, the growth is not coming only from Singapore and Indonesia. But as I said before, I’m very excited about the start-up ecosystem in the Philippines. So I mentioned that the Adama which is doing really well invested also in a company called Peddler, which is similar to Bookoo Cas that I’ve mentioned, is doing bookkeeping for the sari-sari store in the Philippines.

In Vietnam, I saw so significant. I mean, quite an interesting start-up there. One of them that I backed last year is a start-up name Inphenol. It’s essentially the equivalent of you know, and our stash away for Vietnam. And I’ve been quite amazed by the innovation in Vietnam, and particularly the talent you can find in that market, specifically when it comes to engineers. So I’m very, very, very bullish about Southeast Asia overall, and Vietnam, specifically, given the talent you can find from there in terms of engineering.

Bernard Leong: And Alap, what do you think about the markets within the region itself?

Alap Bharadwaj: Yeah, so I think Bernard two points from me, I think the very first is, I mean, you’ll remember right back, say four or five years ago, when we were investing, I think one of the things that we would probably really stick to was either a start-up is coming out of Singapore, and is doing a regional Southeast Asia strategy, or a start-up is coming out of Indonesia and is doing an Indonesia only strategy.

But I think the delightful thing over the last, say, 24 months has been to Tony’s point, we’ve got these individual countries that have stepped up and have exhibited that the total addressable market is large is growing, and that providing a Robin Hood for Vietnam is going to be profitable and thereby Tony’s investment in Inphenol. And so I think that has been one major plus point if you look at expansion. Now what I’d love to underline is a subtext there, which is no longer can you take regional expansion for granted.

If you do not understand local dynamics, if you do not have a deep local connection to each market, you’re expanding into, forget about it, the local competitors are phenomenal. And they will eat you for breakfast. It’s not going to be easy if you just feel like I’m going to start off in Singapore, and I’m going to be able to launch in Vietnam and the Philippines and Indonesia and Malaysia, and Thailand it is just not going to happen, folks, the local competitors are already there, and they’re building. So the second point that I often end up thinking about is talent, especially engineering talent. And I think one thing that we all know is that engineering talent in Southeast Asia is hard to come by.

It’s already been snapped up by most of the large unicorns or the larger companies. But I’ve been finding a very interesting dynamic, which I think will help with expansion as well, which is, while engineering talent can be offshore, product management talent can be onshore. So what I love is when you’re building for Indonesia, if you have PMs, who are Indonesian, and who are on the ground, but you might have a development team that is based out of Europe, or based out of Africa, or based out of India, that is sweet talent, software engineering talent that can then help support.

And I think this combination of offshore engineering talent, which is high quality, paired with onshore PM talent that really knows their market back and front, I think is going to be a really good recipe for expansion going forward. So these are the couple of points that I’d like to make on this one.

Bernard Leong: I’m pretty curious now, given that we are now moved out, I call it the post-pandemic world what are the key trends that you have now observed in the market that will give you some indication of what is this going to evolve towards? Any thoughts on that?

Alap Bharadwaj: Sure. So I’d like to pick up on one theme that I think is fairly unifying, and that’s financial inclusion. And I love sharing the stat because it really is indicative of how we need to think about financial inclusion going forward in Southeast Asia, especially as the global youth, Southeast Asian youth sort of come into the picture. In Indonesia, the all-time buyers of stocks, equity, all time, is just about 3 million people.

Meanwhile, the all-time buyers for cryptocurrency are in the 10 to 11 million double-digit million range, we are talking 4X over what we have, in say a more traditional sense. So financial inclusion in Southeast Asia in the next 10 years is going to look very different from financial inclusion in the United States of America, or even financial inclusion in India.

So my encouragement is that when we have these amazing FinTech businesses that are sort of getting built out, please keep in mind that the sands are shifting, they probably already have shifted. And you need to now skate to where the puck is going, not to where it’s been. So I think for me, that’s one thing that I’d really love to focus on right now, which is how financial inclusion is probably changing for Southeast Asia.

Bernard Leong: There’s a pretty good report that just came out by the World Bank on Web 3, and crypto. And one important data point that actually reinforces is that 60% of cryptocurrency owners are actually from the emerging markets and Southeast Asia is actually the top three markets.

Alap Bharadwaj: Yep. If you look at meta masks active wallet holders, I mean, Bernard was better than me. But in the top 10, you’ve got five of them are from Southeast Asia, and five Southeast Asian countries are in the top 10. So it’s really changing. And I think we have to think in these new paradigms.

Bernard Leong: Tony, what about you? What is going to be most exciting for you?

Tony Zameczkowski: I’d like to double-click on what Alap said. Definitely, I mean, crypto is big in Southeast Asia and will continue to be big, but I see companies that are democratising crypto. And I think that’s a massive opportunity because you want crypto to become really, really massive and make sure that anyone can get access to it. So I’ve seen companies that are building products in order to make it simple to invest in crypto. And I think that is going to be a step change, a game changer when it comes to crypto investment in this part of the world. So I’ve been looking into that now.

Bernard Leong: I have one last question before we go to closing and that’s for Belinda, what does great look like for the XA Network?

Belinda Ong: So great for the XA network, would be when our members are able to partner with founders that can firstly create sustainable businesses. And second, have a positive impact on the communities that are so similar to what Tony and Alap mentioned that point about financial inclusion, or it could even be things like reducing carbon footprint. And third, if they can effectively utilise technology to multiply that impact on society as a whole. I think if we’re able to achieve this in each and every country across Southeast Asia, it’ll be great for the XA Network.

Bernard Leong: Belinda, Alap, and Tony many thanks for coming on the show. But in closing, I have two questions for you, my first question, is any recommendations that have inspired you recently, maybe I’ll start with Tony.

Tony Zameczkowski: Given that I’m from Netflix, I’m happy to share Netflix recommendations. I particularly enjoy watching a documentary called 14 Peaks. It’s about a Nepalese climber who is basically climbing the 14th highest peak in the world for more than 8000 meters. And I think it’s a great lesson of resilience. In terms of book recommendations, I am currently reading The Power Law, which is a great story of venture capital. And it’s been quite fascinating.

Bernard Leong: By Sebastian Mallaby, the power law, that’s the book you’re talking about.

Tony Zameczkowski: That’s right.

Bernard Leong: Yeah. And Tony, definitely, I’ll get you back to talk about Netflix at some point in time. Alap what about you?

Alap Bharadwaj: So from my side, a couple of book recommendations. Speaking of never wasting a good crisis, I think the required reading during this period is The Black Swan by Nassim Taleb and I would pair reading The Black Swan read Thinking Fast and Slow by Daniel Kahneman at the same time. The way this will short-circuit your brain into thinking differently is non-trivial, highly, highly recommend reading both of these books at the same time. So read one chapter of one and a chapter of the other.

The second recommendation is, this is a recommendation I’m giving with a lot of hope. I am a huge Star Wars fan and Star Wars nerd and so the recommendation I hope to put out into the universe, and hopefully it’s a great TV show is the Obi-Wan Kenobi show that’s about to launch on Disney Plus, so fingers crossed and everybody watch it. Hopefully, it’s great. Thank you.

Bernard Leong: So you are going to watch it today. I’m also a Star Wars fan too. Belinda, what are your recommendations?

Belinda Ong: Yes, in terms of book recommendations, what I would say will be great reading to better understand early-stage investing would be Secrets of Sand Hill Road by Scott Kupor, another great book I read recently was super founders by Ali. And since Tony is here, I guess I need to mention a Netflix show as well. The latest season of Love Death and Robots is out. I love speculative Sci-fi so that’s what I recently binged.

Bernard Leong: In the last question, how do my audience find you? I’ll start with Belinda. Is it on LinkedIn? I am trying to find your Twitter account.

Belinda Ong: No, I don’t have a Twitter account. But yes, you can find me on LinkedIn or feel free to email me as well. Belinda@XAnetwork.co.

Bernard Leong: Alap.

Alap Bharadwaj: Yeah, you can find me on Twitter at @alapjb and you can hit me up on LinkedIn as well.

Bernard Leong: Tony, how about you?

Tony Zameczkowski: So you can find me on LinkedIn, as well as by email Tony.zam@gmail.com.

Bernard Leong: You can find this podcast on any podcast platform. And just one important note, this particular episode will be a cross-post between both analyse Asia and also on the XA podcast. So you’re gonna get a double special on that. And actually, I will give a recommendation to check out the XA podcast because they have very, very good guests. Some of the guests I also want to interview. So Tony, Belinda, and Alap many thanks for coming on the show. And I look forward to speaking to you all soon.

Alap Bharadwaj: Thank you so much, Bernard, it was amazing.

Belinda Ong: Thank you for having us.