Antler VC Cast Episode 3 - Navigating through crisis with Nick Nash & Oliver Rippel

On episode 3 of the Asia VC Cast, we have with us Nick Nash and Oliver Rippel, the founding partners of Asia Partners

Asia Partners is a growth equity firm focusing on investments in technology and tech-enabled companies in Southeast Asia. Some of their portfolio companies are RedDoorz and Snapask.

We spoke about about the gap in the funding ecosystem, the steps businesses can take to navigate through these uncertain times, why this is still a good time for investors and a special breed of rhinos. 

This too shall pass

  • “It's Southeast Asia's moment. It may not feel like that right now today, with the crisis that's unfolding on a global basis, but if we take just a slightly wider view and a longer view and hopefully this too shall pass as so many crises do. These next 10 years are going to be and frankly, already are, a bit of a golden age for Southeast Asia.”
  • “We've noticed in other emerging markets, especially China and before that Korea and even before that Japan, years ago, that when economies get to roughly $3,500 to $7,000 of affluence per person per year, magical things happen. Discretionary spending starts to really rise in a non-linear way and really great platform companies get built.” - Nick Nash

The gap in the funding ecosystem

  • “The world that Nick and I come from, which is sort of like the larger PE as well as the strategic world, they tend to often write larger cheques. For them to become the lead investor in a Series C is a bit off their own thesis. So you have that interesting gap in the market that we described where we felt we can be useful to the ecosystem, given also some of the experience that we have had in terms of seeing first-hand scaling of companies at a pivotal moment when they go from several hundred people to several thousand people and the organization goes from three markets to six markets. It can also go from one business model to maybe a couple, up and down the platform stack. We both have a desire is to be useful and to play our part to help those companies scale.” - Oliver Rippel

Investing during a crisis

Jussi: “With the global pandemic, the hot topic on everyone's mind is investing in a time like this. So how do you look at investing at a time like this? Are you looking to deploy? Are you putting brakes on things? What's your philosophy right now and what will this crisis bring?

Nick Nash: “It's a little bit of what somebody once said which is, "the thing about a crisis is it can make two decades happen in two weeks." Consumer behavior changes. There's so many examples of that. The SARs crisis, as tragic as that was in China, was instrumental for the pickup of Alibaba's business in eCommerce on the consumer side. I think likewise, this current crisis will be one of the final bits of a nudge away from a cash economy in many, many jurisdictions towards digital payments and likewise, with online education.”

Jussi: “Would you guys actively recommend startups to look for changes in their business model or new verticals? Or really hunt for that opportunity? It may be tough to answer on a generic level, but how much should it be opportunistic thinking versus survival and semi-hibernation?”

Nick: “If you're in a B2B sale, how are you making your clients more productive? If you're a B2C sale, how are you making your clients more happy, their lives more convenient, their lives more fulfilling? If you're doing those things, you'll do fine over the long haul and in the short haul.”

Oliver: “I think the stance that we take is, prepare for the worst and that goes back to the question of cost containment and cash runway and it will mean very different things to companies that will run out of cash in the next couple of months versus companies that have already the maturity of business model and deeper pockets. Either way, be prepared for this to last for quite a while and adopt that. From a budgeting perspective, at least for the next 12 to 18 months.”

Puja: “That's great advice for businesses, but I want to ask you guys as investors.  As the whole world is pausing, there's still investments going on. We hear about funding rounds going on and in SEA for Q1 of this year, there has already been $2.9bln raised by startups. How are you investing? Are you pausing?”

Nick: “Quite the opposite, Puja. We are open for business -- and as an anecdotal fact, we have doubled the frequency of our IC's from one per week to twice a week. We've made them longer because we're running out of time. The number of very interesting opportunities to help entrepreneurs is great. I would say it's probably first and foremost great because over the last five years, there have been 452 Series A and Series B deals down their ecosystem, so as those cohorts just mature and those grapes on the vines ripen, that's great for us. We would love to be supportive of entrepreneurs through the thick of this and helpfully have the resources and the intent and the desire to be very helpful. And again, it goes back to timeless wisdom Oliver shared, a crisis is an opportunity for the best companies to get bigger and to bring on great people and to strengthen themselves and to actually push themselves a bit. It's kind of like a challenge level in a video game.”

Winter is here - where are the rhinos?

  • “So we coined the term rhinoceros about a year ago. Basically, it's a different model from a unicorn. It's humbler- these are companies that are perfectly happy to just get the job done at ground level. They're swift, they're efficient, they have a horn and it's weaponized. It's a serious horn. And now we've come to call them rhinos, because now that winter has come, to use the Game of Thrones analogy, we're looking for businesses that are going to be rhinos that prosper in a time of adversity and of stress.” - Nick Nash

Timecode highlights

[06:52] Nick takes a wider and longer view, exploring SEA’s golden moment and sharing his founding thesis.

[09:10] Oliver explains the gap in series C.

[12:02] Nick shares what they look for on a highest level, and how they learn from other tech companies.

[15:41] Nick shares how can we plan for a crisis like this.

[16:28] Nick dives into how a crisis can cause an acceleration of the inevitable.

[19:00] Oliver breaks down how companies can get through recessions and crisis through creating shareholder value and adopting a customer-oriented approach.

[22:03] Some practical steps to take in order to provide great value to customers in the long run.

[25:24] Nick extends the support for entrepreneurs, as they approach challenging levels.

[28:40] Asia Partners is open for business.

[38:12] What is the rhinoceros model of companies? We look at how Singapore is a role model for many other nations.

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