Disruptive Innovation and Singapore’s status as a candy store for Startups: Interview with Pete Bonee from IDEAS Ventures
‘Disruptive innovation’ is a term coined by business theorist Clayton Christensen to describe products or services that create a new and unexpected market. Innosight Ventures, a venture capital fund was set up in 2001 to put some of Christensen’s ideas in action.
Innosight expanded into Asia in 2006 by setting up IDEAS Ventures in Singapore. IDEAS is an early-stage incubator supported by the National Research Foundation of Singapore (NRF), a government agency behind other startup incubators, and managed by Innosight.
IDEAS Ventures is an early-stage investor in two e27-alumni companies, TheMobileGamer, which has a mobile game discovery app, and iTwin, which sells a product that enables simple file-sharing between computers.
We spoke to Pete Bonee, a partner at IDEAS Ventures, on what he thinks about startups in Singapore and what he looks for when investing in startups.
Background
“IDEAS Ventures’ notion was to apply (Christensen’s) disruptive innovation principles to early stage ventures. We were fortunate enough to hook up with NRF for this and our goal is to select the most promising startups, nurture them and help them out for the first one or two years of their life.”
Why Singapore?
“The venture industry is crowded in the US. But both Singapore and Silicon Valley are very similar. Population size is roughly of the same range, both places are high quality places to live, attract lots of immigrants, it is a melting pot of different cultures. Both places have highly educated workforces.
However the difference is the entrepreneurial ecosystem (in Singapore) is not nearly as developed. You don’t have VCs here. In a sense, this is an ideal laboratory for new type of VCs to come without the noise of SV. In SV we have to compete with a thousand VCs to have access to these startups and ideas.
It’s a very fertile ground for startups. Lots of my friends ask — You are going to invest in startups in Singapore? Are there any Singapore startups? There are loads of opportunities here except there is no proper eco-system here. But the raw talent is pretty strong in universities, research labs like A*star and Singapore has a great business environment.
I feel like a kid in candy store, there are so many opportunities here. Organizations like e27, business plan competitions and universities are all great sources for ideas and startups – this is my candy store.”
What IDEAS Ventures brings to the table
We look at all industries. We are not industry specific. The money is just one part. What is critical for startups is to have guidance at board level. They have bright ideas, they may have not done a company before. They will have skill gaps in areas of management in putting together a team. Sharpening their go-to-market strategy and helping them with their road map.
If you look at a case study of successful companies, you will always find they are all passionate and have great ideas. But they were helped by board members, mentors, investors, been-there done-that people. My personal goal is to be looked at as maybe the most involved, helpful board member at these companies.
Mentoring is very, very, crucial. Look at the early history of successful companies, smart entrepreneurs will always surround them with smart mentors.
What do you look out for when you invest?
We look at their potential to be a disruptive innovation. When I talk about disruptive innovation, (I mean) to transform industries.
Other things we look at is the team. We look for people with tenacity, who won’t give up easily, people who have a vision. People who want to create an impact. First time they are going to stumble and they are not going to give up.
It’s a combination of the basic concept plus team.
Third criteria is — if we can help.
What portfolio companies TheMobileGamer and iTwin did right
TheMobileGamer initially identified the problem of difficulty in discovering games in mobile phones and buying them, especially in emerging markets. They came up with a wrapper technology to wrap j2ME apps and build a infrastructure so that content providers can sell these games to people who had a prepaid account.
They launched that product. And I think they did a pretty good job figuring out the give’s, get’s and the tradeoffs in this model. Their business model was initially through the content providers. When they got this platform out, TMG is just masterful at measuring every little thing and statistics and they are always learning and based on that, they are able to iterate to drive up the conversion rates on their initial products.
They have also been discovering some new applications to create and can use the same platform to serve up advertisement in the games.
iTwin is another great example, look at this (points towards the iTwin device) a simple approach to remote access and file sharing.
There are big companies that make billions of dollars out of VPN technology. Big enterprises and IT companies buy these fancy routers, virtual networks and use SSL technology. It’s expensive and a pain to administer. And there are departments to run this, employees have to fill up forms and it’s hard to use those things. This is sort of a end-run to this. People in organizations who ask, “Excuse me, can I have remote access?” can buy one of these and plug this to one computer and access your working computer when you are on a business trip and you don’t have to talk to the IT guy. Disruptive technology to SSL and VPN.
Challenges facing Singapore startups
The ecosystem is still developing, and is not as robust as let’s say Silicon Valley. Ecosystem matters a lot. When you are an entrepreneur, you don’t have time to reinvent the wheel. Things will get better and better. There will be more VCs.
Advice to entrepreneurs
Be patient. Have commitment and passion. Startups rarely go from zero to big success in a straight line. It’s just like life. We really emphasize on this. If you’re pursuing a startup dream, you need a board that understands this.
You have to believe in your vision. But know that along the way you’ll have to deal with product risks, market risks and unknowns. You will get out there, stumble along the way and you need board who has a like mind and it’s a partnership.
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