We're back with Season 2 of the Iterative podcast!
We're kicking things off with a topic that everybody is talking about - 'How to Fundraise in an Economic Downturn'. But most of what's happening is heavily centred on the States, and we wanted to provide more nuance for what it means for founders specifically in Southeast Asia. In this podcast, we got Shiyan Koh from the Hustle Fund, and Hsu Ken from Iterative, to shed light on the investors' POV on two things:
- What's happening in the economic landscape
- How should founders approach fundraising
Shiyan Koh, The Hustle Fund
Shiyan Koh is the Managing Partner of The Hustle Fund, a venture capital fund that invests in pre-seed startups in the US, Canada and Southeast Asia. Her experiences range across various financial services, having worked at the likes of JPMorgan, Institutional Venture Partners, and Bridgewater Associates. She joined NerdWallet in 2012, a financial service marketplace, as employee #10. There, she ran business operations and corporate development, helping the company grow from US$1M to US$150M in revenue.
Hsu Ken Ooi, Iterative
Hsu Ken is the Managing Partner at Iterative. He was previously the Chief Product Officer of Workmate, an on-demand blue collar staffing platform in Southeast Asia. In 2014, he was VP of Product at Weave (YCS14). In 2009, he started Decide.com, an early machine learning company that predicted the future price of consumer goods. It was acquired by eBay in 2013.
We extracted the key highlights from this podcast on how founders should think about fundraising during this economic downturn.
Why Pitches Should Be Different Now
Survival is the Prerequisite for Success
Key to Being Successful in Fundraising
3:22 - Shiyan's fundraising experience at Nerdwallet, which was bootstrapped to $50m
8:00- Hsu Ken's fundraising experience for Decide.com - how they didn't need to think about macroeconomics
9:51 - Current perspective on what's happening in the fundraising market - and why it's important to talk about the stages because different stages are impacted differently
10:54 - There's a slow down in the early stages - fewer preemptive deals
12:44 - Why flight to quality matters now
13:57 - Why the Hustle Fund has not changed their approach to investing (despite the current downturn) - and why they're not slowing down at 16:45
16:22 - Why Iterative isn't slowing down either (FOMO in reverse)
17:52 - The name of the game is 'don't die' - if you have to take a flat round, that's better than dying six months from now. Don't tie valuations to your ego
19:08 - Getting first term sheet is significantly harder now - fundraising process will take longer (at least six months)
19:51 - "Survival is the prerequisite to success" - Shiyan Keep things moving, sign a wire, send the docs.
21:20 - The key to being successful in fundraising is to be organised
23:03 - Pitches have to be different now - show clear signs of revenue. Protect your runway because even investors don't know what's going to happen in the future
24:56 - How The Hustle Fund is helping their portfolio companies navigating fundraising
26:03 - There's only two ways to survive longer: get more money or spend less money
27:14 - Why Shiyan believes (philosophically) that companies should be run 10% away from full capacity
28:05 - What founders can learn from Shopify when they made an expensive bet on hiring more to capitalise on growing (Covid-19) demand
29:10 - What can founders do if they, for some reason, just can't fundraise?
29:32 - Why the founder mentality makes or breaks a company
31:15 - How to go cockroach mode to survive long enough
33:07 - Unhelpful conventions that Shiyan thinks Southeast Asian founders should take note of
34:15 - We're seeing more predatory deal terms
35:06 - Why overly structured deals at early stages are a no go for Shiyan
36:52 - Should founders take lower deals?
38:36 - How should founders keep their mentality and health in check?
39:45 - Reality: You're more than your startup
41:20 - “We've been through this before - and we're all still here”