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Here's How Your Startup Can Get Funded By One Of The Largest VC's In The World

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Silicon Valley is known by many as the Mecca of entrepreneurship. Over the years hundreds of thousands have journeyed to pay homage to the gods of tech and for most, the experience is simply eye-opening.

This was no different for Khailee Ng, a 28-year-old from Malaysia, who has now risen the ranks to becoming the managing partner of500 Startups in Southeast Asia. Ng’s pilgrimage opened his eyes to a number of things, the first being just how international Silicon Valley has become.

“When I started working with Silicon Valley entrepreneurs, I was shocked because there’s almost no such thing as a Silicon Valley entrepreneur,” Ng recalled. “These people came from all around the world. I heard Russian accents and Japanese accents. People came from everywhere to Silicon Valley to build companies. It was rarer that you find someone who had grown up on Mission Street in San Francisco and became an entrepreneur. I didn’t meet as many of those people.”

The second realization Ng came to was that hustle, not intelligence, was the hallmark of everyone trying to make it big in the Valley. “A lot of people I met there were no smarter than the people I met in Malaysia, Singapore, Hong Kong, or Indonesia.Everyone was just hustling. We were all in the dark and trying to figure things out.”

Ng’s third realization led him to join 500 Startups after a couple successful exits during his earlier days when he was actively angel investing. In the Valley, as you’re trying to build a business, you’re more likely to find what Ng calls “very useful friends.” In places outside of the Valley, like Hong Kong or Malaysia, the friends you meet might not be doing things that are useful to your mission.

“It was a place where unicorn magicians are running around, a place where hustlers meet and become friends,” Ng explained. “I told myself, ‘this can’t be right.’ We need to be in a world where everyone has friends who can help them. It can’t be concentrated in one place. Coincidentally, that’s how a lot of people at 500 Startups felt, as well.”

Now Ng works with the 500 Startups team to wire the rest of the world to work like Silicon Valley. They envision a world where entrepreneurs can be supported by other entrepreneurs in peer circles and everyone can build companies that have a higher probability of success. That way, innovation and the proliferation of wealth creation isn’t concentrated in one place in one country. In their minds, that comes down to something as simple as making sure people have useful friends who can help them.

What makes for a fundable startup

To bring the mission of 500 Startups to Southeast Asia, Ng worked to create a fund called500 Durians that started with $10 million and quickly grew. Within two years, 500 Durians had invested in 120 companies, which represented about 20% of all the publicized deals in the region at the time. Among those the group invested in was Grab, the Uber rival that was valued at $2.3 billion during an August fundraising round. &nbsp;

Among the factors Ng considers when looking at funding requests is whether a startup is truly scaling. In his mind, there’s an easy way to tell if that’s the case.

“What scales well is when every new customer you take on, the experience gets better,” he said. “That’s scaling. If every customer you pile on makes the customer experience poorer, you’re not scaling. It’s the same with 500 Startups as we pursue our ambitions: every new startup we fund needs to have a better experience working with us.”

The way that Ng finds scalable companies starts with a high-quality deal pipeline. In his mind, that’s more important than the nuance of selection. As a visible media brand, 500 Startups enjoys tight relationships with co-investors. Ng prides himself on respecting those relationships and respecting the media attention the company gets, especially in Southeast Asia where he operates 500 Durians. Hecultivates those relationships because they are the source of a lot of good deals that come across his desk.

Ng also receives deals from those at the companies he’s funded:

“My entrepreneurs, they get a lot of deals too because they’re the local heroes. They get deals from their network and they only pass me deals they think are good because their reputation is at stake. I respect those relationships, so I look at those deals. Having an influx of highly recommended deals is a privilege, but it takes years to build a pipeline like this because you have to build your relationship network.”

Once you have the pipeline in place, selection begins. In addition to scalability, Ng looks for companies that understand unit economics, have a clear sense of who their customer is and how to acquire them, and that have returning customers. Fundable companies have a working product and options for growth. Ng’s portfolio is filled with companies built to weather any storm. Some are even in a position where they don’t need to fundraise because their cash flow will break even.

“It’s not to say that I avoid companies who spend a lot of money to grow because I’m invested in companies that grab, these fast-growing machines,” Ng said. “At the time of seed investing,you just never know which one’s going to be the big one. All of them look similar: strong entrepreneurs, good teams, a clear sense of the product, a business model you recognize. But it’s so hard early on to know which ones will be the fast-growing units. That’s why it helps to have a curated pool of applicants.”

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Shutterstock

Silicon Valley is known by many as the Mecca of entrepreneurship. Over the years hundreds of thousands have journeyed to pay homage to the gods of tech and for most, the experience is simply eye-opening.

This was no different for Khailee Ng, a 28-year-old from Malaysia, who has now risen the ranks to becoming the managing partner of500 Startups in Southeast Asia. Ng’s pilgrimage opened his eyes to a number of things, the first being just how international Silicon Valley has become.

“When I started working with Silicon Valley entrepreneurs, I was shocked because there’s almost no such thing as a Silicon Valley entrepreneur,” Ng recalled. “These people came from all around the world. I heard Russian accents and Japanese accents. People came from everywhere to Silicon Valley to build companies. It was rarer that you find someone who had grown up on Mission Street in San Francisco and became an entrepreneur. I didn’t meet as many of those people.”

The second realization Ng came to was that hustle, not intelligence, was the hallmark of everyone trying to make it big in the Valley. “A lot of people I met there were no smarter than the people I met in Malaysia, Singapore, Hong Kong, or Indonesia.Everyone was just hustling. We were all in the dark and trying to figure things out.”

Ng’s third realization led him to join 500 Startups after a couple successful exits during his earlier days when he was actively angel investing. In the Valley, as you’re trying to build a business, you’re more likely to find what Ng calls “very useful friends.” In places outside of the Valley, like Hong Kong or Malaysia, the friends you meet might not be doing things that are useful to your mission.

“It was a place where unicorn magicians are running around, a place where hustlers meet and become friends,” Ng explained. “I told myself, ‘this can’t be right.’ We need to be in a world where everyone has friends who can help them. It can’t be concentrated in one place. Coincidentally, that’s how a lot of people at 500 Startups felt, as well.”

Now Ng works with the 500 Startups team to wire the rest of the world to work like Silicon Valley. They envision a world where entrepreneurs can be supported by other entrepreneurs in peer circles and everyone can build companies that have a higher probability of success. That way, innovation and the proliferation of wealth creation isn’t concentrated in one place in one country. In their minds, that comes down to something as simple as making sure people have useful friends who can help them.

What makes for a fundable startup

To bring the mission of 500 Startups to Southeast Asia, Ng worked to create a fund called500 Durians that started with $10 million and quickly grew. Within two years, 500 Durians had invested in 120 companies, which represented about 20% of all the publicized deals in the region at the time. Among those the group invested in was Grab, the Uber rival that was valued at $2.3 billion during an August fundraising round.  

Among the factors Ng considers when looking at funding requests is whether a startup is truly scaling. In his mind, there’s an easy way to tell if that’s the case.

“What scales well is when every new customer you take on, the experience gets better,” he said. “That’s scaling. If every customer you pile on makes the customer experience poorer, you’re not scaling. It’s the same with 500 Startups as we pursue our ambitions: every new startup we fund needs to have a better experience working with us.”

The way that Ng finds scalable companies starts with a high-quality deal pipeline. In his mind, that’s more important than the nuance of selection. As a visible media brand, 500 Startups enjoys tight relationships with co-investors. Ng prides himself on respecting those relationships and respecting the media attention the company gets, especially in Southeast Asia where he operates 500 Durians. Hecultivates those relationships because they are the source of a lot of good deals that come across his desk.

Ng also receives deals from those at the companies he’s funded:

“My entrepreneurs, they get a lot of deals too because they’re the local heroes. They get deals from their network and they only pass me deals they think are good because their reputation is at stake. I respect those relationships, so I look at those deals. Having an influx of highly recommended deals is a privilege, but it takes years to build a pipeline like this because you have to build your relationship network.”

Once you have the pipeline in place, selection begins. In addition to scalability, Ng looks for companies that understand unit economics, have a clear sense of who their customer is and how to acquire them, and that have returning customers. Fundable companies have a working product and options for growth. Ng’s portfolio is filled with companies built to weather any storm. Some are even in a position where they don’t need to fundraise because their cash flow will break even.

“It’s not to say that I avoid companies who spend a lot of money to grow because I’m invested in companies that grab, these fast-growing machines,” Ng said. “At the time of seed investing,you just never know which one’s going to be the big one. All of them look similar: strong entrepreneurs, good teams, a clear sense of the product, a business model you recognize. But it’s so hard early on to know which ones will be the fast-growing units. That’s why it helps to have a curated pool of applicants.”

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