From Startup Ecosystem Builder to Strategic Investor: E27 and Orvel Ventures with Mohan Belani
Fresh out of the studio, Mohan Belani, CEO and co-founder of E27 and partner at Orvel Ventures, joins us to explore his 15 years of journey shaping Southeast Asia's startup ecosystem. In the conversation, Mohan reflected on the evolution of Southeast Asia's ecosystem through different eras and offered his perspectives in how startups need to navigate the current funding winter in Southeast Asia. He also shared the spark that inspired him to set Orvel Ventures and how the investment thesis will fit better for the Southeast Asia region. Last but not least, he offered his vision what great would look like for Orvel and E27 in the next decade.
"If you take a step back and ask, how has the last 10-15 years panned out? The truth of the matter is that Southeast Asia has not done as well as it should have based on the reports and projections that existed earlier. There have been fundamental flaws from a culture standpoint with respect to how the ecosystem has been shaped. I think there has been too much of a mirror of what's happening in Silicon Valley and figuring out how to replicate those concepts in Southeast Asia, whereas there should have been a better, more localized, customized, regional model to suit the culture and concepts in this region. We've mirrored our fundraising, our entire ecosystem to be too much like Silicon Valley - blitzscaling style model, power law style investing which in hindsight, maybe were not the right approaches. There's also been an over-reliance on funding." - Mohan Belani, CEO & Co-founder of E27, Partner at Orvel Ventures
Profile:
Mohan Belani, CEO & Co-founder, E27 and Partner, Orvel Ventures
Here is the edited transcript of our conversation:
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 E27 has been integral part of the Southeast Asia startup and investor ecosystem for the past decade. With me today, Mohan Belani, CEO and co-founder of E27 and partner at Orvel Ventures to reflect and look ahead where we are heading with the ecosystem.
Of course, I have to disclose first that Orvel VC is an investor to one of my companies, Dorje AI.
So with that out the way, Mohan, welcome to the show. Honored to have you here.
Mohan Belani: Thanks for having me. It's really great to be part of this.
Bernard Leong: Yes, and of course, the Echelon Conference 2025 is coming next week (on 10 and 11 June 2025). So in preparing for this interview, I noted that you are also part of the National University of Singapore (NUS) Overseas College (NOC) program in Silicon Valley. To start off, how did that experience influence your entrepreneurial journey?
Mohan Belani: The program was pivotal in quite a few ways. The first part is in really exposing me to this concept called startups where small, nimble teams with limited resources and a very tight timeframe to execution can actually solve really big problems. So the company that I was a part of, I was effectively employee number one. So it was me and the CEO the whole time. He had an outsourced tech team. He hired a director of engineering a few weeks after I came in. It was just the three of us all along. So the exposure to doing trade shows, to doing marketing and business development [BD] was an amazing holistic understanding to what it was to build a company.
NOC provided that groundwork fundamental experience of working at companies. The attachment that we had on the education side was with the classes at Stanford taught by the very reputable Tom Kosnik. It was amazing to have a balance between the theoretical classroom understanding of entrepreneurship and the practical day to day workings of starting up. I even remember the other professors I had in class, had the startups of their own. So it was just a fascinating melting pot of events, learning, hands-on experience and of course, the constant intermingling with other founders in the valley that really shaped my entire worldview of what it meant to be part of the startup ecosystem. Of course, this led me to working on E27 and making my entire life's career to helping work on the startup ecosystem in Southeast Asia.
Bernard Leong: If you were to reflect on your journey, what are some of the pivotal lessons you have learned from NOC or your entire career and can share with the aspiring entrepreneurs out there?
Mohan Belani: So I remember on the NOC side, there were two stories I like to share with people. The first one I remember within the first couple of weeks in the office, I was trying to tell my boss, Saeed that we should really do something about the UX [user experience], and he basically said, "Look, we don't have a budget for UX person. By the way, my friends have tried out the product. The product works fine. I think it's great. So there's nothing to worry about."
So I learned very quickly that in order to get support for what I was trying to push, I decided to email like a hundred of my friends mostly back in Singapore, and say, "Hey, check out this product that I'm part of that is happening. Give me your super honest feedback and we'll see."
Like literally 99% of the feedback was just the product was bad and crap, the UX was bad. Back then we still printed emails [on paper]. So I literally printed the emails, stapled a stack of them, left it on his table the night before, and the next day he came in, looked at it and called me over shortly after he said, "Okay, maybe we should. I hear you on the need to improve our UX. I recognize the feedback. Now is not the time, but I promise you give me some time and I'll get a UX person in on a project level."
Sometimes if you want to push through ideas, it's not enough to just have it from your innate self. Getting customer validation, customer feedback, or the general community to support and back what you're doing from a data-driven standpoint is quite meaningful and powerful.
The second story was about opening up and asking, which I thought has really helped me to today was that I wanted to go to New York to attend a conference, which my boss was going for. We didn't have the budget to fly me there. The good news is that my grandparents live in New York, so accommodation was free. But the ticket cost for the event was about USD $3000. So my boss was like, no way you're going. So I quietly emailed the company and I said, "Hey, I'm from Singapore, I'm part of this NUS NOC program. I studied in Stanford. I want to come and volunteer time and effort to supporting the event." The organizer came back saying, "Yes sure, come by and meet me at the registration booth and you can do some volunteer work for us. Okay, problem number one solved. I got a volunteer pass. Problem number two was the tickets. So that was simple because I scrambled some cash, borrowed some money from my roommates and managed to get the cheapest flight over, which had a layover and all, but got that done. Then housing was covered. The moment I landed at the event, the guy at registration gave me a gold pass. He's like, "This is our highest tier pass. Take the pass. Enjoy yourself. Go learn, meet great people, and I hope you have a wonderful time." I was like, wait. I said, wait a minute. What the hell happened? So I had a higher tier of pass than my boss. I was getting into the VIP sessions I had pretty much full access and that led me to like, be pitching to some of the potential clients. I had a stack of name cards that I collected, brought them back to the company a week later and then we started doing demos with these clients. We closed some of them. But it fundamentally started from me just going, Hey, can I do something to support you that then allows me to get a pass that I can cover with the cost of the ticket?
I think that's this whole idea of just come on, just ask was something that really opened up my mind. I would've never done that before in the past. So I guess the Silicon Valley environment sparked that whole initiative to just go out there and try things out.
Bernard Leong: Yes, it reminded me of the Jensen Huang story where he had to ask the President from SEGA to pay him just before the company [NVIDIA] was about to go bankrupt. In this video, we have a different life story but the same lesson. The asking is the most important for all entrepreneurs. You totally reflected that lesson pretty well.
So, the main subject of the day is to talk about E27 and your reflection over the evolution of the entire Southeast Asia startup ecosystem. To help my audience as a baseline, can you share the story of E27 from its origin story all the way to its evolution as a platform for startups and investors today?
Mohan Belani: Yeah, so the company originally started as a community in NUS and it was actually originally started by a couple of other folks Justin Lee, Bjorn Lee, and a whole bunch of individuals that are actually all successful founders today, including the founders of Zopim and MoneyMax. So if I recall correctly, there were about 20 of them that started this as a community in NUS. When it started, I was still in the U.S. So when I came back from NOC in July 2007, I got integrated in this group. The reason why it became or got registered as a company was because way back when MDA [Media Development Authority, Singapore that is now Infocomm Media Development Authority - IMDA] had the iJAM program, NUS was one of the incubating companies. I believe you had a fund too at that time.
Bernard Leong: That was my first fund.
Mohan Belani: So NUS wanted to collaborate with this group of individuals that were very active and passionate about startups and very close to the student community. So that's how Optimatic, the parent company of E27 started. Then they were doing contractual work for NUS to run the Garage startup incubator back in Prince George's Park, the bungalows at the back. But that led to the investment in companies like PatSnap, 2359 Media, SG and a few others. So it started as a community and then over the years it was doing events. I went on to work at a tech company called Little Lives, which if you have a child in the kindergarten today, there's a high chance that you would be using the app.
Bernard Leong: Yes. I use that app.
Mohan Belani: Yeah, so I did the first sales to the MOE and the kindergartens, and did the iPad training for the teachers. I worked at Mig33 for a while, and then I had a gaming company shortly after that. But the honest truth to that, sometime around 2011 and for most of that period, deep down inside, I really wanted to get back to supporting startup companies.
Mohan Belani: The core thesis that I had in my mind, and this is a thesis that was not new because I even pitched it to Saeed Amidi who was the CEO and founder of Plug and Play when I was back in the valley, was this concept that if you look at Southeast Asia, it is riddled with problems and also opportunities. Those opportunities are not going to be capitalized by the larger companies. Neither are they going to be fixed by the government. The one core group of people that should be tackling these problems and can do them in a scalable manner, is going to be founders and entrepreneurs, and the startup mindset is what is needed to fix all the issues in Southeast Asia. So if we as a platform could support more startups, give them the visibility, provide them the access to the investors, give them the information that they need to better be competitive, a lot less startups will fail. And so 2011, I set up with that and said, "Hey, I'm going to do this. I want to do this. You want to be part of it? We went back to the original core group of E27 folks restructured the cap table and basically said, look, we have a plan to bring this to another level. I brought in our first angel investor who's still on my board, Nick Lim, whose fund is called 8Capital. Yeah. With that first initial 25K check it led to what it is today."
Bernard Leong: From Garage, E27 also moved to Block 71, which is the integral part of the startup ecosystem within Singapore itself. Now of course, Block 71 is all over the world.
Mohan Belani: Yes. At that period, we were close to MDA and NUS to discuss the initial seedling ideas of this concept called Block 71. When it first started, we had the opportunity to be one of the incubators, FatFish on the second floor in Block 71 itself. Because there were a lot of stringent requirements around what kind of companies could be there. So long story short, we managed to be part of it and then, we were based there all the way until 2018. Yeah. It was an amazing environment to be in.
Bernard Leong: You got all the best like there is INSEAD business school, there is Fusionopolis and all the startups are there in Blk 71.
Mohan Belani: Yeah, it was like a startup zoo because you would have people from all over the world coming visiting, and it was like a central hub of activities happening. Unfortunately, it didn't have much event space back then, or we would've probably done a lot more events, but it was really like the melting pot of the early Singapore startup ecosystem when there was barely even Series A funding. So I think that original opportunity to be in the center from a physicality standpoint of the entire rise and growth of the startup ecosystem where we were very fortunate to be in that place, and then over time we had our own office on the fifth floor, and then we moved over to Science Park in 2018.
Bernard Leong: Oh, okay. But it's still very new to the center of all the things. I think Block 71 is still running strong these days.
Mohan Belani: Yeah. I think the community is still strong. I mean, it's very professionalized in a lot of ways. Now it's run by JTC, there are multiple blocks. I believe there's Block 69. I can't even remember all the different numbers, but fundamentally, it's really become a very integral part of the ecosystem, and is a brand name kind of known to be synonymous with starting up.
Bernard Leong: When you think about then to now, what were some of the significant challenges you faced in those early days and the growing stages of E27, and then how do you overcome some of them?
Mohan Belani: I think in the very start the large part of the challenge were around fundamental missing building blocks of what it needed to have as a good ecosystem. So there was always this chicken and egg issue around funding and investors. I remember that while the [Singapore] government played a really amazing role at trying to make sure that there was capital it never felt like there was enough. So everything we did there, were always bigger questions around. How do you get to Series A? How do you get to Series B? Does the ecosystem have that support for it? Rather than focusing back on really the companies and what they were doing, so I think the earlier part from maybe 2012 to 2015 that was the first part of the challenge.
From 2015 to like 2018, those were the boom days. There was capital coming in. There was starting to be really good companies coming out. I remember there was the period where there were so many different programs to support founders both on the capital, the talent, the market access side, and more importantly, there were also interesting, like back people with the right backgrounds from corporate, they were willing to say, "Hey, look, I'm going to leave my corporate opportunity jump into this startup bandwagon and raise capital." There was also the early formulations of interesting ideas and verticals that had started to shape up, like fintech was really starting to shape up to be an interesting vertical. Health-tech was another big area starting out, but I think it hasn't really fully reached its full potential. The B2B [business to business] marketplaces had been starting up in 2012. That period was still very consumer centric and with consumer comes the need for a lot of capital and that's where a lot of the investment thesis would fail. But 2015 to 2018 was a larger emergence of B2B. I remember even at the tail end, you started to have sub micro verticals around such mental health and where you had the logistics supply chain. That started coming up and along with these problems and opportunities came an interesting diversity of corporate venture funds, later stage funds, international funds.
Bernard Leong: That is right before that COVID period. But there's another boom between 2020 and 2021. What about that era then from that buildup all the way to 2018 to 2020
Mohan Belani: I think there was a good buildup. In 2020, there was a major crash because everyone's just like, oh crap, what do we do now? But I think 2020 to 2021 was when things just went on another level, I mean, majorly because of the interest rates issue and the stock markets. So [the market] going all nuts and plus all the COVID money coming in. But there was also that realization that certain sectors are doing extremely well. No one had a clear sensing of when the world would open up. So maybe everyone thought that we would be stuck watching Netflix, using Zoom and consuming digital services in perpetuity. So there was a massive fervor. Of course, the Web3 space started really heating up and very exciting in that period, which helped also channel a different type of capital into the ecosystem. Both founders and funds were also raising at record levels. Remember there were like funds popping up every other day raising anywhere between 50 to $300 million funds all over the region. I'm not sure how a lot of them are doing, but last I heard, I think it's been a struggle. But on the founders side, the founders that were able to capitalize on capital raises at that period, I'm sure they must have done really well. But they must have taken a massive hit on their valuations from that period until now. So the startup ecosystem lost a sense of bearing. But then again, it was also comparing itself with the capital markets on the U.S. side. In that sense, every founder would've done what they should do, which is to just capitalize on the opportunity, raise capital, push hard, and see what happens at a later stage.
Bernard Leong: So from your perspective how do you see your role being both media and also community platform where you have to support the startups through this entire period, these different stages you identify. What do you feel is the role then and now?
Mohan Belani: Yes. So we've always played the role of an ecosystem builder. Media is a byproduct of ecosystem building. The large reason why we launched the media arm was simply because we wanted to educate and inform the ecosystem not to have a journalism stance to investigate what was happening. So media for us has always been an avenue whereby we can uncover and feature interesting companies and what's happening in the ecosystem. But we also realized that as an organization, we are not the subject matter experts in any particular field. So I think it was around 2015 to 2016 is when we launched our contributor program. Basically, it's a glorified guest post concept. What we realized is that if you are a founder in AI, if you're a founder in logistics, you've probably done enough research and due diligence about that sector to then be a thought leader. All of this was pre LinkedIn thought leadership content side. So we were very actively engaging the entire ecosystem, founder, investor, corporate to basically say, Hey, can you be a thought leader on the platform, create content and write about it. So the tricky part is that we had to just make sure that the content was not overly a sales pitch about what they were doing. But was providing true value to the ecosystem. Then that funneled into our events with the way we structured the content at our conferences. A lot of our conference content is, again, very thought leadership driven. Less about organizations or companies or being critical of their business. I think that shaped the culture that we have. Our core value number one is respect the ecosystem. We don't believe in creating content that maybe vilifies or pushes down a particular individual or company. I think constructive criticism is important. Organizations will make mistakes. You will have some bad actors, eFishery for example. But we want to focus on the individuals that are doing good work. We want to focus on the knowledge sharing, the thought leadership content that we feel will elevate this ecosystem.
Bernard Leong: So from Singapore, you actually also go across different parts of Southeast Asia. How do you find when you go into the other different countries, say Indonesia, Thailand, Vietnam, Malaysia, or Philippines, what is the sense like when you bring the E27 kind of community platform across these countries? Is there is a different vibe or different perspective?
Mohan Belani: Yeah. So in the early days, we really had not much intention to regionalize and go abroad. The reason is because we did not have the resources, but also the know-how and how it started is that regional players would contact us to say, "Hey, why aren't you doing Echelon in my particular country?" We're like: "Oh, do you want an Echelon? How do we do it? Is there an appetite? Is there a market for it?" Most of the time, it'll be: "why don't I help you out and we'll do an event here." That's how the roadshow concept came about.
In our heyday, we used to have 13 Echelon roadshows all across APAC [Asia Pacific], including Central Asia, Mongolia, Australia, and every major city across Southeast Asia and Northeast Asia. A lot of this was driven by partners, not by us. We strongly believe that in order for us to add value to the ecosystem, we need to collaborate and partner with the local communities and local ecosystem players, whether they are investors, whether they're governments, or whether they're local equivalents of E27.
Bernard Leong: What would you have done differently? Let's say, you know what you know now, and then you rewind backwards and then start all over again. or you may stick to the same decision all the way.
Mohan Belani: So we learned a lot by going out to all these markets. On hindsight, what we could have done better, is to be smarter in evaluating whether an ecosystem was ready. Most ecosystems were really just not ready. So when we went in, when we did the activities, we were basically working with founders or an ecosystem that was maybe five years behind. So we might do an event. If it might go extremely well, but there'll be no follow through after that. It's not about the founders or investors not doing the job, it's the ecosystem that was just too early. So on one level, that would've been something that we should have been a bit more mindful and smarter about. The second thing is that we should have figured out how to better capitalize on the platform to support these regions and not the events. I think culturally we were always stuck: Are we a product company? Are we a community? Are we an events company? Up to COVID, we were very much an events mindset organization and the platform was just purely content and maybe to market events. COVID was a wake up call for us and an opportunity to be more community and platform centric from an online standpoint. On hindsight, if we had done that earlier. we could have impacted ecosystems on a much deeper and much more sustainable level.
Bernard Leong: With the rise of new technologies across the entire decade, we have mobile, then we had crypto and AI now, and the market dynamics have changed quite significantly over this period of time. For E27, what is the thing that you can adapt to stay relevant and also continue providing that value to the ecosystem?
Mohan Belani: That's a really great question because in the early days, a lot of the companies were B2C [Business to Consumer], and then that evolved to be B2B and even B2B2C. There were very few verticals that made sense, SaaS, maybe marketplaces. But over time, there were deeper verticals that started coming up. Fintech was a very deep vertical that started coming out. HR was another deep one. Even CX like customer experience was a deep one, so for us, I think what we've always done is to say, look, we know that there will be a flavour of the month concept in the startup ecosystem. I remember in 2020, the flavour of the month was food tech companies, partly because Singapore was having a food security crisis, wanted to invest in making our food networks a bit more resilient. But there was a whole plant-based movement and all that. Now nobody talks about food tech companies. So we realized if we went after or chased after a certain vertical, it might be too risky for us. We need to be a bit more generic and serve the larger general entrepreneurship ecosystem. Now we will miss out on certain areas. Like for example if you're a fintech company, the Singapore FinTech Festival and some fintech-centric organizations might provide you a lot more deeper value. But if you look at what we are doing, the general startup ecosystem with some nuggets of verticalization is what we are looking at. So AI is a vertical, for example, we really cannot ignore. To be honest, it's not so much of a vertical, but an entire ecosystem centric integration that's going to happen. To me, in a year or two, we will stop even talking about AI because it's going to be a feature in every company. The same way how social, local and mobile was something that Silicon Valley was talking about like crazy in the 2012 era. No one talks about it now because it's assumed that every company is a social or local or mobile company. The same way with AI. But AI goes across the board. Regardless of B2B, B2C, regardless of fintech, healthtech or logistics, AI has a role to play, and that's why we focus a lot more on AI in the recent Echelons last year as well as this year. But we want to be an agnostic platform for startups.
Bernard Leong: So what's the one thing you know about the Southeast Asia investor and startup ecosystem that very few do?
Mohan Belani: If you take a step back and ask, okay. How has the last 10 to 15 years panned out? The truth of the matter is that Southeast Asia has not done as well as it should have been based on the reports and the projections that existed earlier, but also, to me, there have been fundamental flaws from a culture standpoint with respect to how the ecosystem has been shaped and in a way that has led to why we launched Orvel Ventures. I think there has been too much of a mirror of what's happening in Silicon Valley and figuring out how to replicate those concepts in Southeast Asia, whereas if you ask me there should have been a better, more localized, customized, regional model to suit the culture and concepts in this region. So that's the first part of the problem. I think we've mirrored our fundraising, our entire ecosystem to be too much like Silicon Valley. So blitzscaling style model, power law style investing which in hindsight, maybe were not the right approaches. The second thing is, there's also been an over-reliance on funding. So for markets like Philippines, interestingly, because they've not been the darling of the ecosystem from a fundraising standpoint, they've had to be more resilient to make sure that they go to market faster and get revenue faster. That's starting to show in terms of some of the quality of the companies.
Bernard Leong: You see the same, even in like Malaysia, given that they have much more vibrant crypto companies?
Mohan Belani: Malaysia has always been a great ecosystem if you're looking to build a small, medium size startup. The problem with us in the region is our obsession with Silicon Valley metrics for success, which is, if you're not building to be a unicorn, no VC is going to invest in you. I invested in one Malaysian company and he's a good founder, he's building a great business, and he raised capital from his previous company, from tier one VCs. When I asked him, why didn't the VCs invest in the new company? The messaging was that, oh, this does not have unicorn potential. I'm like: What is wrong with us as an ecosystem? Why haven't we learned that the power law way of investing in this region does not always work and probably will not work for a while.
Bernard Leong: So it would be fair because we move forward with Orvel Ventures, so I want to walk you a step back and say, "Hey, what was the spark that inspired you to establish Orvel Ventures?" I think your investment thesis is very different. And by the way, I like the way you define the origin of Orvel Ventures. Maybe you want to talk about the name, how it came about?
Mohan Belani: Yeah. So Orvel stands for Origin Velocity. I never intended to start a fund. I know a lot of people casually over the last 10 to 15 years have said, "Hey, why don't you start a fund?" For me, I did not think that I am suited to be in the finance side of the ecosystem. I'm better suited to be on the founder side and the ecosystem building side. So, I'd rather work with and build relationships with the VCs and use their capital to support the ecosystem, which is what we've done on E27. We have our investor portal with over a thousand investors. The Echelon business matching activity that we do, a lot of founders actually raise capital through Echelon. So that to me has been the right fit. But in 2022 I was doing some of my usual angel investment with Milan, who's now my partner at Orvel. So Milan and I caught up over a drink because I've done some deals with him, but never met him face to face. We started with this one question. It's like: "Hey, if you were going to start a company tomorrow, who would you want to raise from?" So I had my list of about three to five investors who I liked, and Milan had his list and we were comparing notes. As we went through the list and we were talking, we started to realize, look. In our current stage, us being a bit more experienced in the ecosystem, us knowing how we want to build companies, we realized that most VCs were not ideal for founders of our level. That means a bit older, have done it before, need more support than pure capital.
So we started to dissect the problem. Let's look at the founder side. What would a more senior seasoned founder need? Through the discussions, we realized capital is something that they could very easily get from the network, and most VCs would throw money at them, but what they really, really needed was strategic networks that helped to open doors for them, that allowed them to go to market faster, improve their runway, thanks to the warm relationships that a strategic investor could provide. So network driven was one key part. The second part was on the portfolio construction standpoint. We looked at a lot of the funds that existed today, a lot of them went in with cheque sizes that allowed them to have 10-15% ownership in the companies. Then we realized that over time it was really hard for these funds to exit the companies because unless a very large later stage investor came in, they really couldn't sell down and return money back to LPs. So you needed to bet on the power law model, which meant that you would have to, let's say, invest in 20 companies knowing that very well, that 18 of them will either die or not return you a dime, and you hope that the final two get a unicorn 100X level exit. So the 18 founders that you originally support will be left to die. To me, that's the shitty thing. I felt when during COVID, I'm talking to a lot of my angel portfolio companies, the one conversation they will have with me, they're like, "Why aren't my investors supporting me now when I need them the most?" And I openly say, "It's not you, it's the model. They're looking for that one unicorn exit in their portfolio. If you're not that, they're not going to support you. And again, it's not that they're mean or evil. It's a function of the model."
The last part was the LP side. So I've been an LP in funds. I know multiple people who are LPs in funds. I've had some great successes as a fund LP. I've had some not so good successes. The one common theme, if you talk to any LP that has invested in Southeast Asia funds, the answer is always no DPI [Distributed to Paid-In Capital]. Like virtually no. There's virtually very little or no DPI in most Southeast Asia funds, whereas if you look at some of the American funds and other funds that I've invested in, there's typically some level of DPI within the first couple of years. Again, there are many reasons for that. On some level, it's the nature of the ecosystem. A lot more M&A happens. On some level, the funds are better at getting out as good as they are in getting in. So we looked at these three issues and said, "How can we launch a fund that tackles this problem or at least alleviates some of these problems?"
So we started a fund that is network driven, so the capital that we provide is up to on average a hundred K [thousand]. Second issue is that we only take a 1% ownership. We increase that up to 3% over time. But the goal is to take very small stakes in many, many companies as opposed to large stakes in maybe 10 to 20 companies. More importantly, these companies at the point of investment have to be generating revenue. Our valuation shouldn't be more than 20-25x of gross margin multiples, which means that our entry prices are not at a ridiculous level that a lot of funds get into.
Bernard Leong: So, let's say if a company, because AI companies are quite different. I suppose if they can get profitable, then there is a DPI that you can return to your fund, right.
Mohan Belani: Yeah, absolutely. I mean, they could do share buybacks, they could do dividends. There are multiple ways to work around that. But importantly, is to not fall into the trap of investing in a tier one founder with a tier one lead VC in a really hot market, and then having a 15 to 20 million pre-money valuation with no real product or no revenue. So it was making sure that we were very deliberate, that we wanted to go back to investing in companies that have good financial fundamentals. They might not be unicorns, but they could be really a good hundred million dollar to $200 million companies.
Bernard Leong: You're right. The ecosystem actually missed out a lot on these companies
Mohan Belani: Absolutely. Yeah. And here's the thing. In 2022 when we were talking about this, the truth is we still got a lot of blank stares from investors looking at us going like, what nonsense is this? That's not VC investing. The one group of people that resonated very well with us were the founders and most of the exited founders. And that's the first bucket of capital that we raised from founders that have exited that said, look, this model, I want to see this model work and hence I'm giving you this capital. But I really wish a fund like that existed when I was building my company.
Bernard Leong: Do you think that your fund will ever reach a point where you could also do almost like a private equity where you can actually even roll up companies? You are looking at that kind of trajectory. You're not looking for the power law type, but you're actually looking for very sustainable, but essentially provide a proper DPI from their point of view.
Mohan Belani: I think to do that effectively, you definitely need a large amount of capital and you need a team that has the management experience with respect to either operator management or consultancy type management. But for us, we are dealing with a very small fund. We like small funds. We don't like funds that are more than 20 million. Even from an investment standpoint, I generally don't invest in larger funds. I made the mistake of investing in one or two large funds. To be honest, the outcomes have not been great. So for me, smaller funds have limited resources in terms of dry powder that they can invest and they typically invest earlier at rounds that are at a price that is a lot more pragmatic. I think smaller funds also have a higher chance of, at the very least, returning their base capital, which is, in my experience, the smaller funds I've invested in have done quite well in doing that.
Bernard Leong: I agree with you. Actually, coming to think about it as an angel investor myself, I'm very curious to hear your point of view on this. What are the traits that you look out for when you invest in startup founders?
Mohan Belani: So I stopped actively angel investing. But interestingly, I did one deal early this year. I wasn't intending to, but the founder reached out to me, he was an old friend of mine. The part that got me over the line was very simple. One is that it was a problem that he deeply resonated with and was looking for a company to invest in to solve the problem. It's in a sector I would've never thought of, which is in the film testing sector.
Bernard Leong: That's interesting.
Mohan Belani: Yeah. If you think of sectors, I think that's probably a sector I wouldn't even know existed. He's deeply passionate about a sector he has built up research knowledge and information repository in the entire sector for many years because of his personal passion. Two is that he's been looking actively for founders to invest in. He never found one and decided he just needed to scratch that itch. So on his own dime, he built a prototype, got a small team together, got a very strong proof of concept that started to validate potentially what the idea looked like before he even raised a dime. So based on that logic, I know this founder really well and I know how hardworking and passionate he is, and this is a sector he's deeply passionate about. He's spent many years of his life researching it and understanding it. He managed to get to a level whereby he has something to show the world with his own capital, and he's put a team together to support him in that process. So for me, these are the kind of founders I would want to back.
Bernard Leong: So if I reverse the question, what are the red flags then?
Mohan Belani: So the red flags for me are founders whereby they're raising capital for the pure sake of raising capital to get their product out or to get their company going. Like they don't seem to have any real skin in the game with respect to, let's say, putting in their own capital, or at least maybe bootstrapping or working on the product for six to 12 months. They're just purely using investor capital to get there.
Bernard Leong: Do you notice that this is becoming a big problem? Because I also notice in startup founders, some of the startup founders I talked to seems to be very heavily reliant on raising more and more capital, but never got to a stage where they can actually be revenue positive.
Mohan Belani: Yeah, I mean, again, we've all drunk the Kool-Aid of raising capital and of course it doesn't help that media platforms also glorify founders that raise capital. So do events. So we've drunk that Silicon Valley Kool-Aid of VC [venture capital] fundraising, when we should be flipping the switch and going, Hey, look, how do I make sure I get to financial sustainability as quickly as possible on my own? Then venture capital is a catalyst for me to get to the next level where I know organically I can't get there quickly. I think that's the missing gap in VC. So VC to me is really good for two things. One, it's good to invest in the craziest ideas that no one in the world will touch. The founders are deeply passionate about it, and they need capital because there's maybe a deep tech centric expertise, or the market is not ready to pay for it. So that's where VC comes in.
So if we look at the plant-based meat sector, that's one good example of how VC capital was really able to unlock that sector extremely well. The second part is when you have something and you want to scale it, you know it works. There's product market fit. Now you need to scale it to a level that your product can get into the hands of a large number of people. This can be a big company, and VC money is literally the fuel to the fire. If you are using VC money to be the fire starter, that's wrong. VC money is the fuel to the fire. In that scenario, I think VC money is phenomenal.
Bernard Leong: You've seen the Southeast Asia startup ecosystem growth. I guess one question, if you were to look back towards it, how do you now perceive the current state of venture capital? I think that some of the funds have reached that time and you rightfully point out that the DPI problem is there. How do you think I'm starting to see even like there's like a Series B gap now. I don't know whether Series C will exist. Maybe all the capital is now starting around pre-seed to seed. That's the only way you have funding. After that, it is probably very difficult to raise unless you say you really have the product market fit, you can add fuel to the fire, otherwise having it as a fire starter will not work for you either.
Bernard Leong: How would you think about venture capital within the region? Do you think that it's going to be very challenging or maybe it's going to be just a blip for a while? Maybe you need the fundamentals growing. there's some hope that you look at, the Vietnam market, you look at say like for example, you identified Philippines as well. I think Malaysia is interesting because I have seen very good crypto companies come from there.
Mohan Belani: I think later stage venture capital is going to have a very tough time. Early stage venture capital, if done right with the correct pricing entry points, I think they will not have an issue. So my question to the ecosystem is this: If you can build a company, scale it to maybe 10 million revenue and get it to like 30-40% net margin, not the EBITDA bullshit. The 30-40% net margin to me, that is a very good success. With that net margin, you can buy out and do share buybacks for all the early stage investors
Bernard Leong: Yeah, that's possible. I think this is actually doable.
Mohan Belani: Yeah, it is very doable, but most companies just don't think of growth and scale that way. But to them, I think that concept is probably a failure. There are two problems here. The first problem is that most companies can probably get to 2 million revenue, maybe three. Then at that stage, they might have maybe 10% net margin, but for them to get a 30% net margin, it might be difficult. But this is where I think AI is a massive opportunity, with workflow automation and some level of scalability. Using AI agents, you can get to the 30% margin. So if you have a company doing two to three million with 30% net margins, then the question is now can you scale this to 10 million to 15 million? This is where new markets come in, expansion to other markets in the region. So you're essentially creating multiple markets doing two to three million combined. And I think if at the next level you can do a 10 million company revenue at a 30% net margin, you can buy out all the early stage VCs that came in. They will all make a multiple positive return. That's what the ecosystem needs.
Now, some companies will get from the 10 million to the 100 million valuation or revenue. And I think that level of companies are mostly companies that either are deeply entrenched in this region or they will have to scale to markets like Europe or U.S. like, I mean, if we look at PatSnap, for example, they have already started exploring the U.S. market. Carousell, on the other hand, deeply entrenched in this region. Really pushing hard to get their top line closer to a 100 million level. But the net margin is always going to be an issue. So PropertyGuru, another clear example of a company deeply entrenched in this region. EQT privatized the company so that they can maximize the net margins from it. But that to me is another, like the few great examples of companies that can get to a significant amount of revenue, be publicly listed, good net margins. But I think for most other founders, aspire to build a 2 million to 3 million revenue company with a 20-30% net margin. First, you get to that milestone. You can buy back all your early investors, and everybody will be happy,
Bernard Leong: So if you think about it then, what are the sectors or technology now you think would be good for startups in Southeast Asia? Because it seems to me market penetration is one of the clear things. If you stay within this market, there's a challenge. Even for myself, I'm thinking a lot more about the Australia and New Zealand market, which are developed markets where there are clear customers there or even the U.S. market or European markets. Where do you think what kind of sectors that really makes sense within this current, I guess 2024 batch of startups? Because I think it's actually a good time because the more depressed the era is, actually the better startups will come from the era.
Mohan Belani: Yeah. The unfortunate truth is that we've just been depressed for quite a while. Everyone thought that maybe by 2024 the startup market will recover, but it's still been depressed for a while. So I think that's the only demoralizing part. So the country matters. So if you look at markets like the Philippines, what I've noticed is that consumer centric opportunities, food centric opportunities, local brands. Those are completely missing. There's a blue ocean there for companies to capitalize on. Markets like Singapore and Malaysia, there are interesting vertical SaaS opportunities. Yes. I think AI is providing disruption there, but high quality vertical SaaS opportunities, focus on painful manual issues. I would say document processing, for example. So one of our Orvel portfolios, Staple AI, I mean, they're doing extremely well, focusing on document processing problems that exist in a lot of the key markets in this region. So deep verticalized AI based SaaS kind of companies, I think still have a very strong fit. The third opportunity I think that we can look to capitalize on, is potentially B2B marketplaces in certain verticals. Again, in markets like Philippines or Indonesia, where there are enough inefficiencies in the market that tech can come in and capitalize and make it a bit simpler and then leverage the productivity improvement. The last one is on talent arbitrage. So one of our Orvel portfolios, they provide English education talent to markets like Europe. The company is called EdgeTutor. So talent arbitrage, where you are selling from a lower cost base to a much higher revenue opportunity base are models that could work. So I think at least in this part of the world English education is one thing I've seen. I heard of a company trying to provide nursing or healthcare centric talent and arbitrage it with markets like the U.S. and then Europe. with some level of education and certification training involved. So I think that's another opportunity to potentially capitalize on. Then you have the longer far-flung opportunities like waste management, FinTech in terms of mortgage lending and all. But I think those are far and few in between. Like you really have to have the good set of founders that have the experience in their space, the right technology, and then the right relationships with the current incumbent players. I think what we've learned in Indonesia is that if you are trying to completely disrupt or go in and try to take away all the existing players, those things don't work.
But if you go in, you integrate with incumbents, you help them get more productive while you also sell your product or service, I think those are models that will make a lot of sense. So Baskit and Ringkas in Indonesia. Those are two clear examples: Baskit being in the supply chain space and Ringkas being in the mortgage lending space. They have very nicely integrated with the current players, so they don't try to get rid of them or disrupt them. The results have shown that those two are doing extremely well.
Bernard Leong: What happened with the recent the boom and bust in 2021 in Southeast Asia that actually got a couple of high profile failures. I think we look at Zilingo, eFishery and probably a couple others. What are your reflections on the ecosystem on those situations, and do you see difficulty of actually VC firms now getting LPs to actually invest in the region now?
Mohan Belani: Firstly, I would say that they're not, like these unfortunate incidents are not a reflection of the ecosystem at large. It's an isolated one-off case where whether the founder or the teams have zero accountability and integrity over what it means to run a business, what it means to take investor or external capital. So I would say those are isolated. I mean, if we look at Builder AI, that's another example of a global American company, completely exploding. Same issue, integrity issues, fudging numbers and all that. So I think I would reflect that from an individual standpoint, less about the whole ecosystem at large.
But the challenge is that the repercussions here is that the questions are always asked in terms of what could the VCs have done to better predict or to better foresee this, what part of their due diligence was missing, what gap was not there. So if you have tier one investors that are aggressively investing, how is it that their own due diligence or their own checks and balances were passed in companies like that and could there be many more?
Those larger questions will need a bit more time. But the truth is could it have been avoided. My honest opinion is no, because if Gibran (from Efishery) wanted to fudge numbers and lie to his investors, he would've done anything and everything to get there. The challenge in the ecosystem is that if one particular investor started to get really deep in the due diligence (DD) process it would've unfortunately derailed the entire fundraising plan of the company and then caused a lot more problems for the company itself. So it's a tricky issue. Like on some level, you want investors to be really thorough in DD, but on another level, bad founders will always figure out how to hide shit from their investors,
I empathize with the VCs that invested in the company. I don't think it's entirely their incompetence or incapability that led to the situation, but I think what upsets me and pisses me off the most is the fact that individuals like Gibran and everyone else that has done this, have taken no accountability. There have been no organizations that have put them to task. I see VCs going on LinkedIn saying things like oh, we should be moving forward. This is a blip in the ecosystem, but putting them to task is not helpful to the ecosystem. I think that's complete nonsense. The investors should sue him. They should sue their auditors.
Bernard Leong: Yeah, that's right.
Mohan Belani: They should throw him in jail. It's as simple as that. It is fraud on a crazy level. And I think the worst thing is that media companies should stop giving him visibility, stop treating his story like a sad story of how he tried to do this for the betterment of his employees and because he couldn't figure out another way out. From an ecosystem standpoint, we have to reflect on how we want to manage these situations moving forward.
Bernard Leong: So what is the one question that you wish more people would ask you? Be it, whether it's E27 or Orvel Ventures?
Mohan Belani: I actually wish people would be a bit more critical on the stuff they read. In terms of the numbers that are raised from a fundraising standpoint, or the numbers that are raised from an exit standpoint, and whether the stakeholders in all of these equations actually truly benefited. We've seen multiple fundraising stories over the years where the founders celebrate by posting on LinkedIn. The article that you read on E27, TechInAsia and DealStreetAsia is a really rosy number, but the insiders know that actually no one really made money, or there are nuances in the deal that is not a true reflection of what people read outside.
Bernard Leong: So you wish people would ask you actually what is the critique of the ecosystem? That's a very good question from my point of view.
Mohan Belani: Critique what you're reading. I mean, a lot of companies also share fundraising stories and like for example, they might share that, oh, company X raised this amount when actually it was many rounds over the last two years, put together, and now they're making the fundraising announcement to make it seem like the fundraising was a significant amount. The little things like that matter from an accountability standpoint. If founders can get away here and there on all these little things, they will start getting away on the company level from a governance level on the investor update level, and then before you know it, you have another eFishery situation.
Bernard Leong: So my traditional closing question then, and looking ahead, what does great look like for E27 and Orvel Ventures from your point of view in the next few years?
Mohan Belani: So for E27, I am always aspiring to figure out how can we make a larger impact on the ecosystem. We did our three-year plan earlier this year, and we were really trying to figure out, okay, how do we really measure the impact in terms of the number of stakeholders that we really impact? And we finally came out with a model to calculate that, whether it's the investors, founders and all. So our goal actually is that within a three year timeframe we want to be able to impact a million stakeholders across the region. And this could be again, founders, investors, corporates, governments alike. It's going to be a mix of offline and online, but we need to be better at measuring the impact of the programs and activities that we do and making sure that we are doing them in a financially sustainable model and a scalable model, which means also rethinking how many Echelons that we do or rethinking where we want to make investments on the product level. And also rethinking what part of the entrepreneurship ecosystem do we want to impact. For a large part of our life, we've always impacted the founder level and the investor level. And then I tell my team, there's an entire organization within a startup that we don't seem to do enough for. Like people within the marketing team, the product team, the tech team. The finance team. That's why we actually started Flux, which is a sister event. A couple of years ago we ran one, I think in April this year.
Bernard Leong: Yeah, it's a pretty good event
Mohan Belani: Yeah. The concept is like, it's not large, couple hundred people. We want to go vertical. So the Flux event that we did was for AI marketing leaders. It's like, can we get the deeper levels of marketing folks at an event, impact them to improve their skills? So that they can become better marketing leaders for tomorrow. Can we do the same with product leaders? Can we do the same with HR leaders, finance leaders, so that way, we really truly impact the larger ecosystem and not just the founders and investors. So that's the goal for us on the E27 side. On the Orvel side we've actually done the first round of our first check investments. Right now we are taking a very hands-on approach to supporting the portfolio. Helping them figure out, okay, what kind of milestones they have over the next six months, how can we use our network to help them get there? And then that will allow us to start doing follow on investments in these companies. So it's really a hands-on portfolio centric approach that we are focused on for the next six months or the rest of the year essentially.
Bernard Leong: So, Mohan, thanks for coming on the show and definitely two more quick questions to ask you. First is any recommendations that have inspired you recently?
Mohan Belani: So, the most recent book I read let me just pull out the title to make sure I get it correct is called "The AI Driven Leader" by Geoff Woods. So that book has been helpful because it basically changes the frame and narrative with respect to how you use AI. A lot of the AI usage now is now okay. Improving workflow or helping me with my speech or my marketing content and all that. But the opportunity that this book provides is how do you take a step back, like everyone says, think of AI as a really smart intern. I think this book basically says, what if AI could be a really smart advisor or board member? How would you use AI to sometimes also question you to see if your biases or your assumptions are correct, and how can AI give you a more strategic view of the work that you're doing on a more long-term level? So it's a very different narrative with respect to AI usage. And it's not meant to immediately drive outcome or make you do something, but help you basically find gaps in your thinking. Identify opportunities based on strengths or review some of the strategies that you have in place with your teams. So very different view on how AI should be used. That has been quite meaningful.
Bernard Leong: How can my audience find you? And of course, can you talk about your next upcoming Echelon event?
Mohan Belani: Sure. So we have our Echelon event coming up next week on June 10 and 11. It's going to be held at Suntec City with three stages, a few hundred companies that will be present at the event. But more importantly, if you want to get the pulse of what's happening in Southeast Asia, if you want to meet who are the primary movers, shakers, the key individuals, whether it is the investors, the founders even the corporates, it's a really good event to get that sensing. Like the feedback I've always gotten from people is that the moment they walk in, the energy and the culture around meeting people, getting deals done, driving for business activity is something they don't see at other events. And for us, every one of the platforms or features that we have is meant to drive a business outcome, whether it is to raise capital or to drive partnerships. So if this is something that resonates with your audience, I think they should definitely check out the Echelon event happening next week. June 10 and 11. I'm most active on LinkedIn on a personal level. I do have an Instagram account and Facebook account, but I barely post. I mostly reshare my wife's posts. So that's typically what I do from pure laziness and my happiness to have a bit more of a private life. But LinkedIn is really the best way to connect with me. Just search for Mohan Belani, follow E27. And then you should be able to find me there.
Bernard Leong: Congratulations and now you're a full-time dad too, right?
Mohan Belani: Oh, yes, I am a very happy and full time dad. I just celebrated my daughter's second birthday over the weekend. So, yeah, super happy with it.
Bernard Leong: So thank you very much for coming on the show, and you can definitely find us on Spotify and YouTube, and of course subscribe to our newsletter as well. Mohan, thanks for coming on the show and thank you for the 15 years, or even more than that, I think even 17 to 18 years of actually working with the Southeast Asia ecosystem. You're someone that actually helped to shepherd along this whole entire space hopefully for another two to three decades or more.
Mohan Belani: Yeah, yeah. As long as I can. I've always told people that for me, it's always been a privilege to be able to do the work that we do. And I always tell people, no ecosystem, no E27. And that's why I think I believe as an organization, we need to play a role in working together and collaborating with the ecosystem for the greater good of the startup and investor community. So I'm really appreciative and thankful that you have me here to be able to share my story. So thank you for having me.
Bernard Leong: Thank you.
Podcast Information: Bernard Leong (@bernardleong, Linkedin) hosts and produces the show. Proper credits for the intro and end music: "Energetic Sports Drive" and the episode is mixed & edited in both video and audio format by G. Thomas Craig (@gthomascraig, LinkedIn). Here are the links to watch or listen to our podcast.
