Adjunct Professor, Entrepreneurship INSEAD
Adjunct Associate Professor, National University of Singapore Business School
AsianScientist (Jul. 22, 2015) – While it is now increasingly common for researchers to start their own spin-off companies, it was still relatively unheard of 30 years ago when Professor Virgina Cha first made her foray into entrepreneurship. Driven by the irrepressible urge to try new things, fail fast, and try again, her career has spanned investing, founding, research and education.
A serial entrepreneur, Cha has also served as the first technology transfer officer for infocomm in Singapore and seen companies through to successful exits on stock markets around the world. Asian Scientist Magazine catches up with Cha to hear about her journey in entrepreneurship and her views on the rise of Asian startups.
You began your career as a systems programmer, what made you decide to become an entrepreneur?
I was fascinated with trying something new–something very difficult to do within an institutional environment.
In my last role before I came to Singapore in the mid-1990s, I was the director of advanced technology at Unisys Corporation, in charge of looking at new technology. At that time, the World Wide Web was starting; Java and all that technology emerged. I thought that we should do something about it and leap into it. But for many reasons, the company I was in was into the mainframe technology and wasn’t able to make that jump.
I learned that you can’t really do radical innovation within an institutional environment–there are just too many constraints. So I came to Singapore to look at how to commercialize some of the technology that came out of the research institutes.
What were the main challenges that you faced as an entrepreneur?
The first challenge was getting the team together. We were all new entrepreneurs and were dealing with the uncertainty of the market demand. The second was the technology itself–how to benchmark it, is it any good? The third part is the team ourselves, as we were just learning how to be entrepreneurs and work with each other. When you are in an institutional environment, objectives, goals and how to do things is passed down from above. But when you’re in a startup, you have to set your own objectives and rules.
My first startup was a spinoff from a research institute. My teammates were all software engineers who were working in research labs. There was the challenge of convincing everybody to leave the safe employment of a research institution to go to a startup that has no guarantee of survivability. So there was always the challenge of convincing the junior engineers to leave the research institute.
I remember that I was considering it greatly because of the whole idea of not having a steady income. I’ve been fully employed from the time I came out of university to the time I actually became an entrepreneur. So it was kind of difficult to overcome this loss of security and steady income.
As an angel investor, how do you choose which companies to invest in?
Every time you hear anybody who is experienced in engaging in angel investing, the number one consideration is the team. I have learned not to invest in solo founders, but to always invest in a team. You may have the CEO/main founder and champion, but he or she has to have the team around him or her.
The second thing I look for is that the team and the key members are capable of learning. They are either coachable or open to learning, open to receiving feedback and adjusting their course based on the feedback. The worst thing you can do is to invest in a solo founder who is stubborn–you will definitely fail, hands down.
Lastly, what I look for is if there’s some underlying interesting technology.
A related question: what is your personal investment philosophy?
The best way to be an angel investor is when you write that check, imagine it burnt and gone! If you cannot imagine that, you cannot be an angel investor. After you write that check—as far as I’m concerned—that money is gone. This helps you work with the entrepreneur without the money in mind and keeps you focused on how you can create value, as opposed to being afraid of losing your money.
You want to avoid loss-aversion, because that’s a negative emotion which changes the way you interact with the entrepreneur, making you afraid to experiment. Rather, you should work towards a more positive emotion to help create value.
What does advantage does being in Asia offer people who want to start a business?
For an entrepreneur, your biggest challenge is how to stay afloat and [maintain] cash flow while you’re building up a business. The first rule of entrepreneurship is: don’t run out of money. A couple of good conditions:
- When capital is loose in terms of investing environment.
- When the market is growing.
For these two circumstances, when you think about it, Asia is the best place to start. Because money is loose and the market is growing. That’s why you see a lot of activity in entrepreneurship here.
Asia is a very diverse region, ranging from the massive market of China to the emerging economies of Indonesia and Malaysia. Where do you think is the best place for entrepreneurs to start?
In entrepreneurship, you have the concept of a ‘beachhead market’–the first geographic point of entry for you to grow your business. I always advise my startups using the following four criteria on how to choose a beachhead:
- Choose a beachhead that has a budget and that has the money to spend on this problem.
- They have an urgency to spend this money right now, as opposed to something they plan for three years from now. Not only is it the money allocated, but there is an urgency to spend it.
- Your solution to this problem is one of the top three available in the marketplace. This has to be independent; it can’t be [feedback from] your own buyers. You really have to independently verify that your solution is one of the top three available.
- You, as an entrepreneur, have reasonable access to this market, based on your resources, knowledge, etc. You have a path to this customer.
Sometimes I think a lot of Singaporean startups just like to do it in Singapore for convenience, but that may not be the best market. You have to be very rational about choosing your beachhead.
Asian startups have been criticized for being imitators of Western innovations. Do you think that this is valid criticism?
No, I think there’s always some localization that needs to be done. I think if you’re just a mere copycat, that’s not going to go very far. Many online businesses may start that way but they very quickly realize that it won’t work anyway so they have to innovate on top of that.
What are some of the most exciting made-in-Asia innovations you have come across?
I like the mobile and media sector, especially video. I think there’s interesting things to be done there, technology-wise.
But I also think that business-to-business (B2B) startups are just scratching the surface right now. Most people are starting business-to-consumer (B2C) businesses because it’s easier for them to understand and as young entrepreneurs don’t have the experience in business environments, so they only think in terms of B2C. Actually, there are a lot of B2B opportunities.
Finally, what is your advice for would-be entrepreneurs?
I think one of the most guiding principles I can imagine is to be 360 degrees in receiving information. Entrepreneurs tend to want to follow a certain logic, they want to confirm what they’re doing is correct. This is actually very difficult to do, to look at information around them and sort out the signal from the noise. They can choose to take the advice that makes sense to them, but they have to be willing to listen.
This article is from a monthly series called Asia’s Scientific Trailblazers. Click here to read other articles in the series.
Copyright: Asian Scientist Magazine; Photo: Annie Ruan.
Disclaimer: This article does not necessarily reflect the views of AsianScientist or its staff.