It happens—sometimes, companies go down a path that puts their own existence in jeopardy. But even when the situation is dire, the right choices—and maybe a little help from the outside—can put them back on course. This week, KrASIA reached out to two venture capitalists who told us about their experiences with startups that teetered toward failure but managed to come back with a vengeance.
In Singapore, Dave Ng, venture partner of B Capital Group, unpacked how a startup needs to evolve as it grows, potentially making significant adaptations as it enters new stages of growth:
Many startups struggle to grow beyond the initial phase. Monetization is a challenge—especially so in enterprise tech. You are selling to a business audience, which unlike for individual consumers, involves a long sales cycle and multiple demos before signing up a few starter accounts.
The best founders who have cracked this understand how crucial it is to have the right sales playbook and execution. Do you have the right quarterback who could (1) organize salespeople and enable operations; (2) execute targets on a quarterly basis; (3) maintain pipeline visibility and continuity; (4) rope in services and customer success; and last but not least, (5) tie back sales data to your annual P&L target? Startups that have overcome stagnation get these right. The best founders know what works at early phase won’t work during growth and, likewise, the late phase of a company lifecycle. They are not afraid to change their approach and people. The analogy is similar to climbing a mountain, where you don’t get to the top in a straight line. Rather, you need to overcome switchbacks.
Over in Jakarta, Joshua Agusta, vice president at MDI Ventures, shared a specific example of a startup that had to surmount those difficulties:
One of our portfolio companies, Kata.ai, was previously known as Yesboss, a B2C concierge service and personal assistant. It had its momentum back in the day, gaining some traction and securing seed financing and pre-Series A funding from us. However, due to the unsustainable unit economics of that business, they pivoted from direct-to-consumer B2C into B2B, transforming the platform into what today is known as Kata.ai.
Here’s how they pulled it off:
What Yesboss did was find a more sustainable go-to-market strategy through enterprise channels by seeing a product-market fit potential in the enterprise customer service space. By partnering with multiple customer service providers, like Infomedia from Telkom Group, they were able to gain revenue by providing a low cost customer engagement channel, a chatbot. Kata.ai now licenses chatbot services to complement enterprises’ human-based customer service, which resulted in increased conversion or reply-rates and customer satisfaction.
I think product-market fit is essential for a business to sustain itself. It can be measured through retention and customer satisfaction. Without that, startups won’t be able to achieve the desired sustainable growth and won’t be able to get off the ground. A lot of startups spend too much money to “buy” their growth even when they haven’t reached product-market fit. This may cause them to spend all their money before finding ways to sustain the growth.
Dave Ng is the venture partner of B Capital Group, which was formed in 2015 by Eduardo Saverin and Raj Ganguly. The goal was to bridge the gap between startups and major corporations. The firm invests in B2B startups across four tech-enabled verticals, namely industrial and transportation, health and wellness, financial services and insurance, as well as consumer enablement.
Joshua Agusta leads MDI’s investment team in investment strategy formulation and execution, portfolio management, divestment activities, and fundraising initiatives. Agusta is also highly involved in industry and market research and has co-led MDI Ventures’ two white-paper publications. He is one of the youngest senior leaders in Telkom Group.
This article is part of “Venture Voices”, a series where the writers of KrASIA speak with venture capitalists based in Southeast Asia to get their takes on topics of interest.