Author: Ekta Sahasi / Source: Entrepreneur An entrepreneur recently approached me and asked me to “tell him the truth” about working with
An entrepreneur recently approached me and asked me to “tell him the truth” about working with Asian investors. In the several years that I have served as an investor and VP for a Japanese corporate innovation center, I cannot count the number of times I have answered this question. In this article, I will share with you the current status of Asian investors in the startup sector, the key investors you should know, and add a word of caution about confusing geographic culture and corporate culture.
The truth is that the distinction between a venture capitalist (VC) and strategic investors from the East as compared to their Western counterparts is not as pronounced as one may think. There is a popular narrative about cultural differences and how it impacts investing. Take the Credit Suisse report How Culture Impacts Investment Behavior, which found that culture does have noticeable impact on individuals’ investing decisions. However, these differences relate to the individual and not to the institutional investor. In fact, the study shows that investment differences across cultures become less prominent as the amount of investable assets increases.
Large-scale investors have the same principles in mind when it comes to an investment philosophy. Commonly, you will hear investors say they look at the team, market size, product-market fit and traction, among other things. Each firm has its own thesis and priorities, but at the end of the day, all of the components matter.
While there may not be a marked distinction between Eastern and Western investing philosophies, there is a change in participation of Asian investors within the startup ecosystem.
Rise of Asian investors in the startup sector.
Recently, numerous Asian companies have been investing in Silicon Valley startups. As a 2016 Washington Post article noted, “Over the past two years, Internet giants such as Alibaba, Baidu and Tencent — sometimes referred to as the Amazon, Google and Facebook of China — as well as dozens of private investors, family offices, local municipalities and state-owned enterprises have raced to capture a stake in the region’s cutting-edge technologies.”
CB Insights, a venture capital database, reports that over 25 percent of all U.S. unicorns like Snap, Uber and others have an investor from Taiwan, Hong Kong, or China — which only covers a portion of Asian countries….
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