2022 Key insights from Singapore Tech EcoSystem

Saemin Ahn – Venture Capital blockchain investment

VC challenges in cryptocurrency investing

A problem faced by traditional VCs looking to invest in cryptocurrency projects

  • VCs will experience problem exiting their coins when they need to pay their LPs
  • Developers of cryptocurrency projects might stake the liquidity provided by VCs on other currencies get the interest and then abandon their own project. EOS is a prime example
  • VCs are concerned about continued health of crypto project when early developers leave with out sized voting rights and tokens leaving not much motivation for newer developers

Proposed solution

  • A SAAS model that charges subscription fees to cryptocurrency projects that pretty much function like Monday.com. Developers are awarded tokens only upon job completion.
  • SAAS model will end up with a basket of cryptocurrency tokens. This can then function as a clearing house, exchange or a fund.
Additional Insights
  • Blockchain audits gain access to audit the protocol of blockchain projects prior to their listings. Utilizing this unfair advantage, they purchase stakes in stronger projects with their investment arm
  • Most cryptocurrencies have a offramp problem back to fiat. CHAI, LUNA and TERRA are good examples of how the offramp is managed.

On China

  • China CCP has utilized a very blunt tool to deal with the consumer software sector
  • Exceptions are Hardware and Electric Vehicles industry

Teck Chong Lim – Market Research

  • Never perform research and sales lead generation at the same. It corrupts the research data and discourages the research participant from future engagement
  • US seeking to expand into new Asia Pacific region will need to utilize research services
  • Research companies maintain a database of research participants. They keep their research database fresh by periodically giving out freebies in exchange for answering questions.
  • COVID has reduced the use of focus groups (one off) and brought most of the research activities online. Online research panels (ongoing) is now the prevalent form
  • Business developers function like lone wolf hunters. Conversion rates are low usually around 1%. Their job is to find new opportunities to extend their top line. They also work on bringing back customers that have lapsed.
  • Account managers function like farmers. They basically retain customers and grow their customer’s business.

Insight on discussion with Tiffine

  • Deploying USD40 million per year
  • Deploying USD1-2 million per company
  • Estimated number of companies deployed is 20
  • Looking for companies that can return 10X of investments
  • Looking for companies that has potential to be big versus companies that are sold off as features
    • Companies sold off as a feature will fetch a maximum of USD30 million
    • Companies with successful exists should fetch more than USD50 million
  • Expectations
    • Seed stage to pull in USD 1 million dollar revenue a year
    • Series A to pull in USD 10 million dollar revenue a year
  • Company that has been around for 7 years without remarkable growth is not exciting for VCs trying to hit their own target
  • VC take the pitch deck provided by Founders and translate these pitch deck into a investment memo which gets forwarded to all her partners
  • At the early stage, VC fund not just the idea but their assessment of founder’s ability to pivot fast to another idea that could return 10x if current idea does not work
  • At latter stage, VC ok funding for 3X returns but deploying larger amount of capital

Key takeaways

To make the job of a VC easier do the following:

  • Make it obvious how this company is going to return at least 10X the capital deployed
  • Paint how big the company could potentially grow by describing the size of the market it is going after
  • Structure the pitch deck in such a way that it could almost be just copied and paste into an investment memo


Single man flying suites: The future is here

We are now a few stages before single man flying suites become commercially available for the masses. In this stage of the technology life cycle, it is common to see multiple companies coming up with their own working prototype.

In the next stage, some number of companies will figure out the business model and marketing channels while a lot more will fail. Many of the viable ideas and employees from these failed companies will get absorbed into the surviving companies.

The final stage would be when the manufacturing gets outsourced to China. During this stage, cost of production will drop by 10X. That is when adoption gains traction amongst the early majority .

The stage after would be when government steps in to define regulations for proper use in public.


#business #manufacturing #innovation #supplychain

Founder University day 2021 May 4th

Precursor Ventures – Charles
Acceleprise VC – on sales process

  • Whitney Sales
  • whitney@acceleprise.vc
  • Enterprise sales early stage investor B2B space
  • @thesalesmethod

Whitney Graw

  • Becki Degraw
  • Wilson Sonsini, Partner
  • rdegraw@wsgr.com

Acrew Capital

  • Lauren Kolodny
  • Twitter @LaurenKolodny

Do fewer things in terms of revenue stream. Do them better and faster.

Give a great example of the solution to the problem that a user is experiencing

Don’t care about recognition on the Forbes list. Just focus on product, customer, revenue and team member

Show how business model and product strategy are closely linked are fit together.
Show how business model will scale to a 100 million dollars revenue in a year

How to get laggard industry to adopt the technology

De-emphasize do-gooder (save the world) stuff in the content. It does not seem profitable

Show traction earlier in the deck

  • brain treats companies with product and actual usage builds way more credibility earlier in the presentation
  • if don’t have customer but have demo, show how it works
  • if product is strong start with product, if performance is strong start with performance
  • show bottoms up business model
    • this is how we work
    • this is how we charge
    • profit margin??
  • Looking for net negative churn
  • Like easier bets and very focused
  • elegant and simple means scale
  • complex means founder might need to spend a few million dollars to figure out their business model
  • Sales process
  • problem solving
  • project management
  • the larger organization being sold, the more they want to be told what to do.
  • record your calls so that you can reference it later on for product development and education
  • work your network in the early days
  • use twitter direct messaging
  • for engaging engineers, you won’t be able to engage them directly.
    • use community development and content and APIS
  • handling price rejections
    • in early days not optimized for price
    • but to learn for use case
    • see early users for partners
    • use what you learn in the qualification and use that as reference for the price point
    • anchor to how much the problem is costing your company right now
  • let your early customers be your guide
  • Negotiating term sheets
  • Becki Degraw
  • Wilson Sonsini, Partner
  • rdegraw@wsgr.com
  • Types
    • preferred stocks
    • convertible notes
    • safes
  • components
    • Valuation
    • pre/post money valuation
    • option pool – dilutive to founders
    • liquidition preferences
    • board composition
    • stocket holder vetos/controls
    • investor rights
  • focus on how much you need till 12 to 18 months
    • the hiring plans
    • 90% shares
    • 10% option pool
    • help with negotiating the options pools
  • talk about how outstanding convertible and SAFEs are accounted for – pre-money valuation
  • Get legal council to prepare the cap table to see the dilution
  • preferred stock used to keep common stock cheap for employees
    • participating or non-participating preferred shares
    • participating gets to double dip after the preferred payout
    • usually only happens during down round or PE is involved
    • should not see it during initial round
  • Board
    • make sure to have odd number to avoid deadlock
    • smaller boards are good – keep it to as small as possible
    • hires or fires the CEO
    • financing transactions – new pool
    • M&A transactions
    • Series A – common should control board
    • Series B – more balanced board common and preferred
    • Seed round – 3 directors
    • Series
    • 2 common directors – 1.5X voting rights
    • 1 seed director
    • 1 preferred director
  • Preferred investors will usually ask for board seat
    • negotiate down to observer
  • Prorate or information rights are reserved to major investors – cross a certain threshold
  • Founder re-vesting
    • usually during Seed stage and Series A
  • If founder puts in money
    • treat that as convertible note and convert at the next round
    • demand note – to get paid back during the next round
    • totally ok if it is a small amount in there
    • 200K easy versus 2 million
    • If raising less than 2 millino USD just use convertible or safe notes for seed stage
  • Put founders on a vesting schedule for optics purposes
  • US investors only what to invest in Delaware LLC Corps
  • Vesting is important for protecting company against vagrant founders and employees
  • We are in a company/founder friendly market right now
    • investors are doing things we haven’t seem the doing in many years
    • putting down term sheets 2 months ago with nothing
    • need to get in earlier and earlier to beat the valuation from investors
    • create hype and interest
  • For small financing round – seed round
    • small amount of money
    • Use YC safe note
  • Million dollar Marketing campaign
  • Unit Economics
  • creative testing
  • Landing pages
  • media buying
  • metric
    • Cold traffic needs to convert at 2%
    • CPM needs to be lower than 20
    • Ads click through rate > 3%
    • CPA 1.8
    • gross margin needs to be 70%
    • COGS less than 30%
    • 4000K impression
    • 5% add to cart
  • If has no prior competition – make really good videos
  • GrowthUniversity.IO
  • Looking for
    • 100 million revenue in 10 years with 50% margin
  • Avoid the Total addressable market (TAM) trap
    • We have 15 people paying us
    • we acquired them for CAC XXX
    • we know their LTV right now to be X
    • we are going to spend X on Facebook, Google and LinkedIn for CAC XXX
  • Structure to use to follow based on lead investor
    • SAFE notes is cheaper and less expensive to issue and no maturity dates

Predator’s Ball by Connie Bruck

  • no matter how much research you done regarding a stock you don’t have a contract what the future price should be
  • with high yield bond there is a contract for a certain price in a future, if you are correct about the calculation, you will be correct about your yield
  • bargain price: liquidation price 75cents on the dollar buy at 20 cents
  • when you are not a big established investment firm like Lehmen brothers, you have no franchise to protect. You are free to go the unconventional route for potential outsized returns
  • great ideas are born bad. Its easy to make your way to a great idea from crazy outrageous ones than cautious and sensible ones. Investment bankers by default filter out the crazy outrageous ones.
  • Contrarian thinkers need to train themselves to see things via unconventional routes
  • ways to structure a bond
    • give money back sooner
    • give higher interest rates
    • give more stock
    • give stocks cheap
  • It is easier for corporation to pay interest which is tax deductible than dividends which are not
  • Bonds offer process
    • first tier  high rollers offer liquidity get to buy at cheaper price and exit earlier
    • second tier payers, with franchise to protect, who want to avoid stigma of being junk bond buyers will come in later at more expensive price and exit later.
  • Successful leverage buyout scenario: after buy out use cashflow from business to pay off the junk bonds thus deleverage the business
  • Mutual fund arbitrage: compare value of underlying portfolio and stock price
  • If you are right about a company being undervalued and it is willing to put itself up for sale, there will be buyers
  • Poison pill: defense mechanism against corporate take overs. When would be acquirers crosses threshold of ownership, existing shareholders are given extravagant rights rights making it less desirable as take over target
  • Michael Milken:
    • perception versus reality, see what the world could not.
    • Vision is Strength.
    • capital is abundant, vision is scarce.
    • excess capital is not strength but opportunity for weakness
    • capital put in the hands of someone with vision will result in drastically different results.
    • return of the owner manager as opposed to the corporate manager
    • by-pass the China wall principle where companies try to isolate the deal making and arbitrage departments
    • knows many industry in depth

Related references

Investment Biker, Jim Rogers

Key take aways

  • Central investment thesis:
    • Always bet against the central banks and with the real world
    • truly down trodden people do not rise, but hell hath no fury like suppressed peoples whose expectations have been aroused
    • people don’t change their ways until their are forced to
    • while it is easy to figure out an investment is cheap, the real work is figuring out if a change is about to occur in the near future. It is important to study markets and their history
    • when seeing a big change coming (the opening of the trans Siberian railway), consider the economic, political and social shift
  • modus operandi
    • Why buy a new sofa when it could be put to work in the markets
    • Only invest in what I can sell quickly
    • do nothing until you can see the money to be picked up around the corner
  • key areas of study
    • geography
    • politics
    • economics
    • history
  • Company assessment criteria
    • Price to book value
    • sound balance sheet
    • pay dividend
    • Price to earnings ratios
    • Viable industries
    • start with largest soundest enterprises
      • banks
      • mines
      • news papers
  • On assessing countries
    • Watch out for statism – governments getting in the way of an organic market
      • democracy does not equal prosperity
      • US government piling more and more regulations
      • SnL crisis of the 1980s
      • Artificially suppressed prices
        • 1970s gold in America
        • 2019 prices of pork in China
      • Foreign aids (IMF, UN and Peace Corps) just props up a system that does not work and delays the actual rebuilding process. Have faith in the locals to rebuild themselves in a configuration that works for them as opposed to a system suited to foreigners liking (hubris)
    • On ethnic strife and separatism
      • Some geographical boundaries don’t make sense.
      • no borders remain stable for long
      • economic hardship will bring to surface these fault lines as they get used as a vehicles to get more
      • Wait till wars are fought and border issues sorted out. It might then become a great investment opportunity to enter at the bottom
      • examples
        • Rise of Islam and Christianity in Siberia prior to Soviet collapse
        • Hong Kong riots
        • Barcelona declaration of independence
        • XinJiang, Tibet
    • black markets as signals: difference between black markets rates and official exchange rates provide an indicator of how much the central bank has propped up the exchange rate. Minimal to no differences are signs of a strong economy
    • major red flags:
      • currency controls, import taxes, export restrictions. Makes it hard to pull funds out
      • is country trying to devalue its way out of its internal problems instead of doing a proper fix?
      • frantic purchase of gold in local jewelry store
    • Positive signal:
      • Is the country trying to get foreign hard currency by making things other people want to buy – quality goods
      • Is the country learning to compete and out innovate its competition
      • an educated population
  • On centrally planned economies
    • the market feedback mechanism is missing
    • resources get ruined due to misuse
    • it would have thrive if it was a sound economic theory
  • On China
    • while Russia abused their resources, China having nowhere to go were more deliberate and took better care of their resources
    • success had a lot to do with economic and political organization
    • example
      • took bees to blooming flowers to work them 5-7 times harder than their foreign counterparts
    • Hong Kong, Guangzhou and Shanghai being captured by the capitalist spirit generally ignores capital’s policies
  • Note worthy collations
    • China (labor) / Siberia (natural resources)
    • Australia (natural resources) / Japan (capital)
    • US (capital) / Canada (natural resources) / Mexico (labor)
  • On commodities
    • most local markets will eventually get assimilated into the global market
    • diamonds have artificially propped up prices that will be hard to maintain in the long run. DeBeers will eventually run out of cash buying up supplies from the black market and it will lead to sudden price collapse. Opt for gem and rubies instead
    • when gold gets too cheap companies will figure out ways to use it thereby depleting its supply driving up price. Same could be said of oil
    • underlying structural issues within a country can stay hidden for long during times of a commodity boom
  • The key to success
    • out of every 1000 people who wants to be rich only 6 can master the discipline to do so
    • stay focus on a single goal for five, ten, twenty years

Related readings

Examples of various networks failing at scale

Most solutions will inevitably break when used at scale. These are two recent examples.

AirBnB’s network scales to extend it starts disrupting entire neighborhoods


Political campaigning on social media gets way out of control after politicians attempt to scale up the method which got President Obama elected to office 


Technology eco-system scales up operations in California thereby triggering the housing crisis.


Moderation and self restrain is not common when caught up in a winner takes all situation


Crypto-currency exchanges

Business model

  • Pricing model
    • USD 80K initial listing fee
    • fees on each transaction
  • Enterprise sales acquisition approach
    • acquisition channels
      • LinkedIn
      • Crypto-conferences
    • Cost
      • USD2500/month for sales staff
      • USD4000/month for engineers


  • Over supply of exchanges versus crypto projects
    • Crypto-currencies have tanked in 2019
    • There are more than 2000 exchanges right now
    • 20 new currencies are minted each month
    • There is a lack of differentiation between exchanges
  • crypto projects are reporting an exceeding high level of failure rates
    • due diligence traditionally handled by VCs for traditional startups are left to end consumers for crypto projects
    • most projects do not have a sound use case
    • teams tend to be poorly managed
  • Uneven playing field
    • US media’s extensive distribution network is the primary advantage of US based exchanges
      • Binance is the largest exchange
      • Binance ability to tap into engineering talent in US has allowed it to be the trail blazer helping it garner constant media attention
    • Chinese crypto-currency companies are attempting to penetrate US and Europe by hiring talents with fluent in English

Complementary assets for Biki

  • Parent company’s crypto news portal
  • Parent company’s engineering knowledge in building exchange software

Launch Scale conference with Jason Calcanis Day 2

    Jason does an impression of Trump

Brandon Brown, Grin

The founder needs to sell the product first before bringing onboard any sales representatives. We need to build out the play book first. PlayBook must help uncover the pain and map the pain to the problem and sell the solution to the company

Need to figure out how to spend money in the engine to generate more than proportionate sales. Sales Pods proposed winning by design. Individuals from sales and marketing functions that are depending on each other and grouped together as a team. Around 35K per month to build out a sales pod. Growth rate doubled.

Yosiat Gimbernard, Odoo

Presentation format

  • Describes the difference between traditional ERP and single use case apps.
  • EPR has high implementation cost. Single use case apps are all over the place
  • Describes the pain of managing all the single use case apps.
  • Focuses on product and usability
  • 150,000 companies using Odoo

Roland Ligtenberg, Housecall Pro

The Viral evangelism loop characteristics. Always ask them how they hear about the company?

Once you have a base of users that are interacting more frequently with you, do start thinking about how to implement the evangelist program.

  • buys product
  • loyal customer
  • helps you find other customers
  • and helps find other evangelists.


Written component
  • Title of program
  • Who we are targeting
  • What they need to do to qualify
    • needs to be objective / quantitative
      • 100% profile complete?
    • challenging but not unobtainable. Only the top 10% can qualify
      • minimum 15 reviews with a 4.5 star average
    • hijack the endowment effect
  • Why should they do it
    • exclusive. Its earned and not bought
    • priority access
    • generate status
    • make sure you are listening to them and show them respect
    • make sure you respond fast
Visual component

A soldier will fight long and hard when given a piece of ribbon. Give me enough medals and I will win the war.

  • Need to give them a badge
  • recognition
    • offline: see them face to face so things are more impactful
      • example
        • meetups
        • events
        • Conferences
        • Tradeshows
      • mastermind events
      • recognized in front of their peers
      • small little tokens make it feel real
    • online
      • internal and external communities
      • FB groups
      • Forums
      • Directory
      • Spotlights
      • Case studies
  • Create assets
    • makes it easy for them to brag
    • leverage curiosity to increase virality
    • allows for easy to reuse
    • physical User certificates that is hand signed.
      • they build shrines?
    • give them Stickers they can put on their physical accessories
      • their customers see it
      • their competitors see it
    • Create Facebook and Instagram content they could reuse

Ashley Whitehurst, Syndicates Launch

The investment funnel

  • Online/Written Content
  • In-Person Education
  • Accelerator
  • Syndicate – funding size 100K – 650K
    • Lead
      • 20% carry
    • Backer
      • well connected high network individuals
    • Startup

Syndicates are useful for closing the current round. Flexible investment amount.

Keeps your Cap table clean.


  • Fees range from 10-15K so if lower than 250K not suitable
  • Too slow 1month to close
  • If privacy is an issue then don’t use it.

Minimum viable metric

  • has syndicate lead
  • investors lead for the round
  • 50%+ of the current round closed
  • 18-24 months of runway
  • 50K MRR w/50%+ Mom Growth
  • 10,000+DAUs w/5% + WoW growth

Due diligence

  • P&L
    • not tracking revenue
  • Org chart
  • Cap Table
    • Lack of vesting schedule
    • Founders is fully vested
    • Dead weight on the cap table – owns more than 10% of the equity that is no longer contributing
    • founder is the only full time employee
  • Detailed bank statements
    • low bank balance
    • paying personal rent out of the company
    • slow growth
  • Founder Q&A via webinar
    • 70+ investors
    • Need a FAQ documentation
      • 30% about product
      • 25% about performance

Why syndicate investors are passing

  • usually just invest in the founder
  • lack of moat
  • valuation is too high
  • market is not too big
  • not part of his investment thesis

The wire and sign for banks it a painful process. Vacations and burning man get in the way.

Investor qualification

  • making more than USD200K per year or
  • asset has more than USD1million

Aileen Lee, Cowboy Ventures

Worked with Mary Maker who is one of the world’s class research analyst. The willingness to have conviction and willingness to standup on what you think when no one else believes it. The early believer of Amazon.

Current trends

While software is eating the world. A lot of the companies that do not have profit margin structure of software companies are being invested as if they are software companies. WeWork is one of those classic examples. Its becoming hard to raise money for businesses and for certain people. Ratios will collapse.

We are in major tech trend right now. Priorly was social which made marketing easy. Cloud, SaaS and mobile made it easy for people to dislodge competitors. These trends are around 15 years old already. Investors are always ready to deploy cash.

War chest strategy

Real Estate Tech was an up and rising trend which allowed the ability to deploy capital. There is too much money chasing too little opportunity. WeWork has something physical so it feels easier to value, aka real world virality like Uber.

For 5 to 10 years the ecosystem has been in this war chest strategy paradigm. Investors invest in growth. They were willing to fund 20% growth  versus 10% while burning more. It pushes the founders to take the money and promise the moon or blow up trying.

The risk is asymmetrical between investors versus founders and employees, since investors just need to make sure one company makes it while the latter group are all in.

Slow and steady growth

The slow and steady growth examples. Founders firmly believe their products are differentiated and don’t want to pretend to be something they are not.

  • PagerDuty
  • DatatDog

Choice between these two tracks is based on personality of founder and investor expectation.

Due to the prevalence of war chest strategy the environment has became really sharky.

Dollar shave club

What is the biggest risk and who can address the risk. Micheal the cofounder was able to address the risk for the consumer digital marketing company. The category was open for disruption due to the way its currently being sold. Razors were easy to ship. Patents were expiring.


Just find one or two of the right investor to invest in the company. Don’t have to waste time listening to how other founders are killing it. Just focus on the batting average.

Need to have a unique insight into the market or a technology twist. A lot of the markets are well understood.

Lack of diversity in the VC

Most funds right now are private and very small.  Most VCs don’t have friends who are not white and not male.

The easiest way to fix the problem was to start her own firm. She was a venture backed CEO. Sales reps report progress and attend a lot of meetings but didn’t close.

Lots of people rejected her while raising money for CowBoy ventures. Most have never invested in a single founder and single GP fund. The three funds are from the same set of LPs so not much need to look for new LPs.

White men are hired on a promise and women/minorities are hired from the past.

Founders need to consider how they signal the market to change this trend.


Hiring female partners who don’t have cheque writing ability.

Macro economic trends

Concerned about our industry taking money from Saudi Arabia

Investor assessment criteria

  • tight presentation
  • founder understands product and market
  • Clear revenue model
  • huge potential market

Guillaume Cabane, Growth Advisor at G2

Key to success product and distribution

For distribution, create a distribution moat.

Distribution channel saturation.

Google CTR is dropping

Facebook has finite inventory. Cost per click has increased by 50% within the past 5 years. Not going to be viable comparing against LTV of customers.

Move beyond average. Forecast the value of each customer in the funnel and choose the right acquisition approach.

  • Self service
  • Enterprise
  • Budget per lead


Levels of influence in a purchasing decision

  • business colleagues
  • community
  • marketeer
  • sales person

outbound emails need to inject personalization by using their logo, their font, their screenshot.

Use clearbit to predict who is coming to the site. If potential high value customer make chat available. Drive engagement to hijack reciprocity.

Create an engagement that is cheap, qualified and memorable.

If selling complex product, remove pricing to avoid anchoring which makes it hard for sales people.

Test different UVP with very different valuation.

Enterprise B2B hard to use Facebook. Send data back to Facebook to train their ML ad model using our forecast.

Once converted users to dollar, then instead of tracking number of people converted then track how much dollar converted.

Nate Smith, CTO Lever

how to hire people?

Don’t write job description. It’s useless. Candidates just ignore them. Write the impact overtime. 1 month, 3 month and 1 year.

Hiring the candidates for roles once you understand. Helps interviewers evaluate

Saves time.

What they will own. What they will teach. What they will learn.

Really need to horn your pitch and track them via a  CRM. Keep selling them the culture. Make sure to chat verbally before providing a written offer.

Sara Deahpande, Maven Ventures

Levers to optimize funding round


process is in your control. Leverage momentum. Keep the investors informed in the process. You are always raising.

investor fit:

individual partners and firms reputation/brand as a working partner. stage and sector focus for the investor. chemistry

size of round:

start with how much you need. What milestones you will hit and how long that runway will be.


make sure not too high otherwise will be hard to justify the valuation of the next round. They might have ownership level requirements and how much they need to deploy


10% ownership at seed

20-25% ownership at A round

Trade offs.

valuation versus investor fit. Round size vs valuation. Speed versus valuation.

The success of the underlying business is the most critical criteria to even consider raising money.

VC operations

Assuming 50 million USD fund.

  • First 3 years to deploy
  • 10 years to generate returns
Fund allocation
  • 20% for operating costs and fees (USD 10 million)
  • 40% reserves for follow on rounds (USD 20 million)
  • 40% for writing initial checks to spread over 20 companies to generate yield for LPs. Aka USD1 million each. (USD 20 million)
  • LP expect 3X returns on the original 100% investment
  • 20% carry on returns
Industry benchmark

A strong return of an upper quartile VC firm for USD50 million injection will return 175 million which is 4.4X returns.

viable exit scenarios

Scenario 1 for USD50 million returns

  • zero dilution
  • 500 million exit
  • 10% ownership

scenario 2 for USD50 million returns

  • 50% dilution,
  • USD1 billion exit,
  • 10% ownership



Thoughts on excessive use of leverage

One of worst mistakes I made was during the 2015/6 Oil crash. I bought into shares of oil exploration companies instead of buying the oil directly. 

It was a very painful and expensive mistake. While the price of oil made a nice recovery since then, the exploration companies never made it through to the other side. Majority of them filed for bankruptcy during the height of the crisis. Unfortunately they took on too much debt when the times were good and were unable to finance the debts and ongoing operations through the continued sales of their inventory when situations turned south. 

The lesson learned is that when buying the dip, it’s important to make sure that not just yourself but the underlying assets you hold are resilient to the environment shock. Utilization of excessive leverage reduces the resilience. Over expansion into fancy offices and overstaffing is another form of excessive leverage. Tech startup founders are often caught red handed committing these mistakes. 

With regards to oil, until the world stops relying on plastic, chemical lubricants and switches completely to alternative forms of energy, we should not expect the price of oil to fall to zero anytime soon. 

A simple acid test to figure out the intrinsic value of oil is to ask your neighbor for his tank of gasoline for free. The most likely response you will get from him is a suggestion to go f**k yourself…?!?