Listener Q&A: Founder-Investor Trust, Buy-Now Pay-Later Credit Models & USA SEC Regulatory Impact on SE Asia VC

Shiyan Koh, Managing Partner of Hustle Fund and Jeremy Au answer some listeners’ questions. They discuss three major themes:

1. Founder-Investor Trust Dynamics & Reality Checks: Shiyan and Jeremy underscore the importance of cultivating transparent relationships between founders and investors. Founders often hesitate to reveal business setbacks to investors, but transparency is vital and investors can assist better when they're kept in the loop. They discuss that perfection is unattainable and not believable, and it’s more credible for founders to admit when they don't have answers and share their approach to resolving uncertainties. They also advise founders to confront the reality of their business, whether to pivot to a small business model, return the remaining capital to investors, or pursue an alternative route.

2. Buy Now, Pay Later Credit Policies: Shiyan highlights that successful BNPL models extend credit at the point of sale based on quality underwriting, especially in emerging markets with underdeveloped credit scoring systems. Jeremy also talks about how certain products, like Peloton in the US, are well-suited for BNPL due to the high price point and the creditworthiness of its typical consumers, but there’s a challenge in finding products that align with the BNPL model in markets where transaction volumes may be low, and the costs of underwriting could outweigh the benefits.

3. US SEC Impact on SEA VC Landscape: They discuss how SEC guidelines, particularly those affecting investments in China, pose challenges for US LPs looking to diversify into Asia. They highlight the significant shift of Chinese founders and global investment teams and their consideration to move to Singapore as a reaction to the current investment climate. They also share that the trend of decoupling between the U.S. and China is unlikely to improve in the near future, prompting both investors and founders to strategize accordingly for the long term.

They also talk about venture debt as a financing option, how founders can deal with emotional ups and downs and the value of seeking advice, and the significance of devising a contingency plan.

Watch, listen or read the full insight at https://www.bravesea.com/blog/listener-qna

Get transcripts, startup resources & community discussions at www.bravesea.com

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