James Tan has gone from startup founder to operating an $80M venture capital fund to fuel the growth of other early-stage ventures today. Now on his third fund, he’s already helped create four unicorn companies.
On the Dealmakers Podcast, Tan talks about being on both sides of the table, investing in over a hundred companies, building marketplace businesses, network effects, being ruthless when going against the competition, and as an entrepreneur.
Plus, going public, when you need to exit your company, and what he is looking to fund now.
Listen to the full podcast episode and review the transcript here.
The Ultimate Guide To Pitch Decks
Markets & Startup Ecosystems
James Tan was born in Singapore. A market and startup ecosystem which has really evolved over the past few decades. A fact which he himself has certainly contributed to.
Though he credits it to a combination of its hard-working people, startups that have jumped on opportunities, educational institutions, government agencies, corporations, angels, and VCs providing capital.
Today, he says that Singapore is the number one startup ecosystem in Southeast Asia, and easily in the top five of all of Asia.
One thing that he says was really impactful on his own career coming from Singapore was needing to, and getting comfortable with going into new larger markets, cities, countries, and broader regions.
His studies that took him to Australia, China, and the USA certainly helped him gain a grander, more global perspective. Including watching the first and second dot com booms in action.
At school, he studied both business and computer science. He says having both real technical skills and a business mind are essential. They are two halves of what it takes to build something.
However, he chose to drop out of school. Not a decision that his parents loved, even after successfully building and selling his first company. He’s still not sure whether that was foolish optimism or great courage, but he wouldn’t go back and do it any other way.
In fact, his top piece of advice today would be to drop out earlier, raise funding earlier, and eliminate distractions, including studies so that you can just focus on building a business.
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Knowing When It’s Time To Exit Your Business
After successfully launching and exiting his first company, James Tan went on to take his second venture public on the NASDAQ.
Going public and especially listing on the NASDAQ may well be the big dream of many entrepreneurs. Though for James, it was also very much about seeing the right timing to exit your company and move on.
He says that “many entrepreneurs fail to understand that there is a window of opportunity when the industry that you’re in and the company that you’re doing can be well understood and well covered by the market at large.”
Analysts, investment firms, and public investors are all riding trends. Once you miss that, he says, “it’s going to be a tough sell, because now you’re up against the new trend.” You must understand when that window, and exit while it is open.
Expanding Your Business
There are two big parts of growing your business that James talked about on the Dealmakers Show.
One is to scale up sales and revenue in your initial market. Then it is about if you can replicate that success in other cities, countries, and regions.
The way this founder tested expansion was to give new cities three weeks to three months to pay for themselves. They look at the costs for each market to justify itself. Including the hires, they would make, marketing, etc.
Tan sees ruthlessness as a desirable trait in startup founders. While business people may be very polite in public, the competition behind the scenes is certainly fierce.
He says that you cannot forget that if you aren’t number one or two in your market (maybe number three), you are going to lose. You will lose everything. Including the capital your investors provided to you, and the jobs your staff relied on.
If you want to disrupt an industry and stand a chance competing against larger incumbent corporations, then you have to find everywhere you can get an edge, and do whatever it takes to win against them, regulations, and anything else in your way.
One of these strategies being to outwork your competition. If you and your team can work through the weekends, and through the night when your competition is sleeping and taking days off, then that can be an advantage.
After founding his own startups, James is now on to managing his own venture capital fund, which has raised $80M across three funds.
Storytelling is everything which is something that James Tan was able to master. Being able to capture the essence of what you are doing in 15 to 20 slides is the key. For a winning deck, take a look at the pitch deck template created by Silicon Valley legend, Peter Thiel (see it here), where the most critical slides are highlighted.
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They have made over 100 investments, including four that have already become worth more than $1B.
Quest Ventures focuses on funding early-stage startups that are ripe to scale.
Listen in to the full podcast episode to find out more, including:
- Network effects
- Fundraising and pitching investors
- How to pitch your idea to James Tan’s latest fund