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[As Seen on e27] From Classroom to Boardrooms: How we landed our first deal as student VCs

Monday Jul 01,2024 | IIE News

This article shares our journey as student investment analysts, leading to our first real investment decision.

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This article first appears on e27. Link to the original article here.

Written by Protege Ventures analysts Arjun Kumar & Joanna Teo

We’ve all heard stories about inspiring young people who dared to dream big with a deep motivation to leave an impact and launch their own startups. But what about the challenges they face while simultaneously juggling various other commitments like academics and careers?

In 2023, Crunchbase reported that Asia hit an all-time low in venture funding value since 2015, and early-stage startups had been the most affected with a decline of 40 per cent year on year globally. Closer to home in Singapore, the decline in early startup funding value dropped by 37 per cent to US$3.04 billion.

What is fascinating though, is the shift of proportion of funding to the early-stage deals in Singapore in 2023. According to the Singapore Venture Funding Landscape 2023 study by DealStreetAsia, early-stage deals made up a whopping 94 per cent of total deal volume and 49.8 per cent of total deal value, which is a 90 per cent increase from the year before!

Securing funding, especially in the early pre-seed stages, can be a major hurdle for student founders. Thankfully, programs like Protege Ventures (PV) are emerging to bridge the gap and empower student investors to support the next generation of entrepreneurs.

PV is Southeast Asia’s first and Singapore’s only student-run venture fund, supported by SMU Institute of Innovation & Entrepreneurship (IIE). In this article, we’ll share our journey as student investment analysts at PV, culminating in our first exhilarating experience making a real investment decision.

As students from different universities, our paths crossed at PV. As an aspiring software engineer with a keen interest in product management and strategy, I’m passionate about the intersection of finance and technology and love to dive deeply into projects that bridge these areas.

My passion for startups has led me to take part in hackathons and serve in the NTU Entrepreneurship Club as a Vice President. I want to make a meaningful impact among student entrepreneurs through purposeful initiatives that my team has put together. Joining PV provided me with the opportunity to immerse myself in the region’s startup and venture capital scene.

Having founded a data intelligence company, Attribute Data, Joanna is focused on the mission to help decision-makers and organisations solve their most pressing problems by transforming data into actionable intelligence. Joanna discovered the PV Academy when she came back to SMU to pursue her master’s with a specialisation in fintech and analytics.

PV gave her a unique investor’s viewpoint on valuing and accelerating business growth, extending beyond just venture capital. Working on deals with her peers from different backgrounds also opens up opportunities for future startup collaborations and ventures.

Behind-the-scenes: The investment process

As investment analysts, our primary role is to identify promising startups led by students or recent graduates. We have weekly venture sessions where PV members discuss the interesting startups that we have come across.

During one such venture session, we got to know about Zolo, a startup that aims to be Southeast Asia’s #1 B2B food marketplace helping Suppliers and Restaurants to save cost, and time and reduce waste. Using an AI-powered assistant, they streamline the ordering process by intelligently converting WhatsApp order details into back-office ERP systems.

Sourcing and pre-call preparations

This deal came through our doors as a referral from an early angel investor of Zolo who was connected to one of our managing partners. We assembled a deal team, inclusive of students from business, computer science, and entrepreneurship to analyse the startup.
Initial calls and decision to progress deal

We conducted a thorough review of the company’s background, business models and challenges faced in the B2B food supply industry. We had calls with Zolo’s founders and investors to gain insights into their motivations, competitive landscape assumptions, and market opportunity perspectives. Post-call, we completed our initial research and prepared a pre-investment document outlining our decision to proceed with further due diligence.

Conducting due diligence and preparing the investment memorandum

Our due diligence applied PV’s Pre-Investment framework, rigorously evaluating Zolo’s management team, product-market fit, market size, revenue model, and other crucial factors. This assessment formed the basis for our investment thesis, outlining our rationale for investing in Zolo.

We presented our findings to the PV team, sparking a discussion and we addressed any concerns. We then proceeded to craft the Investment Memorandum (IM).

The IM served as a comprehensive summary of our due diligence efforts. It detailed Zolo’s competitive advantages, growth strategies, exit opportunities, risk mitigations, and financial projections. We meticulously built and defended financial models using MOIC (Multiple on Invested Capital) to showcase potential returns under various scenarios.

Presenting our proposal to the investment committee

With the Investment Memorandum finalised, our deal team was called on to present our proposal to the members of the PV Investment Committee (IC). This IC consists of PV’s managing partners and past partners — ensuring a diverse and objective group of investors.
As we articulated our vision for Zolo’s future and underscored its potential to yield substantial returns, the Investment Committee deliberated thoughtfully before rendering their final decision in a vote to invest in Zolo.

Our biggest learnings as first-time investors

While the investment process may sound straightforward, there were various discussions and considerations that significantly shaped our eye-opening journey as first-year analysts. As we delved deeper into the intricacies of due diligence and decision-making, we encountered several learning points that underscored the importance of thorough analysis and strategic thinking, which we would summarise into the following key takeaways.

Being prepared

Ensuring thorough due diligence and accessing accurate data from reliable sources are paramount in the investment process. This involved comprehensive research, including market analysis, competitor landscape, and financial modelling.

For instance, our findings highlighted Zolo’s strong product-market fit, innovative utilisation of technology, and promising growth potential. On top of obtaining data, it is also important to develop a well-rounded perspective about the industry of the startup, which is especially important for us as a sector-agnostic venture capital.

Also, defining the right market that the startup is serving, properly sizing the market with well-founded assumptions and anticipating inquiries from the investment committee is essential.

Having conviction in the deal

Before presenting our proposal to the rest of PV, it was imperative for us to harbour a deep-seated conviction in the potential of Zolo. This conviction stemmed from a thorough evaluation of various aspects, as mentioned earlier.

In Zolo’s case, we were impressed by their ability to address critical pain points within the industry, such as cost reduction, ease of adoption without disrupting existing order-making routines and efficiency enhancement for suppliers and restaurants.

Furthermore, Zolo’s robust management team and strategic vision bolstered our confidence in their ability to execute and scale effectively.

These key factors further solidified our conviction in Zolo’s prospects and paved the way for our investment decision.

Embracing teachability

Along the way, our journey involved engaging with diverse stakeholders, including startup founders, fellow analysts, and members of the Investment Committee. These thought-provoking questions and discussions served as invaluable learning opportunities, enabling us to broaden our perspectives and enhance our analytical skills.

While disagreements occasionally arose, we approached them with open-mindedness and constructive dialogue, leveraging diverse viewpoints to arrive at well-informed decisions. Overall, these experiences underscored the importance of adaptability, collaboration, and continuous learning in our roles as investors.

Our final thoughts

As we reminisce about our journey, we deeply appreciate the experiences, mentorship, and personal development opportunities provided by PV. Through our involvement, we’ve gained not only confidence but also first-hand insights into life as a VC analyst.

The world of VC was once an exclusive club, often dominated by finance professionals. PV had shattered those barriers, empowering students from diverse backgrounds like us – computing students, no less – to become skilled investment analysts.

A true highlight of our PV experience was the unparalleled access we gained to some of the region’s most accomplished VCs. These industry leaders generously invested their time in preparing materials, nurturing our potential, and coaching us on a mix of essential soft skills and hard technical competencies.

Their masterclasses weren’t just theoretical – they were top-notch and always included hands-on sessions that pushed us to be ready for entry-level VC roles. They allow us to apply theoretical knowledge in a practical setting, fostering critical thinking, and honing our analytical skills.

These built up to a rigorous and unforgettable experience, pitching and defending our investment recommendation for Zolo in a real boardroom setting. The pressure and lessons learned during this hot seat moment will stay with us for a long time.

Our journey with PV has also reaffirmed our admiration for the entrepreneurial spirit thriving among young founders in Singapore. Interacting directly with founders and being in a community of fellow students in PV who share similar interests has been both enriching and inspiring.

Looking ahead, we’re excited to see the startup scene continue to grow and hope to see more support for students and youths, just like PV has supported us. We also urge aspiring innovators and investors to seek out similar opportunities like PV, where they demonstrate the power of empowering young minds, regardless of background, to become active participants in shaping the future of innovation.

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Interested in joining Protege Ventures as a student analyst? Our recruitment to 2024/2025 cohort is open! Apply here now!


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