Michael Do of BEENEXT, in Finding Open-Minded Founders to Build a Sustainable Tech Ecosystem in Vietnam
by Heloise Diamante
BEENEXT is an early-stage venture capital firm assisting startups with operational experience, network, trust, and capital, among others. Since 2015, they've invested in over 200 early-stage technology startups primarily from Southeast Asia, India, and Japan. With the intention to create a founder-centric community to create great products that have a lasting impact on society. Emerging from the economic setback that is the COVID pandemic, the fund sees opportunities in 2021 for transformative technologies.
Michael Do is venture investing in Vietnam with BEENEXT, believing in the future of the country as a driving economic powerhouse in the Asia-Pacific region. He shares with TechShake how he finds and challenges founders to create value in people's lives.
Can you tell us about yourself and how you're involved in BEENEXT?
I was born in Vietnam and immigrated to the US at an early age. I attended the University of Southern California majoring in Finance and Business Administration. After school, I worked in investment banking then a Silicon Valley startup. After a few years, I wanted to do something bold and decided to come back to Vietnam, where I joined a small venture capital fund. It allowed me to expand my local network and take advantage of my experience in finance and technology.
That led me to join BEENEXT nine months ago where I got such great exposure to the greater regional ecosystem, especially Southeast Asia and India. I get to speak with smart, passionate people every day, learning about what innovative models that have and haven’t worked. At BEENEXT, I cover Vietnam as my primary market, building our partnerships with local founders and experts, and bridge them with ecosystems abroad.
Can you explain BEENEXT's statement, "We don’t just invest in startups, we get ‘invested’ in them."?
In BEENEXT we have a saying, “OF the founder, BY the founder, FOR the founder,” which speaks to the dependence on our founders. We dedicate ourselves to founders and are always considering our value beyond the capital. Once we invest, we're very proactive in helping founders with knowledge and resources. Anytime they're willing to ask for help, we're there to support.
For example, we have active communication channels of the BEENEXT team and our founders. We're always sharing insights and have open discussions, in addition to supporting things like key hires. On top of that, we do a BEE Global Camp every 1.5 years with all our founders invited. During the event, we encourage the founders to exchange their best practices on various topics. It adds a lot of value to not only the founders but the ecosystem itself, as people find partnerships and collaborations.
Image from BEENEXT.
In the past years, BEENEXT focused on e-commerce and fintech. And during the pandemic, businesses have shifted. Have you also shifted your focus? What are the other verticals that you are betting on?
Since the past, we have been focusing on the data-driven platform that brings in the network effect, but we were always very open and opportunistic with strong beliefs in founders and their visionaries.
In terms of the pandemic, we've had internal discussions about short term challengers that could be long term winners. Like in terms of digital transformation, how much of it is retainable in a post-pandemic world? How do you distinguish a trend from a fundamental shift in behavior? Developing a thesis and correctly characterizing is key.
And what verticals are where we can contribute to growth? For Vietnam specifically, I’m interested in the touchpoints between SME’s and end customers. Any start-up that improves that experience with tech enablement I would support. Including those that optimize supply chains to deliver cost savings.
Most of the companies were affected by the pandemic. Can you share how BEENEXT dealt with the pandemic to make sure your portfolio companies are in good health?
When the pandemic started, no one knew how long it would last. The advice we gave about a year ago, is to reconfigure their spending and their burn to last about 18 months. We advised a lot of our companies to be very adaptable, to change the way they run their business, to operate in a pandemic.
I was impressed by how fast these companies were able to twist in a black swan situation, like the COVID pandemic. Doing things like switching to remote work, be more creative to the marketing spend, and switching fixed costs to variable costs. Whatever may come next, we don’t know but being ready to evolve and do so fast is essential.
What are the qualities of startups that you are looking for?
Every investment professional has a framework from which we value startups. For founders, I look for these traits: a good balance of humbleness and aggression with the open-mindedness to pursue innovation; founders who have stories and anecdotes of their past evolutions and thoughtfulness on the results. I also respect founders who have demonstrated they can lead and inspire teams as it’s very easy to lose motivation in the windy roads of startups.
Business models are tougher to concrete at an early stage because oftentimes, they could change. I like founders who understand the balance between product and growth. Understanding their cycles and how to evaluate when to focus on one, both, or neither. All in the name of achieving the coveted Product-Market fit.
Finally, evaluating the market need and size. This will usually involve personal research to form an opinion. Market sizes can become very big if you include things like going global and more customer segmentation. However, deciding when and how is not an easy decision.
If I develop a good thesis, I will bring a deal for the greater team to evaluate.
What is your outlook for startups in 2021?
I don't think that 2021 is going to be vastly different from 2020. COVID cases are still going up all around the world, and it's still a serious situation. We're always looking for great opportunities with long term potential.
I’m optimistic because post-COVID, I think a lot of new tech will witness permanent adoption. People have seen the value in digitally transforming their businesses which establishes clearer market needs for SaaS, marketplaces, and fintech. That will contribute to the ubiquity of these platforms and services, create network effects, and build an ecosystem.
To learn more about BEENEXT, you may visit their website here.