Introducing Meituan and UC to Ali, An Angel Investor Looking for a Billion Company in Southeast Asia
China’s capital market has been raging in the past 20 years, and the equity market has experienced ups and downs. It has finally become the persistence and success of Qu Tian as the “first Chinese market investor in Southeast Asia”.
“ATM Capital has a more straightforward meaning,” said Qu Tian, Founding Partner of ATM Capital. “We want to do a cash machine. What is the most direct medium between entrepreneurs and investors, right? Money. We have to be the most solid back of entrepreneurs, the most reliable partners of investors, and their first choice in the venture capital industry,” he said.
The earliest contact with Southeast Asia was when Qu Tian was investigating Jakarta for Bat Capital. He was shocked and attracted by the huge but unexplored market in Southeast Asia.
“In my opinion, Southeast Asia is made up of countless time and space fragments. The combination of the place, right, it is very uneven, but it just corresponds to the various stages of China’s 20 years of development. China has created several heroes in the financial arena in the past 20 years, but here is not yet open The wasteland, this is a huge opportunity for us to be able to do number one here,” Qu Tian explained.
At first, Qu Tian wanted to open up a new world in the RMB or US dollar market. However, at this turning point in 2017, he found that these markets have too few opportunities for early investment institutions, the market tends to be saturated, and the entire market is generally controlled by the existing investment giants, and they want to be in the market. In the middle of a rush, a bloody flow, too expensive, is not realistic.
After determining the market, Qu Tian quickly decided to be a fund for Southeast Asia, and at this time he met his first strategic partner.
The opportunity to meet is because Qu Tian wants to invest in a logistics company, so he often talks about the investment of the founder of this logistics company. But slowly, the scope of their conversations shifted from investing in this logistics company to the concept of a Southeast Asian venture capital fund. After a year of mutual understanding, the ATM came into being.
“He [the name is not disclosed] is a difficult Lord,” Qu Tian said, showing a smile. “This is not a bad thing, indicating that he is very assertive. Many people are looking for him, but only I finally persisted. And successfully pulled him into a partner in my startup team. I feel that no matter where you are, the most important thing to do is to be patient and determined. When you decide that you have to do something, you must have perseverance. I will do it all the time. I have been with him for one year, once a month. I looked for him one by one and finally moved him, making him my original partner. He is a very resourceful founder. People, this has made my way in Southeast Asia go a lot, and there are many new possibilities.”
Subsequently, Qu Tian found two partners with extensive experience in offline and channel in Indonesia, both of whom are local head office Internet and IT executives — Ali UC Indonesia General Manager, Jonathan Zhong, who is also Jeeves Jiang, a friend who first met in Indonesia, was the former overseas investment director of Oppo.
The initial team of ATM Capital was relatively small, so the market they focused on was only in this region of Southeast Asia. This allows ATM Capital to deepen Southeast Asia, especially in the Indonesian market.
The market covered by eWTP is very wide. This is their advantage and the same disadvantage. They need a team deep in the local market to obtain resources and information in various fields of the local market. ATM Capital has strong logistics and retail network resources in Indonesia, which allows them to provide an investment vane for eWTP. ATM Capital can learn and draw on the research experience in various fields through eWTP’s extensive research team. This will enable the ATM fund team to benchmark the Chinese market and learn from the experience of China, India and the Middle East market to have a deeper understanding of the business and a more accurate market. Entry point.
“I don’t like the hot market very much. We don’t blindly vote for hot spots.”
Hearing here, Qu Tian showed an expression that he did not agree with: “We don’t like the attitude of pursuing hotspots. I hate the idea of blindly pursuing hotspots. I think the so-called hot market is more dependent on local teams and investors. Orientation. We cannot assume that these teams are completely rational.”
In this regard, he cited an example of a very hot shared bicycle in the Chinese market some time ago. “You see, you can’t say that this is a very successful model.” Qu Tian shrugged.
“I am more concerned about whether each company team has potential, whether it can be targeted to the pain points and lack of parts of the current market,” he said. And, Qu Tian stressed, “Can the company succeed in three to five years?”
“This is very important.” Qu Tian added a tone again. “I don’t expect the company I invested in to catch up with a boom next year, and then suddenly reach a point of explosion. I am more concerned about whether the company I invest in can do in the future.”
The scale of billions and billions, if it can, can be listed in the US. Now there are many opportunities in this market. Who can meet this market demand, who can seize this huge market.”
“For example, Indonesia’s retail market has a very large space for development. Indonesia does not produce products locally. Therefore, the quality of cheap products is very poor, and slightly better products are extremely expensive. You see, the space that can be found here is very big. Secondly, financial technology. In financial technology, we are more concerned with insurance technology. For example, the water droplets we invest in are doing this. They have already landed in Singapore.”
“Other services, including the industry Internet, recruitment, used cars, second-hand houses, all food, clothing, housing and travel, and 2B services, have great opportunities. These business models are all established, but the lack of a good entrepreneur is being done in a down-to-earth manner. From the business perspective of 2B, no matter from research and development or promotion, it is a very slow accumulation process. It may take 1 to 2 years to win the explosion point. Is there an entrepreneur who can withstand loneliness? It is very important to develop this market.”
“We value the future and we don’t ignore the present.”
ATM is a hybrid fund that invests both early and late, but most of the funding will be invested in growth fund projects. Qu Tian tells us that the investment in the B and C rounds is very demanding for investors because the amount of each investment can have 8 digits. This means that to ensure a high success rate, each shot is a test of their project’s ability to investigate, decision-making, and even the choice of investment time.
“For the mid-to-late projects, we will invest 8–10 in a year. For the early projects, the strategy we generally adopt is the model of joint investment and investment. One of the most important cores of our investment is that our investment can be 3 or 5 years, we will give us a return of 10 times or more. We also hope to have a certain influence on this company. We hold 10% or more of the shares and have a board of directors. We tend to invest 50 million in investment projects. The dollar is between $200 million,” said Qu Tian.
“Compared to who is the next unicorn, I am more concerned about whether there will be unicorns in these projects that I invest in after 3–5 years. Of course, it is better for companies that are rooted in Indonesia to grow up. The unicorn. I still think that there are still many good opportunities in the logistics industry and offline retail in the Southeast Asian market, and we have very rich resources in these two areas, which is our advantage,” he said.
Qu Tian then gave us a few examples, such as Kargo, which they had previously invested in, and the goods match the logistics service company. “Kargo is a very promising company. Their entrepreneurial philosophy is very advanced. The logistics industry is very big. For example, China has good wind and a medium, but the same is full of help and blessing, and Kargo is the service platform of the latter. “
At present, ATM Capital has not disclosed the investment in the e-commerce industry. We are very curious about Qutian’s views on the e-commerce industry. Qu Tian pondered for a while and said: “In fact, the supply chain in the e-commerce industry is very important, and the most important terminal in the supply chain in China. If the supply chain can be managed well, it will be advantageous in the market. The platform is not weak in the supply chain; it is not good at landing, we have not seen the right company yet, we are still waiting to see.”
“And, I think that in Southeast Asia, the gathering mode is better than the multi-mode in the current stage. It is inseparable from the fact that we can successfully push e-commerce with WeChat. Therefore, the conversion efficiency will be relatively high,” he said.
Qu Tian explains about Indonesia market. “First, whether Indonesia can find a big social platform like WeChat to promote the multi-modality model in Indonesia is a problem. Secondly, the cost of promotion is not enough. This is the same as the concept of burning money mentioned before. The core, also, now actually buying items from third-party social platforms is very laborious, you can’t fully automate, the operation interface is more troublesome, and the payment also has big problems, so the multi-mode is at least for the moment. There is no way to replicate successfully in Southeast Asia. The advantage of the cloud model is that he has a service at the front end, which is simply a micro-business, and it seems feasible to do 2C, but if you directly jump the front-end service, Not only can the infrastructure not keep up, the payment and social tools have not yet reached the level of popularity,” he said.
“ATM Capital will also help Chinese companies to land-based on our strengths.”
Qu Tian believes that there are two types of entrepreneurship in the sea: business goes out to sea and the team goes out to sea. “And we prefer the entrepreneurs who go out to the team.”
“Business can go overseas and you can do a lot of business overseas, covering dozens of countries. The business volume of each country adds up a lot. This is very good, but this is not the team we are looking for. We like localized teams, You have to be a business in this market, you have to dig deep, and must be the core team to take root in the local market. The best choice in Southeast Asia is Indonesia. For us, we are looking for a potential leader in each Southeast Asian single market. The team, and want to do the best in the local vertical field, it is impossible to take root in the home.”
“Now local entrepreneurs in Southeast Asia are more like early Chinese entrepreneurs. Most of them are working abroad, having investment banking, consulting companies and other large companies. These people are very smart and have a comparative advantage in forming local teams. However, management and business capabilities are slightly weaker. Chinese entrepreneurs are divided into two categories, the first category, speculative entrepreneurs, who are unqualified in terms of entrepreneurial quality: they value speculation and have no patience at all. Rooted in the local area; and another type of entrepreneur, who has worked in a certain field for 10 years and 15 years, understands the vertical field and has entrepreneurial experience, but only has no suitable opportunities in China and turns to Southeast Asia, this type of entrepreneur It will be more incumbent on management, which is inevitable.”
“The so-called industry leaders, top talents and second-rate talents are not fundamentally different. The final difference is not the potential, but the opportunity. Southeast Asia can give entrepreneurs this rare opportunity. The rest is to look at the entrepreneurs themselves. It’s hard.”
“A good entrepreneur is an impossible one,” he said.
Qu Tian has his own opinions on the qualifications of investors, which is inextricably linked to his investment philosophy.
“I think investors have to be very patient. There are many B-round and C-round projects on the market, but really good projects may only have 1–2 in a year. Because of the business model or the target market segment. Look, these long-term projects are facing a lot of problems, and at this stage, it is the easiest to see the direction of a company, so it is highly undesirable to invest in a good enough business before it appears. That’s why patience is very important to investment institutions. For us, investment is not very broad. Instead of investing in some places, it is better to grab a good project and get enough shares in it.” When confirming whether this project is a good project, Qu Tian’s mysterious smile said: “There is a very metaphysical question here. You must know that it is a good project when you see a good project.”
“The first criterion for a good project is not to burn money, the second is that the team is very strong, and the third is that the market ceiling is high.”
“It’s not that the company can’t lose money, but that the money is controllable. Many companies, including the taxi industry, are doing business with subsidies. The business volume and subsidies are rising in direct proportion. Of course, I can understand them. The reason for doing it and the logic behind it, but for us, not burning money is the first criterion for our choice of projects.”
“At the time when we voted for the US group, the cash flow of the US group was very good. Although they were losing money, when their customers’ size was 4 or 5 times, their losses did not increase much.”
“Our challenge is whether we can capture those companies with tens of billions of dollars in potential.”
“We believe that after 3–5 years in Indonesia, there will be several Internet project mergers and acquisitions that will be worth hundreds of millions of dollars. These hundreds of billions of companies are now on the table, and the situation is relatively clear, including Tokopedia, Grab, I think there is potential.”
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“Then there will be 7–8 billion-dollar companies and dozens of billion-dollar companies. I think it is not difficult for us to seize several billion-dollar companies in the growth fund project. The challenge is that we Can you seize the $10 billion business?”
“As the Southeast Asian market becomes more mature, we can consider the return of funds and gains through mergers and acquisitions in the future. It is foreseeable that 80%-90% of our projects will be profitable through mergers and acquisitions, Internet giant Google, Facebook, including when Chinese Internet companies look for companies in Southeast Asia, is our chance to quit. These leading companies are not only focusing on the company’s business itself, but also looking for teams, so when it comes to acquisitions, Out of the premium for talent, the purchase price is likely to be higher, of course, these are all words.”
“But these are all foreseeable. Why? If the benchmark China market, Alibaba has reached a value of 400 billion US dollars, the vitality of the entire Chinese M&A market is very different.”
When it comes to investing in other markets in Southeast Asia, Qu Tian said that they are very interested in the Vietnamese market. It seems that although Vietnam has a large population (more than one-third of Indonesia), examples of plagiarism projects in the Vietnamese market startup team Too many, so they will be very careful when selecting projects. Thailand is entering a period of growth stagnation, and the Philippine Internet of Things and IT are not enough.
“So we will spend 70%-80% of our energy on the Indonesian market and stand firm in Indonesia,” Qu Tian conclusion.
