Page 12 - Forbes - Asia (December 2019 - January 2020)

TECH CONNECTOR RICH KARLGAARD

Follow the (Smart) Money

I Conference in Jakarta. One was Willson Cuaca, cofounder of
have a Silicon Valley friend,
East Ventures in Jakarta. The other was Nicholas Nash, co-
Andy Kessler, with a storied
history in technology invest-
founder of Asia Partners, based in Singapore.
The two have different strategies. Cuaca makes small seed
ment. He was a top-rated
semiconductor analyst for Mor- investments in consumer internet, software as a service and
gan Stanley in the 1980s. In the mobile startups. He catches them in the first wave in growth.
1990s he started Velocity Capi- Cuaca often follows his intuition, making his investments
tal Management, a hedge fund usually within 24 hours after meeting the founders, a style
that invested in public and pri- similar to that of Masayoshi Son. His method may seem un-
vate tech companies. Velocity was conventional, but he can do it, Cuaca says, because he was
named one of the top five hedge among Indonesia’s first successful internet entrepreneurs in
funds of 1998 by Barron’s magazine. the early 2000s. Cuaca knows his investing domain, and what
In 1999, Kessler began to unwind the fund. He shut it it takes to win in Indonesia’s burgeoning tech space. Last year,
down as tech stocks crashed. How did he know? “Saudi in- Cuaca says, East Ventures produced a 90% rate of return for
vestors,” he told me. After the Barron’s story, rich people and its limited partners.
institutions pestered Kessler to invest in Velocity. Pension Nash takes a different, more conventional approach to
funds. Corporate treasurers. Saudi princes. “Dumb money,” investing in Southeast Asia tech companies. No surprise
Kessler explained. Not dumb people, but as investors, they there. Nash was a physics major at Harvard and earned
were late to the tech party and knew little about tech, except an M.B.A. from Stanford. He cut his professional teeth at
that it was hot. McKinsey and learned investment at private equity firm
I was thinking of dumb money when I read a book called General Atlantic. Nash then became group president of
Bad Blood by John Carreyrou. This is the best-reported Singapore’s leading internet company, Sea, which he helped
account of Theranos, the Silicon to take public on the New York
Valley biotech company started by Stock Exchange in an IPO that
Willson Cuaca
Elizabeth Holmes. The company’s valued the company at $14 billion.
product, called Edison, took blood Nash’s aim at Asia Partners is to
samples with a painless finger prick fill the gap he sees in midrange fi-
and analyzed them. The idea was nancing for fast-growing Southeast
to disrupt the old way of drawing Asian tech companies. While Cuaca
blood using painful needles in the and others provide seed capital, and
arm. But Edison’s blood samples corporate partners and tycoon-led
proved to be useless. family businesses provide funding
Nicholas Nash
As an investment, Theranos was later on, the midrange—C and D
a bust. The billion dollars invested in rounds of $20 million to $100 mil-
the company was lost, all of it. Who were the Theranos inves- lion—offers Asia Partners a unique opportunity.
tors? Apart from the early seed-round venture capitalists, most Cuaca and Nash also differ on how to scale fast-growth
represented dumb money. The investors included a global titan companies. Cuaca wants his Indonesian companies to seek
of publishing, a former U.S. secretary of state and a famous dominance in Indonesia before scaling outside the country.
heiress now in Donald Trump’s Cabinet. Not dumb people by Nash thinks Southeast Asia, with its some 600 million peo-
any stretch. Just dumb when it came to investing in biotech. ple, represents a large, common market akin to China, the
As Southeast Asia booms, it has also become a hotbed of U.S. and the European Union. He likes his companies to es-
investment. Many investors will earn extraordinary returns. tablish a Southeast Asia regional presence as quickly as pos-
But not the dumb money. A few weeks ago, Forbes Asia Edi- sible. Cuaca and Nash are exemplars of smart money. If you
tor Justin Doebele and I interviewed two successful tech in- plan on investing in Southeast Asian tech companies, these
vestors from Southeast Asia at Forbes Indonesia’s Digital two have set the bar of excellence. F
FORBES INDONESIA

Rich Karlgaard is editor at large at Forbes. As an author and global futurist, he has published several books, the latest of which
is Late Bloomers, a groundbreaking exploration of what it means to be a late bloomer in a culture obsessed with SAT scores and
early success. For his past columns and blogs visit our website at www.forbes.com/sites/richkarlgaard.

10 | FORBES ASIA DECEMBER 2019 / JANUARY 2020