Cash is king and survival is key for startups, which should focus on maintaining good cash visibility and looking creatively at what levers they can pull to generate cash, according to experts at TechNode Global’s ORIGIN 2020 conference held on Nov. 18.

“Don’t think about growing your market too aggressively as you were pre-pandemic,” Jeff Chi, founding member and vice chairman of Vickers Venture Partners, cautioned during a panel discussion moderated by Ambar Machfoedy, BD Director of Sistema Asia. 

Pinn Lawjindakul, vice president of Lightspeed Venture Partners, agreed. “There is always this quadrant of non-urgent but important things to do. Make time to work on them now as they will be your competitive advantage post-pandemic.”

During times of uncertainty, Lawjindakul said that companies should focus on retaining and attracting competences needed to recover and create tomorrow’s growth. “You want to make sure that your best talent stays with you to execute your strategy,” she said.

Resilience is an essential concept in entrepreneurial crisis management. The key considerations are business relevancy and business model, which should be the focus for startup founders for two reasons according to Kenneth Li, managing partner of MDI Ventures Singapore. First, “Your solution doesn’t mean anything if the problem ceases to exist. Pivot if your business is no longer relevant post-pandemic.” Secondly, reconfigure the business model to the changes in demand amid the new circumstances, he said.

The knock-on effects for startups have been huge, but some businesses are faring better than others. “We see sectors in healthcare, logistics, and e-commerce getting boosted,” said Li. These three verticals have since become a new investment focus, he added, noting that MDI Ventures has completed more deals in 2020 compared to the whole of 2019. MDI Ventures has announced a fresh $500 million pool of cash in August.

However, most venture capitalists pumped the brakes on deal-making in order to assess the landscape. “After observing the pandemic impact for six months, we collectively as an industry are more certain on how the next two years will be like, which is this current new norm,” said Lawjindakul.

Chi agreed: “There is indeed a challenge VCs have to figure out. Which business will thrive and which business will face challenges post-pandemic?”

Venture capitalists have slowed down their investment process which Chi said was a result of the pandemic’s throttling of normal business procedures. “We have duties to our investors and portfolio companies to ensure that they have the required capital to weather this downturn,” he said. Chi added that the inability to conduct in-person due diligence and face-to-face meetings has made it hard to close cross-border deals.

Startups trying to fundraise need to understand that international travel restrictions are curtailing a significant amount of cross-border activity, Chi said.     

The current climate could lead to investor-friendly terms and founders should expect “discounts” on valuation. Founders are more realistic about their expectations now, according to Li. “We definitely have seen valuations gone down. Companies who approached us last year are now agreeing to lower valuations.” 

With recent news on Tiktok owner Bytedance investing billions into Singapore, and Tencent opening a regional hub in Singapore for Southeast Asia, it is clear that Chinese players are setting their eyes on emerging Southeast Asian markets. “There’s an opportunity to take the foresight from previous experience and look for an equivalent in the Southeast Asia region,” said Chi.

However, the panelists agreed that developments in Southeast Asia during this time have been less aggressive compared to other regions. Southeast Asia is probably more risk averse of all markets, according to Pinn. “We are living in a time of uncertainty without much opportunities to build relationships organically. The environment just isn’t optimal for founders to build teams and things,” she added.

While tech listings are flourishing in the US and China, Chi said that Southeast Asia hasn’t really seen any notable IPOs in recent years. The last IPO landmark in the region happened in 2017, with Sea Group’s listing on the New York Stock Exchange. While one of the highest-profile mergers in the region was Grab acquiring Uber’s Southeast Asia operations in 2018.

“It’s the US stock market, STAR market, and Special Purpose Acquisition Companies (SPAC) in the West that are drawing massive investments,” he added.