- 4 months ago
How can Southeast Asian startups thrive in a world where AI dominates headlines and global investors are more selective than ever? In this episode, we sit down with Scott Fox, CEO of StartupCouncil.org, angel investor, and best-selling author unpacking actionable insights for founders, investors, and anyone curious about the future of innovation.
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00:00all right thank you for tuning in to niagawani right now we're asking a big question for
00:12founders and as well as investors across southeast asia so how do you build a global ready fundable
00:18startup and at the same time without getting lost in the artificial intelligence or ai hype
00:23so our guest right now in the studio knows this world inside out scott fox the ceo of startup
00:28council.org a serial entrepreneur angel investor and author of three best selling entrepreneurship
00:34books so he mentors founders worldwide on fundraising also strategy ai adoption and u.s
00:40expansion so thank you scott thank you for joining us and great to have you how are you thank you
00:45nabilia so i'm lovely and thank you for having me here it's great to be here amazing amazing so
00:48before we dive in um you've worked with founders globally so what's the most encouraging trend
00:54that you're seeing right now the ai explosion is offering all sorts of new opportunities especially
00:59to non-technical founders even can get involved so as we've seen the technology stack move toward the
01:06consumer audience it's become easier and easier for people who may not have technical expertise or a lot
01:11of capital to build their own mini sort of apps and agents that's still we're still in the early days
01:17of that but i think it's an explosion that's about to happen and hopefully a rising tide will lift a lot
01:22of boats encouraging and timely as well because despite tougher funding climate we see that
01:27southeast asia's digital economy still grows strongly actually for lasting 2024 it's about around 260
01:34billion u.s dollars in a gmv which is up to about 15 percent with revenues and also profits rising and
01:41that's actually powerful so scott for viewers who aren't deep in tech why do startups matter to
01:47economies like ours in southeast asia and is it just about tech or is it just about creating jobs
01:53and also innovation as a whole yeah it's about all of those things i i think the opportunity to create
01:59new businesses creates jobs jobs create more revenues which create more taxes which create
02:05better public services and goods better schools better roads all those things can benefit and that's
02:10what we're really about in silicon valley is trying to figure out how we can empower more people
02:15to be more productive it's really about productivity and and really about progress i think entrepreneurs
02:19are the ones who are going to move the world forward politicians get stuck in their own
02:23complications and relationships and and those of us who are really out there solving problems day to
02:29day that's what gets me out of bed in the morning to try to get and bring people excitement about the
02:34opportunities to build things that make the world better exactly and we're seeing it across the region
02:39right now and financial technology or fintech inclusion is advancing fast we have gcash as
02:45parent we have a mint which hit around 5 billion valuation in last year 2024 and this is a signal of
02:52skill and also everyday impact in the philippines that's an example so it's not just software it's
02:57agri-tech like we have e-fishery has become unicorn by making fish farming and whatnot so you've seen
03:04ecosystem worldwide what makes a strong startup ecosystem my first question and where does a
03:10southeast asia stand today are we on the right track or what's your opinion well i think an
03:15ecosystem is really a collection of players obviously right as the name implies so the way we look at it
03:21at startup council is you've got the founders of course then you've got the investors and most
03:25people kind of stop there but the whole world of service providers the lawyers the banks the
03:29accountants the coding shops the it shops and those are important and then you've got the ngos and
03:36the universities and the non-profits all those have to work together and that's where i think the
03:42opportunities lie to create a couple things and the first is confidence a mid-market size country like
03:49malaysia is perhaps a little intimidated by the size of a u.s. or a china for example but that doesn't
03:56mean that there are opportunities that can be solved by local people building up that confidence through
04:01the ecosystem and having some exits will then feed the capital back in and create a reinvestment cycle
04:06and that's what really we've seen in silicon valley which has been so exciting i think has impressed
04:10everyone in the world is that you can create a lot of money by helping a lot of people essentially
04:15from nothing these are ideas and a lot of hard work but then they can solve local problems so i think southeast
04:21asia is very well positioned because you have such a young and growing um population uh especially
04:27here in malaysia there's a lot of english which is like it or not kind of the language in which a
04:31lot of this is done uh and then you have the opportunity to um you'd be at just the right time to capture
04:38a lot of the uh the upside the alpha as the investors call it as the ai revolution arrives you guys are
04:44perfectly positioned to jump on and kind of you know surf that wave if you can get the timing right
04:48so confidence is the key and but let's now talk about the uh where founders worry about the most
04:54which is the money so so what was the reality of raising capital right now for uh founders outside
05:00silicon valley and what's the reality of raising capital today is it harder now with the global economy
05:07you know uncertainties yes i i think it is harder uh there's certainly in the software world which is
05:13mostly my expertise it it's all most of the oxygen in the room has been taken by the artificial
05:19intelligence revolution right a lot of capital a lot of capital going that way so what does that leave
05:24for the rest of the cut companies uh and then what does that leave for the rest of the world if you're
05:28not building an llm if you're not set up to compete with open ai what's left for you well a lot right i
05:34mean the media loves to cover certain aspects and there's a lot of money happening there but the
05:38opportunities in real life are still here the things that you see in your daily life in penang or in
05:44joharbaru or wherever you live those are still problems that need to be solved that have customers
05:49waiting for you to solve them and that might be individual consumer customers or it might be
05:53businesses or it might be regional customers especially if you can figure out some innovation
05:58here in malaysia that you can then scale regionally i think the opportunities are are there yes it's
06:03challenging but it's always challenging money does not grow on trees ever i was there during the first
06:08web boom my first company i raised venture capital in 1997 and that was when they said oh
06:13money was so easy it was never easy right there are times when it is easier but here's a fact and
06:20this is i'm writing you mentioned my books i'm writing another book about raising money and here's the
06:24fact the fact is that you are not a statistic you are a single dot a single sample and it doesn't
06:31matter what the market's doing if you are ready to go and build that company then you need to
06:35find a way that's your job you're an entrepreneur so get after it go right call me we'll figure it
06:41out right we need to be aggressive and ambitious about these things because if it were easy
06:47nobody's going to invest in you because they don't want people to do it the easy way we need to
06:51people that have grit and are going to find success and bring it home and make everybody better and
06:56rich so funding is selective and not gone and not easy as well yeah so let's put a situation here if
07:03i'm a founder um how do i actually stand out when check sizes are bigger but deals are fewer what's
07:09your opinion on that yeah that's interesting so yes check sizes are bigger and deals are fewer
07:17it's i think of it as a ladder so you're going to have to start people you're going to start at the
07:21bottom and generally that's f and f friends and family and you need to find people that can trust
07:27and believe in you and even if they don't understand the technology this is probably friends and family
07:31because they know you they know to be able she's smart she's got this beautiful idea i don't really
07:35understand it but we like her we're going to go for it and they may have a little they may have a lot
07:40whatever but that's how you get started the next step is the angels at least in the united states we have
07:44a ladder friends and family then angel investors and venture capital firms then hopefully you get
07:48acquired and go public and really big numbers right it's your job to do more research to work harder
07:56not just on the product and the building the team and the marketing the obvious things but these days
08:00the world is so big that there are pockets of money everywhere and you need to do extra research to
08:05figure out as you said is your uh you know agriculture tool or it's a med tech device or it's a better
08:11way to make pizza i don't know what you're doing but there are investors somewhere interested in almost
08:16everything right and you need to do extra research and find those people and connect and um that's
08:22your job your job is not just to build the product it's to build the company and that's a slightly wider
08:28lens that a lot of founders miss and a lot of the founders get frustrated because um i do office hours
08:34on youtube and i had a young woman on my program um a month or two ago and she said oh i'm so frustrated
08:40i can't raise money i've talked to so many people nobody wants to invest i said how many people have you
08:44talked to you know what she said three i said three that's not right i mean you you know yeah that's
08:51that's not right you've got to be 30 or 300 this is the job the job isn't just to have an idea and
08:56then the money shows up you've got to go find the money sorry that's the reality unfortunately yeah
09:02right so uh scott uh given that you invest at sea and also mentor angels um what are investors really
09:09looking for in a startup and is it the idea the team or the traction yes all of those sure the time
09:17the team the idea the traction what's really difficult about this and like i said i'm writing
09:22a book about it it's really hard especially people that might have an engineering or maths background
09:28they want an answer and there's not an answer this isn't one plus one equals two this is a whole
09:34bunch of factors and i think the best summary i've heard of it is uh paul graham is a gentleman
09:39in the states who started a famous incubator accelerator program called y combinator and paul's
09:44you can look him up online lots of clever things he said over the years but he said how do you get
09:49invest how do you find investors be investable and what that means is you walk in the room and you start
09:55talking and it makes me think if i give this person a dollar they're going to give me back ten
09:59and so that's all those things it's a vision it's the team around them which shows not just that they
10:05can build stuff but that that leader can recruit other people to the vision it's a capital structure
10:11meaning how much you're going to sell this what is it what does it cost to make how much you're going
10:16to sell it for and then how much do you make and then how often does that repeat we need all those
10:20things all at the same time and in different sectors and times in the market the emphasis may be on
10:27different parts of that but that's why this is hard you need to be able to do all those things
10:32let's take a situation another situation as well like if i'm a pre venue what's one practical step
10:38this week that actually helped me to move toward investability sure that's a great question so
10:44in the states we call that traction meaning your your company has to demonstrate movement toward
10:49revenue so idea the best traction of course is a bunch of revenue right you have a lot of sales great
10:54that makes it easier certainly you might just be able to get a bank loan then you don't have to
10:57give up a piece of your company in exchange for equity minimum one of the concepts in my new book
11:03is mvt minimum viable traction what can you show us anything because the problem is so many
11:09entrepreneurs come and they have a billion idea and it may be amazing they may have the cure for cancer
11:15but if they haven't convinced even a single other person that that's a good idea why would we believe you
11:20right okay so maybe your mom invested okay that's that's two but that doesn't count right you have
11:25to go out and engage with customers so minimum viable traction is the idea that even if you have
11:29no revenue and you don't even have a product yet what can you do to give me some numbers investors we
11:34eat numbers if you don't feed us numbers we starve so what can you do well i talked to 10 customers
11:40in fact i talked to 100 customers and 50 of them said no way okay so i went and i i updated my message
11:47and we tweaked the product a little and we made it blue instead of green and i talked to another
11:50hundred customers and this time 73 percent were interested okay that's starting to give me the
11:54numbers that show a pattern and i want to see a momentum and i want to see that you're the kind of
11:59person that can adapt and react to that customer input and pivot to uh to capitalize on it and then of
12:07course if you throw real money at it you can say well we spent ten thousand dollars um maybe it's on
12:11facebook ads and we tested the reaction and we got this kind of reaction those are small steps you can
12:16show long before you actually have customers paying you money just to show that somebody other
12:21than you and your mom cares and that is how we minimize risk and that's what i call minimum viable
12:27traction did that answer the question yes definitely i like the mvt the technique minimum viable traction
12:33but many founders also ask about us investors at the same time where for non-us founders who won us
12:38backers for example what's misunderstood about the process that you can actually tell them what's i'm
12:43sorry uh what's misunderstood what misunderstood about the process well if you want to raise money
12:48in the united states unfortunately we can't invest directly in malaysia well it's not that we can't
12:53it's not illegal it's just that the tax structures in the united states are so favorable for onshore
12:58investments that i can't i won't right um so if you were trying to raise money from the u.s you need to do is
13:06actually it's it's not simple but it's clear there's a u.s corporate entity you need to start a delaware
13:12c corporation so a c corporate it's just a legal structure just like you have corporations here
13:17right with a certain kind of corporation in the u.s state of delaware we have 50 different states so
13:21you can't just pick a random one it has to be delaware and a c corp and then you move your company
13:26to be a subsidiary of that c corp and then americans can invest because now it's onshore and that is the
13:33way that leads to uh to new york and a initial public offering and big money for everybody so that's a
13:38process that is very clear and understood um and the reason for that is that there used to be a lot
13:45of conflict of choices but now the entire industry uses that one and it means that it's cheaper for
13:50you because all the lawyers use the same documentation based on this delaware standard so um that might be
13:55helpful for your viewers who don't didn't know that so just got to make sure the structure is right
14:00so then will the net network be right as well so um now let's move on on the big password which every
14:06founder asked about artificial intelligence ai of course so um let's be frank scott is ai more
14:13opportunity or more hype for startups right now uh yeah some of both isn't it there's a lot lots of
14:20hype i think the interesting part of ai right now especially if you're just getting started and you
14:24don't have a billion dollars to start a competitor to open ai is the next level so i think ai 1.0 is
14:31ending and we're now entering ai 2.0 so just as in the internet web 1.0 was a lot of infrastructure
14:38build and a lot of money and the stock market went way up and all this stuff but then it crashed and
14:43a lot of those companies faded away but we're what was left and this is the typical venture capital
14:47model right nine out of ten fail but a couple go to the moon out of that came amazon.com and paypal
14:54and ebay and facebook and all these platforms which have still survived i think that's what's happening
14:59here so you're going to see the web what ai 1.0 the llms pick which ones you like cloud or perplexity
15:07or open ai whichever ones it's an oligopoly essentially there's going to be four or five or
15:11eight of those and they're going to run everything so we you and i can't compete right we just don't
15:17have the money who has the capital to compete like that's nation state level capital so what do you do
15:21you build on top of those you use those as distribution platforms and as as ingredients to the cake
15:28your baking i guess and you focus on what can you do just like your phone used to be empty when you
15:33got a new phone and then you what you do you add a bunch of apps and specific use cases that problems
15:38you want to solve and i think that's what we're going to see now they're ai enabled sort of apps
15:43it's not on your well i guess it will be on your phone anyway but it's it's ai powered so the opportunity
15:47for entrepreneurs what i'm saying is look at how you can add ai to existing problems and solution sets
15:53and then also there's going to be a massive opportunity this is where i'm looking personally
15:57i've only made one ai investment so far but it's in kind of this space is take all these tools
16:03they're going to be more expensive because there are fewer providers when there's only five llms the
16:09prices are going to go up so there's going to be a big opportunity in creating services for orchestration
16:16and optimization and productivity improvement to helping other people do those better and faster
16:21and then once people can make them better and faster they'll get easier to use and then you can
16:25build consumer apps on top of that so this is what we call the application layer that's that's ai 2.0 i
16:30think like you mentioned we're moving to its ai 2.0 but the concern now is for non-technical founders on
16:35a budget for example do you have any opinion or any cases that ai can actually deploy this quarter that
16:43they have no big team and no big spend so any advices for them it's it's hard right if i had that
16:50answer i might be off doing it myself but the the real opportunity of course is this vibe coding you
16:55hear about people you can spin up things um and and try to build things yourself with low code and no
17:01code environments so yes i think there are opportunities there i don't have a specific
17:05suggestion about what to do but i think what's interesting is i think we're kind of back for a
17:09while everybody was trying to build these global platforms and now we're kind of back to where we were
17:16say in the late 90s early 2000s you have the platforms the ai 1.0 the llms and you can build
17:22on top of those so what applications are you going to find um and that you can do with a much smaller
17:27budget and a much smaller team and with ai being useful for non-technical people you might be able
17:32to build it yourself what you could do today with a hundred thousand dollars would have cost us 10 million
17:39back in the 90s right because all of this stuff is getting more modular and more user friendly and
17:47i would encourage everybody who's interested in this to at least be using chat gpt and these tools
17:52in your daily life learn the language as it grows don't come in later and then suddenly try to learn
17:59when it's already you know established it'll be too late so that's why i think southeast asia has a big
18:04advantage here because you have a younger population and a lot of ambition and intelligence and you could
18:10grow with this market and uh and be some of the winners let's look at the smallest skill because we
18:17have about a few minutes left look at malaysia and the region what ecosystem investments matter most right
18:22now is it community capital or perhaps policy right this is one of my favorite topics so this is my next
18:28book is about how to raise money and then the next next book is about ecosystems so um i i i think
18:34the ecosystems are the most important part of all of this the confidence and the community and the
18:39connections are what build the networks and that's what we've seen in silicon valley that's what works
18:44is that everybody is connected and any restaurant or bar or or baseball game you go to people are talking
18:50about startups the community is there and everybody's interested and why because there's a ton of money
18:57available if you figure it out so i don't think capital is actually the issue the capital will come
19:03guys like me we will get on an airplane if if malaysia suddenly has uh three or five or ten
19:10really promising companies you will start to see vcs from all over the world they don't have to come
19:15from as far away as i did right i mean you've got people in india and right next door in singapore
19:19with plenty of money so that's not the issue i don't think it's really about creating a community
19:24that supports enough activity that deals start to emerge where this is really frustrating for
19:30uh government and uh regulators and so forth is you can't mandate outputs all you can really control
19:38is the inputs nine nine out of ten startups fail probably so all you can do is build a community
19:44where people are welcoming and supportive and creative give them opportunities repeated events
19:49to encounter one another exchange ideas solve problems together and and things can and will emerge
19:56if you don't do that it's not going to happen so that's i think the role for government is not to
20:01recruit capital but to support the ecosystem you have some great champions that i've met here around
20:06the country over the last week and that's why the u.s embassy brought me over here was to meet those
20:10people and encourage them those leaders because there's no money in it for them they're just doing it for
20:16the love of the game like i do and um they are the required secret ingredient to encourage your
20:23entrepreneurs to have the confidence to build the connections that lead to the companies but indeed
20:28you're right it's always easy to start but to actually maintain is a real question that's exactly
20:32right but just to mention here malaysia's roadmap right now is trying to double vcs gdp contribution to
20:37about 1.0 to 1.4 billion us dollars via funding and regulatory reform and also talent which signals
20:44are improving locally too my last question to you scott if you had one message for a founder here who's
20:50feeling overwhelmed what would it be for them to actually stay resilient and keep moving forward
20:55and don't give up yes well i would get involved the best thing you can do is go out you can't grow
21:02if you don't go like go to events go meet those people build that network mental health is an important
21:08part of the entrepreneurship game as it is everywhere you need to have friends who understand this your
21:13parents may be sympathetic but they probably don't know what you're talking about you need to get out and
21:17find peers and build those teams so i would go and grow and one of the cool things these days is you
21:22can do that online as well at startup council.org which is the group that i community service group
21:27i run i think we have the only calendar in the world that only shows events for founders that are
21:33all virtual and the reason i did that is because i wanted founders from anywhere from brazil or bahrain
21:40or or here to be able to meet online and share those ideas and build those relationships because
21:47you need that safety net because you're going to fail that's the fact right you're probably going to
21:51fail i've failed a bunch of times and if you don't fail you're not learning and you need somebody there
21:57to help pick you back up and and keep going and kind of remix the cake batter or whatever the metaphor
22:02is and try again and i would focus on the community and participation is is the way forward so there's
22:09a saying saying that fall eight times get back up eight times yeah that's right exactly right all
22:13right so scott thank you so much for sharing your insights on your time uh it's clear that world's
22:18startup journey is challenging there are real opportunities for founders who are prepared and
22:22connected so for more resources you can actually check out scott's work at startup council.org and his
22:28youtube channels for a free start of advice and stay tuned for more conversations after this
22:32uh niagawani will go for a short break we'll be right back
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