Unicorn Hunting: Investing in the Next Wave of Innovation

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The infrastructure can be seen as safe compared to the wild child of private equity I think you could also say that private equity has seen as safe compared to the more wild child of venture capital and that’s what we’re going to be focusing on next depending on which data provider you follow there are just over unicorns currently in the world today with an estimated aggregate value of about.

trillion dollars so I’m very excited to bring on our next panel of experts which is unicorn hunting and investing in the next wave of innovation so I’d like to welcome the moderator maja abu el inane to the stage and her fellow panelists please join me in welcoming maja so the Middle East is no secret that we have our own unicorns and we’re very proud that some of the companies in the region KTM and others have been able to be unicorns in the region and we understand that you know innovation is driving a lot of what is driving industry and business today I’d like to take a minute to have everyone kind of just introduce themselves and then we’ll dive right into the questions and talk about how we’re gonna be hunting for the next unicorn not just in the Middle East but globally and the importance of the unicorn kind of Northstar and where you guys think everyone need to be investing in thinking about innovation where we need to go let’s start off with Ewan or thank you very much maja my name is nour suede I run a VC firm in Dubai called global ventures we focus on trying to find the unicorns here in the region across the Mia region and scale them globally enabling them to enter new markets this is Janet Sonam come from MSA capital China Africa the venture capital firm but recently a few years to win more towards to me now this region we fully believe this region will be the next big market hub a lot with Minicon companies we like to hear that.
hi everybody sada Amir I’m a managing partner of the Softbank vision fund as most people know we are a hundred billion dollar fund focused on what we call tech investing I serve on the investment committee I serve as a board member I run the European office I get only one salary though but very glad to be here and with these esteemed panelists thank you for a terrific I’m Tim Draper with Draper associates were a global venture fund and we have a network of venture capitalists around the world and Newar is the most recent that Global VC by the way great brand global VC is our most recent edition and it’s great to have someone here in the region because it does feel it has this feeling of change and when you have a feeling of change you can create unicorns or what we call rhinos which are fat unicorns we we think that this is really one of those times and one of those places where there’s so much change happening that entrepreneurship is really going to thrive I mean if you think about it everyone wants to be an entrepreneur everyone wants to work for a start-up everyone wants to be part of this ecosyst of entrepreneurship where is let’s take off with you kick off with you Tim where is the next wave of innovation coming from in your point of view and what are your thoughts on that ?
I was very lucky because I was there for the Internet boom and as a venture capitalist and we got to see the the Internet transform industries like media and communications and information gaming entertainment all these industries and their big industries tend to a hundred billion dollar industries and and I got to see that and I thought wow I was so lucky I got to see that and now all of a sudden they’re they’re these new technologies artificial intelligence Bitcoin the blockchain smart contracts quantum computing they’re all going to start transforming industries that are to a hundred times bigger than the industries that were transformed by the internet so you’re gonna see a transformation of banking and finance and insurance and healthcare and government itself is going to go through major transformations we the the big opportunity I think is the the decentralization of everything where we’re opening up the world the world used to be very tribal and now we’re very much global and in decentralization that technology forces everybody to think globally and you’re seeing governments trying to reposition themselves and when you have that kind of turmoil it’s the best time to be either an entrepreneur venture capitalists because when there’s when there’s when nobody when there’s no change going on in the world people are all very happy and they they sort of push down the entrepreneurs but when there’s this crazy weird environment where nobody knows what’s going to happen next the entrepreneur is will reveal the winner and becomes the winner and not and so either you want to be an entrepreneur in this environment or you want to be a venture capitalist it’s a it’s a wonderful time to be both Jenni touched me a limited about your point of view from China you are established here than one of the largest VC firms in China how do you see it from your point of view and and where do you think the next wave of innovation is coming from in your market or anywhere else in the world that you operate yeah I totally agree with steam I think that the technology have a little border internet is flat that’s reason we start from China bracha six five years ago you miss a little bit too many Kimani but right now we have underground tea in Mena around five people we dedicated to one team based in this region in China France became my personal not my profession career lasted years in China metrocapital practically you consistent I would say this cuz the experience it just gave me a lot of you know keep me very exciting everyday so I was saying from the first wave of internet booming year and back to years ago our internet a mobile a booming China definitely as you you guys already know how the top big company of Internet in this world half of them come from China today mm-hmm so China’s Chinese have a very small market . billion population and people working very hard and the people there are lots from Silicon Valley but they adopted a lot of tech knowledge and application from us then but the beauty all super apps for example one other part foreign companies meet one so today’s vanishing on billion US dollar they build everything on that attention every know the build the super up above which had people every day given in life there they open the chat the to payment so I would say our team we really want to build most of our expensive what kind of a yeah most of us successful kind of a ecosystem and the biggest model in this region this region have bird no penetration for e-commerce mobile payments p p landing and a lot jesting a definite so we won’t build the core technology infrastructure here we already put a lot of a part of our new company and I gotta the largest big data health company in town and the largest jalan-jalan can sequence a company here and we distributed the one of the larger not just a company here won’t build the penis in this region so for China I was saying right now we you know the third wave bubble innovation we believe most of the AI big data in later business we believe with this AI big data will disrupt lot about traditional penis and the second opinion is emerging market which you are so excited for this Ridge on me not wonderful yeah I mean I just like to go back to what Jenny and Tim we’re saying there’s no doubt that we are on the cusp of probably the most exciting phase of this tech revolution right and simply put it’s because the speed of transmission the cost of storage and importantly processing speeds have reached a point where we really believe that this notion of a is going to transform so many of these traditional sectors and industries that Tim and Jenny mentioned right to us that’s very interesting so for us it’s not so much investing in tech per se it’s just that we believe that tech underpins the way so many traditional industries are going to get transformed that to us is the most important part now what excites us as in division fun most are essentially five things right first just because the size of our fund we look for big underlying sectors to invest in and that’s important rather than looking for niche players we look for big underlying sectors and certainly as Tim mentioned there’s some massive sectors being health tech and mobility and logistics all these sectors FinTech are huge sectors that are ready to be disrupted that’s one – we look for for companies that have already established kind of a market leading position so some proof of concept that they’re able to dominate that particular sector and that’s important because we this notion of of network effect becomes important size baguettes size of course and then thirdly the important thing for us is to to see a level of growth that suits and matches our expectations and our ambitions right so we look for companies that are growing and certainly there’s no shortage of those fourthly what’s important to us as you mentioned is is the drive of the entrepreneur the vision of the that’s critical in this equation because ultimately if you don’t have vision it’s very hard to have a strategy and a plan that you can execute everything is driven off vision so to us knowing the entrepreneurs ambition knowing the entrepreneurs capabilities his or her capabilities and the ambition that they have is critical to that right so we have to believe in the entrepreneur and the founder and then last but not least I’d like to come back to this idea that AI and tech has to be pervasive in that particular sector that our belief that tech can transform that sector and it’s going to revolutionize that sector any sector that’s it so as long as you have that sort of an alignment of those five vectors that’s something that excites us and that’s something that we want to be investing in absolutely Softbank it came at that was just brilliant strategy I mentioned this to you to come at a time when sarbanes-oxley made it so difficult for anybody to go public no no great entrepreneur in their right mind would ever want to go public at this point but Softbank filled this huge gap and so thank you for that and and think I need to promote thank you to both your in major investors because they did create liquidity where there was none and we saw companies dying on the vine because they couldn’t go public back in the – time frame and you guys came and kind of saved the day so good job thank you I’m prompted thank you very much Nora you built the business here in the Middle East and your family business has invested in a lot of companies you know we’ve talked a little bit about the different areas of next ways of innovations that are happening but a lot of people don’t just invest in companies they invest in people and he was just pointing on about the whole thing about we invest in founders what is it going to take to upskill the work force and are you gonna be investing in companies that aren’t investing in making sure that the employees are lifelong learners the founders are making sure that they’re disrupting themselves in terms of staying up to speed with what’s happening because technology is accelerating everyone’s ability to either you have to innovate or you literally will die what’s your take on that so first of all I think that we’re very fortunate to live in a region which is one of the youngest in the world poses as challenges such as how do you upscale your workforce but it also means that we have a rising population so half the population of four hundred million peoples under age obviously they do need to be educated they do need to be up skills as all populations do across China and the u.s. consistently in this fast-moving environment what we’re also fortunate enough to find is that the founders we’re backing are properly globally competitive so we’re not backing founders in the region because they’re from the region we’re backing founders in the region because they happen to be able to compete globally and we’ve seen that repeatedly we’ve built out this fantastic portfolio where our founders have you know gone from being UAE based to being UAE New York London in revenues not in costs with at least percent of revenues derived from outside markets and this goes across the board so from software-as-a-service companies we’ve backed a founder who was the first in the region to integrate with service now who now has clients including Georgetown the city of Tampa the Port of Tampa and just came as a runner-up for the best cybersecurity sorry the best security solution in America won an award of the Javits Center in New York last week so when you see our founders being able to do that when just a year ago he was a UAE based company or another one as we were talking has gone from UAE to UAE Asia from million monthly revenue to million monthly revenue and as they grow they create jobs as our founders have grown over the last year they’ve created jobs in the region now these jobs normally and especially in the region need to be at that competitive level otherwise these founders cannot come internationally what they’re lacking back to Tim’s point is access to capital we have a problem much earlier than the US and these founders much later down the line had a problem which is when our founders get to a stage when they have a few million dollars in revenue and one or is ten million we have to syndicate these deals we cannot sustain these founders with regional venture capital because there just isn’t enough so we have to send it internationally we syndicate with Excel we syndicate with Gobi we have to attract that and exert energy as VCS and energy as founders syndicating these smaller tales because the kappa doesn’t exist yet in the region so we don’t intentionally say we will only vac founders from the region because you know we’re trying to support regional growth we think regional growth and upskilling will come naturally as these founders grow and create jobs for their companies those where the talent is it’s where that we have a lot of talent it’s really hard for someone to convince me that you know of million people of which half are under and that % youth unemployment in some of our markets so the opportunity cost of starting companies actually close to zero for a lot of these people we cannot find a hundred awesome founders right so when you take a look statistically you’re gonna find them they’re gonna be self-motivated they’re driven and actually I argue and and some of our investors agree especially our us-based investors is that our founders are times stronger than founders in common countries and markets where there’s a lot of capital they have to work ten times as hard to start their companies they have to work ten times as hard to land a client with long sales cycles in the region they have to open in Jordan or Pakistan for talent instead of that just their backyard and down the street or Egypt and they have to be cross-border they have to get so much more done to raise a million dollars then a founder in the Bay Area or in New York might have to get done so by the time they’ve actually reached ten million dollars in revenue they are really the top founders globally and when we position them globally they’re able to not just compete but also succeed yeah there’s scrappier and they have go through more hurdles than they’re profitable there come from a very young age they’re profitable because they cannot bank on all I’ll raise that ten million dollars later right so there is this thing where every dollar counts which is not the same when we look at founders globally at this point in time and venture capital has cycles where we sit in the cycle is where you know in Tim correct me if I’m wrong but it’s kind of where VC was in the Silicon Valley area in the s and s where we get to work with the founders for three to six months before we make an investment we get to see if they’re coachable we get to see where the value we can bring to the table is we get to really make introductions with them and help them grow their companies before we decide to invest or as we decide to invest and work alongside them as true partners and for them every dollar matters no founder here comes through VC and says here’s a term sheet you have a week it doesn’t work that way so we’re still operating VC and the Bay Area and the s and you know where it’s very fortunate position where and it also means that the founders you support we give a lot of effort to yes good you yeah I would add something to that it is true that it feels a little bit that way like it feels a little like China did in the early s where it’s like hey things are going there’s a lot of change and that creates more entrepreneurs and great things can happen I recommend everybody think you’re not gonna become the Silicon Valley overnight China took about years Silicon Valley took years to get where they are today so you have to be patient with it and I love that you have already gotten your fund raise or it’s almost there because it it makes me feel like okay good we’ve got some stakes in the ground we’re starting to build the the base the ecosystem it’ll take time but there will be great returns from something like this so I think it’s it’s really exciting and we’ve been able to start these ecosystems in a lot of different places and that has China for one we were first Silicon Valley venture capitalist into China – and and we notice that as long as people are patient they’re willing because a lot of people say hey let’s put Silicon Valley here and then they build a nice building and they say entrepreneurs come on in and it’s not enough you have to kind of create an ecosystem and we tried to do that with Draper University we get students from all over the world and they come in they they start they eventually get hero training and then they go off and they start big businesses and then but they often go back to their their own countries to do that you can’t expect that to happen overnight but if you get you know when it when China turned around was we backed by do and it wasn’t when we backed by do but it was when bitey went public and the range was to and the first day it closed at that that woke up the entire Silicon Valley investor group they all came and flew to China the next day and it started to build from there the same thing can happen here noir is gonna get a unicorn or hopefully a rhino in this region and we’re all going to throw ourselves into first office in China Beijing one you send Beauty like Tucson year that year I remember it sound fun there yeah I totally with you I’ve every time I come back to this region you know what I feel I feel again I’ve saw that time machine everything happened last years in China right now when they were happening here I love the word that you can sister you machine so I’m so lucky I was the earlier year to you Bob the whole ecosystem business in China or that call myself the investor actually my own self other founder and also back to equation the enterprise ship keeping me lumbering sites and for China which is I’m so president repair ship in China so which Chinese are working so hard their fellow no holiday it’s a kind of like a working kanima style and also the nerve the nerve very fast and the triphala feel fast we say you feel faster you can find it this accompanies and also we’re so pretty that we call zero inch players which you have found in a multiple successful business already like a tourist republic company in a second Hong Kong they still have a driver and I be sure to build in the next big sense so would make a lot of who’s gonna serious founders and yeah the pioneer of this so you know the title of the panel is talking about you know hunting for the next unicorn it is the unicorn worth the hype should startups that are in the room we’re listening today you know dream and hope of becoming a unicorn for that exit well I mean some companies are getting a bad rap that they’re overinflated and hasn’t been worth it talk to me about the unicorn Northstar so here’s the way I look at it will invest in startups will invest in companies in our next fund and then we’ll focus on sort of the top and then maybe the top to and then eventually like the top will end up in their portfolio we’re we’re looking at it and saying look if if we’ve got the if we’ve got something that’s got the potential to be a unicorn we’re gonna we’re gonna let the rest of the companies kind of fend for themselves and we’re gonna really focus on those ones that can become those great unicorns and and maybe rhinos and the difference between a fund of ours that gets like a percent return and one that gets it like a percent return is how high is up for the biggest winner so all I’m focused on when I’m sitting there talking to an entrepreneur all I’m thinking is if this lot of great venture capitalists are all telling me I’ll talk about all the risks to making an investment all I’m thinking about is if this works mm-hmm when I’m interviewing an entrepreneur what if this works if that works and it be you know maybe it works and it becomes a ten million dollar business I don’t care but if it works and it becomes a ten billion or a hundred billion dollar business that’s when I say okay I’m willing to take all those risks all that crazy all the crazy things that can happen to this because I know that if it wins it’s gonna be enormous and I and we want to make sure that so that’s the way I’ve been investing and it’s working it’s not broken don’t fix it yeah I mean just to touch on what Tim mentioned the role that Softbank plays is coming in at a stage where these unicorns are now ready to grow even bigger further right and how do we do that well for one we help them grow cross-border right because of our breadth and because of our size we have connectivity in practically every geography around the world including this part of the world thanks to our partners Mubadala and what we do is help them grow cross-border so if we take a company that sort of become a unicorn in India we’re able to grow them into China or the US right so that’s one vector cross-border the other way we do it is now that we have over companies within the vision fund itself not to mention a slew of companies that sit within the mothership Softbank group we’re able to create a lot of b b opportunities right so there’s a lot of tech companies that have symbiotic businesses or symbiotic relationships with one another we are actively connecting those and helping to grow on that the other thing we do is that so many of these companies are growing within the vision fund we have a lot of finance knowledge like myself within the vision fund so we’re able to give them a lot of direction a lot of connectivity to help them lower their council of capital and give them access to capital right Capital is the oxygen for a lot of these we help them do that and then last but not least we continue to maintain an active dialogue with the entrepreneur to be able to push the entrepreneur to get to the next level today thinking ambitiously right so if we can do that holistically right we believe that you know these unicorns kind of glorifying these unicorns is good because we’re able to pick out the winners that can continue to keep growing that is our role and it gives an ambition for that entrepreneur to try to target to reach that goal unfortunately we are out of time I wanted to thank you all for being on our panel today unicorn hunting looking at the next innovation of skilling in people thank you for all being with us today.

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