With a stage-agnostic strategy, the firm’s portfolio includes early-stage startups and recent IPOs like Snap Inc.
The other week, I learned about Muhammad Yunus.
As I spoke with Abhijit Banerjee, the Managing Director for Decacorn Capital, he began explaining an idea in his humble office above the heart of Singapore.
To help me understand, he brought up a Bangladeshi man named Muhammad Yunus, world renowned social entrepreneur, professor turned banker who challenged many a convention to start a movement which we now refer to as microcredit or microfinance.
In 2006, Yunus won the Nobel Peace Prize for reforming how the traditional banking system works. In doing so, he invented the idea of micro-financing but, more importantly, helped lift millions of people out of poverty.
His bank, Grameen, not only lent money to the extremely poor, it did so without the extortion-like interest rates that ensured the borrowers would remain in poverty for eternity.
Furthermore, when he won the award in 2006, 97 per cent of the 6.5 million borrowers were women.
Grameen has an interesting strategy, it lends money to groups, rather than individuals, so they can buy raw materials to transform into goods to sell on the market. The theory is that lending to groups makes it more likely that Grameen will see the loan returned.
This is not how the “real world” works, but despite that Yunus’ model was a huge success, and now micro-financing is a fairly well-known business strategy across the world.
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The point Banerjee was trying to make while bringing up Yunus, is people who make a real difference do so by turning the system on its head. They zig while everyone zags.
Banerjee hopes that in a similar way, his firm Decacorn Capital do the same in the technology world: Challenge the status quo.
Connecting dots
For a Singaporean VC, Decacorn Capital’s portfolio is unexpected and, upon first glance, curiously diverse.
The firm has an exit, by way of IPO of Snap Inc., and it has invested in other Silicon Valley tech unicorns.
But then, there are a mix of early-stage companies like an Israeli deep tech cognitive-behaviour tracking firm for cybersecurity; it sits alongside a Bangalore-based self-driving transportation startup. There is an Italian eyewear company, which makes custom designed, 3D-printed, eyewear.
To drive the point home, its portfolio includes a Silicon Valley think tank that is trying to train the world’s next future-makers.
Banerjee calls this strategy ‘seeking best-in- class businesses’ and Decacorn focusses primarily on
the company and the founders rather than the technology. The technology is important, but
Banerjee firmly believes technology is, and always has been, a means to an end.
So, Decacorn invests in the ‘end’ that the business is working towards.
The result is that Decacorn is stage-agnostic. This works because the Partners are all shareholders and have put their own “skin in the game”.
Banerjee said they are not fund managers, and the team is “working to create delight for ourselves at our own pace and time, thereby creating delight for all our stakeholders both upstream and downstream — which means we are not under pressure for an exit timeline.”
The firm has been around for 15 months and has invested in 15 companies (the barbelled mix of companies highlighted above). The goal is to balance the risk reward structure.
The firm typically co-invests with other angels and VCs, with their ‘sweet spot’ being US$500,000. with US$50,000 to US$2 million for outliers.
Yes, Banerjee says, obviously money is a draw, but during the conversation, he seemed to be more motivated by the excitement and energy he gets from seeing cutting edge technologies from the front row seat — which he says helps him stay relevant in this rapidly changing world.
A significant reason, it seems, Decacorn is in business is because they are having fun.
“This time and age is the most exciting stage of our lives and we would like to enjoy this ride and
rather die with our boots on,” he said.
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After spending its first year+ in mostly Western markets (plus the India investment), Decacorn is circling back to Asia.
The problems and opportunities in Asia
Asia continues to be one of the most diverse economic terrains in the world, with its mix of developed and developing economies at different stages of economic maturity.
This means, for Founders and investors, there are major problems to solve as well as good availability of capital to help propel the startup ecosystem.
“Just to take a case in point, looking at the landscape beyond our immediate neighbourhood towards rapidly growing India or even frontier markets like Bangladesh, with its 160 million people, everywhere you look around there are challenges, and hence, opportunities,” said Banerjee.
When asked about the technologies that can solve these problems/challenges, Banerjee pointed to artificial intelligence, machine learning, drones and data analytics.
AI and data analytics are often brought up as the technologies building the future, but Banerjee’s point about drones was particularly interesting.
Southeast and South Asia are notorious for having some of the worst traffic in the world, which means last-mile logistics is one of the golden-goose industries in the region. But, this challenge isn’t just for some e-commerce company trying to facilitate same-day deliveries.
Think about rush-hour in Bangkok, Dehli, Jakarta or Manila — and imagine in that situation someone is trying to deliver life-saving medicine. Finding a sustainable and scaleable solution to genuinely bypass traffic would not only be a game-changing business model, it would make a huge positive impact on humanity.
Banerjee brought up the point that he is probably not a genius, that time passed in this lifetime. Instead, by supporting these geniuses, then, in his own way, he is helping in making this world a better place.
Advice for entrepreneurs
The advice from Banerjee is simple: explore the world, test your comfort-zone and actually learn about how the world works.
“The first thing is that you have to look around for opportunities beyond your comfort zone,” he said.
Travel on the cheap to Sri Lanka, Bangladesh, India or the Philippines. Take a train through Southeast Asia to Beijing. Visit the Baltics and the Nordics, discover middle and Latin America, tread into Africa and avoid the 5-star hotels.
“If you really believe that the world is our oyster and passionate about finding best in class companies then you must go out in the world and search for them,” said Banerjee.
This kind of searching means having an open mind and being humble enough to truly learn about the lives of people in other parts of the world.
That said, in the world of startup investing, success is still few and far between and often ‘luck’ is a far better skill than ‘genius’. But, those who are successful are the ones who are prepared when luck circles around to their front door.
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