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Episode #415: Sajid Rahman, MyAsiaVC – The VC Landscape in Emerging Markets From Someone Who’s Made Over 1,400 Investments – Meb Faber Research



Episode #415: Sajid Rahman, MyAsiaVC – The VC Landscape in Emerging Markets From Someone Who’s Made Over 1,400 Investments

 

Guest: Sajid Rahman is the co-founder & CEO of Digital Healthcare Solutions and Managing Partner of MyAsiaVC, an early stage venture fund.

Date Recorded: 4/27/2022     |     Run-Time: 57:14


Summary: In today’s episode, we talk with someone who’s made over 1,400 investments – yes, you heard that right. Sajid shares his journey of breaking into the VC world and then dives in to what he’s excited about today. He touches on areas like Africa, India, Nigeria, Pakistan, and Bangladesh, and explains what makes each place unique. Then he explains why he’s bullish on fintech, logistics, and edtech, and shares some of his investments he’s excited about today.

As we wind down, Sajid shares why he’s especially bullish on Web3 companies coming out of India.


Comments or suggestions? Interested in sponsoring an episode? Email us [email protected]

Links from the Episode:

  • 1:11 – Intro
  • 2:00 – Welcome to our guest, Sajid Rahman
  • 3:39 – Sajid’s path into venture capital
  • 6:42 – Sajid’s investment philosophy
  • 10:46 – How the view of investing in emerging markets has evolved over time
  • 15:16 – Sajid’s view on the global investment landscape toda
  • 18:07 – Sectors Sajid is attracted to: payments and logistics
  • 30:58 – Sajid’s approach to sourcing deals
  • 33:31 – Some of Sajid’s portfolio companies
  • 42:38 – Advice that he’d offer to someone interested in angel investing
  • 50:03 – Sajid’s most memorable investment
  • 53:24 – Learn more about Sajid; LinkedIn, Twitter, AngelList (MyAsiaVC), AngelList (Web3.0), Web3 Fund, Rolling Fund

 

Transcript of Episode 415:

Welcome Message: Welcome to “The Meb Faber Show,” where the focus is on helping you grow and preserve your wealth. Join us as we discuss the craft of investing and uncover new and profitable ideas, all to help you grow wealthier and wiser. Better investing starts here.

Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria Investment Management or its affiliates. For more information, visit cambriainvestments.com.

Meb: Welcome, my friends. We got a really fun show for you today. Our guest is Sajid Rahman, managing partner of MyAsiaVC, an early-stage venture fund, and the co-founder and CEO of Digital Healthcare Solutions. In today’s episode, we talk with someone who’s made over 1,400 angel investments. Yeah, you heard that right. Sajid shares his journey of breaking into the VC world and then dives into what he’s excited about today. He touches on areas like Africa, India, Nigeria, Pakistan, Bangladesh, and explains what makes each place unique. Then he explains why he’s bullish on FinTech, logistics in EdTech, and shares some of his investments he’s optimistic about today. As we wind down, Sajid shares why he’s especially keen on Web3 companies coming out of India. Please enjoy this episode with MyAsiaVC’s, Sajid Rahman.

Meb: Sajid, welcome to the show.

Sajid: Thanks, Meb. It’s a pleasure.

Meb: It’s awesome to hang out with you all the way across the world. Tell our listeners, where do we find you today?

Sajid: I’m in Indonesia, the capital city, in Jakarta.

Meb: I was joking with you before this, so coffee for you in the morning, I’m in Los Angeles, normally it would be some wine or beer for me. We have a beautiful family of birds outside my window, which listeners may be able to pick up. One of my favorite podcasts we once did from Hawaii, where there was a bunch of roosters throughout the entire show. So it gives a little color. What’s the vibe like there right now? You’ve been there for a while? I know you’ve lived in a lot of different places. How long have you been in Jakarta?

Sajid: For a while, actually. Almost nine years now. As a city, it’s opening up. The COVID restrictions are almost over, you don’t need to do quarantine anymore if you travel here. So, yeah, life is getting back to normal. Cafes are full, restaurants are full.

Meb: Where were some of the stops prior? I know some of the answers, but tell the listeners, where are some of the places you lived all around the world?

Sajid: Spent quite a bit of time in Africa. So I was based out of Lagos, Nigeria managing the West Africa… So in different countries in Africa, sometime in the Middle East, and of course, in Bangladesh where I’m from.

Meb: Awesome. So we’re going to talk all things startup investing. It’s so fun at this, sort of, day and age. One of the reasons I was pestering you to be on the show was we joke some of the top startup investors all over the world have been on the show and certain deals and characteristics show up from, I think, a lot of the best ones. And you were new to me, but kept presenting a lot of unique and different investment opportunities. And we’ve invested together on a handful now, and companies all over the place. And so, I’m excited to welcome you today. But if I have this right, and you may have to correct me, you weren’t always an angel investor, right? A banker, once upon a time, what was the origin story for you?

Sajid: So I started in banking, and which essentially took me to Africa and all these countries. So I was part of an international bank. It’s a British bank, but they mostly focus on emerging markets. So while they’re trading at FTSE, most of their money they make either in Asia or Africa. That took me to all these places. The bank brought me to Indonesia, where I’m based now. But then I left banking and a telco company, it’s a Norwegian telco, again, big in the emerging markets, so they hired me to build a global health business. A lot of these telcos are struggling to make money from their core business, which is providing infrastructure, trying to build digital layer on top of those telco networks. The company, Telenor, has done some big businesses in financial services in markets like Myanmar and Pakistan. So they wanted me to build a health business in Bangladesh, so I was hired to do that. So obviously I left banking, built a digital health business, which is actually quite scale. We currently serve 5 billion people. It’s a really large healthcare business, also one of the largest health insurance book. But I have been investing on the side for the past six, seven years, and that’s what I now do full time.

Meb: How’d the investment journey start? People kind of arrive at this destination in different ways. We’ve kind of very publicly chronicled my journey here. How did it start for you? Was it public company stocks or your college roommate come up to you and said, “You know what? I got this great opportunity. Invest in my Bollywood film or my restaurant down the street, or…” What was the initial foray for you into this world?

Sajid: Yeah, it was sort of like an accidental tech investor. So when I was with the bank, a couple of young guys, they approached me. They wanted to build a FinTech business, comparison sites, one of those places where you go and get different comparison of credit cards and you decide which one to buy, and etc. They needed some advisor. So they were launching an Indonesia, they wanted someone to advise them to navigate the regulatory landscape, how to talk with the central bank, and all this stuff. So I decided to help them out. I joined as an advisor, and six months down the line, they were raising a round. And they said, “Would you be willing to invest?” I wrote my first personal check. Now, that was my first angel investment. What is interesting is there were other people on the cap table who had been doing it for a while. So they showed me the rope. So that, “Oh, if you’re interested in angel investment, you need to do this many companies. This is where you can find deals,” and stuff like that. So that’s how the whole thing started.

Meb: That’s a pretty traditional path, I feel like, and a thoughtful path, I think. Getting involved, whether it’s operational or sweat equity is a way that kind of gets you into the world. We talk a lot about the access is much more ubiquitous at this point versus 10 years ago, versus 20 years ago. You might have been able to join one of these, like, angel investing clubs or work at a VC. Other than that, unless it’s, like, your college buddy, like, you probably didn’t see as many, but now particularly with AngelList and sites like it, it’s opening up a whole new world of opportunity. All right. So I think I’ve invested with you about half a dozen, dozen deals, somewhere in that 10 range. Pretty eclectic grouping. But tell the audience, what is sort of, like, your framework? What are you looking for? What’s the general investment philosophy that’s sort of your opportunity set?

Sajid: I think two things, which probably as someone who has been part of my syndicate, you probably have noticed that my deal flows are pretty much all over the world. I’m based in Indonesia but I bring deals from Africa to LATAM and of course from Asia and then U.S. I’m broadly agnostic of the geography. In fact, I think there are more opportunities in these markets than the traditional markets where we are more accustomed to invest, so that’s one. Second, I operate from this philosophy that all countries are on the same digitization curve but at different points. It is sometimes quite astonishing for me. So I talk with a founder in India in the morning, and then I talk with another founder in Asia or in Africa, and they’re all building the same business. Probably the similar business model has already been proved in U.S. So one of the mental model that I use is that has this model already been proven? Am I only taking an execution risk other than a business model risk? So that I have found it quite helpful in investing in the emerging markets.

The second thing, of course, as we have always seen, some of these valuation is a bit out of whack compared to the traction. Sometimes I do invest, I do bring in companies on the syndicate where the valuation may be. Sometimes it’s overvalued, then the traction, but I think given the potential and everything. But I try to recalibrate that, whether the valuation makes sense. So that would be the second model. And the third one, of course, is the traditional, the founders set. So when I’m talking with the founders, one of the things is that I have now invested through AngelList to other people’s syndicate directly, it’s almost, like, 1400 companies.

Meb: Fourteen hundred?

Sajid: Yeah.

Meb: You officially have the record. Because I asked this question on Twitter maybe like a year ago, because listeners may be spitting out their drink listening to this or laughing like I did. So I’m, like, around 320 or 330, been investing since about 2014. But you hit upon something that to me is, we’ve said this before, it’s not a unique insight, but it is a critical insight, which is you need to have a certain amount of breath, certain amount of shots on goal to be able to capture this world. And so, I actually think you have the record for… Fabrice Grinda, I think was close to 1000, Calacanis was in the hundreds. I mean, some of the platforms, certainly. That’s definitely the record. I love it. That’s awesome, man.

Sajid: What happens is when you invest in that level of companies, you tend to develop, what do you call it, gut feel, when you talk with founders? And that of course always helps. So those are the sort of the tools I use.

Meb: I think it’s right, man. The amount of pattern recognition and what we tell a lot of listeners when they’re particularly getting started, I said, you should start to just read every deal memo possible. You start to pick up on the good, the bad, the missing, the exaggerated, the interesting, and on and on. And I mean, I think I’ve reviewed something like 6,000 deal memos at this point, but you start to also pick up some pretty interesting signals, and not just from investing, but also things you can incorporate. My team is so sick of me saying this at this point, almost every day, certainly once a week, I’ll send a message on Slack or email and be like, “Have you guys seen this? Maybe we can incorporate this, da, da da. This SaaS company into our company.” Or, “Have you used this personally?” Like, on and on. I have, like, products over here that are sitting here that I’ve, like, been trying to make everyone in my family try. They are consistently kind of grossed out by some of my ideas. But I think it’s a very thoughtful approach. And so, wait, what is the timeline, like, spread on this? I assume this wasn’t all in one year. How far has this been spread around?

Sajid: So I started investing in 2014. So roughly eight years or so.

Meb: Yeah, man. Well, all right. Well, you and I came to the plate at the same period. All right. So, you know, it’s funny the two though, and think this to me is one of the reasons I was attracted to you and what you’re up to. I look back and I had someone go run all the numbers on the portfolio that I’ve invested in. And I said, location, gender, founders, where they’re from, every possible statistic. And I don’t know if it’s 3 of the top 5, but it’s, I mean, like, 75% are U.S. based companies for me, but I think 3 of the top 5, on paper still, of the best performers were non-US. And part of that was due to the, and I don’t know if this will continue for indefinitely, but more reasonable valuation starting points, or just that the opportunity is things where people weren’t looking. Like, how have you felt the global viewpoint has evolved over the past eight years? Are those things you’ve seen? Has it changed? What’s kind of the lay of the land for looking all global and international?

Sajid: Two things. I think, first of all, the so-called emerging market or markets, especially with Asia and LATAM and nowadays in Africa, pretty much you can name any top tier font, they’re all here. So there’s a lot of money coming into this space across markets. So I think the valuation is, of course, as a factor of that is inking up, which, when I started this thing, seven, eight years back, the valuation was much more palatable. So that’s one. In terms of the growth of some of these companies, just to give, probably relate to what you just said, of all the companies that I invested, it’ll also be roughly 65%, 70% in U.S. and the rest 30% outside U.S. in my case. But in terms of pure money on money return, the big top three or four are outside U.S.

Meb: Interesting.

Sajid: So I’m saying the similar thing, probably on a much broader base. So that’s one. And that’s probably because, like you’re saying, one is of course the starting point and valuation. The second, I think, which is very interesting, is some of these companies are such a fast mover into the geography that they pretty much control the dominant position. And the third thing is a lot of these economies are early stage of their growth. So the delta is growing very fast in most of these companies. So just to give you an example, one of my best performing company is what they call building a Stripe for Southeast Asia. Now, as these economies are getting more digitized and people are using all the digital services, so the market is expanding, this company is essentially building on top of that growth. The rising tide is obviously helping, and because they’re a first mover, they have a big market share. So all this combination with a low entry point really makes a good investment.

Meb: How often do you see that? It seems to me a lot of times you have, particularly in the emerging markets, a successful idea concept that has been taken and tried elsewhere, and that it often has a pretty amazing immediate product-market fit. Is that a traditional business model idea that you’re attracted to that you think is… Because, I mean, this goes way back to, it reminds me of some companies were doing this in Europe, like, 15, 20 years ago on some of the ideas. And it doesn’t always work out, but is that something that you think is a repeatable sort of concept that can get applied?

Sajid: Oh, definitely. And if you look at most of these markets, the pitch is essentially X of Asia or Y of Africa, or Z… You know, it’s Uber’s version or fit for these markets, it’s Amazon’s versions of this market, Stripe’s version… That is very predominant across these geographies. And then nowadays what’s probably happening is we are seeing between one country to another. So let’s say India has a very successful model and we are seeing now that model getting replicated in Indonesia. Or Indonesia has a very successful model, we’re seeing that getting replicated in Africa and Nigeria. I didn’t invest many in Europe, but I think the biggest delta I see in these markets is the huge demographics. So Indonesia has 260 million people, you are talking about 1 billion people in India, and Africa as a continent. So when you’re investing in digital services or companies, which cater to such a large population, all companies, which are probably helping in digitizing their semi businesses, you probably are talking about a business, which has a lot of runway. Because most of these people are underserved digitally, most of these SMEs don’t have access to lot of these digital services. So there’s a huge runway to growth for all these companies. And that’s where I think is sort of the winning formula, so to speak, for a lot of these companies.

Meb: How many sort of generalizations can you make? Because, like, these geographies are so different and at various stages of developing emerging sectors or different rules and regulations, how challenging is it for the world to be your oyster? I feel like it’s almost easier for some of these VCs. “I only invest in SaaS companies in Boston.” Good, that narrows your universe for you. You have the opposite challenge and it’s good because it’s a bigger pond to fish in. But it’s sort of limitless on what’s going on. So maybe walk through some of the geographies specifically. You mentioned you’re everywhere, but that you focus on in particular, or ones that you think are really the most interesting and opportune right now.

Sajid: I think, I mean, purely if we go by country, I would say there are five countries where I’m seeing most of the deals coming through. One is Pakistan, which is a large population growing economy. Second is Indonesia, similar. I’m seeing a lot of similar demographics. Third would be, you would say, Nigeria within the Africa continent, similar geographics. And the good thing is that I spent four years in Nigeria, so I know that market quite well. Then, of course, you have the traditional India, which is a big enough market and at growth. And within the LATAM context, it’s essentially either Columbia or Brazil. So these are the markets. And then, of course, from Bangladesh, I invested in a couple of companies where I’m seeing similar growth trajectory. Now, if you look at these five, six countries, the point you’re making, it’s not actually very different in terms of where they are. Probably each country is three to four years apart from other in terms of the digitization curve. But the number of people, the growth rate of the economy, and the trajectory are pretty similar.

Meb: That’s funny you mentioned that. I have a friend who I love to talk to about AngelList deals and others, and it’s frustrating that you can’t really talk about them publicly, the accreditation and fundraising processes. It’s still a little frustrating, and in many ways, look, I get it, but we text about it, talk about it. And he always laughs because I’m drawn specifically…like, the Pakistan deals are so consistently obvious to me. I see so many where I’m like, “Oh, my God, this looks amazing.” And I’m always sending him, I’m like, “Hey, I think I’m going to do this one.” And he’s like, “Dude, your batting average on the Pakistan is like, it just has to say Pakistan and you’ll invest in it.” But it’s funny because I agree, like, exactly what you’re talking about. A lot of the, and I don’t want to jinx myself. Look, until the cash hits the bank, none of this is finished, of course.

But looking a lot of the opportunity sets and the deals that seem obvious to me where they’re like, wow, this seems like a great opportunity, product-market fit, revenues are going up, on and on and on. Latin America, like you mentioned, a lot of the places you’re talking about, it’s exciting. Okay. So I’m agreeing with you too much. I love to play devil’s advocate. It’s a little harder with you because I agree with you, but. Now, what about sectors? So you mentioned, I think, in the intro you like payments, what else? Is that broadly FinTech or what’s sort of the main sort of places you’re attracted to?

Sajid: FinTech obviously would top the list. And within FinTech, it’s essentially, I’m seeing two categories. One is payments in general and the second, it would be SME digitization. So anything that helps SMEs to manage their accounts better and books. Because, you know, it’s probably untapped. So you have this father who had this small shop, now the son is taking over who is more digitally savvy, has an access to a smartphone, wants to use that smartphone to download apps and everything. So he’s a perfect customer to bring to this digital world. These would be the two big areas within the FinTech space. The second would be logistics and marketplaces. And I think, again, you have one or two big players in terms of marketplaces across these geographies that I mentioned, but then there are opportunities of some niche marketplaces across these geographies, which up are for grab. Same with logistics, because a lot of these countries have an inefficiency in logistics which can resolved through better execution.

So that would be the second bucket. And the third one, which is quite interesting and which one would thought, I mean, I’m seeing EdTech coming up recently. There are a couple of EdTech companies, which has really made a stride, I think mostly driven by…and can you see that, right? So you have this BYJU’S in India, which is a decacorn, and then you see the BYJU’S of X, the BYJU’S of Y, you know, right? You have Khatabook and you see Khatabook of X, Khatabook of Y. And we are seeing some version of by BYJU’S across this market, so they take space. The two, three areas as someone from emerging market you thought, okay, these countries suffer or need a lot of improvement in health. You’re seeing that these countries require a lot of support on AgriTech, and then of course, EdTech. So we are seeing EdTech coming up, but we are yet to see very big breakthrough companies in health and agriculture across these markets.

As someone who’s built a health tech business, I know it can be very difficult to monetize, unlike a FinTech and others. So there’s no clear winner yet. And same with AgriTech. I think the reason for AgriTech is mostly because the way the ownership and the decisions are made at a village level is very different in these countries. So to help them bring to the digital world requires a lot of bureaucracies, a lot of tenures to go through. So that’s really where AgriTech is struggling. What we are seeing now in countries like Indonesia and others is that sort of like farm to table sort of concepts, where people are bringing their supplies together and providing directly to consumers. So that model is getting started in a couple of countries with some success, but not around their success yet.

Meb: It’s funny, you’ve mentioned a handful of places, Africa while obviously more than just one country as a geography was something we started picking up a few years ago where we saw the opportunity as being, in many ways, like a paradigm shift, where it was going from really not so much to all of a sudden something very big quickly. And then of course, over the last year, you’ve seen, I feel like, the rest of the world kind of wake up to this kind of discussion. But how much of these various geographies has the culture of entrepreneurship, I mean, entrepreneurship’s always been there. You go to a lot of the emerging markets like it’s the best entrepreneurs in the world, but meaning specifically like startup style, Silicon Valley mindset and startups, how is that compared across these geographies? Like if you look at it and you’re like, “You know what, this amazing YC branch in Nigeria, but in Columbia, it’s not.” How does it kind of compare here in 2022 for a lot of these geographies that you’re looking at?

Sajid: So what’s happening, we are seeing a reverse brain drain in many of these countries. So you’re talking with founders who studied in U.S., worked for some startups in U.S., and coming back and building their companies. And a lot of these startup founders, has a very strong network across the world. I continuously see founders from Nigeria talking with founders in Indonesia, or of course in U.S. or in India. In a way, as diverse as wide geographical distance they may seem, all these founders are quite well connected. And that’s probably the beauty of this whole startup thing, because people are very open to collaborate and talk with each other, which I don’t see happened in the traditional brick and mortar businesses or manufacturing businesses before. So I’m seeing a lot of the exchange of ideas happening. But in terms of the question, in all these countries, you’ll see a very, the same group… of course I should caveat that, that does not mean that people who studied locally, didn’t work out, are not good founders. I’m seeing some of them are really building very interesting companies, but then they’re getting exposed to international through accelerator program or through funds and others. But I would say many of the very successful companies in these places are done by founders who worked outside, came back, and building it. So they’re bringing their network with them.

Meb: It has this percolation effect where you have a success, they get liquidity, maybe not just the founder, but maybe all the way down two or three levels of operators. And then they start to see investments and on and on and on. So it’s like a snowball type of effect. And like you mentioned, you start to have some of the benefits like startup templates happening, not just for ideas, but all these people that went to Stanford together or on and on. And it’s having this sort of jump effect, it feels like in some ways, in a lot of these countries that have moved from almost like a yellow pin and paper style business opportunity to all of a sudden digital and it just goes absolutely bonkers crazy. Some of the adoption metrics and revenue growth on some of these companies is really kind of mind boggling, which is awesome. It’s super fun to see.

Sajid: One thing I will, on the point that you just mentioned, one thing which probably lacks, I think, especially in countries, like not really so much in India, but countries like Bangladesh, Pakistan, and to some extent, Indonesia, you know, is the question of the liquidity. We are yet to see large exits in these markets. Indonesia just had a couple of sparks of Gojek and Tokopedia, and stuff like that. So the idea that big unicorn exit and early employers coming back into the ecosystem building as a company or investor, so we are yet to see that virtual cycle working up here. But even then, I think the growth in some of these markets are so big that a lot of money is pouring in and that is helping the growth. One of cases I work on is, being someone from this part of the woods, if you look at the people who used to make decisions at a commercial level, at a regulatory level, and others, are people who used to lot of lands at one time. They had the wealth and power. Then it moved to the trading people.

So used to commodity trades in this markets and then they accumulated wealth and power. Then it went to the manufacturing. So people who are owning in a large practice and stuff. I think it’s time that this wealth and power moved to the technology entrepreneurs, which we have seen already happen in countries like U.S. And I think that’s the fourth level of power and wealth shift will happen in these societies. And that will fundamentally transform how a lot of this society and a lot of the decision makings happen in these countries. And I think we’re seeing that starting with that.

Meb: And how much is, like, the receptivity in the actual countries themselves? I know this is very country-specific as we look around the world. Some countries, the citizens and institutions are both, say, like you mentioned, more interested in owning real estate. In some countries, it’s more of a stock culture, in some countries it’s gold and hard sort of assets. Is it starting to be a scenario? And do you get a feel for it where in a lot of the places, Indonesia and others, where there’s an interest in investing in startups in general? Like, is that something you’re starting to see or maybe that you have seen for a while, or not at all?

Sajid: I would say it is starting to see in that category. It’s a long way from other markets. Like I mentioned, it varies from countries within these geographies, but I think these are very early stages. I would still say most of investments at a corporate level, at a business level, as well as an individual level are still into the traditional stocks and golds and lands, etc. So startup investment is still very, very tiny in all these markets.

Meb: All right. You have both invested in a gazillion companies as well as run a syndicate. You also are, I believe, in the process of rolling out a fund or have a fund as well. And by the way, I love the name MyAsiaVC. That’s such a great just right on the nose name. But tell me how you think about these various channels of how to reach both investors and companies. Like, what’s the feeling on using all those different sort of routes for fundraising as well as allocation?

Sajid: So just to give you a bit of a context on my syndicate journey. It all started in June, 2020, when we were in the early days of COVID. So I was stuck in a room trying to decide what to do. And then I thought, “Okay, let me launch a fund.” But then I thought, “Uh, with this COVID, reaching out to LPs might not be a good idea. So let me start a syndicate.” Because I was an active investor through different syndicates on AngelList, so I thought, “Okay, let me set up my syndicate.” So I did my first deal in June, 2020. So I’ve got roughly two years now, and the syndicate turned out to be quite a bit of success, probably because of timing. Everyone was stuck and everyone was investing. Within last 2 years, we deployed roughly $50 million. So almost $25 million each year. If you think of a typical fund which invests 5 years so that’s roughly $125 million of a fund, if you think that way.

And essentially, it’s a one person entity. I don’t have any back office, no analyst, nothing. So that’s what’s happening. And quite a large LP, 2000 plus LPs and staff, quite a few of them are very active. So that’s the syndicate bit. And then beginning of this year, I saw a lot of interest, which actually we didn’t touch in terms of sector, lot of interest in Web3. So I started a Web3 syndicate in, I think, in February of this year. So in last 2 months it’s already deployed roughly $3.5 million, $4 million, quite a few deals. So these are the two syndicates. Now, the way I approach syndicate is, so I have seen a couple of syndicates for very sector stage-specific syndicates. So, you know, syndicates which have said that, “Okay, we’ll only invest in climate at seed stage, or we only invest in FinTech at this stage.” The way I run the syndicate is sector, stage, geography agnostic.

So a very general platform where I bring in bills that I like and which I think would create value. So it can be as early as pre-seed to as late as pre-IPO. So, you know, I do a lot of second trade deals, so it’s a very wide-ranging. Of course, the geography wise is very wide. The sector-wise is from FinTech to AgriTech. So it’s a very wide ranging. So the way I see syndicate is a more like buffet sort of thing where I bring deals, LPs depending on their requirement of whether they want to do a… So I bring the deals, which I’m really convinced about given all the business models and the mental model, and leave it up to LP whether that fits to what he or she wants to do. So if some LP wants to create exposure in FinTech, in emerging market, or in EdTech in LATAM or in Asia or Africa, and also depending on…so I leave it up to the LPs is to decide which sector or segment they want to invest.

So that’s my thinking of the syndicate. Then what I started doing is, if you think syndicate has a big horizontal line, I want to create vertical funds, which are specifically focused on different parts of those deal flow. So what I did first is I set up a rolling fund, which is last year, because I was coming across companies who were not very willing to do syndicate. So they think, “Oh, you know, you’re sending this to so many people. We don’t know who these people are. I don’t want to share my data. I want a commitment upfront of how much you’re going to invest.” So I started the rolling fund essentially to cater to those companies which I cannot syndicate. Then, of course, then the YC deal happened. Not this year, last year. what happened is I was talking with the YC companies, and by the time I tell them the syndicate has been approved I’m going to launch it, they said, “No, we’re full.”

But after two days of syndicate launching, they say, “Sorry, we’re full, we can’t take any more funding.” Then I said, “Okay, set up a YC fund.” So this is the first time I did it. A YC that we’re trying fund, essentially to be able to decide and write checks on the spot. So that’s the second one. The third one I set up is a Web3 fund. When the Web3 syndicates started, I’m seeing a lot of interest in Web3, as well as I’m seeing people, again, a sort of a similar question because Web3 is now so hot that lot of times the deals are just getting built before even we study the syndicate. So I set up this Web3 fund. Now, the fourth one that I’m working on is a South Asia Southeast Asia fund, which essentially will focus all the deals in this part of the world. The way I see it is as I launch these verticals of funds, that part of the Syndicate is slowly moving away and will only go through the fund in most of the cases. So the South Asia Southeast Asia will take a big chunk of it. So that’s the fund I’m working on now.

Meb: Awesome, man. Tell me a little bit of about the deal flow and probably now it’s well established how you find a lot of the companies, but also give us a little insight into the early days too. Like, how, obviously you’ve invested in many companies over the years, but now as a lead, as someone who’s bringing these, what has that experience been like? And how do you source all these deals in which you’re finding and then investing in?

Sajid: So source one, of course, is like you’re saying, the investors are the founders where I already invested. Their friend is working. So I invest in a lot of companies and they say, “Hey, Sajid, my friend is launching a similar company. I told him about you, would you like to talk with him?” So that’s a sort of one source of deal flow. The second is essentially people who are LPs in the syndicate. So I get a lot of LPs who keep referring deals, that there’s X or Y I think… So that’s the second source. And the third source…

Meb: And that’s cool, just to interrupt you for a second, but that’s a fascinating resource that not only are they investors, but they’re also helping. We always talk about, like, with companies, this concept of inclusive capitalism, but also from a fund manager standpoint of having a resource of investors and not utilizing it, that’s crazy to me. And I think some people are just reluctant to do it, they’re nervous or afraid. But as you mentioned, like, you have thousands of investors that not only are giving money, but also giving you insight and signal as well.

Sajid: Oh, definitely. The number of deals that I’m getting through the LP base that I have is phenomenal. So I have almost like 1000 scout or 2000 scout who are active LP, so they’re constantly different deals. So that’s the second one. The third one, of course, is firms where I know a couple of those partners and they keep different deals. They’re investing in a company and they have a small space and they say, “Will you be willing to run a syndicate?” So that’s the third one. The fourth one is essentially where I read about some company on TechCrunch or something. This looks cool. Let me reach out to the founder through a LinkedIn and somewhere else and get connected. So these are the four pillars.

Meb: How often are they receptive to that? Is that something where a lot of the times they’re like, “Okay, let’s chat,” or are they just like, “Dude, what?”

Sajid: Actually, interestingly, I get good feedback. I mean, feedback in the sense that almost, I would say 75%, 80% of the cases, the founder replies. Probably if they go to the website to look at … I give some link and then they reply. Of those who reply, in some of the cases they have already closed a round because it’s already in TechCrunch. But in other cases they say, “Yeah, we’re going to launch it or do extension and stuff.” So it’s on the cases there.

Meb: That’s awesome, man. Well, it’s going to be exciting to watch all these avenues develop. If you’re willing to, I would love to hear mainly as almost like a case study sort of insight, any of the companies that you’ve invested in over the years that you think are particularly insightful where you’re like, “Hey, I invest in this company and this geography and this kind of illustrates how I was thinking about X, Y, Z.” Is there anything that comes to mind that you think is pretty good insight in the way you think?

Sajid: So one would be a company called ShopUp in Bangladesh. So this is a company, which I invested very highly, almost at a pre-seed stage. So they essentially started, I don’t know whether you know of a company called Udaan in India.

Meb: Mm-mm.

Sajid: So Udaan is a B2B marketplace. ShopUp, I think, started as a Shopify. So there are a lot of people in Bangladesh who use Facebook to sell items, from housewives and others. They use this to sell clothes and stuff. So ShopUp, started with the Shopify of Bangladesh, giving these people front door, digital store and stuff like that, and taking care of their backend logistics. From there, it started to become sort of like a Udaan concept with B2B marketplaces, for all these people to buy and sell things and stuff. And from there, they have also now started a big logistics firm because they found that logistics needs improvement.

Then, of course, there is a FinTech play for a buy now pay later, which is coming in. So when I first heard of ShopUp when I invested, it was more from a concept of, okay, let’s invest in the Shopify of Bangladesh, because I could see the number of people who are doing their businesses from home. And then of course it evolved to the extent that they did probably one of the largest series B in the region, given that, from Bangladesh, which has been relatively ignored to that extent. And you pretty much name from Sequoia to Tiger, to pretty much name all the tier 1 bases we tried, this was one of the big stories coming out of Bangladesh. So that’s one.

Meb: Well, I mean, it sounded like, you’ve been talking about Bangladesh, the size of some of these emerging markets, and obviously India is a-whole-nother level. I mean, I remember talking to someone years ago on the podcast and there was just, like, a statistic, which was India has more people playing fantasy sports than in the U.S. I’m like, “How is that possible? The U.S. is such a…” And they’re like, there’s more fantasy sportspeople on, like, cricket, just because there’s so many people at … And you start to like think about some of the opportunities in particularly countries that have huge population but not as developed and the numbers all of a sudden get very interesting quick.

Sajid: I’m very bullish on the next wave of Web3 companies coming out of India. Because there was a bit of regulatory uncertainty which seems to be clear now, with the government coming out with very clear tax jurisdictions and what will be taxed or not. I think that’s going to be a big space. Like you’re saying fantasy leagues and stuff, which was probably coming, and there’s a big sports community in India and same in Indonesia, and I think built on that, there’ll be a big wave of Web3 companies coming out of that region.

Meb: All right. Let’s hear another one, man. What’s another interesting company and what are they up to?

Sajid: I think the second one would be a company called Xendit, which I was mentioning previously. So again, you know, I’m an early investor and advisor to the company. It’s one of the YC top 100 companies that they publish. When I first heard of the idea being pitched to me across a table, it was more of, okay, you know, we want to facilitate payment of all these small mom and pop shops in Indonesian economy. And then after they’ve started building the one-click payment options and stuff like that, and then it’s exploded as the digitization, and the usage of data service exploded in the country. Now, first, it started in Indonesia, expanded to other markets within Southeast Asia. It’s now a unicorn, which reached Silicon last year. So, again, an explosion, huge sort of transition happening through the company. A really big business. I look at some of their numbers, which is staggering and I think it’ll only continue to grow. It has a long runway in the coming years. So that’ll be the second one.

Meb: I could listen to these all day, but give me a third while we’re at it. Let’s do the Trinity. What’s the third one?

Sajid: So the first two are the ones I did not syndicate because, yeah, it happened before I syndicated. The third one is one which I syndicated. It’s a company called Spenmo, and now it is getting very popular. The breaks of the word, that version of it, right? So Spenmo, again, a company which I syndicated. And then they of course started providing the accounting backend services to help all these mom and pops, the mom and pop shop SMEs to better manage their accounts and everything. And then from there they started issuing corporate cards to better manage their expenses. So, again, Spenmo is one of the top YC list and etc.

Meb: What geography is that?

Sajid: In the Southeast Asia, but based out of Singapore.

Meb: The bad news is the other 1,397 companies are going to be like, “What the hell? You didn’t mention me? These are the three you picked?” This is the problem with having too many children, man. You got too many kids under the household.

Sajid: Some of these companies, I mean, I mostly mentioned from Asia, but some of these companies from Africa are fundamental. I invest in some of these African companies. There’s one which is called Relief. So the reason I mention Relief, it’s very different. They’re trying to streamline the supply chain of palm oil, which is a big business at that part of the world. And you don’t see a typical startup…

Meb: It’s a big business in this part of the world, and it was in the news today, where I forget which country it was, just announced, they were banning exports because of all the supply chains and everything in palm oil, I forget where, I’ll look it up. But tell me more.

Sajid: One of the companies is out of Nigeria, Lagos, because it’s a big palm oil producing country. So they are trying to streamline the palm oil production for a very agricultural level to manufacturing level, how to streamline that and reduce the waste. It’s a very hard problem to crack and it’s not those typical financial services or the Web3 companies. It’s very different. So there are some companies like that. There are quite a few companies in renewable energy space across these markets, which is quite interesting in solving the hard problems and stuff, and similar in data.

Meb: I’m having a little FOMO because I remember seeing this palm oil startup and I was like, “This is outside of my wheelhouse about as far as it can get.” And I come from, like, a farming background. And I love anything farming related. And I hemmed and hawed about this one for usually, for me, it’s an instant no, some I’ll do some due diligence. This one I was, like, spending an inordinate amount of time with and didn’t do it, much to my probably eventual regret. But that was one, I remember reading that. I must have read that write up probably 15 times on the deck and I was like, “Man, this seems really thoughtful and smart.” I’ll get it on the next round as we go through one of yours, which fits like a much more traditional startup, U.S. based, that I had actually seen elsewhere first, ordered the product, and this is NutriSense. So shout out NutriSense.

And with any of the products or services that I can actually try out, I use them just to see… Because often I’m like, “Oh, this is terrible. This food is disgusting. Why would anyone use this?” And so, I tried out the NutriSense and I was like, “Oh, this is very clear and obvious. This is going to be huge.” And then was just waiting to see somewhere this come across my desk. And so, thank you, because that one I love and it was one that… Listeners, it’s a blood glucose monitor. You’ve probably heard me talk about it before. It’s pretty cool. I think it’s going to be a rocket ship. Or it is rocket ship. And I think it’s going to…

Sajid: Yeah. It’s growing very fast.

Meb: You don’t have say the names but you got any 100 baggers on paper yet out of that 1400 investments?

Sajid: So, quite a few. So I think has 26 unicorns or so, if I recollect correctly. I mean, a lot of these are not through my syndicate, we pass on other syndicates, etc. Within my syndicate, yeah, and then there are quite a few hundred. Because my syndicate is two years old.

Meb: You’re young. You’re a toddler at this point, just learning how to walk and crawl all at this point. But how many have you syndicated to date so far?

Sajid: Around 230 deals.

Meb: That’s incredible.

Sajid: So, yeah, everything is in…

Meb: You’re like a 1 man, 500 startups.

Sajid: Nothing below 100.

Meb: This is awesome. Oh, my God. I love it. But it’s funny. I mean, in a world of power laws, like, it’s got to be a numbers game.

Sajid: That’s why I think the syndicate is a bit tricky from LP angle because these are essentially investing in one company rather than a pool of lead, then getting either the upside or downside based on the single company performance. But I think that’s where the challenge is, from a LP perspective is, for a syndicate lead like me where you have a volume of deals coming through, is to decide which one you want to invest. So, myself, as an overall syndicate, might do very well given the number of deals. And there are always, within that two-year syndicate, I’m seeing two, three companies really breaking up. Probably will reach Android Espresso. And then of course, then the question is that whether the LP were into those two, three companies, and that’s where I think the syndicate versus the fund dynamics come through, or segregates. That’s why I’m building this fund vertical more to essentially get exposure to my selective deal flows and better all those …

Meb: So talk to the investors out there who are individuals who haven’t invested in 1,400 companies yet. So talked about, like, some of your advice, like, you want to give some people that are either newish, interested in angel investing, even some of the pros too. What are some of the lessons learned? Some of the things you maybe wish you knew a few years ago or you changed your mind on? All these sort of things. What’s some perspective on somebody who’s been at it for almost a decade in the trenches and now doing it for a career as well?

Sajid: So I think almost all the investors have heard that, but it’s more about creating the portfolios. It’s not about one or five companies. Ideally it’s 35, 50, 40 companies that are depending on the disposable income that individual has. So that’s one. Second, of course, is what I’ve seen is I have seen my good decisions, the decisions that I really… where I am getting outside returns is where I have taken time. I know the syndicate sometimes clears this FOMO thing. It’s getting close, the last cake and all those stuff. So it creates an unnecessary FOMO in the system. My suggestion would be to investors to really take time and be convinced that he or she wants to really invest in that company. So I would suggest to reach out to the syndicate lead to save and ask questions. So I think that’s important. Because at the end of the, I mean, investment is quite a bit of luck, despite whatever we say.

Meb: If you could go back eight years ago, I wish, once I got to the go-no-go decision on the investments, so I’m going to invest, then I could then rank it maybe one, two, three, one being I have, like, utmost confidence, two being, like, I think this may work, and three being, like, eh, or whatever this system would be. One to 10. I’d be curious to see how much correlation there is between eventual outcome… I think it’d be different. I think it’d be different between all the deals because, like, there’s certain plenty I see where I’m like, this is the dumbest thing I’ve ever heard in my life and it’s spending a gazillion, like, yada, yada. Versus the ones where I’m like, “Okay, this seems like it has a chance.” Anyway, I don’t know the answer to that. How much correlation do you think you would see with yours? Do you think your initial optimism versus kind of the eventual outcome, do you think it’s a high R squared regression or something where it’s, like, a little more randomness involved?

Sajid: I think, I mean, there is some randomness, but the three example that I gave of the companies which are all going to be unicorn or are already unicorn. These three cases I probably made a decision within the first 10, 15 minutes after talking with the founder. Because I talked with the founder, I felt like, “Okay, this is going to work. I like this guy. I like this space,” and I invested. And there are cases where it didn’t, but all these three cases, they turned out to be good. And that’s because mostly the way the wholesale of investments work. So you need one winner in a pool to make it work. So that’s how it helps. I have seen companies where I let it go, which ultimately turned out to be a big winner, is essentially because I was overthinking it. I was overthinking, “Okay, should I invest, should I?” And then let it go. And then ultimately it does turn out to be big winners. And that’s probably sort of memory thing because we regret those decisions and we probably remember those requests more than the winner. So whenever I see an ex-company doing very good and I had a chance to invest and didn’t, I say, “Ah.” So those happened. Yeah. But if you create a portfolio of 50, 60 companies, it’s very likely that you’ll get more than principle 2x, 3x depending on the winner set.

Meb: So as we look out to the future, are there any ideas, in particular, you’re just chomping out the bit to fund where you’re like, “Man, I’m just waiting for the right founder, the right opportunity in this space,” or any areas that, like, you’re really particularly industries, whatever business models that you’re really excited about in here in 2022?

Sajid: I think one of the areas which would be good, I’m starting to invest… In fact, the fund that I raised up on the Web3 side is to invest in companies which are more building the infrastructure of Web3, rather than all these B2C apps, and etc., like that. So the DAO is a big concept now, which is coming up. So anything that is helping DAO manage better. So if you can spin DAO as an office, what is the MS Office of DAO? What is the slack of DAO? What is the team of DAO? Anything that is helping that DAO to operate I think is going to be big and I’m effectively looking for companies in that space to invest. So I think that’s one area. The second area, the similar thing would be in this part of the world, in the emerging markets, I’m always looking for big AgriTech companies. Agriculture companies, which I’m really convinced to invest because I think that’s a big opportunity, but yet to see a good founder set there. So that would be the second one, purely from a Web3 angle.

And, of course, purely from a moonshot angle, I haven’t done many in space, but I think that again is a big one. I don’t see many space companies coming out from this part of the world because of the infrastructure is not there, but from U.S. and others, other investors and other syndicating companies like Axiom Space and others. But I think there are more opportunities there.

Meb: There’s certain signals you pick up on where you’re just like, wow, it’s having its moment, and space seems to be one that’s going to be exciting for years to come as we start making it to Mars and on out. We come outta COVID, like you said, you teleport back to pre-COVID and say, man, all of a sudden you’ve got all these syndicates and funds and different ideas going on. Anything got you curious, confused, excited, nervous, as we look out to the horizon for you? I mean, what’s the eventual build-out of this? You seem pretty busy. Are you going to add some team members at some point? Do you have a support staff or is this going to remain a one man show for a while?

Sajid: Probably. Just a caveat there, so syndicate everything is a one man show, but the two funds, so one is this Web3 fund where I have a partner now. On the MyAsiaVC fund, which I’m planning to do South Asia, Southeast Asia, I already have founders, I mean, some partners, because I think these are more conventional to integrate, create, or built infrastructure on that. I mean, COVID has been a boon for many. I regret not investing in some of the companies in early COVID days, but from … to others. So I was like, okay. But anyway, there are quite a bit of mistakes there, but I’m really grateful of the way it turned out in terms of going full time into these investments. And I see, if you look at some of the companies, which really shine, I don’t know whether you’ve seen companies like Hopin and others, which is now being traded at a significant discount at secondary level.

So a lot of the companies which really came out at that stage may get challenged in the coming days in subsequent funding. We are seeing that reflected in public markets and I’m sure it will reflect in private markets too. So we’ll probably go through difficult time for the next 12 months or so, depending how the whole Ukraine, the whole inflation, this whole COVID situation in China, everything shapes up. So there’s quite a bit of uncertainty out there. I’m a very optimistic technology investor and I think, on a longer enough timeframe and as a startup investor, I’m always looking at 5 years, 10 years timeframe, I think we are in a good position. So I want to do this more with all the funds in the pipeline. I want to really build a sort of infrastructure. The way I see my investment portfolio over time is we’ll have the syndicate to do more and more specific deals which doesn’t fall into the front traces and then have this fund… So I have a Web3 fund, I have an Asia fund. I will probably at some stage do Africa fund and stuff. And for each of this fund, I’ll probably bring in partners who are more expert in that space to do that.

Meb: Awesome. As you look back on these 1000 plus investments and others, by the way, and we don’t have to narrow it down to this, what’s been the most memorable investment? Good, bad, in between, anything come to mind?

Sajid: Yeah. I mean, I think the memorable one would be the one that I mentioned. One is where we invested in companies very early, sort of like a first or second check and really being involved. There you get to really, unlike being part of another syndicate when you’re writing your personal check directly into the company and seed cross, especially in markets…

Meb: You got to pick one though. I’m holding your feet to the fire. And it doesn’t have to be the best. It could be the worst, but something that is memorable, seared into your brain. I can’t even remember my first angel investment. I’m going to have to look that up.

Sajid: The one that I mentioned before, the one which brought me to the investment in the first place. So that company ultimately didn’t end up well. So…definitely.

Meb: You said it did or did not end up well?

Sajid: It did not end up well. But it started my journey, so.

Meb: That’s part of it, man. Like, it’s funny, because you talk to everyone in this world and the expectation is that many, if not, the majority, will fail or not do much. Now you talk to every startup founder, and they realize that stat. They say, “I understand most startups will fail, but mine won’t.” This is great cognitive dissonance, but, like, you have to have that confidence and, we like to call it naive optimism. But part of it, I think, for a lot of people who are just starting out angel investing that part is hard for them to see the companies not do well and fail. Because a lot of these founders you’re cheering for and it’s a struggle. My favorites are the ones that sort of fail with class and integrity. They keep updating, they say, “Look, this sucks, but it’s not working and we’re losing money and we’re going to go bankrupt.” But, like, are honest about it. And I would invest in all those again, like, those founders. Probably more so as they have the scars. The ones that really frustrate me are the ones that go full ostrich, just head in the sand, pretend like nothing’s happening. But it’s hard. It’s a very emotional thing. And so that’s why it’s a numbers game as well though, is from the investor’s side.

Sajid: One of the things that, now that I have a lot the companies I invested, you know, either syndicate or personally, but the companies I syndicated in last few years, what I’m seeing is there are clearly three groups emerging. One is of course the founders who, they’re doing very good, you can see the valuations on the numbers, balance sheet numbers and everything. So that’s very strong. So the second one I’m seeing where some of these companies are going a bit silent. And they’re reporting on others, but they’re struggling. And we know that they’re struggling, but they keep you updated of what they’re doing. And then the third group is essentially like you’re saying, sort of going silent and it takes some time to follow up and see where they are. There is another, I sometimes…the question of integrity. That’s very interesting to me. Because there have been, I think, one company in my portfolio where, and you have pretty much all the tier one investors there, they are now looking into the company accounting. So that was quite an interesting thing for me. Sometimes you look at all these investors, or the institution investors on the capital bill and they’re on the board, because I’m not in the board, the check is too small, and then you have these issues coming up. That was quite an interesting one.

Meb: Awesome. What’s the best place people want to reach out to you for, A, to sign up for your syndicate, B, to send you big checks for your fund, C, to send you deals, and lastly, to potentially join you as a partner in one of these new funds? What’s the best place to go?

Sajid: Linkedin. So I have LinkedIn and a quite open LinkedIn and Twitter. Those would be the two. But if you also wanted, of course, AngelList is, I don’t know, many of them if they’re accredited then go to Angellist and Syndicate. But, yeah, LinkedIn and Twitter would the two, where I’m always there.

Meb: Don’t forget MyAsiaVC too!

Sajid: So that website, it was good, so I’m just revamping the website with the new fund details. So it’s a bit work in progress and the numbers are pretty, you know, it’s not fully baked yet.

Meb: Hey, no problem. We’ll add all the links to the show notes. This was a lot of fun. I had a great time. Looking forward to seeing you in the real world one day. I’ve never been to Indonesia, so I’m going to hit you up to be my Jim Rogers style startup tour guide when I make it over there. Thanks so much for joining us today.

Sajid: Thanks, Meb. It was a pleasure.

Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at the mebfabershow.com. We love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.

 

 



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