Investment perspective of Phumin Yuwacharaskul “Losses for growth” Experience of success with startups

“Taking losses to prosper and grow”…because money is not the only factor. It’s more of a method for investors struggling to protect themselves from losses, accumulate experience and overcome obstacles until they achieve success, and are able to expand and sell the business on with big profits.

This is the perspective of Phumin Yuwacharaskul, founder and CEO of Eatigo (Thailand) Co Ltd. This startup developed the app Eatigo, a platform to order food from restaurants and obtain discount coupons from them. The company has grown rapidly through a round of capitalization worth US$15.5 million or about 530 million baht.

Phumin has now used his experience of success to get involved with other startups with potential as a Venture Capitalist (VC). He can bring his ideas to the table to benefit these businesses, and Phumin has three principles for success as a VC:

The Business Model of a startup must have a clear expansion plan from the beginning with the aim to grow both domestically and overseas, and it may expand or sell out. This is one way to prevent or avoid losses occurring.

“However much the product or service can build a wide and growing customer base, or however much supporting capital there us, if a large number of customers cannot create income for the company, or the business model isn’t scalable in other markets, then you can expect rapid growth to stop in the near future.”

Secondly, to be a good VC, you need to make yourself a strategic partner of the business, giving advice and sharing experience of success in a beneficial way. This must also consider sustainability over and above various KPIs.

“Investing in a startup, nobody is waiting for profits from dividends. Investors crave profit from rapidly increasing the company’s value. Hence, it is not unusual for a startup to intentionally take losses in exchange for future growth.”

The last principle is giving startups the rights and opportunities to negotiate with other investors. Just like choosing any other partner, it’s necessary to study their habits deeply and have maximum mutual satisfaction. This is because the two of you are in it together for the long haul. If opinions differ during the negotiations, one party should have the manners to make way for a more satisfactory partner.

“Choosing to invest in a startup which is a hardware product, because it is something tangible and somewhat less risky, is the same as investing in a “person”. You are confident in that person’s ability to navigate their team through the business and keep aware of their business sector both here and abroad. They can assess the situation, propose ideas and advise on options to buy the business that will tend to be successful.”

Reference:

http://www.forbesthailand.com/special_issue-detail.php?did=1921