In 2010, Gobi’s Founding Partner Thomas G. Tsao believed that the “Decade of Loss” was over, and subsequently decided to officially enter the Southeast Asian market. He invited Kay-Mok Ku, a long-time friend with extensive investment experience, to set up a Fund, and with that, Kay-Mok Ku joined Gobi; eight years have now passed.

The “Decade of Loss” and Market Opportunities

Kay-Mok Ku graduated from the University of California (UC) Berkeley’s Computer Science faculty. He began his career as an entrepreneur in Silicon Valley, but in 2006, returned to Asia. Before joining Gobi, Mok was working in Singapore for a government fund. These experiences have given him a full understanding of the funding cycle in the US, China, and Southeast Asia.

Mok told MomentumWorks that during the 90s, when China was still developing its venture capital industry, Southeast Asia was already experiencing a peak moment in its own ecosystem. At that time, the “Dot-com” bubble was trending, and local entrepreneurs were all imitating companies in the US in similar ways to how they imitate Chinese companies today.

After the “Dot-com” bubble burst in 2001 however, the US and Southeast Asia suffered a huge blow. During the industry’s peak in 1999, the Singaporean government had in fact set up a US$1 B fund of funds (FoF), which unfortunately disappeared after the bubble burst.

Before the bubble burst, China’s venture capital industry was slowly emerging: IDG had just invested in Baidu,, and other well-known Internet companies a year before. In 2001, Zhu Linan founded Legend Capital, Baring Private Equity Asia’s Partner Kathy Xu invested US$5 M in Netease, and in 2002, Thomas G. Tsao founded Gobi Partners in Shanghai.

2001 to 2010 was Southeast Asia’s “Decade of Loss”, as a large number of experienced investors from Singapore turned their attention to Mainland China. These investors included GGV Capital’s Managing Partners Jenny Lee and Jixun Foo; David Su from Matrix Partners; Helen Wong from Qiming Ventures; GSR Ventures’ Managing Partner Richard Lim; Zero One Venture Capital’s Founding Partner Ian Goh, and many others. They all eventually became the backbone of the development of China’s venture capital industry, and helped nurture the careers of many investment professionals.

China’s subsequent rapid development of its venture capital industry was a convincing demonstration that China, as well as other emerging markets, had plenty of room for development, even with the US being out of the equation. For instance, a ranking of the top global Internet companies that was released in 2018, listed three Chinese companies in the Top 10 (Alibaba, Tencent, and Baidu).

Back in 2010, this obvious turn of events was foreshadowing when China’s smartphone brands began gaining traction in Southeast Asia. For mobile Internet to explode within emerging markets, there was a major prerequisite for smartphones to cost below US$100, and smartphones within that price limit were pretty much monopolized by Chinese brands. Additionally, these smartphones usually come pre-installed with mobile apps from China, which is an absolute advantage for Chinese companies and entrepreneurs. After many years of progress, Chinese entrepreneurs have developed a deep understanding and knowledge of the flexibility and usability of online traffic.

2018, however, is the start of a new era. Mok firmly believes that the current trade war between the US and China will have a direct impact on the development of the venture capital industry in emerging markets.

Looking at the bigger picture, a trade war between the two countries, which account for 50% of the global GDP, would mostly have a negative impact in the long term, but in the short term, emerging markets may still stand to gain something from this situation.

After the trade war began, the US used Europe as an alternative market for their agricultural products, and China has also stepped up her relations with developing and emerging markets. Consequently, capital that was originally flowing towards the US, will now gradually find its way to emerging markets, therefore creating more opportunities.

In terms of supporting new startups, the US and China have always been focusing on Southeast Asia. While China has the advantage of being closer in distance and culturally similar, the US has the advantage of being innovative, and of having a more matured capital market. These factors have created opportunities for Gobi in the past, but they also pose a challenge.

Investing Separately from the Giants

The development of the venture capital field in Southeast Asia is mainly propelled by China. On the company level, the driving forces are Chinese corporates, such as Alibaba, Tencent,,, and others; on the government level, it is the One Belt One Road initiative, as China is the biggest trade partner for a majority of Southeast Asian countries.

While Southeast Asia is pretty much under the reign of Alibaba and Tencent, Mok pointed out that the investment strategy of Gobi is very different from Alibaba’s, Tencent’s, and other large corporations’.

Firstly, investing was originally mainly about the people in the early days. When Gobi is interested in a company, they will observe the entrepreneurs for a certain period, to ensure that the person is cooperative, after which they will invest in the company. With large corporations however, the days of hunting for talent are in the past; they will mainly invest in companies that have met their requirements of being a certain size with a certain amount of operational data.

Secondly, companies such as Alibaba, Tencent, and the like, have their own array of businesses, which means when they are considering whether to invest, monetary returns are not the only aspect considered. Gobi, as a Fund, will have relatively more to consider finance-wise, with profit being their end goal.

Thirdly, in terms of the structure of an institution, the venture capital industry basically follows a system of partnerships. If you were to add up all the partners that Gobi has in Southeast Asia, Hong Kong, and China, you would get a total of around 50 affiliates, resulting in a flexible team that delivers quick response when a good startup that is worth investing in is identified. For large corporates such as Alibaba or Tencent, a simple look at the titles held by their investment team, such as “Vice President of Alibaba Group Investments”, tells one that their system is based on their company alone.

Gobi’s investments in Southeast Asia are stage-specific. In the two years between 2010 and 2012, investments by the firm were made in startups that did not require much capital. In 2013, e-commerce began developing in Southeast Asia, and the capital that was needed became much larger. As a result, Gobi’s investments in e-commerce startups correspondingly increased in ticket size.

Southeast Asia’s startups also have features that were evidently copied from China. One such example is Malaysia’s version of, Hermo.

Hermo’s founder stated that he initially decided to “do this in Malaysia”, after he had watched an interview with Jumei Founder Leo Chen in 2012. Gobi tracked this company for two years before investing in them, after they realized the feasibility of Jumei’s model. In 2017, Hermo was acquired by Japanese company istyle Inc., and Gobi successfully achieved an exit with an internal rate of return (IRR) of 91%.

However, Mok emphasized that simply copying a model is far from enough. Hermo’s successful acquisition was not merely because it was in the right place at the right time: Gobi’s guidance and support were inseparable from Hermo’s success.

Overall, while Southeast is unique in most aspects, there is one similarity with China, and that is the “Hallyu Wave”. 60% of the makeup products in Malaysia are imported from South Korea. One of Gobi’s

Limited Partners in South Korea’s major retailer, GS Group (Watson’s previously sold their business in South Korea to this company). It isn’t easy to obtain goods from South Korea, but because of this working relationship, Hermo has a more stable supply chain.

To replicate a business model from China does not just involve straight-out copying it; the model must also be localized. The founder of Hermo is a Malaysian-Chinese, which is an advantage when it comes to the localization and execution of the model. Chinese startups from overseas should pay attention to this, because while online resources can be easily transferred, offline resources require cooperation with local associates and companies.

While Hermo’s team is familiar with their own operations, they were not trained to handle capital operations, especially when it comes to post-money valuation and finding buyers. As such, Gobi had to put in more effort to assist Hermo with these matters.

Similar companies to Hermo are Orami, an e-commerce site for women that is based in Indonesia; Nuren, another female-dedicated site in Malaysia and Singapore; and BaBe, an Indonesian version of

Which Market Areas are you Focusing on?

Mok explained that when it comes to future market trends, Gobi has its own set of predictions:

  • Southeast Asia is a market mainly based on apps

Gobi believes that future innovation in technology will stem from two countries: the US and China. Due to the high cost of research and development (R&D), if there isn’t a market volume that is large enough, it is hard to justify the large amount of capital needed for R&D. For example, there are a lot of supply chains for IoT in Shenzhen, but in Southeast Asia, due to the limitations of its market, business is mainly dependent on apps.

In the app market, the fields available for investment are relatively limited as well. This market is also predominantly focused on consumers. As such, it is very difficult to develop an app for businesses, as most companies lack the spending power. Therefore, for a company to be sustainable, it has to opt to globalize its business.

  •  TaqwaTech

This is a new word, which was coined by Gobi’s Founding Partner, Thomas G. Tsao. “Taqwa” means “faith”, and was introduced by Gobi in Southeast Asia, referring to a sector that provides customized products and services for Muslims.

There is currently a population of over 1.6 billion Muslims worldwide, which accounts for more than 23% of the world’s population. Hence, the consumer market that is targeting the Muslim population is rapidly growing. Indonesia, a country Gobi has entered while building its roots in Southeast Asia, has a large Muslim population, and has provided the firm the opportunity to fully experience the potential of this market.

Under the TaqwaTech sector, Gobi invested in Tripfez, an online hotel reservation platform for Muslims, in 2016. The platform recommends hotels and travel agencies that offer the option of Halal food, as well as a list of Halal restaurants that are near the customer’s chosen hotel. The site also provides details such as whether a hotel provides prayer mats and the Quran, and can even tell a user which direction to face during prayers.

Gobi had previously invested in, which enabled the firm to provide advice and resources to Tripfez in the field of online reservation platforms; this proved to valuable in terms of support for the company. Apart from Tripfez, Gobi has also begun searching for new TaqwaTech startups in the Middle East, Pakistan, and other Muslim countries.

Advice for Entrepreneurs

Mok believes that Chinese entrepreneurs who are overseas mainly face difficulty in adjusting and adapting to the local ecosystem. As such, it is highly beneficial to have a team that understands one another and works well together.