ATM Capital founder, Qu Tian: how to increase the success rate of investments in Southeast Asia

The Age of Discovery has already begun. Southeast Asia, whether in terms of population size or economic development stage, is a market with enormous investment potential

ATM Capital founder, Qu Tian, recently gave an exclusive interview to Netease Technology's 'The Waves' program. He stated, “ATM Capital is optimistic about the potential of the Southeast Asian market and adheres to a long-term perspective. We emphasize deep incubation and value the worth of individuals.”

The Venture Capital Environment in Southeast Asia

"The Waves" : In 2017, Many people felt that the Southeast Asian market had not fully taken off then. What signals did you see that led to your decision to enter the overseas market?

Qu Tian: In 2017, I had already been involved in investment for ten years. I had invested heavily in mobile and consumer internet during that time, but I noticed fewer new opportunities emerging. At that point, I began to rethink the essence of the VC industry. Over the past decade, only the top-tier funds had made significant profits, with perhaps 10% of the institutions taking away 90% of the money. To become a top-tier fund, there are only two paths: enter the market very early, like IDG Capital did in China in the 1990s, or invest in highly successful early-stage projects, such as Sequoia Capital did with Meituan and ByteDance. However, achieving these two goals was nearly impossible in China, so I explored overseas markets.

"The Waves": Why did you establish roots in the Southeast Asian market?

Qu Tian: On one hand, Southeast Asia, when viewed from a global perspective, offers a massive market despite being smaller than China's population and economic development stage. The ten member states of ASEAN have a combined population ranking third in the world, only surpassed by China and India. The total GDP exceeds that of India, ranking fifth globally.

On the other hand, at the time, the venture capital ecosystem in Southeast Asia was beginning to take shape. I was among the first batch of VCs to enter the Southeast Asian market. We could seize a significant opportunity and invest early in a multi-billion-dollar unicorn. In that case, ATM Capital might become Southeast Asia's IDG or Sequoia Capital.


 Investment Strategy in Southeast Asia: Deep Incubation, Emphasis on the Value of People

"The Waves": To adapt to the venture capital environment in Southeast Asia, what adjustments has ATM Capital made in its investment strategy? How do you increase the success rate of investments?

Qu Tian: We have chosen to pursue a boutique investment strategy. We aim to deeply cultivate high-quality projects with solid certainty, investing in a few projects that are absolute leaders in their markets and then continue to increase our holdings.

Secondly, we adopt a people-centric approach. When we identify a promising entrepreneur, we may follow them closely for a year or two, and once they have a startup idea, we can quickly invest. In the Southeast Asian startup scene, the founder and team must be exceptionally strong.

Thirdly, we select industries with higher pinnacles and proven business models in mature markets and conduct profound incubation in the Southeast Asian market. This includes areas like cosmetics, chain coffee shops, and baby products. There are still many opportunities in the consumer sector in Southeast Asia.

"The Waves": How do you specifically understand "deep incubation"?

Qu Tian: We allocate 30% of our time to investing in new companies and 70% to post-investment management. A significant amount of our time is spent working closely with the entrepreneurial teams, essentially serving as their co-founders. We review the company's data weekly, gain insights into the current business situation, and assist them with subsequent funding, strategic choices, recruiting key talent, and expanding strategic partnerships.

"The Waves": What kind of entrepreneurs do you think are better suited for the Southeast Asian market?

Qu Tian: Firstly, they should have a sufficient understanding of the industry and market they intend to enter and a deep knowledge of it. Additionally, they should have the right expectations and possess a strong vision, ambition, and breadth of mind.

Future Opportunities in Southeast Asia: Bullish on Indonesia's Potential, Committing to Long-Term

“The Waves": Why did ATM Capital choose to set up its headquarters in Indonesia, as opposed to Singapore, Vietnam, or Thailand?

Qu Tian: Indonesia is the fourth most populous country in the world, with nearly 300 million people, trailing only China, India, and the United States. The urbanization rate here is also decent, nearing 60%. Jakarta's per capita GDP is relatively high, approaching $20,000.

Furthermore, Indonesia has a high mobile internet penetration rate, with statistics showing that Indonesians have the highest average mobile phone usage time globally. In terms of social networks, for example, TikTok is ranked first globally in the United States and second in Indonesia. In our view, Indonesia is the most promising, open, and inclusive market in Southeast Asia.

"The Waves": What areas in Southeast Asia do you see as investment opportunities in the future?

Qu Tian: 

New energy is a field of interest for ATM Capital. However, new energy represents a long-term track, and the industry's rapid development may require 3-5 years.

Furthermore, the pandemic has significantly increased the adoption of online payments in Southeast Asia. With the continued development of the online economy in Southeast Asia, there are also opportunities in the fintech sector.

"The Waves": What are the advantages and differences of ATM Capital compared to other organizations?

Qu Tian: Firstly, we are the fund that knows the industry in Southeast Asia the best and is closest to the market. We have been deeply involved in this market for the past six years, with our headquarters in Jakarta, Indonesia, and a local investment team. We have invested substantial time and effort into conducting market research and post-investment support. We are the fund with the most profound understanding of Southeast Asia's logistics and consumer retail sectors.

Secondly, we understand businesses very well. Personally, I have experience working with major companies in China, such as Sina, Tencent, Yahoo China, and Alibaba, all in their early stages. I also have nearly 20 years of investment experience, accompanying startup companies from inception to listing. Therefore, we have a profound understanding of businesses and entrepreneurs. Over the years, we have accumulated a wealth of successful experiences and resources in Southeast Asia, which can help entrepreneurs succeed in the region.