Networking Virtually: An Alumni's Summary of Reactor Global Demo Day

5 VCs.

16 Startups.

50 Alumni.

On 10 July 2021, Reactor launched our inaugural Global Demo Day, held bi-annually over Summer and Winter.

In this 100% virtual event-space designed for cosy conversation and fun interaction, >50 of our young founders across APAC – from Reactor Alumni Network and graduated students from our EntreEd Bootcamps – showcased their startups, met, chatted, and learned about the challenges and advice for starting up with other like-minded peers, and met potential investors and mentors.

During the Reactor Alumni Fireside Chat, Isobel "Izzy" Ngo of VERE360 and Daryl Lim of Augmentus shared some relevant insights for Gen Z entrepreneurs in navigating school, founders' relations, NS and long-term goals.

Didn’t manage to join us at Global Demo Day? Don’t worry, you can join our next one on Dec 18 here – and check out our summary of what happened in the Reactor Alumni Fireside Chat below! 👀

Proudly featuring our Reactor Alumni

• Daryl Lim, Co-founder, Augmentus. Robot programming software platform that allows anyone to program industrial robots in minutes without needing code and CAD.

• Izzy Ngo, Co-founder, VERE360. A socially-driven immersive technology production house, VERE360 uses VR to help users become more empathetic and aware of social issues for social enterprises, schools and governmental institutions.

• Moderated by Rusydi Khairul, Co-Founder & CEO of Reactor School, a leading startup School for Student Entrepreneurs Age 15-24 in Southeast Asia.

In case you have missed the virtual session, no worries we have prepared a transcript of the 2 fireside chats:

ALUMNI FIRESIDE CHAT

TL;DR: Time management is key.

• Set goals and timebox them. Daryl: For example, set a goal to focus on your startup for 1-2 years. If it doesn't work, then you can go find a salaried job. If I was left to my own devices, I will probably just drop out of school. But I continued because my parents wanted me to finish my education. And it’s also because I was left with 1 semester. 2 more modules won’t kill me. 💪🏽

• Compromise on leisure, but don’t compromise on rest! Izzy: Free/leisure time is definitely compromised as an entrepreneur. But I try not to compromise on rest! I think it’s important to be well-rested.

• Plan your schooling schedule to manage your startup. Izzy: It’s not easy to work on your startup part-time. But as an edtech entrepreneur, I value education, so I did my best by planning the courses that I took.

• If you have to, take a Leave of Absence (LOA) to focus on your startup. Daryl: For me, I took an LOA for 3 semesters so that I could focus on building my company when we were finding product-market fit. You don’t need to pay school fees during your LOA, but this may affect the loan scheme, so do plan carefully.

(More relevant for Singaporean males) What advice do you have for pre-university students who are going through 2-year mandatory National Service (NS) and want to start up?

TL;DR: Focus on the early-stage during NS, or get to the mature-stage before NS.

• Daryl:

• It depends on what stage you’re in, but this works well for the extreme ends of early-stage and mature-stage.

• If you’re still in the early ideation stage, you can still work on your startup during NS. You can talk to users and validate your product during this period, or build during those 2 years. Then, once you enter university, you can fully utilise resources there to build your startup.

• When you’re in the middle growth-stage trying to scale, I don’t think it’s possible. When serving National Service, your time is divided, you’re part-time. I’ve never seen or heard of a founder scaling their startup during NS.

• If you can, incorporate before NS, and find someone who can run it full-time during National Service.

Any advice for students who are starting out?

• TL;DR: Try to find Product Market Fit in 6 months.

• Daryl: When you’re starting out, the first 6 months are the most important. Your goal is to get your product to find Product-Market-Fit. It’s a good sign if you can find paying clients when you only have an MVP or POC, without having built the fully developed product. This shows market demand. We took 1.5 years to build a product that’s stable for deployment with clients.

• TL;DR: Think long-term and focus on your strengths.

• Daryl: You’re most likely the youngest and most inexperienced in the industry. For us in the industrial robotics automation industry, most decision makers were older, more than 40 years old. Trust could only be established when they realised we’re there for the long haul, not just as a school project. Also, we branded the company as cutting edge, in the forefront.

• TL;DR: Make sure you understand the entire market ecosystem and its stakeholders.

• Daryl: Besides your primary stakeholder sellers and buyers, you should understand how your secondary stakeholders like channel partners support the industry. Knowing our channel partners really helped us to connect to more customers in the industrial robotics automation industry.

Any tips for finding a good co-founder?

• TL;DR: Finding a good co-founder is like finding a long-term partner.

• Izzy: Your co-founder will probably be your longest lasting relationship. The easiest proxy is to find someone the way you would find your long-term partner – someone you can communicate well with, resolve problems, etc.

• Daryl: Ideally, this person has skills that complement yours. For example, if you’re a designer, find someone who is a tech person who can build, or someone who has the ability to sell your vision, values and story, and get people to join your team for the long term.

• TL;DR: Find co-founders through events like hackathons, projects, and of course, communities like school.

• Izzy: I met my co-founder by networking. I found her project – VR for empathy – cool, and we worked on it together. The business grew from there because there was demand.

• Daryl: I met my co-founders through a hackathon. Hackathons are a great way to meet and test the mettle of your co-founders and even yourself – before committing fully. It’s like “testing” before marriage.

• Daryl: It’s also easier to find co-founders who are currently in university. If you’re looking for someone who is already working and getting paid 8k a month, it might not be as easy to convince them to join your company.

What challenges did you (Izzy) face in raising as a female founder?

• As a founder (without gender labels): As you grow, your belief structure will become more diluted because you’ll be working with more stakeholders. So as much as you can, find investors with alignment to your company.

As a young, female founder: In Singapore, gender equality is pretty good. But people do treat females differently. And if you’re young, they think you need help, or question you more. But let that distract you from your work. Focus on your startup, and let your work and traction speak for itself.

How did Covid affect your business?

• TL;DR: Adapt to situations that arise. Daryl: Negatively, it affected our lead time from 2 to 6 months. But positively, our business model didn’t have to change, and we were able to adapt and change our target market. We focused on people who needed our solution now. For example, the F&B was greatly affected and needed to use robotics more so because of Covid. This was a good hit, and we got early clients through this approach.

Up next with the Investor Fireside Chat — We had a blast chatting with investors to understand what they looked out for, when investing in student-led startups. During the Fireside Chat with our Early-Stage Investors, we had Kia Pongsripetch (REAPRA), Ben Liew (The Hive SEA), Jon (Unfazed Ventures) and Mike Sun (Protégé Ventures) share with our Reactor Alumni founders some candid insights and caveats that investors look out for in a early-stage startup.

INVESTOR FIRESIDE CHAT Proudly featuring Investors across SEA, who invest in student-led startups

• Ben Liew, Hive SEA, Malaysia. Investment in Pre-seed, Seed, to Pre-Series A startups, including Co-creation. Focuses on AI, IOT, Blockchain startups.

• Jonathan, Unfazed Ventures, Singapore. Investment (Pre-seed, Seed, Pre-Series A), invests in Idea to Traction. Focuses on startups by Gen Z from 15-24 years old in ASEAN and APAC.

• Kia Pongsripetch, REAPRA, Singapore. Build80 Venture Builder programme with a goal of identifying at least 80 promising entrepreneurs across Southeast Asia, with a focus on investing for the long-run.

• Mike Sun, Protégé Ventures, Singapore. Protégé is for students, by students. Southeast Asia's First Student Venture Fund focused on helping student entrepreneurs build scalable ventures and train students to be VC-ready. Invests in founders (from students to youths who have graduated for <5 years) who work on solutions revolving around the economic lives of youths.

• Moderated by Rusydi, Co-Founder & CEO of Reactor School. a leading Startup School for Student Entrepreneurs Age 15-24 in Southeast Asia.

What's the worst pitch you’ve gotten from student founders, and why was it bad?

• TL;DR: Not doing homework, like competitive analysis and research.

• Mike: They simply had an idea which they fell in love with and think is brilliant, without doing any homework to understand the problem or users.

• Kia: They’re unable to answer questions about the industry at all. Saying that there are no competitors, or that they’re the first in the market – which is usually unlikely and a sign that they didn't do their homework.

• TL;DR: Raising money without proper validation or need.

• Ben: There was a team who was not ready. Their team pitch deck was more of a final year project. They had just come out of school and wanted to raise 10K USD. You don’t actually need to raise money to get something started. Validation with users is more important for a start.

What's considered a good idea/pitch? What impressed you?

• TL;DR: Thinking long-term, being clear of your goals, and being able to work well as a team.

• Kia: Most of the time when students pitch to us, they are usually still at the idea stage and focused on 1 business model and solution. I find it impressive when students pitch and they know what they want to do in the long run.

• Mike: For us, team dynamics is important. Also, there's a long way to go when you’re building a startup. Along the way, you will refine what you’re doing or pivot. You need to be able to succinctly articulate a vision and the fundamentals of why you’re doing what you’re doing. Otherwise you won’t be able to last.

What are some of the advantages and disadvantages of being a student founder?

• TL;DR: You’re young, so you can do more with less. Of course, you’ll be questioned, so focus on building your product to give yourself leverage.

• Ben: I was a student founder before becoming a VC. I was young with an IT background so I could code. As a young founder this is good because I can work overtime. Mature founders tend to have more obligations and need a higher salary. When you’re younger, you can lower your salary and make use of the free support ecosystem and resources available at school to slow your startup’s burn rate.

• Jonathan: Do what you’re good at. There will always be questions. You do not have creds nor the background and track record. However, focus on what you've done, focus on building your product, which will give you the leverage. As a young founder, you also have advantages like a lower barrier to entry, resources from university and funds available for younger founders – even Reactor.

Was there a time you invested in a founder, not their idea?

• TL;DR: Yes, definitely. Founders > Idea. However, it’s better to have market validation and traction.

• Jonathan: Yes. At Unfazed Ventures, we have a mandate to invest in the founders over ideas.

• Kia: Yes, definitely in REAPRA. We focus more on understanding the founder; how they operate, how they solve their problems, how serious they are, what they want to do in the long-term, and what is the problem they want to solve. We focus less on the business model and idea, since ideas change and you have to adapt based on testing and validation.

• Mike: There’s no hard and fast rule on getting investment before getting revenue. Of course, we focus on the founders and the team. But typically what's happening is that if there are 2 companies that come to us and both are at the same stage, the one with market validation and traction shown that they have done things in the market and taken a dip. They don't have to be successful. Just show that you've taken the effort to have a stake in the market.

Have there been instances when investors rejected the pitch but did it themselves?

• TL;DR: Yes, unfortunately it does happen.

• Jon: I’ve heard stories of it, where VCs shared confidential data with portfolio companies they’ve heard during pitches. But the VC circle is small, and it doesn’t look good on VC when they do that. Word will spread. So this is not something you have to deal with, but unfortunately, it does happen.

• Ben: I've heard this even in Malaysia, because it's a small circle. But this relates to investing in founders, not ideas, where if we met good founders but their startup idea is not that viable, we seek to co-create and venture build. For example, if a founder is good but his/her startup is not viable, we keep an eye for him/her, and pull them to co-create another startup.

Are pre-seed expected to have good traction in the market before even pitching for investment?

• TL;DR: The focus is on founders, but you need to convince us to buy or invest in you too.

• Jon: General expectations in the VC space over the recent months have changed drastically. Recently, there have been pre-seed or seed startups that have raised hundreds of millions. I think it’s not about expected or not expected, but about selling what people can buy or what people want to invest in.

• Kia: As mentioned, at REAPRA, we focus on founders. However, of course, we need the information to make us buy (or invest in you).

Are solo founders less investible than teams with more founders?

• All: Nope!

How can we become investable if we don’t have traction yet?

• Kia: It’s better to have market validation and to know your users, so focus on validation, getting traction and core users. At REAPRA, we’re ok if you don’t have traction yet, so you can speak with us already. But still do your homework, know the numbers you have.

When you're investing in pre-seed, is it ok for a startup to have high burn rates or not yet profitable, but getting funding to reach a bigger market?

• TL;DR: Yes, as long as you can explain why this is so, and how you plan to spend the funding to grow.

• Mike: It's ok, as long as you can see the road to profitability and you have good reason to do it. And that you’ve thought about how you're going to use this money. You’re not just spending for the sake of it.

• Rusydi: Yes, it’s not about how much you’re spending, but the manner of spending. Are you using the money efficiently. For example, why is the $1 dollar spent used for a trade fair versus a social media ad? VCs want to see that you’ve put rigour and due diligence of how you’re using funds.

What is a reasonable amount for a student-founder’s salary?

• TL;DR: Ideally, use funding to grow your business and lower burn rate = Enough to survive.

• Ben: It’ll be reasonable, say using the normal undergraduate salary. For example, in Hong Kong, the normal undergraduate salary is 4K USD. Of course, you can lower it to 3.5k USD to lengthen your startup’s burn rate or runway.

• Kia: Usually founders who want their startup to grow tend to take the minimum to survive. But it’s a good start to base off typical undergraduate salaries.

• Mike: Young founders I know typically don’t take salaries, more of a stipend. But it depends what stage of life you are in. If you’re a student, you don’t have much debt, so you can manage $500-$1000 SGD. It really depends on how long you want to lengthen the runway for your own startup.

How is valuation affected if you’re a student founder versus a non-student founder?

• TL;DR: Yes, but it’s not about being a student/non-student, but on how much industry experience you have.

• Kia: It does affect sometimes. For example, the amount of effort investors need to take to help you.

• Mike: We don’t put a discount on you because you’re a student. It’s more about how investible you are, so student or not, it doesn’t affect.

• Jon: I don't think we place a particular segregation between student or non-student founders. But there are premiums paid to non-student founders, because they have industry experience and understanding of the business.

We’re a B2B SaaS Startup. Investors told us that they wanted more MOUs signed before giving pre-seed funding. What's a critical mass metric for B2B startups before they will invest?

• TL;DR: Focus on traction/paying customers instead of MOUs.

• Jon: We invest in pre-seed to series A, so we have invested in startups without any metrics to speak of. But do share whatever standard SaaS metrics you have. But there’s no hard and fast rule that we’re looking out for.

• Rusydi: To add on that, I think it depends on whether the VC you pitched to has a portfolio company in the industry. They will inadvertently make comparisons to the startups they've invested in.

• Kia: We don;t really compare to our portfolio companies, as they can still be different. For example, what the founders want in the long run. But I do agree, do show whatever you have. Also, an MOU is just a written agreement, it may not mean you will survive. You still need paying customers.

• Ben: We’ve spoken to a few B2B SaaS startups. Especially if they’re super new, with no customers, we will try to introduce them to enterprises to help get them to become their early adopters. Validation is still required to move forward with the deal.

• Mike: MOUs are good to have, but we do question that. Because you can sign 10-20 MOUs, but in the end, no one buys from you. Real traction is still the most important. At an early stage in B2B, it’ll really help if you have 1 customer as a case study.

When investing in pre-seed startups, do you typically take board seats?

• TL;DR: Not necessarily.

• Ben: Not necessarily, it depends on how much input you need from the VC. For example, one of the startups we’re investing in knows what they’re doing in the next 2-3 years, with a clear vision of what they’re going to do. For that startup, we only get to observe, to have a clear lookout on what they're doing, but not a board seat.

• Jon: We don’t lead rounds ourselves, and that’s why we don’t demand board seats. Although if there are startups that require more hand holding, we are happy to take a seat or a proxy seat holder who knows the industry better than us.

• Kia: We do have the option but may ask for that.

• Mike: We don’t have to actively be there, but if you need us, we can be.

Do you recommend founders to specifically find investors with strategic relevance or connections to the industry, or to cast our net wide and look for as many investors as possible?

• TL;DR: It depends on how “desperate” you are, but it’s always good if you do some research about their strategic relevance and let investors know your priorities, so they may connect you.

• Ben: At calls with most startups, I’ll ask why they ask us to invest to check if they’ve done their homework about us, understand what they want from us; their wishlist. Some say it’s because we have a presence in Malaysia, or because they have cash. This is an orange flag for me. For me, if they’ve done their homework, they’ll know our strengths, that we have close ties with GLC, or are able to open doors into the government sector. To be able to leverage on our strengths and bring their startup to the next level.

• Kia: Even if they invest in you or not, I think it’s a good thing to reach out to many different investors since they speak with many different businesses. If you talk to them, they might be able to give feedback and connect you to those people. Talking to them will help you know if they have a fit with your startup, or even to decide that you don’t need investors too. I think it’s not easy to find investors with specific answers to your wishlist.

• Mike: To me it's about how desperate you are. Of course, we want smart money – people who can connect you. But always have the case in mind if you can’t, and how you make do.

• Jon: Even if they are not explicitly strategic to you, it looks better on you from the investor’s perspective if you’ve done your homework about the investor. For example, saying, “You have a background in XYZ”, or “We’re interested in XYZ”.

What made you interested and want to be an investor?

• Jon: I was an Entrepreneur turned Angel turned VC. I started entrepreneurship young at 13, other partners in our Fund started in high school. For us, we first-hand felt the gap in the space in terms of fundraising. So we wanted to remove this chip off our shoulder, to solve this gap, so now that we’ve come out of the other side, to give back. And we also have an advantage to identify founders and ideas.

• Mike: I really enjoyed joining Protege Ventures as it widened my horizon on what everyone is doing, and connected me to the startup ecosystem which I found interesting.

• Kia: I wasn't focused on becoming an investor. I wanted to support businesses. I was in management consulting, trying to support small-sized businesses, and that’s how I moved into startups and investing.

• Ben: Fun fact, my very first internship was with Jefferey at Garuda Ventures. From that moment, that’s how I knew what I wanted to do in future. And I enjoy talking to all kinds of founders of businesses from A-Z, and even investors and analysts (I even organised a mini-group in Malaysia for investors and founders to share and connect.). It’s a fun journey for me!

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Thank you to our alumni, communities, partners and investors for joining us in our inaugural run of Reactor Global Demo Day. For those who are interested in participating in the next session, you can indicate your interest here.

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Written by Reactor Nexus