Founders - What is your Number?

Over the years, many founders have asked me the same question.

“At what personal number is it okay to stop, exit or walk away?”

I usually joke that they should aim to be richer than their VCs and angel investors as a min bar.

Then I give the more serious answer: it is deeply personal. It depends on your ambition, your family situation, your health, your mental state, why you started the company and what you want the rest of your life to look like. There is no single correct answer.

My usual advice is to listen to many stories especially stories with very different outcomes and then decide what works for you. The important thing is to make the decision consciously, so that you are less likely to regret it later.

But after investing in founders for many years, I have also become more opinionated about this.

From an investor’s perspective, I want founders to think bigger for themselves. I will admit that this generally produces a better outcome for me too. But it is also much better for the founder.

Founders who do not think deeply about their personal number and who do not revisit it periodically can leave far too much on the table for other people. They may become less driven because the personal outcome no longer feels meaningful. Or they may make short-term decisions without understanding what those decisions will mean for their eventual ownership and wealth.

So today, I am going to be a little more pushy. I am going to suggest an actual number, at least for founders who intend to continue living in Singapore.

Why founders should aim higher

Building a startup is an unusually risky and draining activity.

Many founders pursue it obsessively for five, ten or fifteen years. The business occupies their thoughts at work, at home and on holiday. The uncertainty affects not only them, but often their spouses, children and parents too.

If you are going to commit such a large part of your life and expose yourself and your family to that much risk you should aim for a genuinely meaningful personal outcome.

You should also review that target every few years.

This is not simply about greed. For many people, their preferred standard of living only becomes clear in their late thirties or forties. By then, they have experienced more of the spectrum: different homes, holidays, restaurants, schools, healthcare choices and ways of travelling. They have a better idea of what they value, what they do not care about and where they can happily settle.

Your benchmarks may also change as you meet more people and observe more outcomes. The number that felt life-changing at 28 may look very different at 45 or 40, particularly after marriage, children and ageing parents.

Your number affects the decisions you make today

The real value of defining a personal number is not just motivational. It is strategic.

If you know roughly what outcome you are trying to achieve, you can work backwards and make better long-horizon decisions about:

● how many co-founders you should have;

● how much dilution you can reasonably accept;

● how many rounds of capital to raise;

● which investors and investment terms to accept;

● whether secondary liquidity makes sense;

● when to buy back or claw back shares;

● how to structure employee equity; and

● how much ownership you must retain as the company scales.

I have seen positive examples of founders who realized that they had given away too many shares early, then found opportunities to buy back or earn back ownership at key moments as the business grew.

I have also seen founders who did not think far enough ahead about their future selves. By the time the company became valuable, they owned only a low-single-digit percentage of the business. Sometimes that still produced a good outcome. Sometimes it did not adequately compensate them for the years of risk and sacrifice.

Ownership decisions that appear small in the early years can become enormous later. A deliberate and patient strategy, careful investor and cofounder selection can make a huge difference to the end result.

So, what is the number?

Friends will tell you that I am not actually the most ambitious person by entrepreneurial standards. I exited relatively young, in my late thirties. I benchmarked myself against successful sg corporate leaders (not billionaires or centimillionaires) and, fortunately, managed to stop raising my mental bar after I exited.

Having now spent more than ten years as a semi-retiree in Singapore, with a reasonable understanding of what most things cost and how investment returns work in practice, my suggested target is:

At least S$20 million in cash to you

By that, I mean personal, liquid proceeds not a headline valuation and not the paper value of shares you still cannot sell.

I am not going to unpack the full mathematics here: early-retirement portfolio construction, inflation, sequence-of-returns risk, the cost of a good home in Singapore, family obligations, healthcare, education and what a top 1% to 5% household lifestyle can cost over several decades.

But my S$20 million figure bakes those considerations in. I would describe it as a conservative minimum only if the founder knows how to invest sensibly and manage spending. A safer target would be S$30 million or more.

Of course, S$20 million is not necessary for a happy or meaningful life. That is not my argument. The point is that startup entrepreneurship is an exceptionally demanding and concentrated gamble. If you are choosing to run that gamble for a decade or longer, your target outcome should reflect the risk, sacrifice and opportunity cost involved.

Having a number does not mean you must sell

This is important: defining your number does not mean you should automatically exit the moment you reach it.

The purpose is to revisit the number, plan ahead and protect the ownership required to give yourself a fair chance of reaching it.

In fact, the best entrepreneurs often reach their number many times over and still retain ownership of their businesses. Many of the world’s great business families built their wealth precisely because they found ways to create liquidity via profits, diversify and continue owning the core assets across generations.

So if you are a founder and have never defined your personal number, perhaps it is time to do so.

Write it down. Explain why it is enough or why it is not. Work backwards from the likely value of your company and the percentage you may own at exit. Revisit the calculation every few years, or whenever your life and the company change materially.

The precise number matters less than the discipline of thinking about it and what you do and act on.

Because if you do not plan and act for your own outcome, everyone else around the table will do it for you.

Note:  20m sgd probably puts one just in top 1% of household wealth in sg. And while I use sg, I guess this number is enough for almost any city except the valley and maybe Monaco/zurich.

When Pref Stack Exceeds Market Value

In recent years, an interesting situation has unfolded and is unfolding in many of our later stage startups that raised large sums of money ( >100m usd and up) at high valuations back in 2020 to 2022 period.

The tough situation to navigate is when the pref stack value is similar or even lower than current market value of company.  Eg startup in 2022 raised another 100m at unicorn 1b valuation. At that time, everyone just dilutes about 10%. Total pref capital is $350m. But with rerating now, the startup is at best worth $300m based on comparables.

This means the entire ord share capital is essentially worth a lot less or zero now. Thats obvious. Whats less obvious is that the pref shareholders may realize their upside is gone/greatly diminished and switch mindset to capital preservation and worry about reporting large writedowns to their LPs. It also means it’s not a winner in their portfolio so they will understandably be unhappy. Also diff class of pref may also have diff terms and feel quite differently. Very early pref can be in same situation as ord.

As one can appreciate, there is a sizable number of factors, relationships for a good mgmt to consider in order to navigate well out of this.  Here’s what I think.

• Once mgmt sense this kind of situation unfolding in the macro environment, cut cost to become profitable. Conserve cash. This is the single most important thing to do. Ning & I pushed for this as early as 2022. You have to get your board to see this improves their outcome.

• Once real cash flow breakeven, resume growth in revenues.  This will show that business is one that survives in low or high IR , diverse macro environment.

• Keep your investors aligned to this plan by explaining it at least this ensures their capital preservation. For mgmt and ordinary, it’s trying to bring back the value of the ord shares. 

• If you can, take milestone esop for mgmt instead of cash to put your money where your mouth is.

• After 2-3 years, let’s say you managed to pull off the cash burn reduction and have runway whether profitable or not. Now have time to solution and negotiate a win win outcome.

Trade sale at right terms of course is best and straight forward. But at $300-400m and up, it’s hard to find buyers in any except a bullish climate.

IPO becomes possible. IPO may require your pref shareholders to still take some haircut but at least their public shares post ipo can offer possibility of profit down the road. For mgmt, it’s a great way to reset everyone. But it must be negotiated as I am sure most pref shareholders terms have anti dilution, vetoes etc. So it’s a need everyone ok with type of move, can’t force.

If scale is smaller, then perhaps finding a new shareholder or mgmt buyout to replace less patient pref shareholders is another solution. Imagine in 2028, your company is profitable but top line and growth still a bit smallish. You can try to find different type of backers to replace pref. Even pay to play type rounds where some existing or mgmt investing. Key is your hand holding of pref shareholders thru this process.

Under the IPO lens, the latest TIA article on Shopback actually showcases many of these actions in play between 2023-2026. Revenue didn’t grow significantly for 2 years but good cost cutting. Latest 2025 financials showing revaluation of pref stack down to $400+m. To me this possibly indicates that valuation or outcome of these shares has fallen as of 2025 and so need to accounting write down value of liabilities.  

Interestingly it shows up as an accounting profit but it’s not really a positive or negative thing. And company says resumed growth in 2026 with 30% rev growth which is very credible. Kudos to the team there.

Now if not already, mgmt should be envisioning and negotiating with investors and board on how to recreate value. 

A decent case will be revenue growth 30% per annum next 2 years, hit 200m+ revenue with a 20m+ net profit after tax. Then I think a asx or sgx is very possible. Exact valuation that moment is anyone’s guess but with those numbers, I think ord shares will have value again, mgmt definitely incentivized and pref shareholders will likely ok (not happy but ok) with outcome too.

What is described above is likely going on with many startups that have raised capital that is beyond that current market value.  We know of at least 3-4 more like this and if anyone just googles for those that raise more than 100m, there are many more. I hope many of these founders are executing as successfully or better than what Shopback is doing.

To summarize, it is cut costs, turn profitable, align your board on new reality and go for win win solution. Most important lever is to make your business attractive for public market investors in all climates. Think SE if really big, or Ifast if smaller or infotech systems or even Toku (though preferably net profitable) if even smaller scale.

Hope this sharing is useful to founders and investors alike. It does also highlight the complexity of having a big pref stack. So perhaps always controlling your board and being the biggest shareholder is the best model to navigate all types of markets. And if really need institutional capital, use as little as possible and negotiate terms contemplating down cycles.

A bit of 废话here, but I think in the exuberance of easy capital, sometimes this basic truth gets lost!

SGX listing - Starting to look like a real option (Founders take note)

Founders & friends will know we don't just invest in startups and VCs - the bulk of investable assets are in public markets, fixed income and cash. And since 2012, we've always had a big preference for USA growth names and China tech. And last 3 years, we have a good allocation to SG stocks. Investing in public markets also help us visualize how later stage investors and buyers view startups in terms of valuation and growth metrics. 

Hence in 2022, when we saw nasdaq rerate down on rising int rates, we made a call asking all founders to stop assuming money is easy to get from VCs and PE. This turned out to be true and is still true today. We told our founders to focus on cashflow, cut costs without mercy and turn profitable if they can. So for our 52 startups, after 3 years of funding winter, I am happy to see about 9-10 of them profitable, breakeven or at least on path to breakeven. The top 2-3 are doing >1m million in profit and still growing 40-50% and more. Many have revenues ranging from 10-30M.

At the same time, because we invested a fair bit into STI post 2022, we realize that in 2024 and 2025, there has been an upward rerating of SGX stocks. Its not just at STI level which are mainly GLCs, its also at mid cap level where many familiar names have rerated with 50-100+% valuation growth in the 2 years. We think this revaluation is driven by the stability of SG, EDQP scheme and also improvement in company financials generally speaking. For those who don't follow the local market, STI has grown 62% since start 2023. There is no ETF tracking mid caps, but I can see many local  names have doubled or tripled or at least grown 50% or more last 18 mths. Valuations of 100-300M companies used to be stuck at 5-8 PE. Now its 10-15 range. 

If the market continues being strong, valuations being offered will start to attract companies that traditionally only thought of the VC/PE route to fund raise esp since that option is now at an all time low.  Its already starting to happen.

For example, new sgx listings started appearing in good numbers last year. Infotech systems, metaoptics, ultragreen, coliwoo, Toku, assembly place all managed to list and their share prices and valuations are mostly stable. Many post listing raises have also happened. Eg meta optics, is a pure tech story that IPO with hardly any revenue. It has since raised another round at better valuation and stock price is about 3-4X. Infotech systems is HR saas company that IPO solidly profitable. Stock price is now about 30% above IPO amid improving financials. So the animals spirits seem to be creeping back into our market and with more govt funds coming in attracting even more interest, we think there is an opportunity here for our local startups to list locally in lieu of next round VC money which is now ever so elusive. 

So how should founders think about IPO? There are many aspects to consider and it is not all about the cost and process and timelines. Those a good sponsor/advisor can help and i won't cover the technical bits.

1) First aspect - Is your company ready now? or 1-2 years from now.

IPO candidates need to have a good story to get public investor interest. You can be deeply loss making but is your technology truly amazing so its worth the risk reward of your cornerstone investors? I think truly amazing tech with near zero revenue is probably a hard sell even today. Though Metaoptics is a great counter example. 

The more usual story is a profitable company (at least 2-3M) with a solid market position that wants to raise its profile and raise some money to execute even further.  A sweetener with be if this company has a growth rate above 25% and has some revenue scale (at least 20M revenue).

But because the process takes a  while and there is a checklist of things to do, we think the sweet spot to start learning about this option is when you are one year away from the financials. Internally too, there are things to prepare so that your finance and compliance are at the right level.

2) Second - What do Founding team/Mgmt want?

Is your goal to cash out next few years and retire? If so IPO is definitely not the right thing to do. Mgmt is expected to want to use the raised profile of being a listed company and the access to constant price discovery and public funds to build the company out much more. 

As for exiting stakes, its possible but the liquidity of your stock price post listing and the subsequent performance of the company will determine very much whether founders can sell small or large sums and at what price.

If the goal is to cash out mostly or fully and to stop working, then a trade sale is probably a much better option.

3)  Third -So what are the main benefits to an IPO?

IPO is a form of fund raising. So you will be able to raise capital that your firm needs to carry on growing. Having constant price discovery theoretically makes it easier for you to price any sale or issuance of more shares to raise more capital.

Second, being listed also signals to vendors, suppliers, investors, acquirers, partners, employees that your firm is of a certain standard and has more transparency. Hiring could be easier, bank loans easier to obtain etc

The third big benefit applies especially to companies that have investors on a timeline and with a preference stack. A successful IPO will reset everyone into ordinary shareholders and most shareholder agreements agree that an IPO of min X value is something that mgmt can pursue and which pref holders wont block.

This removal of pref stack will give back more control to founders and free founders up to re-appoint  a new board and also really have a much longer time frame to think about their business. I think this could be a big point and motivating factor for many founders. The investors won't mind too since an IPO will generate liquidity and an outcome for them to report back to their LPs.

The only group of investors who may be a bit unhappy will be those who invested at valuations that are still above what the IPO values at. Very possible since deals done in 2020/22 could have been at unjustified multiples. But I would think bearing the liquidity and possible future stock improvement in mind, even this group of investors should want the IPO. At least get back some money.

4) Fourth - Any good case studies locally? Or what needs to happen post IPO so i don't become one of the zombie catalist firms?

A successful IPO is just the start. There are many nightmare stories of post IPO poor performance and lack of liquidity. In the past, mgmt will always also blame on market conditions. But if the market conditions do improve as hoped by ecosystem players and govt, then it becomes incumbent on mgmt to ensure your IPO is a success.

Here's what's needed. Strong improving story showing up in financial performance. That's key. Deliver or outperform what you shared in the prospectus. Now your board is aligned on timeframe.  Strong regular engagement with fund managers and the public via a mgmt that can articulate the vision, story and performance.

Two names we have tracked over the years that we feel have done this well. And both have used their listing status to grow from relatively small listed firm many fold to today.

- iFAST Corporation

- LHN Ltd

Hope this article is useful to founders and ecosystem players who read it. Ning & I  have already been actively engaging our founders and correct ecosystem players so that this option is well explored and understood. Who knows maybe we will also get an IPO from our portfolio locally and that firm grows to be an iFast!

SG Market is too small !!

Had a chat with a founder lately where I again heard this phrase “Singapore is too small a market.”

Have heard this phrase many times before and investors and founders both love to say it and then push for overseas expansion.

It always makes me feel slightly uncomfortable because while from a gdp point of view, Singapore is indeed small relative to USA or China or Europe, it’s still the 2nd largest absolute GDP in ASEAN. SG is second only to Indonesia whose population is 50X of ours but is just 3 times as large by GDP.

I also feel uncomfortable because I know the P&L of many successful entrepreneurs who are worth 9,10 digits. A great number of them have an overseas story of course but sg can still be easily 30-80% of their revenue.

The main concern I have is that if founders at earlier stages start with this statement in mind when their first market is SG, they may subconsciously be giving themselves a wrong strategic focus or worst still, a wrong mindset with regards to sg or asean sales.

Things are nuanced as usual. For some businesses, their market is global from day 1. Eg.micro enterprise or consumer saas software subscriptions,  developer community tools/software, Amazon/ecommerce sellers targeting USA or Europe etc. 

The issue is I feel the majority of startups don’t fall into this category. For this majority, founders are probably are better off with the mindset that SG is not too small and there is a lot for me to achieve here. To me, founders should only start saying and acting on “sg market is too small” frame of mind when their startup has a decent traction in SG. 

Eg for job portals space, maybe at least >5m usd revenue and profitable before it’s useful to think that SG is too small. 

That’s why we have been advising most of our companies to prove they have a decent home market business first before talking about overseas. This strategy is now paying off as a handful of our startups have some scale in home market and now can indeed feel sg alone is too small since they need to continue growing past that 5-10m revenue and 1-2m profit. 

So here’s some food for thought. Often common wisdom frequently get repeated because there is some good truth to it. But the interpretation and right timing of when the common wisdom applies can make a huge difference in the outcome of a startup.

Startup Portfolio Review 2025 - All time low IRR

 (For context pls read 2025 mid year, 2024,  2023, 2022 updates. Also this post is all about our startup investments. You can also read post retirement life review for 2025).

Unfortunately my predictions for 2025 largely were correct for our space. To recap, I predicted 2025 will still be weak for funding as investors wait for exits and DPI. Startups who are swimming naked will fail and even those with ok business models will need all their effort and luck to grow revenues to reach breakeven. Only strong margins and decent scale startups will be able to raise meaningful money and even then it will be on investors terms. Only exception will be AI space which was hot even in 2024. Corresponding, we kept our allocation to new startups same as 2023, 2024 which is less than half of sum invested in 2021,2022. 

Last year we funded just 3 new startups and did 2-3 follow on for existing startups. We found a USA AI fund to invest in and that’s our way of capturing some exposure since couldn’t find any AI strong stories here.

On a more granular level, we have now invested in 52 startups as angels since 2013. Of these, 4 have profitable exits ranging from 2x to 5x. 15 are closed down or bad loss making exits. 14 are growing well and are worth more than when we invested for sure. The remainder are either too new or uncertain. 

On a mark to market basis since 2015, it’s a 2.09 TVPI and 14.3% IRR. All time low since I started tracking and a big drop from last year 19-20% IRR and 2.45 TVPI. DPI at 0.36. Main driver for big drop is one paper gain fell by 70% due to a down round. Interestingly, company is now almost breakeven and looks like will survive and may thrive moving forward.

And this is the silver lining - almost all our founders now are building based on profits and operating cashflow. Funding is not the default plan anymore and will only be pursued from a position of solid financials and strength. Pity it took so many burnt millions from 2016 to 2023 for our founders to understand this. 

There were also usual startup problems like founder breakups, ceo being cheated by fake investors etc. These draining stories also resulted in some write downs. Considering all the write downs and the solid financials of the remaining winners,  we believe we are probably near or at bottom of the TVPI trough already. We still expect TVPI to finally land >2.5x with 3x being base case. Quite a few of our winners are at just 30-60m valuation. That means one or two just needs to double for us to have pretty large gains.

Not so sure about our portfolio of VC funds though. Need to see the quality of the P&L of their winners. I strongly believe it’s profitable growth that matters now. Having scale but still burning cash is not that appreciated anymore and the mgmt is taking risk of failed outcomes if they still want to sell a pure growth story.

Personally, we do reflect a lot on our angel investing journey. This 10+ year journey has delivered in terms of giving us something concrete and meaningful to do that plays to our strengths. It gives us good learning and social interaction too, esp when we add on angelcentral club activities.  However, we are disappointed by 2 connected items.

First is that returns are currently poor and time frame at 12-15 years is very long. We had optimistically expected to ride on asean growth story and get a 3x on invested capital within 10-12 years. It’s now 10th year. Our VC portfolio is also sitting on similar TVPI with lots of fund extension requests so I guess these numbers reflect the market. And at least we have 0.36 DPI. 

Second, a minority of founders have ended up displaying disappointing behavior when things go bad or tough. Instead of the tough get going, they end up displaying self serving behavior or worst still unethical tactics to minimize their own troubles or pursue personal goals. The company’s long term survival and story they sold to investors is clearly not their priority.

So moving forward, we have decided to stay cautious with the same reduced budget for angel investing. And we will also extend our expectation of how long we need to wait. One thing we want to avoid is having to handle startups at 70 years old!

Some general observations.

 

Observation 1 - Green shoots are there. Need them to grow and spread all over the landscape.

We can see two main green shoots. First is the solid outperformance of the STI and smaller caps listed in sgx. Also recent tech IPOs like mega optics, infotech systems and ultragreen help the story. Our successful startups can position an exit on sgx if the market interest continues and grow. This is very important because sgx can take valuations of 50m -1b. Significantly below nasdaq average valuation of 2-3b usd.

Second green shoot is that many startups have had 2-3 years to be lean and switch to solid profitable growth. A good number of them have succeeded or are well on the way.  To illustrate, many of our portfolio companies have cut costs and focused on sustainable revenues since 2022 when we first sounded the warning. A lot of pain last 2-3 years but now a good number have reached breakeven and 2-3 are solidly profitable with at least 1m PAT.

Observation 2 - Full cycle average returns are bad compared to listed comparable. Negative for new funds. Also means top VCs will take more. Fund managers have to show results and DPI. Hands on management to secondaries and other forms of exits matter.

14.3% IRR over 11 years is weak compared to investing in nasdaq or spy. And against USA VC top quartile returns it’s also bad. Any investor would compare not just with other asset classes but also with comparables within VC class. So it makes sense that new money will allocate less to asean and for those monies allocated, most will go into the established VCs with scale and best track record.

To me this means newer VC fund managers will have a tough time fund raising in 2026. And if I just have 1 or 2 funds and can’t raise fund 3, it becomes hard to build a good business. Of course, i can have 3 funds with 500m aum but if my dpi and irr of past funds is not strong, i will also suffer.

Finally VC managers cannot just rely on founders for exits. The ones that survive and thrive will need to create a working playbook for secondaries and engineer outcomes that may be ahead of the final founder exit.

Observation 3 - Bottoming out is still ongoing, no obvious catalyst. Implication is founders must create own catalyst via solid revenue growth and profits. 

This is a repeat point from last year. I believe there will be yet more closures and negative disclosures. A good number of startups will be running of cash. Some will be founder burn out. It’s possible more efishery are around.

I don't see any big catalyst on the horizon. China is still bottoming out. USA markets is strong but the tax impact is hitting soon and their K shaped economy will cause problems.  USA is also sucking up a lot of global risk capital as it’s the centre of AI boom. USA IR is lower now at 3.5%, so capital is now ok priced but nowhere cheap like 2020s zero rate type of environment.

The implication of all the above is that founders cannot rely on ecosystem improving. They must continue to improve their business and run growth profitably. That will allow for best chance of some form of outcome for themselves and investors.

Observation 4 : The management of an Angel portfolio has big similarities to listed stock market investing. 

First, is selection and buying in. Over the 2013 to 2020 period, we missed on 2-3 startups that did approach us and which we dug in to explore but decided to pass on. Usually it’s due to lack of knowledge of space or see something in the unit economics that we didn’t like. Turns out we were wrong frequently! If we invested even just $50k in each of them, would have resulted in 2x more on entire portfolio.  So we know by now we are not great unicorn type pickers. This effect is even more pronounced in angel investing since the top winners are 10-100x winners.

Second, as in listed stocks, buying matters but selling also matters as much. For the longest time we had this idealistic philosophy of following the founders. Exit only when they exit. Now we know it has to be case by case. And taking back our capital is never a bad move. We had easily 3 good secondary opportunities during the 2021 peak where if we sold, would improve the dpi and IRR significantly. But overall this effect is weaker compared to first topic.

Observation 5 : Very Early Startup Creation intact. Funding very low.

AngelCentral continues to see 900+ companies registered with us and the quality of the startups is still high. Funding quantum by our angels continue to be at all time low. There are savvy investors trying to invest in fair valuations or downrounds of good companies. All in it’s more of the same.

We hope that 2026 is the year activity starts to come back. Activity in exits need to come first. Then activity in funding - driven by early opportunistic money and trade sales that see value in the startups that not just survived but have thrived in the fund winter.  Personal portfolio wise, we expect angel side to have good markups and Vc side to have more dpi but maybe without much markups.