EHK Chats with Early Stage Investor Jay Kim
Jay is an active early-stage investor and strategic advisor to TCG Capital, a multi-family investment office. Jay is also a Startup Garage mentor.
This interview with Jay Kim was conducted and condensed by EntrepreneurHK (EHK).
1. What got you into early-stage investing?
Growing up, I was always a big tech and electronics geek but by the time I graduated from college in 2001 the tech bubble had already burst so I never even considered pursuing anything in that field. Instead I moved up to Wall Street to join an investment bank. By the time I moved over to Hong Kong in 2005 that bubble had subsided and things were starting to look interesting again. I was able to save some money in the meantime which allowed me to dabble in angel investing which ultimately “paid” for my education in early-stage investing.
2. How do you distinguish between a good product and a fundable product?
This is a very good question. There are many good products out there that aren’t necessarily fundable. Determining product/market fit is one of the most critical yet misunderstood steps in building a startup. I see many founders rush to market without taking the time to determine the true demand for their product. This is common mistake #1. I must also add here that the definition of a fundable product depends vastly on investor type. Some investors gravitate towards finding the next social network or viral mobile game. I personally tend to lean heavily towards products that actually solve real world problems or burning pains in people lives.
3. The founder(s)’s personality vs. startup idea, which one is most important?
The founder(s)’s personality is definitely much more important than any idea out there. Paul Graham lists “flexibility” as the second most important trait that he looks for when backing founders. I believe this to be true. As an early stage investor you are betting much more on the jockey than the horse at this point and the jockey must have the determination to guide the horse down the track but be able to make turns when he needs to along the way. Team cohesiveness is also key and if the founders have prior experience together that builds a much more stable foundation.
4. A lot of start-ups / people are reluctant to talk about their ideas, whether it is with investors or friends, fearing that the “unique” idea will be copied, how important would you consider sharing is at an early stage?
Initially you tell just enough people in order to get the idea off the ground and no more. Peter Thiel defines a company as the “golden mean between telling nobody and telling everybody” which I agree with. That said, once your company is up and running I believe execution, persistence, and in some very rare cases, speed to market as the key drivers of success. An idea is meaningless without execution. That’s also why early stage investors rarely ever sign an NDA when due diligencing a company. And in the off chance that someone does rip off your idea, 9 times out of 10 they won’t be around in a year’s time so you won’t have to worry anyway.
5. To all the people out there who have a full time job and want to embark on the entrepreneurial journey, what advice would you give them? What steps can they take to actively kick-start their plan?
The number one advice I would give is don’t quit your day job! I think a lot of people out there watch movies like “The Social Network” and buy into the “follow your passion” line and end up quitting their jobs prematurely, leaving them in a very precarious position. I’ve been there myself and it wasn’t pretty. Becoming a full time entrepreneur is a lot of hard work and much more difficult than people think. You have all the odds stacked against you, so why add financial burden to that? Stick to your day job and work on your side hustle concurrently. You will know when the time is right to quit and go full time and that usually coincides with the ability to generate recurring revenue from your side business.
6. Advice to start-ups seeking for funding out there?
As the saying goes “Your network is your net worth” and I truly believe that. Networking is an art form and one that is crucial in mastering if you are building a company. As an investor I get pitched or cold called (emailed) on a lot of deals but the best deals have always come through word of mouth referrals. As a startup founder you have to learn to always be networking and selling your product, even if this doesn’t come natural to you. You never know who will end up helping you out in the future.