VC investment thesis: Cento Ventures

Digital transformation is impacting every economic sector across the globe. It enables the creation of new companies that recalibrate established systems and scale rapidly across borders. Cento Ventures invests in carefully chosen startups in Southeast Asia, prioritising industries we believe are currently most susceptible to digital transformation.

In doing so, we are building a new playbook for venture capital – one that is highly applicable to smaller emerging markets. We turn industry insights into investable opportunities, widen domestic ambitions into regional ones, and augment the skills of entrepreneurs we partner with.

Our investment thesis is guided by these three principles:

Sectors ready for digital transformation

We believe that there is a great opportunity for technology to solve some of the inefficiencies present in emerging markets. However, technology alone does not digitise industries. Most of our investments apply innovative business models to industries that are set in their ways, using technology as an enabler. Our goal as an investor is to develop a sophisticated understanding of the industry verticals we invest in. We tend to meet all the teams that are pursuing a variation of a business idea and when we find the right team with the right technology and business model, approach them with an informed point of view.

Early stage, but with proof points

Cento Ventures aims to be the first institutional investor in most of our deals. We believe this helps us establish a solid relationship with the founder, and influence the strategic direction of the company. Our investments are most frequently at Series A and we usually lead the round. We maintain a realistic approach to investment and exit valuations, one that is driven by data we gather on venture capital deals in Southeast Asia.

We only invest once a company can show that a market exists for its product and that it is ready to use the extra capital to scale. Proof points come in many forms and vary by business. One ‘rule of thumb’ which has served us well is when a company can show past revenues that grow consistently each month and can explain how future growth is predictable.

Expansion to multiple countries

Cento Ventures seeks to help our founders build large digital companies that are leaders in their industry or category. In a fragmented region like Southeast Asia, operating across multiple countries is almost inevitable. We look for companies that have certain advantages when doing this. Our preference is for business models that are light on physical assets since they tend to be able to scale internationally more quickly.

We look for founding teams that share this ambition and focus our support on making their expansion easier. We have a suspicion that great companies born in one emerging market have an opportunity to replicate their success across many others. Each company’s growth path is unique, but most of our investments initially focus within ASEAN. Some of our portfolio companies have expanded as far afield as the Middle East, Africa and Latin America.

Some of the key risks to young companies stem from the complexity of expanding to new countries – building talent and upgrading operations; accessing necessary capital; and developing a strong ‘airgame’. We help our founders with each of those things. Cento Ventures has a long track record working with some of Southeast Asia’s most successful startups, and their founders will confirm that the support they get from Cento Ventures is highly valuable. We believe that close involvement with our portfolio companies drives better investment outcomes, and are constantly building and refining our capabilities.

Cento Ventures is convinced that the opportunity exists for Southeast Asian entrepreneurs to build transformational digital companies. We also appreciate that founders have options when choosing who to partner with and that picking the right investor is not always easy. We are transparent about our preferences and look forward to working with startup teams where we share a common vision.