Khailee Ng has a keen sense for identifying promising start-ups.
As managing partner of the venture capital firm 500 Startups, his job is to identify and help develop some of the companies of the future.
And he has some advice for aspiring founders who want to build the next big thing: Look beyond the upper echelons of society.
You can actually make a lot of money by serving a population that doesn’t have that much money.
Khailee Ng
Managing Partner, 500 Startups
Too often, startups focus on developing products and services for wealthy consumers in advanced economies, Ng said. But there are many important – and potentially lucrative – problems that need to be solved in poorer developing countries.
“I don’t think a lot of people think about it,” Ng told CNBC Make It. “You can actually make a lot of money by serving a population that doesn’t have that much money.”
A start-up strategy for Asia
In fact, Ng, who is part of the Silicon Valley company’s Southeast Asia office, is focusing much of his funding there.
The investor was an early backer of the now multi-billion dollar Indonesian e-commerce marketplace Bukalapak, which provides technology for the country’s traditional, family-run street stalls.
His teams’ other regional investments include Singapore-based ride-hailing company Unicorn Grab and Malaysian on-demand work platform GoGet. Unicorns are technology start-ups valued at $1 billion or more.
Therefore, Ng encouraged aspiring entrepreneurs to take a long-term view of evolving markets and consider some of the more likely broad trends.
“I would encourage entrepreneurs to look at each of their markets, especially when looking broadly at large markets like Indonesia and Southeast Asia, and think about the bigger picture and the longer horizon,” Ng advised.
For example, when considering potential investments, 500 Startups consider the relationship between consumption, productivity and gross domestic product in a particular market and how this will develop. More sophisticated markets tend to be productivity-oriented, while developing countries remain consumption-oriented, he said.
Southeast Asia has now entered a new phase… startups aimed at increasing people’s productivity will be the next wave.
Khailee Ng
Managing Partner, 500 Startups
“With the first wave of big unicorns, a lot of them are very consumer-oriented. But later, when many people are saturated with consumption points, you try to think about productivity,” he said.
These metrics can help a startup identify the wants and needs of a particular market, Ng continued.
“Thinking from this perspective, I definitely think that Southeast Asia has now entered a new phase where building startups focused on increasing people’s productivity will be the next wave,” said he. “I look forward to seeing more entrepreneurs actually build more companies that can serve the broader population.”