This month, Surge—the 16-week accelerator programme run by storied venture capital firm Sequoia—welcomes its second cohort of startups. But even with its first batch still visible in its rearview, the initiative is already showing signs of disrupting the venture capital scene in Southeast Asia.

At least two of the Indian participants in the inaugural Surge intake are preparing to raise significant financing rounds, with plenty of reported interest in others. Things on the Southeast Asia front, though, have been more pedestrian. A price-conscious market for investors—by virtue of the few exits that the region has seen—Sequoia’s VC peers are baulking at the large valuations that freshly-minted Surge graduates are coming to the table with.

Used to discussions on their terms, VCs in the region—most of whom call Singapore home—are coming into talks at a disadvantage.

“The founders were all good at pitching, had blue chip backgrounds and could paint the opportunity and state of their company,” one investor who met with five Surge startups from Southeast Asia recalled. The investor passed because the company “wanted a higher valuation compared to what the market is looking at.”

“I sense that Sequoia is trying to play the Silicon Valley/China market game in Southeast Asia, but it hasn’t been proven here,” said another. This person suggested that the association with Sequoia was responsible for startups seeking double the valuation they had expected.

“It felt very much like Ivy League school,” suggested a third investor who held meetings with the Southeast Asia cohort. “Yes, you get a great education, but you can’t necessarily walk into a job.”

Sequoia has always been the venture capital firm to beat in Southeast Asia. It out-muscles all others in the region on financial firepower, history, international reach and—crucially—reputation. Sequoia India and Southeast Asia—as its fund is called in this part of the world—has always enjoyed these unfair advantages.

But Surge is a tacit admission that the firm can do better on early stage deals. Sequoia counts unicorns—startups valued over $1 billion—Ola, Zomato, OYO, Byju’s, Freshworks and MuSigma in its portfolio. However, it was not an early investor in any of these, limiting its upside from such deals.

Over in Southeast Asia, the situation is different. The firm has taken advantage of a higher signal-to-noise ratio and reduced competition to take lucrative stakes in unicorns such as Gojek, Tokopedia and Traveloka, as well as those still vying for billion-dollar valuations such as Zilingo, One Championship and Carousell. While it has always had a reputation for tough dealing, Surge has pushed things further despite pledges to work closely with other VCs.

“We’ve made seed investments and collaborated with other firms in the past. We’ve already spoken to a few friendly firms and they are excited to be involved,” Shailendra Singh, one of Sequoia’s managing directors, said in January regarding the potential to collaborate with other investors.

The investors who spoke to The Ken voiced concern that Surge companies are pricing themselves out of potential investments.

AUTHOR

Jon Russell

Jon Russell is Southeast Asia editor for The Ken based in Bangkok. Originally from the UK, Jon moved to Thailand in 2008. He’s passionate about telling thoughtful business stories, and tracking the impact of the internet in his adopted home of Southeast Asia.

View Full Profile

Read this story. Subscribe Now

This story is available across both editions. Subscribe to the one that’s most relevant for you. Questions?

Pick an edition

MOST POPULAR

Annual Subscription

12-month access to 200+ stories, archive of 800+ stories from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 2,750

Subscribe
 

Quarterly Subscription

3-month access to 60+ new stories with 3-months worth of archives from our India edition. Plus our premium newsletters, Beyond The First Order and The Nutgraf worth Rs. 99/month or $2/month each for free.

Rs. 1,750

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

Rs. 500

Subscribe
MOST POPULAR

Annual Subscription

12-month access to 150+ stories from Southeast Asia.

$ 120

Subscribe
 

Quarterly Subscription

3-month access to 35+ stories from Southeast Asia.

$ 50

Subscribe
 

Single Story

Instant access to this story for a year along with comment privileges.

$ 20

Subscribe

Questions?

What is The Ken?

The Ken is a subscription-only business journalism website and app that provides coverage across two editions - India and Southeast Asia.

What kind of stories do you write?

We publish sharp, original and reported stories on technology, business and healthcare. Our stories are forward-looking, analytical and directional — supported by data, visualisations and infographics.

We use language and narrative that is accessible to even lay readers. And we optimise for quality over quantity, every single time.

What do I get if I subscribe?

For subscribers of the India edition, we publish a new story every weekday, a premium daily newsletter, Beyond The First Order and a weekly newsletter - The Nutgraf.

For subscribers of the Southeast Asia edition, we publish a new story three days a week and a weekly newsletter, Strait Up.

The annual subscription will get you complete, exclusive access to our archive of previously published stories for your edition, along with access to our subscriber-only mobile apps, our premium comment sections, our newsletter archives and several other gifts and benefits.

Do I need to pay separately for your premium newsletters?

Nope. Paid, premium subscribers of The Ken get our newsletters delivered for free.

Does a subscription to the India edition grant me access to Southeast Asia stories? Or vice-versa?

Afraid not. Each edition is separate with its own subscription plan. The India edition publishes stories focused on India. The Southeast Asia edition is focused on Southeast Asia. We may occasionally cross-publish stories from one edition to the other.

Do you offer an all-access joint subscription for both editions?

Not yet. If you’d like to access both editions, you’ll have to purchase two subscriptions separately - one for India and the other for Southeast Asia.

Do you offer any discounts?

No. We have a zero discounts policy.

Is there a free trial I can opt for?

We don’t offer any trials, but you can sign up for a free account which will give you access to the weekly free story, our archive of free stories and summaries of the paid stories. You can stay on the free account as long as you’d like.

Do you offer refunds?

We allow you to sample our journalism for free before signing up, and after you do, we stand by its quality. But we do not offer refunds.

I am facing some trouble purchasing a subscription. What can I do?

Please write to us at [email protected] detailing the error or queries.