By Thomas G. Tsao, Co-founder and Chairman, Gobi Partners

In a challenging startup landscape, founders want more than capital from venture capital firms. They want partners who can help them navigate obstacles as they chart a path toward sustainable growth. Almost all venture capital firms say they offer value creation, but in this environment, those programs need to evolve alongside the startups they serve in the face of unprecedented challenges.

Over the past three years, funding has plummeted to record lows and exit opportunities are increasingly scarce. While ecosystems around the world have been impacted, Asia has been hit especially hard. Exit activity nosedived from $191.2 billion in Q1 2021 to just $10 billion in Q2 2024, according to KPMG.

Despite these headwinds, Gobi Partners saw three of its portfolio startups exit over the last year, generating $350 million in total value with a 20x return on investment. The companies represent diverse sectors and exit strategies: e-commerce enabler Synagistics’ de-SPAC in Hong Kong, Mize’s acquisition by Korea’s Yanolja and Brite Semiconductor’s IPO on the Shanghai Stock Exchange.

When the market is as difficult as it is right now, value creation programs aren’t just about maximising portcos’ returns. When deployed well, they enable innovation to not only survive, but thrive.

Value Creation: A Hybrid Model Scores Big

Almost every VC firm, including Gobi, has a value creation program, but their methods are changing.
The original VC model centered around the idea that if you made an investment, you had to see it all the way through. I use a soccer analogy. You run, you kick, you score a goal, you also have to defend. Not only does a VC invest in a deal, but they build a relationship with the founders, help the startup over several years and then work on their exit.

But as venture capital firms grew, they needed to specialize. Now the VC model resembles American football, with specialized roles. The quarterback throws the ball. Wide receivers catch the ball. If you’re an offensive lineman, you don’t score, you block.

In Gobi’s experience, blending the two approaches is most impactful. Our value creation team provides guidance in areas like financial management, C-level recruiting, fundraising, or identifying strategic partners in our portfolio and network. But ultimately, Gobi’s partners are the value drivers. We serve founders in almost any way they need.

Exit Strategies: Starting with the End in Mind

Before Gobi invests in a startup, we need to be able to visualize an exit strategy. We expect this to evolve over time, but understanding what we’re working toward helps us build customized value-creation strategies.

An example of this approach is Synagistics, formerly called Synagie. Gobi’s team, led by Dan Chong and Zen Liew, first noticed Synagie in 2018, but the company decided to list on the Singapore Stock Exchange instead of pursuing private funding. But in 2020, Gobi and its strategic partner Alibaba had the opportunity to acquire its e-commerce enablement business. Four years ago, this was still a nascent sector in Southeast Asia, but we knew its potential because of our experience watching it grow in China.

As a result, we were able to help Synagistics as it scaled its operations. We helped them strike important partnerships through our network and Alibaba also enabled important connections through its subsidiary Lazada. This resulted in a 7.5x revenue increase between 2019 and 2023. When Synagistics decided it was time to look at an exit, they explored options like a de-SPAC in the United States and an M&A. Ultimately Synagistics became the first de-SPAC in Hong Kong, with Gobi guiding them through an exacting regulatory framework.

Resilience Through Adversity

Sometimes value creation is just continuing to have faith in a startup despite seemingly insurmountable odds. In early 2020, Gobi invested in travel-tech startup Mize, which optimized booking profits for travel companies. Then the pandemic hit, and almost all travel came to a halt. But our Mize team, led by managing partner Chibo Tang, took a long-term approach.

During the first few years after we invested in Mize, our value-creation initiatives focused on their survival. We helped Mize keep costs low until travel began to recover.

As lockdowns began to ease and travel resumed, we shifted our focus to helping Mize find potential partners within our network, including Korean OTA Yanolja. This introduction ultimately led to Yanolja acquiring Mize in 2024.

The pandemic was a black swan event, but our experience shows that value creation is often about flexibility in the face of unexpected challenges. Most companies will run into at least one potentially disastrous situation, even under normal circumstances, and the resilient ones will always find a solution. As VCs, we benefit when we stay as agile as our founders and brainstorm ways to help them succeed.

Patience as a Competitive Advantage

Gobi’s scope reaches across Asia and we also have connections in other markets, including the United States. One way our value creation differentiates is our ability to navigate cultural and language barriers. After becoming seed investors in custom ASIC provider Brite in 2008, my Gobi co-founder Wai Kit Lau and I helped them deal with Chinese regulations. On the other side of the ocean, we paved the way for them to bring prominent American investors like Norwest Venture Partners and Pierre Lamond onto their cap table.

At the time Brite was founded in 2008, the growth rate of China’s semiconductor industry reached one-third of total worldwide consumption for the first time. We envisioned Brite’s rise as part of the global chip industry. But nobody could have predicted the trade wars and like Mize, Brite dealt with events beyond its control. Brite was even swept up into geopolitical tensions after a U.S. media report drew attention to its relationship with one of its minority shareholders SMIC, which is on the U.S. Entity List. But we had faith in Brite’s ability to stay focused on its core business.

The U.S.-China chip war curtailed Brite’s international ambitions, but the company benefited from serving China’s enormous semiconductor market. Despite its setbacks, Brite continued to grow and listed on the Shanghai Stock Exchange earlier this year.

Gobi’s journey with Brite from investment to exit took 16 years, demonstrating how the key ingredient in value creation is often patience.

Venture Capital as a Service Industry

As challenging as it is, the current economic environment is an opportunity for VCs to rethink their approach to value creation. For Gobi Partners, working with our portfolio companies is about more than boosting returns. We want to empower founders to thrive. This often means helping them manage finances or find key hires in our network.

But it also means stepping back and giving companies the room to execute strategies, even if we don’t always agree with them. Often, it means just being patient.

Gobi’s experiences guiding Synagistics, Mize and Brite toward successful exits this past year showed us that value creation isn’t just about maximizing returns. It’s about service. Value creation doesn’t just benefit startups. It also helps venture capital firms attract the best deal flow. This environment doesn’t mean founders have gotten less discerning about who they take money from. In fact, the opposite is true.

They need to know their investors can help them tackle the most difficult obstacles. When founders are given the tools to succeed in even the toughest of landscapes, it results in stronger, more resilient innovation ecosystems.

Featured photo credits: Gobi Partners 

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