The VC firm’s founder gives the lowdown on how value creation can drive portfolio success amid constrained markets.

The following op-ed was contributed by Thomas Tsao, co-founder and chairman of Gobi Partners, a leading venture capital firm in Asia.

Startups need more than funding—they need allies to guide them through a tough landscape. Many venture capital firms now offer value creation programs, but in today’s challenging environment, these initiatives must adapt as swiftly as the startups they serve.

Startups have weathered nearly three years of constrained funding and limited exit opportunities. Asia has been hit especially hard, with exit activity plummeting from a high of USD 191.2 billion in the first quarter of 2021 to just USD 10 billion in the second quarter of 2024, according to KPMG.

Despite this, Gobi Partners oversaw three exits over the past year, generating USD 350 million—a twentyfold return on investment. These exits span diverse sectors and strategies: e-commerce enabler Synagistics became Hong Kong’s first ever de-SPAC; fintech-based travel tech provider Mize (formerly HotelMize) was acquired by South Korea’s Yanolja; and Brite Semiconductor went public on the Shanghai Stock Exchange.

In today’s market, value creation programs aren’t just about maximizing returns—they play a crucial role in helping startups not only survive, but thrive through innovation and resilience.

The evolution of value creation

Almost every venture capital firm, including Gobi, now has a dedicated value creation team, but the way firms approach value creation is evolving.

The traditional VC model centered on the idea that investors should see things all the way through when an investment is made. Often, that means partners don’t stop at investing in deals, but also build relationships with founders, help portfolio companies over several years, and plan for exits. For partners, both returns and reputation are tied to the growth of the startups they write checks for, so taking a very personal approach makes sense.

But as VC firms grew, many found the need to specialize and build dedicated value creation teams composed of specialists in various aspects of startup growth.

Gobi blends these approaches. Our value creation team’s job is to monitor startups’ financials and assist them with matters like cash flow management. This team is a key source of support, but they’re not the only ones working with the startups—ultimately, Gobi’s partners have to be the value drivers, serving founders in almost any way they need help.

Planning for exits from day one

Before Gobi invests in a startup, it needs to be able to visualize an exit. This doesn’t have to be precise to a tee, but such visualizations help when crafting value creation strategies.

Gobi first noticed Singapore-based Synagistics, then called Synagie, in 2018. At that time, Synagie decided to list on the Singapore Stock Exchange instead of fundraising privately. But Gobi, alongside strategic partner Alibaba, were able to acquire its e-commerce enablement business in 2020.

E-commerce enablement was still nascent in Southeast Asia at that time, but Gobi had already seen it take off in China. As platforms like Tmall grew, brands needed help managing sales channels, marketing, and logistics. As e-commerce platforms grew in Southeast Asia, Gobi worked with Synagistics to take advantage of the opportunity.

To help Synagistics grow, Gobi tapped into its network, introducing the founders to other portfolio companies that helped Synagistics expand into new markets. Through its subsidiary Lazada, Alibaba also enabled important connections. The results? Synagistics grew its revenue 7.5 times between 2019 and 2023 despite the pandemic.

When Synagistics decided the time was right to go public, it considered several very different options, including a de-SPAC in the US, another round of private funding, or a merger and acquisition. Synagistics ultimately opted for the first option after weighing the possibilities with Gobi’s advice. De-SPACs have a tight timeline before the SPAC expires, and Hong Kong has a much stricter regulatory environment than other markets. To speed up the process, we worked with Synagistics to secure the necessary internal approvals, and it successfully went public in October.

Holding steady

The last five years have brought a lot of turbulence and sometimes, value creation means simply to hold the line. We invested in Mize, which optimized booking profits for travel companies, in early 2020 just before Covid-19 hit. But our Mize team, led by managing partner Chibo Tang, took a long-term approach.

The first few years post-investment, Gobi sought to create value mainly by helping Mize survive and keep its costs low until travel began to recover. Then, we started making key introductions. We invested in Mize through the Alibaba Entrepreneurs Fund and Alibaba introduced the company to its network of hotel groups and online travel agencies (OTAs), most notably Yanolja. The two built a relationship from that touchpoint, and Yanolja acquired Mize earlier this year.

While the pandemic was an extreme case, part of the process of achieving successful exits is staying the course.  Most companies will run into at least one significant hurdle during their lifetime, and that’s often tied to the scale of their ambitions and their appetite for the kind of risks that lead to greater innovation and potential returns. For VCs, the key is to stay on our toes and brainstorm new ways to help them succeed.

Playing the long game

Gobi is a pan-Asian firm with connections around the world, and one way our value creation stands out is through our ability to navigate language and cultural barriers. For example, after becoming seed investors in custom ASIC provider Brite in 2008, Gobi helped them deal with regulations in China, its home market. In the US, we attracted potential investors by explaining what was unfolding in China’s semiconductor industry and the opportunities at hand. Brite’s cap table came to include Norwest Venture Partners and Pierre Lamond, who invested partly because they were reassured by Gobi’s local presence in Shanghai.

At the time Brite was founded in 2008, China’s semiconductor industry was growing at a pace that far outstripped the rest of the world, accounting for one-third of global consumption for the first time. But like Mize, Brite had to deal with challenges beyond its control.

We always thought Brite would be perfect for a domestic listing, given the strength of China’s semiconductor industry. But that perspective was predicated on the assumption that Brite would be part of a rising global chip industry. Nobody could have predicted the trade wars. Brite was even swept up into geopolitical tensions after a US media report drew attention to its relationship with minority shareholder SMIC, which is on the US Entity List. Gobi chose to keep faith with Brite’s ability to withstand the turmoil.

While Brite was unable to expand into the US market because of export controls, it did very well by serving Chinese companies who couldn’t buy from the US anymore. As with Synagistics’ de-SPAC, Gobi worked with Brite on the details of its IPO, including identifying top candidates for a CFO.

Like Mize, Brite is another example of how value creation is, at times, simply about being patient. Having worked with Brite for 16 years, it finally went public in March this year.

The value of service

Value creation may have begun evolving before the decline in exits, but the current environment gives VCs a chance to step back and reassess just how adaptable their strategies are. As Gobi guided Brite, Mize, and Synagistics toward exits this past year, it became clear that value creation isn’t just about maximizing returns—it’s also about service.

As VCs, our role is to serve startups in whatever way they need. Sometimes this means diving deep into their business by serving on boards, sourcing important hires from our network, or providing financial oversight. Other times, it means stepping back to give them the freedom to execute strategies we might not necessarily agree with but know are right for them. More often than not, it simply requires patience.

Value creation isn’t just beneficial to startups—it’s also a magnet for deal flow. Founders today are more discerning about whose money they accept, even in challenging environments. They do thorough research, scrutinize VC networks, and examine how well past portfolio companies have performed. Ultimately, they’re the ones who decide you bring real value to their cap table.

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