Value Creation 101: A Perspective from a Series A Investor banner images

Value Creation 101: A Perspective from a Series A Investor


Southeast Asia

David Bonifacio

Value Creation

The Southeast Asian venture capital (VC) landscape presents many opportunities. However, many of these ventures might follow unproven models or lack clear paths to scalability. To navigate this vast but potentially shallow pool, TNB Aura prioritises identifying early-stage companies with strong potential for growth. We achieve this by focusing on business models with successful global precedents, especially in established ecosystems like China and India.

In this article, we want to share the approach we've honed over the past three funds – the TNB Aura Value-Creation Process. This framework embodies our philosophy and empowers us to foster the growth of these promising companies. As a Series A investor in Southeast Asia, our main value-added strategy is focused on institutionalisation, such as reporting, governance, etc. This complements the focus of earlier-stage investors who tend to concentrate on value creation aspects like hiring, tech development, and distribution to help startups find product-market fit.

At TNB Aura, we are investing in and helping to build the future of Southeast Asia. As a thesis-led, high-conviction venture capital firm, being a high-conviction investor allows us to be more hands-on in operational activities, assisting startups through their institutionalisation journey. We use data-driven methodologies to identify and invest in select companies primed for the future and ready to change the very face of their categories.

Building on our focus on proven models and fostering growth, the TNB Aura Value-Creation Process departs from a reactive, opportunistic “spray-and-pray” approach. Instead, it prioritises precision and effectiveness through three dedicated teams: Investment, Value-Add, and Exit. This article delves into each team's function, highlighting how the framework orchestrates a seamless journey from initial investment to a successful exit.

Investment Team: Laying the Groundwork for Success

The foundation of TNB Aura's investment philosophy is research, mainly focused on gathering data and learnings from successful business models in established ecosystems like China and India. This research serves as a playbook to identify scalable models with high potential for application in Southeast Asia.

Our Investment Team leverages this research by conducting sector-focused sprints and deep dives into specific industries. This intensive analysis uncovers key success factors and potential pitfalls, allowing us to pinpoint high-potential opportunities with a clear understanding of the underlying dynamics.

Once a promising sector is chosen, the pre-investment phase kicks in. Here, we meticulously assess critical decision points. Conditions precedent, a set of pre-investment requirements, are rigorously evaluated to determine feasibility and mitigate risk. We strategically select co-investors who share our overall investment objectives and can contribute complementary expertise.

Finally, TNB Aura conducts comprehensive due diligence, which examines a company's financial health, legal standing, and operational intricacies, leaving no stone unturned before committing capital.

Our investment approach extends beyond the initial funding. We implement a tailored 100-Day Plan as a strategic roadmap for the post-investment period. This plan aligns all stakeholders, including the portfolio company's leadership team and TNB Aura, on a shared vision for the initial months. It serves as a blueprint for efficient execution, ensuring a smooth transition and maximising the potential for success.

A key focus of the 100-Day Plan is addressing the rapid scaling needs of our portfolio companies following a Series A or B round (typically in the range of US$10-50 million). Many companies at this stage require significant improvements in their finance and board reporting capabilities. TNB Aura works with them to bridge these gaps, ensuring they meet investor reporting requirements.

The 100-Day Plan also identifies areas where early-stage companies might need short-term operational assistance. We offer "CFO as a service" or ESG (Environmental, Social, and Governance) implementation support to address these needs and accelerate growth.

Value-Add Team: Empowering Growth and Sustainability

Beyond identifying promising early-stage companies, TNB Aura actively fosters their growth and sustainability. Building upon the research-backed investment decisions, the Value-Add Team offers a comprehensive suite of services. These include providing CFO-as-a-service expertise, supporting Environmental, Social, and Governance (ESG) initiatives, developing and implementing distribution strategies, integrating cutting-edge technologies, and assisting with PR and marketing efforts.

However, the true value proposition of the Value-Add Team goes beyond offering a menu of services. Their core focus lies in institutionalising long-term success within the portfolio companies.

This process, emphasised by the TNB Aura Value-Creation Process, involves several key aspects:

• Embedding best practices: Portfolio companies gain access to industry-leading approaches in critical areas like finance, operations, and marketing.

• Optimising operational processes: The Value-Add Team collaborates to streamline internal workflows, enabling greater efficiency and effectiveness.

• Fostering a culture of continuous improvement: TNB Aura encourages a growth mindset within portfolio companies, pushing them to seek new avenues for improvement and adaptation constantly.

The Value-Add Team isn't simply a service provider but a strategic partner. They aim to empower portfolio companies to build a strong foundation for long-term, sustainable growth, not just offer quick fixes or one-off support.

Leveraging a Curated Network for Accelerated Growth

TNB Aura's extensive research extends beyond the immediate investment targets. They actively curate a network of strategic third-party partners with proven success in similar industries and sectors. This allows them to connect portfolio companies with the exact partners who can address their specific needs and accelerate their growth trajectory.

However, it's important to note that this diversification of support doesn't dilute the core value proposition. While offering access to a wider range of expertise, TNB Aura remains laser-focused on institutionalising best practices within portfolio companies for long-term, sustainable growth.

The Value-Add Advantage: Setting the Stage for Exits

The TNB Aura Value-Creation Process continues beyond fostering growth. Recognising the importance of successful exits, the framework integrates value-adding activities with the ultimate goal of a positive outcome for all stakeholders. This focus starts at the beginning of the investment journey, ensuring that portfolio companies are well-positioned for future funding rounds or acquisitions.

Exit Team: Ensuring a Smooth Transition

The Exit Team is pivotal in guiding portfolio companies through the critical next funding round. They offer comprehensive support, facilitating connections with follow-on investors and potential acquirers while engaging advisors to navigate the complexities of the process. Leveraging their experience and precedence data, the Exit Team ensures a smooth transition for the portfolio company while maximising the return on investment for TNB Aura and its co-investors.

In the following article, we'll explore the specific exit triggers that TNB Aura prioritises when evaluating portfolio exits. The article also includes a list of experienced exit advisors who can help navigate the complexities of the process and assist in navigating the intricacies of this process. This will give you insights into TNB Aura's exit criteria and connect you with the necessary expertise for a smooth transition for your company.

A Holistic Approach to Building Investment Success

The TNB Aura Value-Creation Process distinguishes itself through its data-driven approach to venture capital. This framework empowers investors to navigate the complexities of the Southeast Asian VC landscape with precision and effectiveness.

The framework's strength lies in its comprehensive nature:

• Anchored by a playbook derived from research into successful business models in established ecosystems like China and India. This research serves as the bedrock, enabling TNB Aura to pinpoint high-potential opportunities with a clear understanding of the critical success factors.

• Strategic pre-investment planning mitigates risk through rigorous due diligence, selection of aligned co-investors, and clear conditions precedent.

• Value-added partnership goes beyond capital injection. The framework fosters long-term success by institutionalising best practices, optimising operations, and cultivating a culture of continuous improvement within portfolio companies.

• A curated network of partners provides targeted support and accelerates growth for portfolio companies.

• Focusing on successful exits integrates value-adding activities with a well-defined exit strategy, ensuring positive outcomes for all stakeholders.

TNB Aura stands out as a strong partner for entrepreneurs, backed by one of the region's lowest loss rates. We provide steadfast support to startups with a carefully designed approach, assisting them at every step of their journey. From the initial investment to successful exits, our dedication to fostering promising ventures in Southeast Asia solidifies TNB Aura's role as a catalyst for innovation and growth in the region.

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