Joseph Lee, CEO of Kairous Capital, Shares His Cross-Border Investment Philosophy for the Asia Pacific Region | AsiaTechDaily

Joseph Lee has a strong track record in the finance industry throughout his career to date. In addition to his rich experiences working in the venture capital (VC) and private equity (PE) sectors, Joseph has also sharpened his investment acumen through his multiple years in the audit and stock-broking industry before deciding to finally launch his cross-border investment firm, Kairous Capital, in 2015.

Together with the rest of the Kairous investment team, the firm has collected more than 80 years of investment experience within the private equity and venture capital space across Greater China and the Southeast Asia (SEA) region. In particular, Kairous takes pride in the team of 16 investment professionals with the essential experience and regional expertise for venture capital investments, especially in the cross-border space. The firm has a strong track record of international exits via initial public offerings (IPOs), trade sales, as well as mergers and acquisitions (M&As), whereby we cover key financial hubs such as Shanghai, Hong Kong, New York, and London.

Besides Malaysia, Kairous’ fund management infrastructure also covers Hong Kong and Singapore, licensed by the Securities Future Commission (Hong Kong) and the Monetary Authority of Singapore. Kairous has also launched a special purpose acquisition company (SPAC) on Nasdaq that was successfully listed in December 2021 (Nasdaq: KACL).

With that, Joseph Lee shared enthusiastically about Kairous Capital and its cross-border business strategy:

Can you tell us about your background and how you started your entrepreneurial journey?

I initially worked as an analyst at a stock-broking firm until 2004 before embarking on my venture capital and private equity journey, where I made my first investments in Greater China before exiting via the London Stock Exchange later between 2005 and 2006. Between 2006 and 2015, I joined one of the leading Islamic banks in the world, Kuwait Finance House, as the pioneering team to set up its Private Equity Division in Asia.

During my tenure there, I was responsible for raising funds from esteemed institutions and ultra-high-net-worth individuals in SEA and the Middle East regions on top of managing investments across the Asia Pacific (APAC) region. Interestingly, I noticed arbitrage opportunities surrounding the interest amongst Chinese companies to expand internationally but lack the operational and domain know-how to do so. Having over 18 years of experience and expertise in cross-border private equity and venture capital investment throughout Asia, I immediately saw the chance to generate value through cross-border partnerships in Southeast Asia and Greater China by starting Kairous Capital.

What prompted you to establish Kairous Capital?

In essence, the word “Kairous” is defined as a “window of opportunity” in Greek. When I started the company in my early 40s, I saw many opportunities in the technology space and the potential for businesses to expand their operations regionally. It turns out that I wasn’t alone in this conviction too.

My long-time friend and Chief Financial Officer of a publicly listed company, whom I got to know during our primary school days, was also looking for a business partner. Simply put, we both dreamt of building a robust commercial ecosystem in the SEA region while focusing on helping technology start-ups thrive in their quest to maximise their positive impact within our homelands. This presented an optimal timing for the both of us to embark on this venture together.

Make no mistake, however! The journey has not been easy, especially in the recent few years, as the role demanded our long-term commitment and resilience because challenges are always around the corner. Nevertheless, we have always prided ourselves in our ability never to back down but instead sail through the thunderstorm and emerge stronger from there.

How is Kairous Capital different from a traditional VC firm? 

Traditionally, venture capital firms would only invest in their local markets. For instance, a Chinese VC will only look at Chinese start-ups, whereas a Singaporean VC would only consider companies operating in the Southeast Asian region. Kairous Capital, on the other hand, positions itself as one of the very few organisations bridging the innovation gap between Greater China and Southeast Asia.

As a regional venture capital firm adopting a private equity methodology to viewing companies, we can guide our investees on transforming their businesses by sharing in-depth business insights, assisting them in adopting the latest technologies, and referencing proven business models worldwide. Fundamentally, this unique skillset is the product of over 20 years of investment experience in technology companies across China and Southeast Asia, where the founding partners have witnessed how technology has transformed businesses across different markets.

With that in mind, Kairous has the expertise to offer value-adding services, including business strategy consulting, financial management, corporate restructuring, talent acquisition, merger and acquisition, as well as business development and expansion advice on top of the usual financial support. Besides that, Kairous has demonstrated its strong exit capability by overseeing three IPOs on the Hong Kong Stock Exchange, Shanghai Stock Exchange, and US Nasdaq, as well as one trade sale in the last three years. Thus, Joseph is confident that the firm’s wealth of investment experiences and robust exit channels will substantially increase the success rate and returns of Kairous’ investments.

What are your criteria for investing in a start-up? Do you only invest in Series A companies and later-stage ones?

We generally look to back 10 to 15 companies in each of our funds. Within each company, Kairous Capital typically look at mid-sized technology start-ups across China and Southeast Asia that are fundraising for their Series A or B rounds. Nonetheless, this is not written in stone; we also consider pre-seed and seed-stage deals if a strong strategic angle is present. In certain cases, we would also participate as a follow-on investor in subsequent funding rounds should we continue to see additional opportunities to add value to our portfolio companies.

Regarding the industry sector, we are quite bullish on e-commerce because of our plethora of successful cases in this space. We made a lucrative exit for one of our investees, a regional e-commerce enabler, to a public corporation in the United Kingdom. Kairous Capital also possesses a SPAC that will acquire a Malaysia-based social commerce nutraceutical firm in 2023. These two exits were ranked as the top 11 and 13 exits in Southeast Asia, respectively, by Tech in Asia over the past five years.

Aside from Kairous Capital having rich industry insights and know-how within its investment team, the firm has also been blessed with its sophisticated enterprise partnership and advisory network. As an example, the current members of the Kairous Capital’s advisory board and SPAC leadership include an Independent Director of China’s largest and most prominent e-commerce enabler, Baozun (Nasdaq: BZUN).

What qualities do you seek in start-up founders whose companies you would invest in?

Ideally speaking, we would want to invest in a founder who has set an exemplary example and assembled a winning team to tackle the market. These founders are often successful serial entrepreneurs, but that is certainly not a one-size-fits-all criterion.

Other than that, we place significant weight on the founder’s attitude. More specifically, they are expected to have the passion and integrity required to thrive in the entrepreneurship world and a high self-awareness to recruit people who can complement their shortcomings. Essentially, Kairous seeks to work with convicted founders with the right principles to manage a company, the grit and determination to solve problems whenever they arrive, and a scrappy and problem-solving mindset to lead the team to victory. In other words, without these qualities, we genuinely struggle to understand how the company would give us the additional return we are looking for.

Besides that, the founder should be mature enough to acknowledge that business models and consumer behaviour are subject to change as technology evolves. Therefore, they must be flexible enough to initiate pivots whenever necessary.

With that, Kairous generally seeks to respect the founders’ technical knowledge of their sector and products. Thus, we hope to play our role as a partner and empower our investees to make decisions that they consider fit for their own companies rather than assume an authoritarian role.

Would you like to share any lessons or advice for anyone looking to enter the venture capital field like you?

In short, venture capital is a long-term game, and there is no escape. One common mistake amongst new joiners is that many aspire to launch their fund and have a hundred-million-dollar assets under management (AUM) immediately. However, such is often a rare occasion.

Even with seven years of experience in our pockets, Kairous is still considered a young player in the venture capital world. The journey up to this point is challenging yet fulfilling. I believe we have passed through the Valley of Death with a smoother and easier path ahead of us. Hence, I suggest taking things one step at a time. Be patient, start small and if you do things right, it will eventually bring you to your end goal.

On top of that, you need to learn how to juggle with limited resources. In Kairous’ case, we started with a small team comprising less than five people before eventually expanding to 15 employees in Malaysia, two in Hong Kong, China and Singapore, respectively, as the business stabilised. As a result, you will often need to think like a company owner.

Where do you see the company five to ten years from now?

The general expectation in Kairous is to focus on enhancing the most important craft of all, generating “value” for all our stakeholders, such as our investors, portfolio companies, and our employees, instead of obsessing excessively over our fund’s AUM. Meanwhile, we see ourselves to be more environmental, social, and governance (ESG)-centric. Thus, if we do all the above correctly, our AUM will grow naturally.

For our investors, besides generating alpha for them (which is a bare minimum as a venture capital firm), Kairous aims to connect them with the right technology and resources in the region to enhance their existing businesses further. This is particularly relevant for family offices, corporates, and conglomerates investing with us. For pure financial investors, due to our extensive regional coverage, we would be able to share interesting and proven business case studies to sharpen their investment instincts.

We also plan to dive deep into our existing markets by forming a local partnership to expand our network and reach further. In the meantime, our current value creation strategies for our investees have been cross-border market expansion, horizontal and vertical integrations via M&A, talent sourcing, and providing global exit channels. Kairous plans to perfect our craft by working closely with several big conglomerates, global consulting firms, and world-renowned universities.

As an organisation, we constantly seek to incorporate positive core values within our employees, whom we view as our partners, so they always think in the best interests of our investors and portfolio companies. Besides that, we believe all hidden gems will need to be polished over time via proper training, guidance, and exposure regionally or globally.

How could start-up founders or other global investors connect with Kairous Capital for investments and value-add services?

With Kairous’ tagline being “your cross-border partner”, we believe that forming strategic cross border partnership in the PE and VC sectors provide win-win outcomes as they harness global resources to bridge gaps within local start-up ecosystems. On that note, we welcome any potential investment and partnership opportunities with South Korean PE and VC players interested in expanding to the Southeast Asian markets.

Not to mention, Kairous is currently fundraising for its second fund, in which we intend to back early-stage Southeast Asian start-ups raising for their Series A to C rounds. Therefore, if you are interested in private market investments and/or partnering with us, please contact Kairous via our official company website or personally email me at [email protected]