Startup ecosystem builder, Bikesh Lakhmichand finds his purpose
- Taken 10 years to be able to do what he initially set out to in 2012
- Has become the mentor, ecosystem leader he wished he had access to
“All roads lead through, Bikesh,” said a startup founder, only half joking when the no-nonsense, say-it-as-it-is Malaysian ecosystem builder, Bikesh Lakhmichand’s name came up in a conversation recently.
The Kuala Lumpur-based Bikesh, who celebrates 10 years as the founder of 1337 Ventures, has earned that praise.
Just his pre-accelerator, Alpha Startups, that kicked off in May 2014, recently crossed 52 cohorts with over 1,800 startups comprising 4,500 founders going through a program focused on giving early founders a crash course in the fundamentals of building a startup, while helping the alum raise US$5.67 million (RM25 million) just in 2021. “If I have to teach someone who claims to be a startup, about technology, then they are in the wrong game,” he says, explaining the business focus.
Add to this the roughly 60 startups 1337 Ventures has invested in and the many corporates and public sector agencies that have engaged Bikesh to help them run various startup and innovation focused programs, and you begin to appreciate his impact.
But it is not a journey that he would have preferred to have taken.
Like most startup founders, the game plan has not worked out as smooth and quick as envisioned
“The idea when I started in 2012, was to run an accelerator, and take small bets on those that we liked, using the profits generated from my training company, iTrain. Simple right?”
Instead, in those early years, he was coming across founders who were simply not ready to handle the cold and hard reality of building a startup, both before and after raising funding, nor in telling their story when applying for government grants, or when pitching to investors not short of options to bet their money on.
Alpha Startups pre-accelerator, solving Bikesh’s own problem
Instead of crying out for government to fill the gap, Bikesh launched his own intervention, the Alpha Startups pre-accelerator program (the founder quoted in the beginning of this article, is an alum). The 10 day course is spread over 5 weeks with assignments that have to be done, or else one is kicked off the program.
Run as a physical program, the pandemic became the jolt that Bikesh needed to really scale its impact.
“I was actually already thinking in 2019 that this was getting tiring and discussing with the team of the possibility to move it online. And then the pandemic hit and we did and it was open to anyone in the world since location did not matter anymore.”
But it was still rough going as old habits die hard, even for a seasoned investor and mentor like Bikesh who constantly exhorts founders to change and adapt.
“We broke our backs when we moved Alpha Startups online because we were still running it like it was physical, meaning we spoke to all the companies and assigned them mentors and ensured they did their assignments etc. It was just wrong,” he admits.
Out of this painful experience came the realization however that it was time to adopt a survival of the fittest mentality. “I think Malaysia is at the stage where we have good founders and knowhow. So, Alpha Startups, since mid 2020 is now an online only pre-accelerator program that anyone can go through and pick any of the modules they want to learn. And, when they are ready, they can join our weekly Tuesday pitch sessions,” says Bikesh.
Teaching in his DNA, and, getting suspended
If you’re wondering why Bikesh wanted to run an accelerator before making his startup bets, well, that’s because he has teaching in his DNA.
A computer science graduate (external program) from Universiti Sains Malaysia in 2004, Bikesh, who taught himself coding in his early teens thanks to a PC his dad bought him, had a sweet side gig helping final year diploma and degree computer science students with their projects while also building data entry systems for small business. He had set up a company with a course mate, Adrian Lim, who pursued a corporate path after graduating and today is Partner at a Big 4 firm in Kuala Lumpur.
“This was when I realized I had a natural flair for breaking down problems and showing people how to get things done. This led to me launching iTrain in 2005 after graduating, with Eric Ku, a fellow course mate who used to work in the computer lab.” The focus initially was on teaching Microsoft based programmes before gradually expanding to over 20 different programs today that range from the technical to digital marketing to design thinking.
And yes, Bikesh got suspended once from using the lab as he refused a login access, preferring to bypass his way in. Bypass he did, suspended he was, from the lab. “I was a trouble maker la,” he laughs.
Alpha pre-accelerator was no magic bullet
But Alpha Startups was no magic bullet. It may have helped filter out unprepared founders and gave Bikesh a better pool of startups to invest in, but he quickly realized that just cutting that first cheque of RM50,000 and hoping his fledgling investments could go on to raise more money to give themselves a chance to meet their potential, was not working.
And having made around 60 investments over the past 10 years of which 1/3 have failed, there have been lessons aplenty over the years.
Highlighting the key ones, he acknowledges the mistake of the early days investing in tech founders who can build the product. It was a comfortable choice for him, coming from a tech background himself. “But what we learnt is that if you can’t sell it, then what’s the point,” he says. He started investing in teams that were not just core tech but had business skills as well.
The second key lesson was the importance of having access to capital to let you ride out the inevitable rough patches and sustain for the long haul. “We had to play the role of being the big brother and do what’s right for our investees,” he says.
Especially in the early years, he saw promising companies he invested in, close down because they could not sustain themselves long enough to turn the corner or raise follow-on funding. “We did not have the access (to corporates), angel network, nor Equity Crowd Funding then. And we didn’t have the means to take more risk ourselves,” he said. Sometimes, all they needed was a soft loan to tide them over a rough patch, “but I wasn’t able to help them,” he says, ruefully.
Bikesh saw good companies he invested in fail because they could not raise quick funds or get loans to tide them over unforeseen rough patches. 2019 however, brought a change. The steady growth of 1337 Ventures had created greater access to funding – he had built an Angel Club (stands at over 250 angels from three countries and has done 20 investments) and was licensed to run an Equity Crowdfunding platform.
Bikesh was also able to extend emergency loans from 1337 Ventures itself. “We would give them a 0% loan that they can later pay back or convert it to equity.” This emergency financial lifeline came in especially handy during the pandemic.
Pandemic spotlights unique value proposition of 1337 Ventures
The pandemic also brought into sharp focus, the strategic value that 1337 Ventures brought to the table for the startups it invests in and the corporates that regularly seek Bikesh’s help around their innovation goals. His latest collaboration is with RHB Bank which will launch an ASEAN accelerator this month.
Working with corporate partners over the past eight years, Bikesh saw the mismatch, akin to magnets with like poles repelling each other. Startups, with unproven technology and no corporate reference customer and flimsy financials just cannot meet the minimum hygiene levels demanded of corporate vendor compliance. It was a story Bikesh saw being played over and over.
But the pandemic accelerated the urgency for corporate innovation, digitization with corporates wanting to work with startups, but not knowing who was out there and whether the startups could survive long enough to deliver. “But they trusted me,” says Bikesh, and asked for his help to identify who could be the right partners.
To be clear, Bikesh was not favoring startups he had invested in when making this match.
But this is where all those founders that came through Alpha Startups gave Bikesh a good picture of what solutions were in the market and he was able to match startups to corporates to run proof of concepts (POCs) to ensure the solutions could solve corporate problems.
This still wasn’t enough to solve the hurdle of vendor compliance. But, Bikesh now has the inside track on which startups are able to deliver successful POCs and go on to win jobs from the corporates.
“This gives me access to startups that have shortcuts to growth via these corporate partnerships,” he says, adding, “It also makes it easier for me to go to VCs and angel investors to invite them to invest with me into these startups which have a corporate deal waiting with access to the distribution channel and corporate customer base to work with.”
An investment made into these startups by 1337 Ventures thus becomes the green light for the corporates to engage with startups as fear over their sustainability recedes.
With the country aspiring to create five unicorns by 2025, Bikesh strongly believes that Malaysian corporates have to play a key role here. “You cannot leave this to chance. You need a formula and I think this is the way to build unicorns. If any startup wants to have a fighting chance to build something at scale, it has to be with our local giants, right? They have the customer base that is going to get you in the door, that allows you to build a track record that you then take regional.”
The search for mini-me’s
While Bikesh feels the Malaysian startup ecosystem has come a long way since he joined it a decade ago, the gap in early stage funding still exists, in his opinion. “I would love to invest in the Series B and onwards stages but if you don’t have the funnel, then what’s the point?”
Which is why he is staying in the early stage funding level and is excited to launch a US$3.4 million (RM15 million) founders fund in 1Q23 that will see successful tech founders as investors and with Suresh Thiru (pic), a former co-founder of JobStreet as the co-GP (General Partner) of the 1337 Alpha Fund 1.
It will cut cheques starting at RM50,000, to RM150,000 and up to RM500,000 to be lead investor in a pre-Series A round. “Startups never had that level of clarity to access funding, until now, with us,” he says. “Keep your eyes on the prize and on building an amazing product. Let us take care of the funding path in the early stages up to pre-Series A,” he says, with the possibility of going up to Series A eventually.
The target is to invest RM5 million a year for three years. His pitch to tech founders is, “we are all looking for mini-me’s, join me to make this happen.”
But Bikesh expects more than just funding. Well aware of the importance of mentors, his investors will have to act as mentors as well, with a special incentive set aside for those who show higher commitment in mentoring and guiding the startups invested in.
Purpose over passion
Identifying a sense of purpose as being the most important characteristic of founders who have successfully raised funding versus those who failed to, Bikesh surprises himself when he realizes this characteristic applies to him as well over the period he has built 1337 Ventures.
Surprised at the question on his key learnings, he tries deflection first. “I learnt I had no time to pause and reflect on my 10 year journey.” Getting serious, he reflects, “I have learned that it’s not easy to build something of this magnitude. It’s hard, especially when you don’t have enough people that have done it here. How do you even do that then? To learn from their mistakes, their successes?”
This lack of mentors to guide him when he started is one of the things he reflects most on. “I wonder where I would be today, what I could have achieved if I had a mentor back then,” he muses.
He couldn’t go into any program, there were no grants to get one started and there was no one to teach you the shortcuts to bypass stuff and avoid falling on your face. To avoid contracts that you didn’t know how to look at, causing you to lose money, time and hope.
Today, Bikesh has become that mentor that he wished he had, that resource person who can shorten your journey, that battle hardened founder who has absorbed all the arrows, so that you don’t have to. “So, that’s my give back to the ecosystem. I have access. I know the corporates, the CEOs, I have their trust. And, it’s easy for me to make a phone call and get you in the door, if you don’t have access,” he says.
“So that’s what I think my purpose is here.”