Kee Lock Chua: Omakase and The Art of Venture Capital

(This article was originally published by Vertex Holdings, revised for brevity. Read the original edition here.)

What does venture capital have in common with omakase?

The world of sushi cuisine is one that can be described in extremes – either you are very successful, a perennial name in the Michelin Guide or you are not. Similarly, in venture capital investing, one observes performance persistence – financial returns from top tier VC firms significantly outperform the rest of their cohort.

Fundamentally, what sets consistently exceptional omakase sushi bars apart from the rest of the pack boils down the superior ingredients used. As great sushi chefs or Taisho endeavour to serve only the finest quality dishes to their customers, outstanding VCs seek to access the best deals in the ecosystem, and serve them to their LPs.

In Vertex Holdings CEO Kee Lock Chua’s apt analogy of venture capital to omakase, the differentiators of outstanding VC firms can be boiled down to having six ‘P’s - an advantage that is exemplified by the greater Vertex group of funds:

• Producer (i.e. Taisho/Chef)
• People (i.e. Fishermen/Farmers)
• Place (i.e. Origin/Locality)
• Produce (e.g. Saba/Tuna)
• Provenance (i.e. the Story)
• Phase (i.e. the Stage)

Producer. As Taisho for Vertex Master Fund II (VMF II), Vertex serves our LPs the very best deals (“dishes”, rather) from the more than 200 active portfolio companies around the world.

People.  Proximal relationships with the fisherman and farmers are critically important in sourcing the finest produce, anywhere in the world. Taishos need to have broad and deep sourcing networks of local experts familiar with the type, availability and conditions of the specific catch or harvest.

At Vertex, we adopt a similar approach as the Taisho - a network of funds managed by General Partners (GP) who are natives to their ecosystems with significant experience and expertise in their specific technology domains.

Place. Vertex Ventures invests in early-stage IT startups across SEA, India, Israel, US, and China. As with how sushi restaurants are influenced by and reflect their locality and origin, each innovation ecosystem is unique in the types of startups observed - given their respective macro environments, demographics, national policies etc.

For instance, China with its burgeoning middle class, national focus on AI and R&D prowess produces a significant number of leading startups in the areas of AI (e.g. Geek+, Horizon Robotics), deep tech (e.g. Solid Energy) and consumer (e.g. Neiwai). Similarly, Israel has its unique military-innovation ecosystem that has propagated many outstanding startups in cybersecurity (e.g. Cymulate, Cylus), automotive (e.g. Fleetonomy, Innoviz), enterprise (e.g. Kryon, Spot).

Produce. Like how outstanding omakase restaurants source for the finest ingredients, Vertex sources of some of the finest start-ups from different geographies or domains.

In SEA, Vertex Ventures SEA & India was the first institutional investor in Grab - the ride hailing app that has become a leading internet platform services company, offering everything from on-demand transport to meal delivery to mobile payments and financial services.

Meanwhile, Vertex Ventures HC invests in leading global healthcare startups in the areas of MedTech and Biotech. For instance, Visterra is clinical stage biotechnology company committed to developing innovative antibody-based therapies for the treatment of patients with kidney diseases and other hard-to-treat diseases. The company was acquired by Otsuka Pharmaceutical in 2018.

Phase. Just as some dishes are best consumed young and fresh, others are better served when ripe. This is also true for startups – some are interesting early-stage opportunities, while there are also others where it makes sense to invest at the later/growth stages.

Vertex Growth is our network fund focused on investments in global, growth stage portfolio companies from our early-stage Vertex healthcare and IT funds. Unlike most growth stage companies, Vertex Growth has access to some of the most compelling, promising startups handpicked by our early stage funds that are ready to significantly scale – an unfair advantage that allows Vertex to serve the best investment opportunities to our LPs while helping promising growth stage Vertex portfolio companies succeed.

Provenance. The Taisho tops off the omakase experience by providing a story to each dish – where the ingredients came from and how it was prepared to reach the customer’s plate.

Not only does Vertex provide our LPs with some of the best investment opportunities in our portfolio. We are also able to share the story of each start-up, their investment thesis and expected return potential.

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