“Always remember, it’s simply not an adventure worth telling if there aren’t any dragons.” ~ Sarah Ban Breathnach, Simple Abundance
East or West, J. R. R. Tolkien or George R. R. Martin, everybody likes dragons. Dragons are cool. We like dragons at HLX and we’re on a mission to incubate baby dragons.
In the Venture Capital world, it’s all about the valuation. Ponies are startups that have reached a valuation of $10 million, centaurs a valuation of $100 million and unicorns a valuation of $1 billion.
VCs obviously like unicorns but unicorns are not necessarily as great as they first appear. Unicorns don’t always provide the kinds of returns that VCs are looking for:
“If a VC invests $10M – $25M from a huge VC fund into an already successful company at a multi-billion dollar valuation to acquire less than .5% of the company, what’s the point – besides the right to display a unicorn logo for its website?” ~ Unicorns Vs. Dragons
Now what really matters is Dragons! Dragons eat ponies for breakfast, centaurs for lunch and unicorns for dinner because dragons focus on realized value:
“Unicorns are somehow more imaginary than Dragons in the sense that they haven’t yet had a liquidity event so they are nice to have but haven’t made anyone rich yet. Dragons on the other hand are only achieved if real money on money return is made.” ~ A song of Unicorns and Dragons: A story about how Venture Capitalists measure their success
There are a couple of definitions for what constitutes a dragon in startup world. The first definition describes a startup that generates positive net returns for an entire fund:
“We have a $140 million dollar fund. We invest in 20 companies, expect 10 to fail and 1 to make it big. Our ownership in one company will pay back at least 140 million dollars. Every single time we invest, we’re trying to pick her out.” ~ Unicorns, Dragons, and Fairy Dust: Demystifying Investors & Venture Capital
We use the second definition at HLX, which is a dragon is a startup that returns a realized value of $1billion plus to its investors. HLX is designed to be a Malaysian Dragon Factory …
Types of Dragon
In their book, Building Dragons, Daniel Newman and Oliver Blanchard move the focus away from startups:
“a dragon isn’t necessarily a startup. Dragons are established or maturing businesses that rely on their original start-up mindsets to adapt to and disrupt markets themselves as a means of dominating them. Dragons are everything unicorns aren’t—alert, adaptive, innovative, agile, sustainable, profit-driven, resilient, and wise.”
They talk about two different kinds of dragon:
- The Changeling Dragon: which innovate and grow in a linear fashion, such as Netflix and Starbucks. They don’t give birth to other dragons.
- The Seeding Dragon: which describe large corporations such as Sony or Alphabet who nurture and drive innovation through internal startups and acquistion. They typically diversify and branch out into more than one product category or market.
At HLX we incubate a different kind of dragon. Let’s call it an Ecosystem Dragon which comes from the co-creation between startups and corporates, from the collisions between our innovation partners and ecosystem participants.
We believe that dragons don’t grow by chance and conditions have not been right for dragons to grow in Malaysia. We don’t want to copy Silicon Valley here in Malaysia. The Malaysian innovation landscape is different. It just won’t work. Asia is different. We want to raise Asian dragons.
We’ll elaborate more on what we mean by this over the coming months but our ambition at HLX is to provide an all encompassing support network for breeding and incubating baby dragons. We’ll be looking to answer some of the following questions:
- Mindset: How can we encourage a ‘world domination mindset’ whereby Malaysian startups act global first, then local?
- Business model: How can we produce an innovation explosion that generates exponential growth opportunities?
- Teams and Talent Pool: How can we structure and build teams of high potential talent to sustain growth?
- Market Access: How can we best facilitate the two-way value exchange between corporates and startups?
- Funding: How can we innovate the startup funding model, providing access to more funding and better quality funding opportunities?
We’ve got plenty of ideas but we’re going to need lots of help in execution. We hope that you’ll come join us and collaborate in creating Asia’s next dragons!!
“It does not do to leave a live dragon out of your calculations, if you live near him.”―