As a Longtime Silicon Valley Investor, Here Are 5 Mistakes I See Founders Make — and How to Hack Each One
Malcolm Gladwell likes to say success is a "constellation of advantages" — being in the right place, at the right time, with the right people.
In venture capital, that constellation is firmly anchored in Silicon Valley. But for startup founders outside of the Valley, especially those in Asia, breaking into this orbit presents a unique set of challenges.
As a Silicon Valley investor for the past 15 years, I've had a front-row seat to this dynamic. After meeting thousands of founders and investing in nearly 100 companies — including Solana, Agora.io (Nasdaq: API), Placer.ai, Otter.ai, Goodnotes, and many others — I've witnessed the same pattern play out repeatedly.
When founders from Hong Kong, Osaka, or Seoul try to plug into the Valley's galaxy — where over $178 billion, roughly 57% of the world’s venture capital, was deployed in 2024 alone — five gravitational forces constantly pull them off course.
Here are the most critical mistakes I see founders make when trying to enter the Silicon Valley orbit, and how to avoid getting pulled off course.
1 | Traction Lost in Translation
Don't expect Silicon Valley investors to value traction that happens outside their backyard. Most Silicon Valley investors are deeply U.S.-centric. If your users, customers, or revenue aren’t in the U.S., many won’t count it as “real” traction — no matter how impressive the numbers.
Founders with international momentum often have to re-prove product-market fit on U.S. soil to get top-tier funds interested. It’s not always fair — but it is the reality.
And there’s a structural challenge too: most U.S. venture funds with less than $500M asset under management (AUM) simply don’t have the capacity to support companies outside the U.S. It’s not about intent — it’s about mandates, networks, and time zones.
Put yourself in the investor’s shoes: if an American founder came to you with great traction in the U.S., but had never stepped foot in Hong Kong or China, and wanted to expand there — would you be 100% confident they could pull it off?
💡 Still Want U.S. Venture Dollars? You Have Two Options
As the founder and CEO, you need to align with how U.S. investors evaluate traction and commitment. That typically means choosing one of two paths:
Option 1 — Don’t Rush the U.S. Expansion
If you can’t afford to walk away from your Hong Kong (or local) customers, focus on building a stable, capital-efficient business at home first.
Wait until you’re generating $20–30M in revenue before seriously entering the U.S. market. At that stage, you’ll have the runway to invest in customer discovery, market exploration, and localization — without compromising your core business.
This is especially true for enterprise startups. When I advise my own Silicon Valley portfolio companies, I often tell them not to even think about international expansion until after Series C. With a lean team, it’s simply too much to manage customers across time zones, languages, currencies, and entirely different workflows or product expectations.
Trying to scale globally too early doesn’t signal ambition — it signals distraction.
Option 2 — Go All-In from Day One
If U.S. customers are mission-critical, relocate your founding team to the U.S. early. Plug into local networks through accelerators like Y Combinator, 500 Global, or Techstars. U.S. enterprise buyers expect facetime and local references — and proximity still matters. This path sends a strong signal of long-term commitment.
2 | 2024 Treasury Outbound Order: A New Red Line for U.S. Investors
Don't underestimate how regulatory headwinds can kill deals before they start. The 2024 Outbound Order directs the U.S. Treasury to ban or require disclosure of certain tech investments between U.S. investors and companies in China, Hong Kong, and Macau.
If your startup touches semiconductors, quantum tech, or AI — expect scrutiny. Some deals will be outright prohibited. Others will require mandatory reporting.
The $75M Benchmark/Manus AI deal is currently under Treasury review. On Sand Hill Road, it’s not viewed as a bold precedent — it’s a cautionary tale. For many U.S. investors, the legal complexity just isn’t worth it. When the risk exceeds the check size, they walk.
Workaround? There isn’t one. Going up against the U.S. government as a seed-stage startup is a losing game. Unfortunately, there’s no shortcut here — not the type of fight you should pick.
3 | A Singapore Entity Will Not Score Your US Investment
Don't just pretend to be a U.S. company. Some global founders say, “We moved our HQ to Singapore, so we’re not really a Chinese or Hong Kong company.”
Nice try. TikTok, Shein, and Pinduoduo did exactly that — and it worked… until it didn’t.
The U.S. government now looks beyond paper addresses, scrutinizing true control, ownership, and operational ties.
Your legal structure signals your commitment (or lack thereof) to the U.S. market. No Delaware C corp? Founders only fly in once a quarter for coffee chats? That’s not a strategy — that’s theater.
And here’s the kicker: cross-border deals, even with our Canadian friends, require investors to hire foreign counsel and tax specialists charging $2,500 an hour. Stack that against a $150K SAFE, and you’re looking at a negative expected return before the first board meeting.
Workaround:
Incorporate your Delaware C corp, establish a Silicon Valley presence (yes, even a coworking desk counts), hire locally — sales, marketing, customer success — and build a U.S. customer base through pilot projects and reference clients.
Momentum precedes everything else. Align your legal, operational, and cultural footprint with your ambitions, and you’ll earn not just attention — but credibility with U.S. investors.
4 | Cap Table Minefields
Don't let your cap table become a geopolitical liability. A cap table that reads like a U.N. summit might look worldly to you — but to a Silicon Valley investor, it looks like a regulatory Rubik’s Cube.
A mix of Chinese angels and funds can trigger extra scrutiny, especially under new CFIUS rules that restrict foreign investment in strategic sectors like semiconductors, quantum tech, or AI.
Case in point: HeyGen. The company asked its Chinese investors to sell shares to U.S. investors just to cut ties — after coming under pressure from American lawmakers. And they’re not alone.
Workaround:
Engage experienced U.S. legal counsel early — specifically those familiar with CFIUS compliance — before raising any non-U.S. capital. It’s far easier to structure it right the first time than unwind it later under a spotlight.
5 | Where do you want to exit?
Don’t assume a U.S. exit is your only path to a landmark success. When the time comes to exit, acquirers gravitate toward companies with momentum in their own backyard.
If your team, revenue, and growth are rooted in Asia, your most likely strategic buyers will be Asian. Remember Grab became Southeast Asia’s ride-hailing leader, prompting Uber’s landmark 27.5% stake acquisition. That deal was the exception — not the rule.
Now imagine if Grab had spread itself thin trying to chase second place in China or the U.S. from Day 1. It likely wouldn’t have earned Uber’s confidence — or its capital. Building regional leadership in one region creates a more compelling “must-have” acquisition target.
When it’s time to take your company public, look to companies like Popmart (valued at $43B) and Xiaomi (valued at $197B) for a playbook that works: both listed on the Hong Kong Stock Exchange, built deep traction in Asia, and only turned to international investors later—on their own terms.
If your first five years are focused on Asia, think twice before chasing U.S. capital too early. A U.S. IPO isn’t impossible — but it’s not just about ambition or money. It’s about readiness and durability.
Going public in the U.S. means meeting rigorous accounting standards (think SEC-compliant audits), implementing advanced data privacy and cybersecurity protocols, and building investor protection practices that withstand U.S. regulatory scrutiny. These aren’t check-the-box tasks — they take time, capital, and deliberate planning.
The better path? Win your home market. Build leverage. Then go global when you're ready to lead, not just to impress.
🔁 It’s Not Bias. It’s Pattern Recognition.
Silicon Valley isn’t biased against Hong Kong. Or Hokkaido. Or Beijing. It just really, really loves things that look... familiar. And it’s not personal — it’s pattern recognition.
So here’s the real-world checklist founders often overlook:
Don’t expect Silicon Valley investors to value traction that happens outside their backyard.
Don’t underestimate how regulatory headwinds can kill deals before they start.
Don’t just pretend to be a U.S. company.
Don’t let your cap table become a geopolitical liability.
Don’t assume a U.S. exit is your only path to a landmark success.
As a founder and CEO, it’s your job to make things effortless for investors, partners, and customers to understand you. Remove the friction. Speak their language. Build in their backyard — or at least rent a desk in it.
Because once investors recognize the pattern, they’ll see the potential. And the capital doors? They swing open fast.
Good luck. You’ve got this.