Some people often compare South-East Asia to Europe, in the way it’s an easy regional shortcut which embraces in reality countries with very different languages, cultures, habits and levels of development. And, just as in Europe, startup ecosystems wonder first what’s the strength of the local regional ecosystem, and then how it fares at a global level.
As Bowei Gai from the World Startup Wiki launched the discussion, he wrapped up a key learning from his world tour: startups come in all shapes and forms. In South-East Asia, a simple flight from Singapore to Cebu, or from Jakarta to Bangkok, makes you feel easily how different innovation is and happen.
Several key factors create many ecosystems with all their own local identity and way to grow.
Diversity of startup ecosystems: infrastructure, local behaviours, history and geography
Infrastructure is a first key, from high-speed internet penetration to the most essential power grid, not present in many emerging markets. In the Philippines, as well as in Indonesia, power supply is not a given, and the payment infrastructure is in any case with very low penetration. In Myanmar, the network for telecommunications is just being built. While in other emerging markets, we also met with this infrastructure issue. In Beirut, the price of power, internet, and rent is so high it made it the most expansive city the Middle-East.
Behaviours from entrepreneurs are different as well. In China, for instance, some 6 000 ventures mimic Groupon in the deal space. Other countries like India have a lot of things happening in low-tech, SMS powered apps.
History matters a lot, and what’s growing today always find an echo in the past. The “mother of all ecosystems”, the Silicon Valley, has been made possible among others by the capability of universities to support and spin-off innovative companies. Other cities have other ways to turn the existing economy and communities into startup mode. In Honk Kong for instance, the ecosystem has really built slowly but surely by the community, events, which in turn became coworking spaces and now a 5 000 strong tech community.
Geography is another factor, which is probably best embodied by Israel, the “Startup Nation” from day 1. Its regional isolation, survival spirit and huge diaspora makes it logically a key country, and as of today, Israel still boasts the highest per capita capital risk availability in the world.
How South-East Asia startups stand the global competition?
With this in mind, the panelists got to the core of the discussion: are South-East Asia startups and ecosystems competitive?
A first insight came from Richard Min, from the Fashion Technology Accelerator of South Korea, who justly says that startup ecosystems don’t have a finished state or a linear evolution: “the story of ecosystems is happening all over the world, some elements can be in place, others are being built, and the definition is being changed day by day.” It means that the state of the ecosystem must not be a condition for a launch (or no launch) decision.
Second, on the role of governments, it’s more than a necessary evil. Mohan Belani from e27 suggests that “there’s a popular belief that in Asia, the government is heavy handed. But in the US, the Universities and the state were also very present at the inception of the Silicon Valley tech ecosystems”. Richard Min added to this that government’s money is often needed as “it”s going wide, when investors’ money is going deep”. It’s the same thing than what panelists were saying the day before, when one of the objective here in the Philippines was to “increase the denominator of existing startups”.
Then, talent is another issue. Beyond the traditional “we lack talent” (which region doesn’t?), panelists stressed that South-East Asia entrepreneurs were often first-time founders, with the usual mistakes one can imagine. More worryingly, adds Amarit Charoenphan from Thailand coworking space Hubba, few have overseas experience, which prevents them from having a regional or global vision from day 1, a key requirement to scale.
On a more funny note, all acknowledge the efficiency of “Rocket Internet refugees”, who, after a stint at one of the German incubator’s ventures, did pretty well. Another strategy from startups as seen in Vietnam by Gwen Tan from Tech in Asia consists in poaching Western companies, where employees already got some training.
A selection of the biggest and most promising South-East Asia startups
Mohan Belani probably best assessed the typology of startups in presence in South-East Asia, by dividing them into three tiers of valuation:
- Startups looking soon to IPO: Property Guru (real estate, based in Singapore and present in Singapore, Thailand, Indonesia and Malaysia), MOL (online payments, based in Malaysia), Garena (online gaming platform on mobile, based in Singapore)
- Startups nearing or above $100m valuation: GrabTaxi (taxi marketplace, founded in Malaysia), Luxola (e-commerce for beauty products, based in Singapore), and 2C2P (online payments, based in Thailand)
- Startups deemed as promising: Computerlogy (Social media marketing, based in Thailand), Payroll Hero (business time tracking with facial recognition, based in the Philippines), and Carousell (mobile marketplace for second-hand items)
These success stories are definitely inspiring, as well as the overall discussion on South-East Asia as a market and a place for startup to grow. We will be travelling again in the region, so stay tuned.