Here’s the 13th part of my bi-weekly column with The Star Metrobiz. Read the original post here. Hope this helps.
MaGIC recently completed two regional programs to expose entrepreneurs to the tech startup ecosystem in Singapore at Tech in Asia in May and Echelon in June. The other regional programs are to Jakarta and potentially to Bangkok and Tokyo in the near future.
In five short years, Singapore has become Southeast Asia’s most robust startup hub. Notably, Singapore has managed to attract a lot of private Venture Capital (VC) funds via its 5:1 and 1:1 fund matching programs such as the Technology Incubation Scheme (TIS) and the Early Stage Venture Fund (ESVF). At last count, there are over 20 international class VCs based in Singapore.
Although more VC funds have recently started to set up shop in Malaysia when they realize that 80% of Southeast Asia’s biggest tech IPOs are founded by Malaysian entrepreneurs, our incentives haven’t been alluring enough to attract them in droves. Therefore, arguably, it is very important for any entrepreneur looking for funding to visit Singapore to expose themselves to the ecosystem and investors there.
Given that Tech in Asia and Echelon are the two largest tech conferences in the region which attract thousands of entrepreneurs from across Southeast Asia, as well as VCs from Japan, China and Silicon Valley, it was obvious that MaGIC had to establish a presence there. Under the Malaysian Pavilion, 307 local entrepreneurs and 168 startups were represented altogether, making Malaysia the largest delegation to both conferences this year. This pavilion served two purposes: 1) to expose Malaysian entrepreneurs and 2) to bring visibility of the potential of Malaysian startups to international investors.
While I was personally not a fan of attending too many conferences in Silicon Valley during my time there, I take a different perspective in this region. In fact, if you’re building a regional company, it becomes more important to attend events where industry folks from all around the region congregate, exchange ideas and learn from each other. It’s the easiest way to meet and establish important ties you’ll later need when you expand across ASEAN.
Many Malaysian startups still hold a locally-focused mindset and lack a compelling regional vision to sell to investors or potential partners. This is likely because they’ve never been exposed to markets outside of Malaysia. That is why to date, MaGIC’s Global Regional Program (GRP) has supported about 200 entrepreneurs on these market exposure programs, to help Malaysian startups realize that it’s important to establish themselves as a regional player from the get go and to make sure that they are not working on niche markets that will not attract investments.
Syed Ahmad Fuqaha, founder of Katsana, a startup that was part of our Tech in Asia delegation wrote a glowing blog post about his first experience at a startup conference. Many of the MaGIC-supported participants from Malaysia appreciated the regional exposure, business development opportunities, benchmarking with other startups, network among fellow exhibitors, and access to world class talks at these conferences.
Every startup is encouraged to first gain traction with a proof of concept in their local market with the help of some seed money. Beyond that, as the startup gears for Series A funding and beyond, and wants to raise regional VC money, the entrepreneur has to commit to traveling a couple of times a month to a different city in SEA for the following 3 reasons:
1) Forge relationships with the relevant industry people and community connectors
2) Understand the local cultural context, the country’s particular strengths and how they may be relevant to the business.
3) Have coffee with potential competitors because you may end up working together. Entrepreneurs can also share information on how a similar product is being received in the different markets.
For point #2 above, every country in ASEAN has different strengths. Philippines has a huge freelancing and outsourcing industry. Thailand has huge traditional family businesses looking to modernise themselves using technology. Vietnam is famous for producing exceptionally strong but affordable technical talent. Singapore is the funding capital, and Malaysia is the best place to look for business development talent because of our English speaking base and multicultural background. Judging from our track record at producing regional successes such as Jobstreet, Grabtaxi, Catcha, Macrokiosk, Nuffnang, Flexiroam and such, I also see Malaysia as the best startup springboard to the rest of Southeast Asia.
On point #3, entrepreneurs need to seek out how other regional competitors are faring to gain perspective. For every local startup, there’s bound to be a similar version in Thailand, Vietnam, Singapore and Indonesia. If we keep cocooned in our own backyard, then we don’t know where we stand compared to them. This is a very important point because if investors themselves are traveling around and meeting entrepreneurs in different cities for deal flow and investments, then they have a bird’s eye view of most startups in the region. Entrepreneurs who don’t go out and travel to these markets are blind-siding themselves as a regional startup.
With low cost airlines making it cheaper to travel across borders, entrepreneurs have no excuse for not doing so. In fact, AirAsia now sells an ASEAN pass that allows people to travel to at least 3 countries for RM499 or 6 countries for RM888.
Back in 2010 when I was running my startup in NYC, I didn’t have a lot of funds. But I got creative and rented out my room on Airbnb.com to pay for my travel to Austin, Texas, to go to SXSW, one of the largest startup conference in the US. I ended up raising money through meeting people at the conference that eventually introduced me to their lead investors.
Anthony Tan from Grabtaxi is constantly on the plane, given that his billion dollar business spans 20+ cities across multiple countries. Joel Neoh of KFit is in a different city every other week, expanding the new fitness model across 13 countries. Travelling is unavoidable if you want to build a regional business.
In short, the message is that this is ASEAN. It’s fragmented and takes extra hustle and hard work to penetrate compared to other large markets like the United States, China, Japan or India. Targeting the 660m strong ASEAN market requires us to get to know each other better. And the first step could be as simple as saying hello to fellow ASEAN counterparts.