The story of how the world’s most influential companies in the 21st century were born in a garage never gets old. Not only have you heard of Mark Zuckerberg’s conflict with the Winklevoss twins over Facebook, but Microsoft, Apple, Disney, Under Armour and more were created and launched out of humble homes before expanding into a worldwide phenomenon.
Likewise, Southeast Asia (SEA) has become a booming global hotbed for startups and creative minds to make an impression over the last couple of years. Even with the coronavirus pandemic in 2020, startups are staying resilient by improvising solutions according to new trends and innovating even more sophisticated technology, service, or product that can contain COVID-19.
Why found a startup in Southeast Asia (SEA)?
Firstly, urbanisation demands for innovation.
There is a need for innovative solutions in the face of evolving demographics. As countries develop higher standards of living, education, health, finance and other sectors naturally have to improve, in turn creating a plethora of money-making opportunities. According to estimations by the United Nations, Asia is one of the world’s fastest-urbanising regions and will have a 66% urbanised population by 2050.
Secondly, SEA has great potential due to the region’s young and tech-savvy population.
According to a 2019 report by the World Economic Forum (WEF), “ASEAN’s youth have a strong preference for entrepreneurial settings.” Indonesia, Thailand, Vietnam, Malaysia, and Singapore have produced many leaders with entrepreneurial spirit who aren’t afraid to use their country as testing grounds before expanding and finding investments elsewhere.
Thirdly, there is governmental support and suitable market conditions in the region.
Southeast Asia’s market is open to trying new products and people are willing to pay for these services. Furthermore, a country like Singapore built with supportive infrastructure and grants provided for entrepreneurs and startups can be very attractive to companies, proven by the landscape of many regional headquarters and the growing startup innovation ecosystem.
To get a deeper understanding of founding a startup in a SEA country, we tuned in to a panel discussion hosted by General Assembly, Singapore with startup entrepreneurs and founders who launched their startup like 99.co and ShopBack in Singapore, one of the world’s best startup hubs. In this article, we extracted important highlights from these experienced founders with different startup industry backgrounds, as they share their
- entrepreneurial journey of founding a startup in Singapore;
- considerations for regional and international expansion of the business;
- how they were able to use Singapore as a launching pad;
- advice and guidance for the next generation of Singapore’s up and coming founders.
Insights and key takeaways by startup entrepreneurs and founders are adopted from Home-Grown Tech Startups – Made in Singapore series, by General Assembly.
Benefits of Launching a Regional Company in Singapore
Singapore is many founder’s top choice to set up their regional company due to multiple pull factors. The presence of a solid startup hub infrastructure, advanced tech processes, and extensive support towards entrepreneurs and startups are major appeals. As proven during the pandemic circuit breaker, the Singapore government and organizations supplied SMEs and corporates with multiple grants, low-interest loans, and subsidies.
Singapore also offers a high level of global reputation and trust for business people intending to enter the region. Ranking 16th out of 100 countries for best Startup Ecosystems Rankings by StartupBlink and 4th most competitive financial centre in the world by Global Financial Centres Index (GFCI), it is no wonder why Singapore was identified as a model for innovation amongst its peers.
For Paul Hadjy, founder and CEO of cybersecurity company Horangi, their main market is in Singapore as they primarily work with B2B companies investing in security. Most large companies are headquartered in Singapore, and revenue spend for security comes from here even if the client is working out from the US or Hong Kong. Although the market might be small, with the startup hub ecosystem, it’s easy to be connected to the regional head working out of Singapore.
Considerations When Expanding into a New Market
Profitability and an international presence are important factors when scaling outside of Singapore. Companies like Carro, SEA’s largest wholesale marketplace for cars, and property platform 99.co, were able to successfully use Singapore as a launching pad before expanding beyond SEA.
From what experienced startup entrepreneurs shared, some of the most effective methods to decide which new international market to expand into consists of looking at:
- investor interest;
- strategic clients;
- Google population rank order.
Networking with existing clients allows you to be introduced to different clientele and Singapore is the perfect place for that, being rated as the top 14th global startup ecosystem in the world by Startup Genome and has Local Connectedness identified as one of its strongest traits. Understanding investor interest through the rank order approach also plays a major role for startups choosing where to expand. Additionally, founders can speak with banks over which market is the most profit-inducing to develop your business.
Find The Best Fit for the Job
It’s important to hold high regard and expectations for your co-founder(s) and pioneer team. Location, culture, interest, and connection are influential people factors that have a direct impact on your ability to execute in each market the business expands to. Founding a startup is a constant learning process and founders are continuously learning or being inspired by other people.
The best way to expand is to “airdrop” one internal team member who understands the company culture, who can find and train a similar person to command in the overseas market. The basis is that you or a designated CEO can see through the launch of the company expansion, but will not stay to run it. When you have to compete with giants in another country, unfamiliar if the new market will be a good product market fit, then it becomes essential to find the right hire.
Localizing and Outsourcing Resources
With so many operations to manage when starting up, how do you decide which methods best work for you and are cost-effective?
The answer stems from the market that you’re operating out from. Based in Singapore, startup entrepreneurs typically retain human resource (HR), marketing, and business development (BD) teams at HQ. Localizing any procedure related to regulations, face-to-face interaction, receivables and important processes will be significantly conducive for your business.
On the other hand, outsourcing some functions like tech is a preferred choice for most startups. ShopBack builds a hub concept for their operational functions that works out exceptionally for them. For example, their tech is divided into hubs in Singapore, Taiwan, and Vietnam. Alternatively, for other startups that depend on the market, tech teams can be outsourced to India, Vietnam, Indonesia, or Thailand.
Balancing between having localized and outsourced teams largely depends on what suits a startup the best, in terms of cost or talents. Teams that can be stationed overseas are IT, Program Managers, and support functions. For some founders, they feel that Singapore has a strong engineering core and talents hard to find elsewhere in the world.
Advice for New Gen Entrepreneurs
For aspiring and potential entrepreneurs of the next generation, we believe taking the valuable advice of local startup entrepreneurs and founders will definitely leverage your position in Singapore’s innovation ecosystem.
- Set a strong foundation from the beginning.
- Find the best and right fit of people.
- Make quick decisions once you recognize what’s not working out.
- Expand earlier, don’t wait to accumulate resources or find the “perfect time”.