It’s all in the spirit
Two leading voices offer Naressa Khan valuable insight into the growth of the Asean startup ecosystem
THE startup ecosystem in the Asean region is booming, no doubt in response to the rapid expansion of technology. Tech-driven business sectors such as clean tech, educational tech and fintech are becoming increasingly disruptive, and evidently necessary.
Much of the development in the Asean startup ecosystem can be credited to the bravery of Asian entrepreneurs today. Largely made up of the young, this group is challenging the landscape to adapt to emerging global trends.
One needs only look at the WIEF Idealab, an annual conference for entrepreneurs and business leaders parented by World Islamic Economic Forum Foundation and WIEF Young Leaders Network to get a glimpse of what’s going on in the region.
WYN chairman Ebrahim Patel says: “It is an exciting ecosystem here, largely because of its robustness and the huge talent pool that exists within the Asean region.”
The annual conference foretells collaborations between young entrepreneurs from across the continent who, in Patel’s own words, “share ideas to understand entrepreneurship, and get back to the community with a better sense of leadership”.
While Silicon Valley may be the poster reference for inspiration, it is not the same pair of shoes in which the startup ecosystem here should walk to flourish.
For one, the Asian socio economic landscape is much different than that of the West, and comes with its own unique set of challenges calling for a unified salvation.
REDEFINING INTENTS
According to Patel, Asian entrepreneurs today are well aware of the region’s strengths and weaknesses, and are set to address it with their business causes.
Technology is evidently rewriting the present operating systems in all areas of the world, so the introspection is timely.
“The main thinking in the Asean region is: how do we come up with solutions to assist with specific challenges specific in particular areas? This question alone brings about multiple concepts, ideas and trend lines overall, and necessitates crossborder collaborations,” added Patel.
Innovations such as blockchain, artificial intelligence and Internet of Things technologies, for example, are recalibrating the way people do things everyday, so it makes sense for businesses to review and rewire how they run and manage manpower.
This realisation is not exclusive to leaders of the ecosystem.
The third edition of Idealab, held earlier this month in Kuala Lumpur, had proved the emergence of breakthrough ideas from new players, in an attempt to democratise access to evolution.
From the birth of sensory assessment
The key lies in the education of startups wherein they sit, says Digby
tools for personal and professional uses, to the various funnellings of cloud technology management, startups across the Asean geography are accumulating a wealth of innovative ideas, all geared for a better tomorrow.
“These startups are driven by change. Many are either expanding existing technologies, or creating new ones to melt ideas for great purposes.
“There’s also this decentralisation that has taken place, moving growth areas back into the rural economies, and thus, making a positive change in the global economy. That is by far the disruption that has taken place in and by the ecosystem,” he added.
It also helps that youth is a factor for expedition, the ingredient necessary for innovation. A flat management is much more prevalent in companies today than the traditional top-down hierarchy.
“And so, you see more startups and more innovations and degree of independent thinking. They are tremendously driven, so it is up to them to channel that energy accordingly.”
RISING TO THE CHALLENGE
Another notable disruption is the transparent communication between all ecosystem members, no doubt inspired by the crossborder collaborations necessary to power on innovative efforts.
As much as all the good is being shared, so too is the bad.
As Patel explained, the most notorious challenge openly experienced by startups in the region is getting funded accordingly and appropriately.
“It all really relies on the regulatory environment we are presently in. Because the Asean region is of a diverse nature, you have levels of regulation which are impacting on current efforts of collaboration. If we could move them into a unified paradigm in general, we’d make it a lot easier for most, if not all, companies,” he said.
Clearly, investors also play a great role in shaping the Asean startup landscape.
Copenhagen-based venture capitalist and key Idealab visitor James Digby, for one, believes that the difficulty lies with the timing and the stages by which investment money is aimed for.
Digby said: “While many ideas posed by the young and driven today are really great, some are really just not profitable at the moment. As investors, we always have to find the balance between what is the next best thing, and us making money and returns.
“There is just not enough being done to get good business into the core of startups today. The key lies in the education of startups wherein they sit.”
A good way for young entrepreneurs to nail it in the bud is to couple their eye and intuition for innovation with a sharpened insight into viable business trends (code for investor’s perspective).
According to Digby, it is also worth the while for startups to take note of the effect that technology imparts on the process and stages of venture capitalisation.
“There was no such thing as seeds 10 years ago. So this movement and the emergence of lean startups which have great ideas also led to things like convertible notes to do, rather than expensive raises that are institutional,” he said.
Series A funding now raises an average of US$5 million (RM21.5 million) early on, instead of the typical US$1 million, as per back in the day. In a nutshell: it’s a lot of money to invest.
“Technology can also be hindering when not channelled properly. We can do so many things, so quickly, that business fundamentals can be missed. And that’s where many startups can struggle with getting the funds they need,” added Digby.
Those well-versed and amped with business knowledge from the very beginning — cue a quick glance at Grabcar, which had just closed US$2 billion worth of funds from Didi Chuxing and Softbank — are the ones rightfully fuelled.
Digbysaid, “With the right focus and spirit which many startups in the Asean ecosystem clearly have, anything is possible.”