Start-up Lessons from Asia: Scale up and go global

Norway-Asia Business Review - - Contents -

Wil­liam Klipp­gen, an early stage tech in­vestor based in Sin­ga­pore, mod­er­ated a panel at the Nor­way-Asia Busi­ness Sum­mit 2016 about the is­land na­tion-state’s me­te­oric rise and what Nor­we­gians can learn from Asia. “In the past decade Sin­ga­pore has made it­self into an en­trepreneur­ship hub, now rank­ing as the sec­ond-most in­no­va­tive coun­try in the world,” he said.

Poon Hong Yuen, chief ex­ec­u­tive of SPRING Sin­ga­pore, the gov­ern­ment agency tasked with help­ing en­ter­prises grow, tried to shed some light on this emer­gence.

“It is stan­dard prac­tice in Sin­ga­pore for civil ser­vants to shuf­fle jobs ev­ery few years to a new post that seem­ingly has noth­ing to do with the pre­vi­ous one,” he said. “The coun­try doesn’t want you to be­come too en­trenched in any one po­si­tion, and this keeps you nim­ble.”

“I was just rem­i­nisc­ing with a bank­ing friend about how 15 years ago if you put money in a start-up in Sin­ga­pore, more or less it was gone. But there have been sev­eral re­cent suc­cesses here, in­clud­ing a USD 1 bil­lion exit by Lazada thanks to the pur­chase by Alibaba, and we’re see­ing the qual­ity of im­prove here as well.

“We want to make Sin­ga­pore a con­ducive en­vi­ron­ment for start-ups to thrive, in­clud­ing for for­eign­ers. Most of the start-ups in Sin­ga­pore have at least one for­eign founder. Our launch­pad has been de­scribed as the dens­est for star­tups in the world by The Econ­o­mist.

“Our start-up launch­pad hap­pened al­most by ac­ci­dent, as there was a clus­ter of old build­ings that were due to be de­mol­ished. But the gov­ern­ment agreed to rent them cheaply to start-ups and the neigh­bour­hood grew quickly from there. The gov­ern­ment is now adding build­ings to the hub.”

Per Gun­nar Borhaug, pres­i­dent of Ban­dak Group AS, be­lieves Nor­way can build from its strengths in try­ing to en­cour­age en­trepreneurs.

“I don’t think Nor­way needs to nec­es­sar­ily move away from its tra­di­tional in­dus­tries of mar­itime and oil and gas as we’ve built up core com­pe­ten­cies in these sec­tors,” he said. “It’s more im­por­tant to look at how new tech­nolo­gies can add to this strength and work to be­come more in­ter­na­tional. That means work­ing to bring some of the clus­ters we’ve built up in Nor­way around the world.”

Sig­b­jørn Du­gal, chief ex­ec­u­tive of Pick­atale, said start-ups need an over­seas fo­cus from the start.

“Nor­way should have started in­no­vat­ing 10 to 15 years ago when we were on the cut­ting edge of the oil and gas in­dus­try,” he said. “We can do proof of con­cept there and then take it out to the world.”

“There is no do­mes­tic mar­ket for start-ups in Nor­way. To be suc­cess­ful you have to take your com­pany in­ter­na­tional to the big mar­kets like China and the US. I think there are a lot of smart peo­ple in Nor­way pro­duc­ing a lot of in­no­va­tion, but the is­sue is we don’t have a plat­form to get them out to the world.

“I don’t think money is the is­sue; I think the prob­lem is the way the coun­try is be­com­ing a lit­tle too fat and happy. In­no­va­tion Nor­way spends a lot of money help­ing start-ups, but the key to­day is distri­bu­tion. It’s get­ting clients or users and start­ing to build rev­enue. That’s how you build a com­pany. Sil­i­con Val­ley is in the US, it has a big mar­ket, firms there build proof of con­cept and then get money from in­vestors.”

Mr Hong Yuen sug­gested Nor­way might look at its cul­tural strengths to de­ter­mine in­vest­ment op­por­tu­ni­ties. “Sin­ga­pore has a plat­form cul­ture — when peo­ple think of us they think ef­fi­ciency, trust­wor­thi­ness, maybe even too strait-laced. Be­cause of that, we were able to build our fi­nance and ship­ping in­dus­tries. Nor­way needs to con­sider which in­dus­tries are com­pli­mented by their cul­tural strengths,” he said.

“Sin­ga­pore is mar­ket-driven in terms of how we in­vest in start-ups be­cause we are too small to cre­ate a mar­ket our­selves. Our strengths lie in med­i­cal tech­nol­ogy, clean tech­nol­ogy, the dig­i­tal econ­omy and ad­vanced man­u­fac­tur­ing. We were able to de­velop wa­ter tech­nol­ogy be­cause we don’t have any nat­u­ral wa­ter re­sources in the coun­try.

“The most im­por­tant doc­u­ment we signed af­ter declar­ing our in­de­pen­dence was our wa­ter agree­ment with Malaysia. We de­vel­oped ad­vanced wa­ter re­cy­cling tech­nol­ogy out of need. We even re­cy­cle our waste wa­ter. When the tech­nol­ogy was first per­fected, the Malaysians were laugh­ing at us be­cause they said we were drink­ing our own pee, which is true, we were. But we’ve de­vel­oped such ex­per­tise in the field Sin­ga­porean com­pa­nies have been able to ex­port this knowl­edge to a num­ber of places in Asia.”

Erik Knive, chief op­er­at­ing of­fi­cer of SN Power, told the au­di­ence it isn’t nec­es­sary to rein­vent the wheel to find suc­cess­ful en­trepreneurs.

“A Swede here in Sin­ga­pore told me no­body ever in­vents any­thing new, rather just new com­bi­na­tions of old ideas,” he said. “I think Nor­way needs to sup­port these kinds of com­pa­nies rather than

try­ing to build some­thing from scratch. My big­gest con­cern is that Nor­way does Mickey Mouse stuff; it’s too small. We need to look at where we can have the big­gest im­pact as a large in­dus­try in­ter­na­tion­ally and put some real money be­hind it.

“I think Nor­way needs to spend some of the money in its sov­er­eign wealth fund to sup­port en­trepreneurs. There are still big struc­tural changes in the en­ergy sec­tor around the world that haven’t been ex­ploited, as many com­pa­nies have gone bank­rupt not re­al­is­ing them. As I look across Asia, there isn’t any coun­try that has adapted to those mar­ket lessons yet so I think there’s an op­por­tu­nity to take that ex­per­tise from the Euro­pean and Amer­i­can mar­kets and bring it here.”

He agreed with Mr Du­gal that Nor­we­gian start-ups are be­ing sold when they are still small, mean­ing scale is not be­ing priced into the val­u­a­tion. Mr Knive urged the Nor­we­gian gov­ern­ment to put some thought into how to help Nor­we­gian founders build up scale.

Mag­nus Grime­land, man­ag­ing director and co-founder of Zalora and Global Fashion Group, shared a con­ver­sa­tion he had re­cently with one of the rich­est men in In­done­sia. “I asked him why he was in­vest­ing so much in dig­i­tal when his off­line busi­ness was so suc­cess­ful. He pulled out some lists and showed me the 10 rich­est men in China from a decade ago, and they were from all the tra­di­tional in­dus­tries. Then he showed me the cur­rent list for China and most of them were in tech­nol­ogy or e-com­merce. He didn’t want the same thing to hap­pen to him,” said Mr Grime­land.

“With my two com­pa­nies, the founders didn’t re­ally have any­thing in com­mon ex­cept a pas­sion for get­ting in­volved in e-com­merce in a rel­a­tively un­de­vel­oped space. None of us had a back­ground in fashion. But one les­son to take away from the In­done­sia story is both Nor­way and Sin­ga­pore are early adopters of tech­nol­ogy, which is go­ing to be a tremen­dous ad­van­tage.”

Mr Du­gal thought Mr Grime­land was be­ing too kind to Nor­way.

“I don’t think Nor­way is an early adopter of tech­nol­ogy any­more. When I came to China in the 1990s with Te­lenor we had meet­ings with all the large Chi­nese tele­com com­pa­nies be­cause they needed our ex­per­tise. Now China has sur­passed Nor­way on al­most all tech­no­log­i­cal fronts and I don’t think we could get those meet­ings. We need to speed up our adop­tion of tech­nol­ogy,” he said. not adopted, said Mr Klipp­gen.

Sin­ga­pore does not set lim­its for sales of start-ups sup­ported by state funds to another Sin­ga­porean com­pany, or re­quire a re­turn on its in­vest­ment. “This only dis­cour­ages in­vest­ment and en­trepreneur­ship,” said Mr Hong Yuen. “Our goal is to en­cour­age lo­cals and for­eign­ers to build start-ups here so we don’t put any lim­its on mar­ket ex­its.”

In­no­va­tion Nor­way helps Nor­we­gian en­trepreneurs abroad in a va­ri­ety of ways, and the panel shared some of their per­sonal sto­ries.

“Labour in China is get­ting more ex­pen­sive now, so I moved all my de­vel­op­ers to Mace­do­nia and was able to get a 10-year tax hol­i­day while the gov­ern­ment there pays for the so­cial wel­fare of my em­ploy­ees,” said Mr Du­gal. “The busi­ness card of In­no­va­tion Nor­way was very help­ful in get­ting me meet­ings in Mace­do­nia be­cause of its gov­ern­ment con­nec­tion.”

“In­no­va­tion Nor­way helped us with con­tacts to talk to the top lev­els of banks, where it oth­er­wise might have taken five meet­ings to get to that level. They were very help­ful,” said Mr Grime­land.

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