Start-ups in Asia: Slowly bridging the gap to Silicon Valley
A panel of Asia entrepreneurs agree that a 'culture of innovation' is rising in the region
At a February 15 Asia Leaders Summit in Singapore, a panel of entrepreneurs and investors discussed the state of the region's technology start-up scene, outlining the differences between countries and the strategic expansion of companies.
Tech entrepreneurship in Asia has undergone a sea of change in the past half decade, the summit participants agreed. While Silicon Valley has remained a barometer for the industry in terms of building a sustainable culture of innovation, Asia is closing the gap.
Fritz Demopoulos, co-founder and former CEO of Qunar, a travel search site partially owned by Baidu, called China an anchor market similar to the United States. He added that if a start-up becomes big in China, it will also be big globally.
China start-ups also have certain “unfair advantages," he said. Besides being able to raise more money than start-ups in neighboring Asian countries, many up-and-coming Chinese companies have access to talent that is not only cheap but also plentiful.
“Significant [Chinese] engineering resources mean that at a company, you can easily have hundreds of engineers working on a problem,” Demopoulos said, pointing out that this reasoning explains why Chinese companies tend to prefer building their own products as opposed to engaging in partnerships or acquisitions.
Sam Kaneda, founder and CEO of marketing company Yo-ren, argued that this domestic competitveness might ultimately affect global expansion plans.
“[Chinese start-ups have an] anchor market [that] is too big, so local competitors may catch up easily,” he said, hinting that any domestic disruption could cause a company to devote attention back to defend its home court, taking energy away from expansion efforts.
The decision between addressing a global market or opting exclusively for local audiences is one faced by all Asian start-ups, said Shin Takamiya, partner at Globis Capital partners.
Paul Srivorakul, co-founder and executive chairman of Ardent Capital, said that he preferred to opt for a hyperlocal strategy with slow expansion across Asia.
Such a strategy involves building small businesses attuned to the intracies of a domestic market, offering local audiences services that large international companies like Google cannot match.
“As you expand across the region, every market you add is like a multiple. And not just from a funding perspective,” he said. “Each country you expand into adds value to your overall business and your customers. There’s a network effect.”
Ryu Suliawan, co-founder and CEO of Indonesian payment processing company Midtrans, added that fostering a company with a strongly local buisness focus will also pay off in the long run, particularly as Asian start-up culture expands over time.
“Instead of globalising, I’ll let globality come to Asia,” Suliawan said.
Additional reporting by Jeremy Blum