Johanna Staaf, Director New Ventures, Telenor Group, shares her thoughts and learnings on the Asian startup landscape, discussing five macro trends gleaned from working with various startups
Digital services providers play a vital role in building the digital future of Asia’s growing economies. Much of this potential lies in Asia’s young Internet innovators and tech entrepreneurs, but how can we ensure that they navigate the challenges that inhibit growth?
For the past four years, my company has run startup incubators in markets across the region. From mobile health to online dress rentals, participants in our programmes have not only allowed us to share knowledge, networks and resources, but have additionally illuminated important, overlooked realities of Asia’s startup community.
Here’s what we’ve learnt:
1. Thailand: Beaches, kick-boxing, and the next tech hub?
With the recent announcement of a US$570 million venture fund by the government, Thailand is taking its goal to nurture 10,000 startups over the next two years seriously.
Can Thailand achieve this? Very likely. Its convenient transport connections, affordable living and working costs have long been a draw for entrepreneurs. Pair this with a welcoming business environment, strong public support and a vibrant creative community, the opportunities ripe for disruption and innovation are many.
Our dtac Accelerate programme is in its fourth batch now, and we’ve seen a voracious appetite for ideas and investments. A round of funding this year saw seven in 11 dtac Accelerate startups landing 70 million Baht in investments. What’s more impressive is that two out of them from the current year’s cohort received seed funding within the first month of the boot camp.
2. E-commerce: An ocean of opportunity
Despite the growing adoption of smart devices, e-commerce has yet to really hit the region. India and China have embraced Flipkart and Taobao, but other countries in Asia lag behind with an online retail penetration of just three per cent. Internet speeds still hamper e-commerce in markets like Pakistan, Myanmar and the Philippines, while logistics across archipelagos have posed cost issues for online retailers.
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But where there are challenges, there are opportunities: Daraz, an e-commerce retailer recently partnered with Telenor Pakistan to roll out a series of “Easy Shops”, connecting consumers that live in areas with low broadband connectivity and access to urban retail centres.
3. A mobile-only horizon
Huge swaths of the region are leapfrogging the use of digital services in such a way that startups are not thinking “mobile first” but rather “mobile only”. One obvious consequence of this is how the mobile chat phenomenon actually got its start in Asia with in LINE and Kakao, only later catching on in the US and Europe (with Messenger, SnapChat and the like). Some countries in this region have become testbeds for concepts developed by US startups like Über, with the premise that if it proves successful in Southeast Asia, it will have a higher probability of success in Europe and the US.
4. Do fragmented business landscapes force commitment, innovation?
Southeast Asia’s cultural and business environments are as diverse as its geography, making it time consuming and highly complex to grow digital services across the region.
But this fragmentation could also provide better “training” to startups – forcing them to challenge boundaries in terms of innovation and scalability. In such a fragmented setting, multinational digital service providers may be well positioned. They may be considered neutral parties in the startup environment, taking on a position as a connector of people, services and business, and an enabler for deals to happen.
5. Digitise more than just businesses – digitise the bridges that connect them
There are just as many opportunities in regulated industries as there are challenges – in health, financial technology, agriculture, B2B or SaaS. I had a conversation with an entrepreneur at an accelerator in Singapore. He told me that a successful fast-food chain entrepreneur in Southeast Asia shared that a broken supply chain was hampering the growth of his business. The farmers don’t grow the crops that are in demand and the logistics are bad so the produce arrives in bad condition. The business pain is in the supply chain.
One startup examining this issue is the winner of dtac Accelerate this year, Freshket. Today, they’re building a marketplace for restaurants and fresh food suppliers, which has the potential to improve the balance between supply and demand in the food and beverage industry. In the long term, they could even consider expanding into logistics and improve the supply chain themselves.
What does this all mean?
Though growth is promising, issues persist. startups cite the lack of comprehensive networks or mentorship. Consumer preferences and needs vary wildly. Uneven regulatory terrain makes international expansion an uphill task. With so much variation “one-size-fits-all” does not work in this region.
These issues highlight the need for programmes and partnerships to recognise and develop disruptive, innovative, scalable ideas able to make differences locally and offer potential regionally or globally. Digital service providers offer the resources, networks and experience that local startups could need to turn their ideas into real businesses.
The startup scene never stops. New programmes need to be constantly rolled out to complement existing initiatives and democratise opportunities. Take accelerators into new regions of Malaysia, like Digi’s Incub8. Include new market startups like those from Myanmar at established programmes like dtac Accelerate. Find ways to give local entrepreneurs the means to look beyond their own borders too – as the first ever Digital Winners Asia will do.
It is through programmes like these that I believe companies like Telenor and our peers can connect inventors to ideas from Karachi to Kuala Lumpur, and continually develop services that improve our lives and keep us all safe, healthy and happy.
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