How are startups in Asia different from those elsewhere in the world?
The biggest risk is not to take any, says Alisée de Tonnac of Seedstars World as she talks about uniqueness and challenges of Asian startupsBy Terence Ng 05 Feb, 2014
Seedstars World (SSW) competition, which brought together startups from all over the world, held its finale event on February 4, 2014. Having seen and evaluated over 1000 startup applications globally, the Seedstars team certainly know what makes startups from various regions around the world tick, as well as their strengths and weaknesses. e27 brings to you an exclusive interview with Alisée de Tonnac, L’Oréal Product Manager and Co-founder of Seedstars SA.
What are the key characteristics common to startups participating in Seedstars World competition?
There really aren’t many distinct characteristics that most of the startups share. However, we did notice that many of them were lacking in tech innovation, following established startup models that work in the US and Europe, modified for local markets. This could be due to our contest rules, which state that startups should be newer than two-years-old and have less than US$50,000 invested, disqualifying older, more innovative startups with greater investment.
Then again, localisation can be considered a sort of innovation. For instance, Nigeria’s SimplePay is designed to simplify Nigeria’s current complex online payment system, incorporating features from PayPal and credit cards.
Can you share with us more startups that, in your opinion, are worthy of note?
There is this startup from Chile, Totus Power, which uses lithium-ion batteries to generate power for villages in India and other developing countries. The key feature of this is that it is designed to be low-maintenance, a boon for regions that lack the tools and expertise to repair advanced technology when it breaks. Many devices, for instance solar panels, that are donated to developing countries are abandoned after they break under regular wear and tear.
In fact, there are many interesting startups and ideas that aim to solve problems unique to developing countries. One idea which I think has a lot of potential is that which generates electricity directly from fire. With this, whole communities will have access to communications and the internet without the need for expensive electricity generating and distribution infrastructure.
That’s awesome. How are startups like these encouraged around the world?
In Africa and East Europe, the startup infrastructure is at an early stage, with investor frameworks and other such support limited. In contrast, South America generally has strong government support for startups. For example, the Chilean government gives a grant of US$50,000 to startups if they are based in Chile for at least six months.
However, this largesse has resulted in many companies exiting Chile once the six months is up. In fact, up to 80 per cent of startups in Chile are started by foreigners, with a correspondingly low retention rate. One silver lining is that tech transfer occurs between foreigners and locals, giving a boost to Chile’s local startup scene. Brazil, which introduced its startup support programme later than Chile, has learned from these lessons, and now only about 20 per cent of startups in Brazil are foreign-owned.
How about Asia?
In general, Asia has a relatively developed startup support infrastructure — be it government subsidies, investor networks, and mentorships. In addition, there is a large market in terms of population, and talent is relatively plentiful and affordable. In the past, people used to talk about conservative Asian culture discouraging Asians from founding startups. Now, with education, tech entrepreneurship has become a more socially acceptable career.
That said, we have gleaned an interesting fact about startups in Asia from the Seedstars competition. We have noticed that many startups in Asia are founded by foreigners instead of locals, similar to the situation in Chile. The difference is, they generally make Asia their base of operations, probably due to the good support as mentioned above. Particularly with tech startups, a computer and a wifi connection will allow one to build products and apps that can travel the world.
That’s interesting. What do you think are the main challenges for startups in Asia?
For one, Asia, and Southeast Asia in particular, is a fragmented market, with different countries and even regions within the same country having different languages, habits, and culture. To expand and scale up within Asia requires a keen knowledge of the individual markets. There is no such thing as one-size-fits-all here.
Also, funding beyond the seed stage is lacking compared to the West, for instance follow-up and Series A investment. Lastly, from what we’ve seen in the competition, a few Asian startups could use some help with their selling pitches.
To overcome the above mentioned challenges, what is the main thing that startups need?
A startup’s team is the most important factor that contributes to its success. A good team can market and sell the product well, iterating and adapting during the process to refine their offering. The tech and developer side is not as important at the beginning if the startup adopts the Lean Startup model, but its importance grows as the product incorporates more features and becomes more complex. As to what makes a good team, I think education is the key. In Ghana, for instance, they have come up with a two-year education programme to train entrepreneurs, which I believe will help greatly in getting more startups off the ground.
Finally, do you have any words for aspiring startups?
The biggest risk is not to take any. Take chances, fail, and try again.
Lead and Featured Image courtesy: Seedstars SA