As an early-stage VC in Singapore, Tri5 Ventures usually gets a good number of pitches monthly from Singapore-based startups.
Given that we are an appointed incubator by SPRING Singapore to facilitate startup grants we receive a lot of millennial entrepreneurs who are usually first or second-time entrepreneurs who want funding to grow their business ideas.
Unfortunately, Singapore is a very small market, coupled along with a strong government involvement in resolving a good number of business problems.
This has led to Singapore-based entrepreneurs trying to solve limited problems based on their understanding of the Singapore market. I found a growing pattern of four repeated startup themes that has been appearing from the pitches.
Four overplayed themes in Singapore
1. Rewards, ordering, supply chain management systems for the food industry
Given Singaporeans insatiable appetite for food, it is no wonder that many early-stage startups try to tackle the issues faced by the Food and Beverage (F&B) industry. From the many startups that pitch to us, there are always two major solutions being offered to F&B operators: increasing sales or increasing efficiency of the back-end operations.
Here are some challenges that startups will face.
One, friends of mine who are in F&B industry said they now see an average of 10-15 vendors offering B2B solutions that fall within the two solutions I mentioned above.
Two, the F&B industry is quite different here in Singapore compared to regional countries. Singapore has a dominance of restaurant chains rather than small-time one-outlet operators, which is the reverse for most Southeast Asian countries.
This was a necessary evolution as Singapore F&B operators have to grapple with rising costs and the only way was to build multiple outlets to benefit scale economies. Having multiple outlets, it make sense to restaurant chains to build a full fledge ERP system that encompass many areas of data analytics, supply chain ordering, HR, POS, queue systems and even rewards.
Startups offering such solutions, which would likely only be a part of the ERP, will find it difficult to scale up in Singapore if they target the large chain operators. If they target the small operators, they will find themselves competing against many other startups offering similar solutions.
Because of government grants helping the F&B operators innovate, operators also prefer that the startup assist them to apply for government grants and usually does not want to foot the bill to pay for a new solution. This leads to long sales cycles to close a deal because applying for government grants can be tedious and long.
2. Travel-related platforms offering customized itineraries using AI
For many years now, the rise of travel has boomed in Southeast Asia due to the relatively cheap budget fares and accommodations. Millennial entrepreneurs have personally travelled to many locations with low budgets and because it is often with friends, group travelling issues arise from the coordination of preferences when travelling together.
This makes entrepreneurs feel as there is a large pain point and one major solution is always being offered: using AI to customize the perfect travel itinerary at the lowest cost possible. In a way, they want to replace the physical travel agent.
I can already sense the bewilderment of data scientists and AI experts reading this article. How does a young startup with limited resources and funding obtain the data from the many APIs of flights, accommodation and tourist attractions?
In fact, a number of such companies do not even have APIs available. Moreover, to obtain the APIs require tedious agreements with service providers. Can there truly be sufficient data to provide the best travel itinerary?
The next challenge would be the ability to sign the best supplier pricing. Given that volumes would be low, it would be very difficult to provide a low cost offering in comparison to other well-established platforms.
Furthermore, it becomes a price-war at razor-thin margins which is an unsustainable business model unless there were substantial funds to grab market share first.
3. Edutech customer management systems and learning management systems
Singapore is well known as an education hub with a huge US$750m private tuition market. Millennial entrepreneurs would have likely been a recipient of enrichment classes over the years, or may have become part-time tutors to earn side income during their tertiary days.
This led to an understanding of how backwards the education market can be, be it public or private. Inefficiencies in communication, tracking of admin and payment of fees have led people to build SaaS startups for customer management systems to help educators manage students and parents. The point is to ease the administration pain so that educators can focus on their core work of teaching.
There are also a number of learning management systems, in particular e-learning platforms, where there are innovative tech using tablets, IOT, videoconferencing, etc.
I previously ran education outlets in 2010, and much progress in the education sector has been made since. Now being a father of school-going children, both public and private education institutes have jumped leaps and bounds in their technology enablement.
So my question to millennial entrepreneurs targeting the edutech market: are you too late in the product curve for Singapore?
4. HR AI systems able to connect jobseekers and employers
Millennial entrepreneurs, while communicating with fellow peers, find that the millennial generation do not just want a job, but seek beyond basic pay to expound on their potential. There are startups who pitch to us, showing us the ability to determine the subjective factors of culture, aspirations, vision goals and through a magical AI, create the ability to provide a match between employers and jobseekers.
It is exciting, no doubt, if we can solve Singapore’s dubious reputation of having the most unhappiest workers in Southeast Asia. But can this problem be resolved easily via a good matching system?
I spoke to two HR directors, one from an MNC and another from an SME, about the various systems that they use to handle recruitment. Both declined to be named for this article.
The director of the MNC firm agrees that such AI systems may help to narrow down the list of candidates to save time on the recruiting process, but it is a no-sure guaranteed process.
She explained, “Human characteristics are dynamic and may change over time. Moreover, the ability to perform does not solely rely on the alignment of vision, but also whether the applicant can rise to the challenge to fulfil his job scope.”
As for the SME HR director, her answer was more pragmatic. “An SME does not have the luxury of writing out value statements. It is a daily affair for us to ensure operations run smoothly. While we hope to fulfil the millennial’s aspirations and therefore stay motivated, we rather hope to pay a good salary and offer perks to retain the individual.”
The purpose of this article was not meant to discourage millennial entrepreneurs, but to get an awareness of what other Singapore entrepreneurs are thinking of and the challenges in implementing them.
From my anecdotal observations of working with Singapore millennial entrepreneurs, there are pockets of those with creative out-of-the-box thinking, a high-risk appetite and entrepreneurial streak of never-say-die.
When combined with an innovative and disruptive solution targeted at a large blue ocean market, perhaps the entrepreneurial startup scene will switch of addressing problems in Singapore and building real scalable businesses.
This article is part of the “Startup Advisories” series. For those who are asking what then, and what problems there are to solve, here is my previous article “Why Singaporeans fail to think big” which may invoke more thought-provoking ideas.