Steve Leonard, Founding CEO of SGInnovate speaks at Echelon

Five years ago, an Echelon conference might have focussed on building a burgeoning e-commerce or mobile startup scene. Since that time, the ecosystem has developed and it is time to consider how the next evolution of Southeast Asian tech will look.

At Echelon Asia 2017, industry players focussed on two key areas to develop in the years to come — deep tech and sustainability.

In Asia, the major social problems are healthcare for aging populations, major traffic concerns and education. Furthermore, agriculture and environmental technology remain global concerns.

Solving these problems presents a major opportunity for startups, but part of the challenge involves convincing people to move away from building the next ‘cool app’ — or, bringing non-entrepreneurs into the startup space.

Steve Leonard, the Founding CEO of SGInnovate, in a talk at Echelon Asia 2017, explained that deep tech does not require a totally unique IP (although that does help) and many times recruiting someone who is proud of their PhD or university research and converting that knowledge into entrepreneurship.

The reason we set up SG Innovate about a year ago was the simple assumption that Singapore does not lack anything to built tech intensive companies. We have great research, great liquidity [but] we were not building those [deep-tech] companies.”

Leonard rejected the notion that Singapore has a talent gap (a complaint we often hear and read in the media), and said all startup ecosystems across the world have the same complaint.

Which means the environment needs activity from entrepreneur and scientists who can “take the technology forward”.

Filling funding gaps

In Southeast Asia, much of the deep-tech investment goes into companies in their Series B or Series C lifecycle and the early-stage funding is still wrapped up in consumer technology or the B2B space.

While VCs are slaves to their LPs, and need to ensure returns to exist; corporations can fill this gap.

“One of our big challenges is we need more help from the corporate ecosystem. We need help from corporates — funding, encouragement, co-development,” said Leonard.

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Southeast Asia has big home-grown companies, who often make noise about running accelerators and supporting startups. In the current funding environment (whereby it is not hard to find VCs), Corporates can make a concrete impact by pushing money into the high-tech sector.

In the region, corporate involvement is lacking, either driven by a risk-adverse culture or ignorance to what startups can offer.

Now that the Southeast Asian ecosystem is maturing, the time is now begin the process of corporate integration.

Working towards sustainability

In the e27 context, sustainability usually means managing revenue to work towards profitability and the long-term success of the company.

However, moving forward, it should mean building tech to help support a more sustainable world — be it through data analytics, environmental breakthroughs or, even, education.

Atsushi Taira, the Chief Growth Officer at Mistletoe, a company that makes investments and incubates startups, explains that while this sector is full of enthusiasm, a lot of the mistakes come from strategy.

For example, understanding at what price-point the technology can become useful. He brought up the example of some agri-tech guys who had built a device that was fantastically accurate with great performance. It also cost US$1000.

A parallel team built a similar device, it did not work as well, but it was ‘good enough’. It cost US$20.

As technology develops, and the average price of the device drops, the second company will be able to offer an increasingly productive device at US$20.

Taira used this example to bring up the point that it’s important to understand how the technology can feasibly be implemented into a society.

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Finally, when asked about the impact investment strategy, Taira brought up one final point.

“If you look at impact investment, mindset is great, intention great, but sometimes they have no idea on the technology. So we like to create a community. Could mean startups, maybe government, of course VCs. So we actually have nine agendas and we gather the different people around those agendas to talk”.