Japanese VC fund IMJ Investment Partners made just one investment in Singapore’s startup scene in 2014, preferring instead to go straight to markets that Singaporean startups are ultimately looking to enter — places like Indonesia, Thailand and the Philippines, shared its Singapore-based Director Koichi Saito.
IMJ disclosed a total of nine investments in 2014: three in Japan, two in the Philippines, two in Thailand, one in Singapore, and one in Indonesia. E-commerce and mobile were prevailing trends. On its website, IMJ lists mobile health startup mClinica as based in the Philippines, but the startup says it is in fact headquartered in Singapore. The VC invested in it in October — its only investment in Singapore in 2014.
“In Southeast Asia, [we invested] in marketplaces and e-commerce… The barriers to entry are slightly higher in the other regions. The startups always think they can start from Singapore and expand into Malaysia or Thailand, but I think it’s not easy and it takes time. So I prefer to go directly to invest locally. That’s faster and easier,” Saito told e27.
The comments paint a slightly worrying picture if there is indeed a trend of VCs increasingly looking to neighbouring markets that Singaporean startups have earmarked for entry further down the line. And it’s a fair question: Why not go straight to those target markets as an investor?
One Asian market that Saito still sees as largely keeping to itself is — perhaps unsurprisingly — his home country of Japan. And he sees little change to that over the coming decade. Worryingly, 73 per cent of Japanese conglomerates have done little on the corporate innovation front over the last five years, according to Saito’s own research.
“I don’t think many startups are looking to the Japanese market. It’s still tough to enter [due to] the language barrier, or just culturally — that’s good and bad. The good side is that there’s always a high barrier to entry for the Japanese industry; there are no competitors from the outside. That’s good for the Japanese [companies]. But ultimately that’s bad for the economic side, and it’s not good for the consumer,” he said.
Saito sees the much-talked-about buzz phrase ‘Internet of Things’ being mainly a trend in Western markets like the Unites States in 2015, with e-commerce and mobile continuing to dominate in Southeast Asia for the next year. He thinks Japanese investors as a whole also have eyes firmly planted on Malaysia going forward.