The four biggest issues for Southeast Asia’s startup ecosystem

I’ve been thinking a lot about startups in Asia, and particularly in my neck of the woods Southeast Asia. While I see tremendous progress in terms of the number of young companies and quality of what they do, a number of issues still remain.

Here’s a really quick skim.

1. Risk-aversion: Starting a new company by yourself is risky, no doubt, but people in Asia are more concerned about that than those in other parts of the world. Working for a big company commands greater social status here…not to mention more money, which undoubtedly holds some back.

2. Fear of failure: Related to risk aversion, many entrepreneurs fear failure. In the US, it’s a badge of honour, a learning step, a vital curve which has helped many a later successful founder find their niche. As one VC told me this week: “learn to quit early and quit often”.

3. Lack of big firm presence: Founders invariably gain experience and ideas from working for big firms or other startups, that’s much harder when the few major players that are in the region – eg Google – hire sales and marketing staff rather than technical teams. Few from Silicon Valley would come back to Asia to start a company – though that could change in the future.

4. Immature ecosystem: Funding is beginning to kick off and go beyond Singapore, but there is still the lack of high profile exits and examples to inspire would-be entrepreneurs.

Things are changing though.

– There are a number of new VCs with global connections actively hunting opportunities here. While some from the western world – eg 500 Startups – are prowling for emerging market opportunities.

– A bunch of new accelerator programs have emerged to help give promising ideas and teams a platform to develop.

– There is more regional thinking within startups – crucial to growing successful companies – while VCs are looking at green field markets to identify opportunities.

– Successful founders are putting time, effort and money back into the community – as mentors, advisers or angel investors – and, importantly in a land where serial entrepreneurism is not the norm, many are [moving on to start new businesses] ( after exits.

– There’s an increase in the number of international companies bringing their business – and opportunities for local talent, e.g. Rocket Internet-backed Lazada – to the region, although that pool remains small.

– A number of initiatives aimed at celebrating failure – such as FailCon Singapore – have come around to help entrepreneurs embrace it as a positive experience. But that’s tough when Asian society is often about not losing face.

As I said before, the fact that Southeast Asia is starting from such a small base makes it a fascinating place to watch. It’s growing fast with more entrepreneurs, startups, media, events, etc than ever before…but there’s still plenty far to go.

It’s going to be an exciting ride.

Update: I was a big fan of the way discussions used to happen across blogs before social networking became so huge, so great to see Smitty pick this discussion up over at his site – which is always thought provoking btw.

He makes some good points from the perspective of someone working at a startup in Southeast Asia. Go see his post for more, here’s the money quote:

I think for the region to really take off the various big companies must offer a lot more product/technical support in the region hopefully from people who are in the region or at least a nearby time zone. Most of the companies continue to support from the valley and apart from conferences, dev events and evangelism – there is not a steady stream of information and local support.

From a media point of view, it frustrates me endlessly when certain so-called ‘global’ firms must wait on London or Silicon Valley in order to run comment, or provide a response to requests. Of course, there are a number that have stellar media relations teams in Asia, but it is by no means universal.


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