How can South-east Asia produce more unicorns?

Singapore

FUELLED by talented and experienced entrepreneurs, South-east Asia is fast becoming a leading innovation destination. While the US fell out of the top 10 in the 2018 Bloomberg Innovation Index, Singapore moved up to third spot driven by its large investment in R&D funding and STEM education. Other South-east Asian countries on the list include Malaysia (#26) and Thailand (#45).

Private equity and venture capital investments into South-east Asia hit a record US$23.5 billion in 2017, which more than doubled from 2016 according to a report by Singapore Venture Capital & Private Equity Association (SVCA).

Against this backdrop, South-east Asia's startup ecosystem has produced some notable success stories - Gojek, Grab, Lazada, Sea Group and Tokopedia, to name a few.

Yet the question remains - will we see more unicorns emerge from South-east Asia any time soon? Well, the answer is not so straightforward.

South-east Asia has vast potential for startup growth, but the main obstacle is the difficulty to scale.

In this highly diverse region, scaling your business requires strong understanding of local market behaviour, the regulatory environment, and different norms and practices.

To overcome these obstacles and succeed across South-east Asia's disparate ecosystems, startups must find the right partners, mentors and network to help give them a leg up.

Look beyond funding; access to ecosystem is crucial

While raising funds and capital is important, our experience has taught us that access to the ecosystem is even more crucial to help startups succeed. To be able to operate effectively across a diverse landscape in Southeast Asia and beyond, startups need access to the right ecosystems and entire value chain to test, validate, commercialise and scale their solutions.

One of the ways to gain that access is to join a startup accelerator. A good example is Propell Asia, a proptech accelerator that was formed by two of the most recognisable names in real estate, Lendlease and JLL. By joining a well-run corporate accelerator, startups get to receive mentorship, structured guidance and above all, access to the ecosystem, to help them bring their products to market.

For Foyr, partnering with JLL in 2016 was crucial to our global expansion as a proptech startup. By tapping into JLL's regional network across the Asia-Pacific, our team was able to test our solutions in larger-scale markets such as Japan and China.

Initially, our 3D virtualisation tool could only work for small floor plates, typically sized at about a few hundred square feet. However, our very first project for JLL required our solution to handle almost five times the floor size it was originally built to handle. To achieve that scale, we had to relook our product, re-design then validate it to support a scale that was much larger than we had ever expected.

This exposure we received also pushed us to localise our product offerings from providing only one English-supported menu in 2016, to now supporting over nine languages. The invaluable insights gained from the ways that people and companies from different markets used our solutions enabled us to refine our products for commercial scalability.

Be agile and open to changes

Another learning is to recognise that there is no fixed roadmap for building a successful business. Entrepreneurs will need to be open to the unexpected, even if it means "pivoting" your product or business model to find the best market fit for your solutions.

For example, we started by offering virtual reality software to enable home owners to customise their interiors based on their floor plans. However, JLL saw the potential for our product to be applied to commercial spaces. Together with JLL, we ended up co-creating a virtual reality-based solution with a much larger addressable market. This is a great example of where a corporate partner enabled a startup to scale by bringing our solution to a much broader range of potential clients.

As startups grow, their organisational structure and needs will also evolve. The requirements and skills needed to build a business from one to 10 employees is vastly different from growing a company from 10 to 100 employees.

Startups that adopt a lean and dynamic approach will be able to adapt much better across the different phases of their business. With continued investment flows into South-east Asia and the development of stronger ecosystems, there is no better time for startups.

We hope that by sharing our lessons as a Singapore-based proptech startup, we can play a small part in helping our community of peers to grow and scale.

The writer is co-founder of Foyr, a Singapore-based proptech startup that recently raised US$4.2 million to expand into the US.