SINGAPORE (Reuters) - Technology start-up companies in Southeast Asia are building momentum but need more funding and success stories to really take off, three entrepreneurs told the Reuters Global Technology Summit on Wednesday.
With 600 million people, Southeast Asia has some of the world’s fastest-growing economies, a rapidly rising middle class and an enormous hunger for smartphones and other mobile devices. But it has yet to produce a huge social media or Internet company.
“You have to believe that you can find unicorns here,” said Steven Goh, chief executive of mig33, a social entertainment platform with 70 million registered users concentrated in Indonesia, South Asia and the Middle East.
“It’s an exciting time. This feels like China in 2003 to 2005. Wouldn’t you just love to have been investing in that region at the time?”
Challenges for technology entrepreneurs in Southeast Asia include a shortage of experienced people and a lack of “exits” for investors to recoup their money through share offerings or stake sales.
“Large markets, lots of potential, monetization, lots of sparks - pull out a calculator, this should completely make sense,” Goh said at the summit at the Reuters’ office in Singapore. “But where’s the success story? We’re all racing to build the first one.”
Funding is also an issue, with many companies able to raise $250,000 or so to get going but not win the backing of venture capitalists (VCs) as they grow, said Graham Lean, chief executive of Media Development Asia and Chorus Digital.
“There’s a lot of very early-stage money. The problem comes a little bit further on, where it’s too small for the VCs, it’s too big for the angels and you’ve got this gap,” Lean said.
“(Success stories) will emerge. It’s difficult, perhaps, now to spot which company it’s going to be, but over the next two, three, four years it will happen. At that stage, you will certainly get more funding directed at this sector.”
Darius Cheung, who moved to Singapore from Hong Kong about 20 years ago, sold his mobile security company tenCube to McAfee three years ago and is now working on a mobile payments start-up.
One of the inspirations for how to target consumers and position his new business is the WeChat service started by Chinese Internet group Tencent Holdings (0700.HK).
”WeChat got 300 million users within 18 months, and that’s because they figured out a lot of people don’t like to type,“ he said. ”So they use voice ... You press a button, you record and send a message.
“It’s focused enough to solve a problem but it’s also large enough to scale across China and Thailand and many Asian countries.”
In South Asia and Southeast Asia, most start-ups focus on the country they are in, said Goh, who set up mig33 in his native Australia, built it up in California’s Silicon Valley and then moved it to Singapore to be closer to his core market.
“When you look within this region, there’s a rising tide of all these little companies starting up,” he said.
“The American companies are coming through Singapore to look at this region. When it comes to the Chinese, Japanese and Korean companies, in many cases they’re just ignoring Singapore and going straight to the countries themselves.”
Singapore is an attractive base because of its infrastructure, the ease of doing business and proximity to the rest of the region. Cheung, however, would like the city state to inject more seed money but spread it between fewer businesses.
“We just don’t have enough talent to create a thousand start-ups,” he said, adding that policymakers across Southeast Asia could do more to make it easier to do business.
“Whether it’s immigration policies to working permits to business registration processes to banking and money flows and trade flows, if you can reduce friction within the region, it’s going to benefit everybody.”
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(Editing by David Goodman)
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