Make no mistake, the secret is out. The tech market potential in Southeast Asia (SEA) has been realised and the region is now the global hotbed for tech startups. Renowned global investors are chomping to enter the market and the digital payments sector in Indonesia is a testament to that.

OVO, an Indonesian digital payments company backed by Grab and Dana (an e-wallet provider backed by the financial arm of Alibaba, Ant Financial) have agreed to merge with the aim to compete against Gojek, who counts Facebook and PayPal amongst its investors.

Given that digital payments only constitute a portion of the tech industry with other sectors such as lending and insurance, the diversity and size of investors serve as validation of the fact that the region is where the next major growth will occur. However, the investing lenses have been over-focused on only the key economies such as Singapore and Indonesia.

Therefore, countries in the Mekong sub-region such as Laos, where the startup ecosystem and support is not as developed, have yet to catch the attention of institutional investors. Given the growth potential their domestic market offer, they represent hidden gems in a regional market where the world is opening its eyes towards.

Hidden gems

Countries in the Mekong sub-region represent what angel investors term, “Frontier Markets”. Consisting of countries beginning to see early signs of economic prosperity and great growth potential, they have flown under the radar when we discuss economic growth prospects in SEA.

Laos, in particular, has escaped this limelight. Research by the World Bank has shown that in the decade to 2015, the Laotian economy grew by an average of 7.8 per cent per year, with annual growth never dipping below 7.0 per cent.

Also Read: From the quieter region of Laos, ride-hailing service LOCA emerges to address the potential market that Uber, Grab overlooked

Consequently, GDP per capita increased from US$476 in 2005 to an estimated US$1,812 in 2015. Hence, it is no surprise that Laos ranks among the fastest-growing economies in Asia.

Not without hurdles

However, the startup ecosystem in Laos is playing catchup with others in the region. Research by the Emerging Markets Consulting shows the private sector development in Laos is often impeded by three main obstacles. Complex business registration, difficulty in accessing financial funding and skill gaps in the labour force.

By analysing each of the above steps, we would be able to understand why startups are far and few in Laos and the ecosystem is not currently thriving.

Red tape

Bureaucracy is often cited as the key pain point for would-be entrepreneurs. It is commonly opined that formulating the idea is the easiest part of the business journey while implementation is the hardest. The Laotian regulatory body for enterprises does little to aid budding entrepreneurs in this aspect. Simply registering a business involves visits to at least three different ministries.

While there have been efforts to streamline the process in recent years, many still complain about the complexity of these procedures and the time it takes to register a business. Therefore, the administrative burden of registering a business serves as a clear disincentive to formalise the business and execute it.

Given registration is usually the first hurdle that entrepreneurs face, they often give up due to the sheer amount of effort required to just legalise their business.

Also Read: From the quieter region of Laos, ride-hailing service LOCA emerges to address the potential market that Uber, Grab overlooked

Funding

For the few determined entrepreneurs that made it through the tedious registration process, they would face their next big obstacle, securing financial support. The lack of financial support impedes startups from achieving their optimal operating model given they will not have the necessary financial ability to invest in R&D or expand to achieve economies of scale.

Given that lack of cash is often cited as the top reasons for startups failing, it is small wonder why Laos has not seen its startup ecosystem excel even when the economy is expanding. Upon exploring the issue at a societal and institutional level, we can unmask these issues.

On the ground, Research by the Asian Development Bank to study the correlation between financial literacy and awareness of fintech development has shown that even though Laos has a relatively high financial literacy rate per capita income that is on par with Vietnam, the level of awareness and adoption of financial services and technologies to potentially secure funding for their businesses is low.

As for financial institutions, they are not inclined to supply loans given the low collateral young entrepreneurs possess and the difficulty in repossessing them if there is a default. However, actions have been taken to address this issue. The World Bank will conclude its Small and Medium Enterprise Access to Finance Project in 2020.

With the main aim to provide long-term funding sources for local banks, World Bank hopes these banks, in turn, can provide long-term credit to small and medium enterprises. Even though we are yet to be able to fully ascertain the initiative’s full effectiveness, it is nonetheless heartening to see changes being implemented to reduce financial barriers of entry for entrepreneurs and give them greater opportunities to succeed.

Also Read: Thailand E-Sports Arena raises funding from Japan’s GameWith; to foray into Myanmar, Laos, Cambodia in 2020

Human capital

Recruiting the right talent is one of the key factors for startups to succeed. Given the lean operating structure, startups adopt, it is paramount that everyone on the team has skillsets that enable them to achieve high levels of productivity. This where the quality of the local labour force matters.

Unfortunately, Laos does not perform well in this aspect. Through analysing the labour market, we will realise the root cause behind the lack of skilled labour is the local education system and skills training framework. On a tertiary educational level, there appears to be a mismatch between what students are studying and what employers are looking for. There is a surplus of university graduates with business degrees and a shortfall of technical vocational graduates such as engineering.

The lack of student demand for vocational training most likely reflects the low status of vocational training and blue-collar jobs, as well as the lack of high-quality vocational training in the country. Therefore, the labour market is highly saturated with plan makers (businessmen) but lacking in executors (engineers).

Ultimately, without the right talent and skills, business ideas would remain as thoughts on paper rather than concrete solutions in the market that address a problem.

But there is hope

Given that the overall SEA startup ecosystem is thriving and the influx of large tech companies investing in it will be the new normal, it is a matter of time before Laos and other countries in the Mekong sub-region catch up to the rest. For that to become a reality, reforms must be done on a governmental level.

Also Read: Book Excerpt: What Google, Facebook did to grow from zero to 1,000

Policies should be streamlined and educational systems need to be upgraded and linked to the future demand of the local economy to produce the required talent. Realistically, it will take a decade or two before we are able to fully assess the efficacy of such initiatives.

With the hope by then that the local startup ecosystem will be thriving together with the region, who knows? Laos might be home to a unicorn.

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Register for our next webinar: Meet the VC: TNB Aura

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Though online grocery has been around for years in Vietnam, it’s only started to gain traction since the emergence of the novel coronavirus outbreak.

The country’s grocery space has witnessed the spike in demand for home delivery of fresh produce and staples, due to the reluctance of customers to step outside and go to crowded places.

A recent survey by Nielsen Vietnam and Infocus Mekong Mobile Panel stated that the COVID-19 pandemic had caused Vietnamese consumers to reduce the visit frequency to supermarkets and grocery stores by 50 per cent.

Back then, there was no denying that Vietnamese shopping habits were still very traditional when it comes to groceries, with most preferring to go directly to brick-and-mortar stores to purchase goods instead of browsing online platforms.

However, given the recent growth in e-commerce, consumers’ changing habits and preferences, and the advent of new technologies, the country’s penetration into online grocery shopping has become increasingly popular, especially in metro cities, particularly amongst the young, tech-savvy and time-crunched people.

To put it bluntly, with a broad base of young customers, the online grocery market in Vietnam holds high-growth potential.

COVID-19 changed the grocery delivery scene in Vietnam

Noticeably, there are different business models around grocery delivery services – be it the shopping model, warehouse model, platform-based model, or the combination of those means.

The shopping model is the easiest and fastest for businesses to deploy. It only manages in-house delivery networks; neither does it need to associate with existing grocery stores nor update the product catalogue on the platform.

Also Read: These 5 Vietnam-based agritech startups are tackling the country’s fragmented farming sector

Customers will provide the list of items they want to buy as well as preferred shopping places. Upon receiving the order, the platform transfers the details directly to its delivery personnel who will shop from stores on customers’ behalf. In fact, many existing online food delivery and e-commerce businesses in Vietnam have extended in this model.

With the warehouse model, delivery players import goods from producers and manufacturers, stock them in the warehouses and then run logistics operations to distribute them to customers. Some of the notable players following this model consist of US-based FreshDirect, Walmart Grocery, or China-based Miss Fresh.

On the other hand, the platform-based model utilises the logistics and distribution networks rather than operating independent warehouses. The drivers will pick up groceries directly from retail stores and deliver straight to customers’ doorsteps, eliminating the need for physical warehouses. Participants who have excelled in this space include Instacart, Peapod, Shipt, etc.

COVID-19 has proved to be a transformative moment for Vietnam’s grocery delivery market. Demand has surged, the industry has seen unprecedented growth, and a slew of service providers have decided to enter the sphere to cater to this overwhelming need.

That is to say, major delivery and e-commerce players such as Grab, Be, and Lazada has recently rolled out their grocery deliveries in Vietnam. Meanwhile, the country’s retail giants like VinMart, Big C, or Co.op Mart have also jumped on the bandwagon to facilitate home delivery.

These brick-and-mortar stores are now waking up to the fact that consumer behaviours are increasingly shifting towards e-commerce and that they need to evolve to stay competitive.

On the other end of the spectrum, Loship, a Vietnam-based aspiring unicorn startup in fields of e-commerce and delivery, seems to be one step ahead as it had stepped into the grocery game since 2018, and that was one year before the arrival of coronavirus.

Grocery delivery battle in Vietnam

With regional, resource-rich companies participating in the game, along with an army of local startups vying for space, who will win the grocery delivery war in Vietnam?

No doubt, major regional players have the resources and brand reputation to capitalise on yet another niche. However, when it comes to grocery delivery, local businesses are poised to have assets that give them a competitive advantage over foreign rivals.

The scenario is somewhat similar to David and Goliath’s classic story. That said, Goliath was tall, dense and powerful, but was also very slow to move and respond. In the business world, large companies represent Goliath, which may have huge budgets, countless resources, and significant market share, but often lack the speed and agility of a startup.

They can be lumbering in decision making or getting new products to market, even illy prepared to confront the smaller yet faster-moving players.

Also Read: Is Vietnam the new golden child of tech startups in SEA?

On the other hand, due to lacking in sheer size, small and nimble startups are more agile, adaptable, and responsive to changing customer needs and business environments. And that’s a distinct competitive advantage for these entrepreneurial Davids.

Take Loship as an example. The Vietnamese unicorn aspiring startup got into the grocery delivery game in 2018 by launching the Lomart service, way before other competitors stepped in vying for a slice of the pie. This exemplifies the startup’s ability to sniff out unique opportunities and execute more efficiently than their counterparts.

Loship is proof positive that the possibility of wearing the grocery delivery crown is not limited to the international resource-rich players. Lomart follows the platform-based business model that doesn’t require warehouses – its drivers will fulfill customer orders directly from store locations and get them delivered within an hour. Over two years, Lomart by Loship has served about 30,000 customers across four big cities in Vietnam, with nearly 1,000 transactions per day.

Loship’s promise of one-hour grocery delivery is capitalised on its vast network of more than 100,000 drivers. By making free delivery available, Loship is pulling the biggest lever it has in the grocery wars: the ability to offer fast, free delivery. The platform has partnered with nearly 10,000 variously-sized grocery stores and supermarkets conveniently located throughout the suburbs of the four major cities in Vietnam.

Grocery delivery war in Vietnam, in a nutshell, may witness another “David vs. Goliath” story in the foreseeable future – with Loship being natural Davids, fighting against larger and more established competitors who seemingly have all the advantages of strength, size, and resources.

In such a case, don’t think of an underdog that got lucky; instead, think of a brave competitor who knows to utilise its strengths and unique capabilities to overcome the odds against larger rivals.

Believe it or not, the world is full of business upstarts that took on industry giants and emerged victoriously.

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Register for our next webinar: Meet the VC: TNB Aura

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Yes, “acceloration”. That is not a typo. Read on, I’ll explain what it means and why.

‘Disruption’ is a word that many people associate with startups, especially technology startups. Often, people or companies will label themselves as disruptors to give the impression that they are game-changers or trail-blazers within their industries. However, as we will explore and examine, the disruptors are usually not the ones that actually change the game.

To do that, we will take a short walk down history to …

The industrial revolution

The first industrial revolution started sometime in about 1760 and what we saw then was the transition to adopting new technology to existing hand production methods. New technology at that time meaning machine tools or mechanised systems to be used in factories.

This was pretty much the modern-day equivalent of disruption – the adoption of new, more advanced technologies to supplement and improve existing processes.

That, in essence, is what disruption is. One can succinctly say disruption is actually technological progress and advancement, just shortened to a single and catchier word. But I digress.

Back to the Industrial Revolution. The disruption, or adoption of new technology, gave rise to a whole suite of other trickle-down effects which spawned the creation of many new companies, business practices, and social norms and standards. As industries and people adapt to and embrace the disruption, we see the accelerated collaboration between the users of technology and the technology itself.

Also Read: A survivor’s guide for businesses dealing with COVID-19-led supply chain disruption

In fact, although the term is used in a more modern context, disruption has always been how the human race has advanced forward. The discovery and control of fire by men during the Early Stone Age was a significant technological disruption.

As more people adopt and use a particular technology or innovation, it brings about more advancement of that technology, which snowballs into more people using it, and so on. As mentioned earlier, I see this as an accelerated collaboration process and this brings us back to my very first paragraph – acceloration.

Why I think we need this

Acceloration is the accelerated collaboration phase that occurs after the initial disruption phase.

It is the phase where the growing adoption of a technology or innovation causes that same technology to accelerate in its growth, thereby finding even more useful benefits and uses of the technology or innovation.

The initial disruption phase is typically a lot shorter than the acceloration phase, which can last for many, many years after the disruption phase. And, as we will see, the disruptors do not usually end up as the key leaders in the industry. It is the accelorators that take the lead because of their adoption of the technology or innovation when it is accelorating.

If we peel the layers of the onion deeper, we find many examples of leading companies that, although looking like disruptors in the first instance, are actually not. Instead, they are accelorators.

Let’s bring ourselves back to the modern era for this.

Also Read: Indonesia is ripe for further disruption by tech-enabled firms: Adrian Li of AC Ventures

Search engines

When we think of an online search engine, chances are, Google will be the name that immediately pops to mind. However, they were not the first one that entered that space. They were not disruptors in that sense. Far from it.

The very first search engine was the Archie Query Form, which was created in 1990. That lead to the Veronica and Jughead search programmes in 1992 and 1993.

In 1993, the first web bot, the World Wide Web Wanderer, was created. Followed by, also in 1993, the first web search engine to use a crawler and indexer, JumpStation.

As you can see, the technology was already starting to accelorate with more users adopting it.

Yahoo! and Lycos were founded in 1994, and then Excite and Altavista in 1995.

Finally, in 1996, Larry Page and Sergey Brin started BackRub, which would eventually become Google in 1998, a good eight whole years after the very first search engine was created.

Social media

Facebook could be easily be considered the largest social media company in the world currently. Again, however, they were definitely not the disruptors, or the first, in this space. Even Friendster and MySpace were not firsts.

The very first social media website was Six Degrees and it was officially launched in 1997.

Also Read: Why disruption is no longer a buzzword in the Philippines

Friendster came on board about five years later in 2002, which was the same year that LinkedIn was founded. MySpace was launched a year later in 2003.

Facebook was then launched in 2004, seven years after the very first social media website.

Many other social media businesses came after Facebook too. Twitter in 2006, Instagram in 2010, Snapchat in 2011, and, most recently, TikTok in 2018 globally (2016 for China).

Ride hailing

You would probably be thinking of Uber or Lyft in this space. However, again, ride-sharing has a very long history which began in the United States in 1942 during World War II, when the US government began requiring ride-sharing arrangements to save rubber during the war.

Even in the early 1990s, there were researchers who envisioned the future of ride-sharing similar to what exists in modern-day.

What Uber and Lyft did was to accelorate the innovation and apply modern technology to what was already in motion. Technology such as the development of the GPS, the smartphone, and electronic payments contributed to the ride-hailing apps we know of today.

We have been focused on the technology space thus far. Let’s take the example of a brick-and-mortar business to see how the accelorators are also the ones which typically become the market leaders.

Co-anything spaces

Let’s start with the concept of coworking. WeWork was definitely not a first nor a disruptor in this space.

The very first equivalent of a coworking space was c-base, although it was called a hacker space at that time, which started in 1995. But it was basically the same thing. c-base provided free access to the internet and had a focus on its community.

Also Read: Startup disruption: the good, the bad and the ugly

The first official coworking space was not launched till 2005 when Brad Neuberg opened the San Francisco Coworking Space.

Greendesk, a shared workspace business and precursor to WeWork, was founded by Adam Neumann and Miguel McKelvey in 2008. This would eventually lead to the actual founding of WeWork in 2010, fifteen years after the first coworking space started.

Next, let’s examine coliving spaces.

The concept of co-living has been around for a long time. The term in the modern context is basically a marketing spin to appeal to a different or specific demographic.

Student accommodations have been around for quite some time and are an example of co-living spaces targeted at, well, students. Again, each individual has their own room, and there are community aspects for cohesion and networking too.

These thoughts would especially be useful for entrepreneurs or venture capital investors. Many a time, I find too much focus only on the disruptors. But, as we have explored, more attention should be paid to be accelorators because they typically are the ones that eventually become the leaders in their industries.

Disruption happened around the year 2000 for real estate when the first online property platforms emerged. Over time, disruption leads to acceloration as the industry accepted and embraced technology, and this, in turn, leads to the rise of smart building, smart leasing, and tenant engagement platforms which we see today.

Entrepreneurs should not be focussed only on finding disruptive technology or innovation but should also look at accelorative ones, the ones that have already been disrupted and are now ripe for acceloration.

Similarly, investors should look at, and look for, accelorators in a similar light.

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Register for our next webinar: Meet the VC: Vertex Ventures

Editor’s note: e27 aims to foster thought leadership by publishing contributions from the community. Become a thought leader in the community and share your opinions or ideas and earn a byline by submitting a post.

Join our e27 Telegram group, or like the e27 Facebook page

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Korea Development Bank invests in Riiid

The story: Riiid, an AI education solutions startup based in South Korea, has secured a US$41.8 million pre-Series D funding round. This brings its total funding to date to US$70.2 million.

Investors: Korea Development Bank (KDB), NVESTOR, Intervest, IMM Investment.

Plans with the capital:

• To advance Riiid’s proprietary deep learning technology that offers personalised test-prep solutions based on precise data diagnosis.
• To work on providing a ‘formative learning’ support solution to the education market, helping achieve learning objectives through continuous evaluation and feedback on performance in the entire learning process rather than preparing for specific tests.
• To accelerate its global expansion across the US, South America, the Middle East and beyond.

What is Riiid?:

• It offers Santa, a mobile test prep application for the popular English proficiency exam, Test of English for International Communication (TOEIC). Santa has been used by more than a million students in Korea and Japan, it claims.
• Riiid’s proprietary AI technology analyses student data and content, predicts scores and user behaviour, and recommends personalised study plans in real-time to help students optimise their learning potential.

500 Startups completes the first batches of Global Launch

The story: 500 Startups has announced that 24 innovative startups in the first batches of Global Launch have successfully completed the Singapore and San Francisco programmes.

Both go-to-market accelerator programmes are run in partnership with Enterprise Singapore (ESG) under the Global Innovation Alliance network.

The goal: To help global startups expand into Singapore (Global Launch Singapore) and Singapore-based startups establish a presence in the U.S. (Global Launch San Francisco).

The startups in the Singapore programme are

• Atta.ai (Japan): A flight and accommodation comparison service that predicts the best-time-to-book.
• 30 Seconds to Fly (US): Provides AI-driven workflow automation for travel management companies
• Clotify (Poland/Korea): A mobile app platform that transforms product placement on TV into a measurable sales channel
• Datagran: An AI data workspace that helps companies to build and put ML pipelines into production, fast without coding.
• Longenesis (Latavia/Hong Kong): Helps to transform clinical data into life-saving shareable assets
• Manet Mobile: A SaaS solution enabling hoteliers to offer a customisable, digital concierge service for their customers via mobile devices.
• Metigy (Australia): A decision support technology made for SME marketers.
• Naluri (Malaysia): A digital treatment programme that helps people manage their chronic disease risks and improve their mental health through personalised, digital health coaching and digital tools augmented by AI technology.
• Goama (Malaysia / Bangladesh): A casual e-sports platform focused on emerging markets, empowering super apps to drive engagement.
• Penbrothers (Philippines): An employment platform for startups and SMEs who want to scale their business through talent from the Philippines.

The startups in the San Francisco programme are

• Artifact: Helps to put every student art show online so they can build connections, get hired, and grow their fans
• Dinomao: Sells goods and services quickly through the form of entertainment
• ELXR: A DNA-based fitness training system in Asia, providing personalised fitness training programs based on an individual’s current fitness level, genetics potential and goals
• Ento: Aims to solve the problem of food insecurity. Its mission is to provide cheaper, healthier and more sustainable food source for the future
• Envolve: Automates analytics for brick and mortar retailers using AI
• Evie: Powers the next wave of intelligent automation across business operations with a next-generation cognitive collaboration platform
• Holistics: Provides a single platform to set up, run and scale analytics on top of the customer’s cloud data warehouses
• IOTA Medtech: Provides a scalable AI platform that prioritises patients that need care first and improves the workflow & productivity for clinicians
• Micepaid: An enterprise event application and event management software platform
• Plant Cartridge: Develops modern farming systems and undertakes turnkey large-scale production development for commercial growers using its patent pending cartridge system and controlled environment farming technology
• Pencil: A creative AI company providing a generative content platform to e-commerce, brand and agency marketing teams
• Wavel: Provides language solutions for businesses powered by A

 

Entrepreneur First unveils 7th Singapore cohort

The story: London-headquartered Entrepreneur First (EF) today unveiled its seventh cohort of nine deep-tech companies from Singapore.

The teams developed innovative solutions that address some of the world’s most pressing issues, including those impacting healthcare access and the environment. They cut across a diverse mix of industries, including biotech, fintech, and energy-tech.

The list of startups 

• Allozymes: Leveraging microfluidics to build a fast and affordable enzyme development platform
• BIOPONICS: Has developed a sustainable, bacteria-based solution as an alternative to chemical fertilizer production
• Cocoon: Empowers creators to become entrepreneurs with an all-in-one micro-business platform that enables them to launch and manage their brand, community, and business from one place
• DiviGas: Purifies and recovers hydrogen gas on an industrial scale with its nano-molecular filter, while helping to reduce overall carbon emissions
• inPact: Improves data-driven decision making by extracting business insights from contracts and unstructured documents through an AI-powered enterprise SaaS
• Origin Health: Its AI platform for pregnancy ultrasound scans expands access to quality prenatal care by improving the reliability of ultrasound screening procedures
• Surge Analytics: Enables rapid and cost-effective R&D for batteries and energy storage systems, with its AI-powered SaaS simulation software
• Venture L: Has developed a customisable platform for freelancers that integrates different tools, knowledge hubs and provides workflow visibility, to enable them to scale and build their business
• Waste Labs: Optimises waste collection systems in cities with a proprietary AI platform

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Image Credit: Riiid

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The COVID-19 pandemic has impacted the world in an almost unprecedented way. We keep on seeing companies being affected, even in industries that have been perceived as more resilient in this crisis –such as e-commerce. The shutdown of Indonesian fashion e-commerce giant Sorabel, which was being announced yesterday, is an example of such incidence.

But how about other industries such as supply chain and logistics, which operations are tightly related to international and local travels, currently restricted by partial or full lockdown in various markets?

In this interview with e27, Marc Dragon, Managing Director of Reefknot Investments, a Singapore-headquartered global Venture Capital firm jointly formed by Temasek and Kuehne + Nagel, shares his insights on the major changes that have happened in the sector recently.

We also look into the available opportunities for the Southeast Asian tech startup ecosystem.

The three buckets of impacts

Before jumping into discussing the impacts that COVID-19 bring to the regional supply chain and logistics sectors, Dragon points out that significant changes have become apparent even before the pandemic strikes earlier this year.

“What the pandemic does was accelerating the need for transformation,” he stresses.

Also Read: Singapore’s new VC firm Reefknot makes maiden investment in AI startup PROWLER.io

Dragon elaborates on how the recent US-China trade war has led industry players to consider how their businesses are being run, and he divides them into the “three buckets” of impact:

1. Digitalisation and visibility of the supply chain

“It’s not only about having visibility of the supply chain and goods itself but also about being able to dynamically manage those supply chain systems, as enabled by the visibility,” Dragon says.

2. Sourcing strategy including the supply chain network design

“As soon as the US-China trade war began, companies are looking for alternatives to China … and COVID-19 has accelerated that. It is the kind of thinking that is saying, ‘We have to be aware of the risks’,” Dragon explains.

“Wouldn’t it make more sense to have [the supply] much closer to the demand countries? It sort of alludes to some form of a decentralised supply chain as well,” he continues.

3. Cash flow management, resilience, and financial stability of the supply chain

“In the industry, previously, there is this general sense of looking at lean supply chain and being as low inventory as possible, as efficient as possible. But with the trade war and COVID-19, we have to ask ourselves … is being too lean really that good?” Dragon says.

“It’s even more important to be resilient. So there should be a combination of efficiency and resilience into the supply chain thinking and design,” he concludes.

Also Read: Reefknot Investments, SGInnovate enter into partnership focussing on logistics innovation

Now that the three buckets of impacts have been identified, industry players still have to tackle some challenges in order to make positive changes.

“The industry needs to figure out how to balance demand and supply. With COVID-19, what we see is not demands being cut … but different countries are coming in different waves. For example, China has pretty much passed that pandemic, the curve has flatted and the demand has come back. Manufacturing capacity has gone back by 100 per cent. But other countries in the world are still struggling to bring the curve down … So we see waves of demand,” Dragon explains.

“How this will impact ASEAN is a big question mark,” he adds.

The restriction of movement as imposed by partial and full lockdown in some markets also brought its own challenges, combined with the fact the airline and shipping industries have not started operating in full capacity. This has caused shipping rates to increase.

“Digitisation needs money, it’s urgent now, but companies are also not in a place where they can spend money freely,” Dragon stresses.

The startup ecosystem

Now here comes the question that has been on everybody’s mind: So what are the available opportunities for tech startups in the ecosystem? Especially since digitalisation is a big theme here.

Also Read: Startups should adopt the glocalisation mode of design and thinking: Reefknot Investments’s Marc Dragon

First and foremost, as investors are becoming “pickier”, there will certainly be challenges in terms of fundraising, Dragon admits.

But there is still room for startups to innovate, especially if they work in an area that is in dire need of it.

Reefknot Investments has worked with SGInnovate and NEXST to produce a white paper on digital transformation for the supply chain industry. The document displays case studies of startups that have the potential to help industry players tackle the challenges.

One example of such startup is Singapore-based DiMuto, whose technology is currently being used at an agriculture facility in San Joaquin Valley, US. The company’s Digital Asset Creation (DACky) device scans QR codes on boxes of fruits; these QR codes are associated with trade information such as purchase orders and shipping documents.

This kind of technology can help solve trade disputes such as orders that failed to be delivered.

So far, DiMuto is said to have identified, classified, tagged, and tracked over 30 million fruits (worth over US$100 million).

“The good news is that there is no one specific type of technology or one specific type of business model that will be successful,” Dragon closes.

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Image Credit: Reefknot Investments

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