Key learnings:
- It is crucial to pursue business fundamentals instead of fundraising metrics
- Stay focused on your north-star vision
- Be bold and seize all opportunities to scale up
- This is a good time to improve margins and unit economics
- Don’t stop experimenting
The year 2022 was not so kind to the startup world. The industry was slowly getting on its feet following a tumultuous COVID-19 crisis until the Russia-Ukraine war jeopardised its plans. The war pushed the whole world to the brink leading to an economic crisis. This affected startups, too, as they struggled to raise funding to stay on in the game.
As the crisis unfolded, many startups laid off thousands of employees to cut costs. Hundreds of employees of Sea Group, Carousell, and Ula, among many others, were let go. The situation continues to be gloomy, and many predict the global economy is inching closer to a recession.
Overall, 2022 was tough and a year full of great learning.
In this feature, founders/top executives of 30 startups across Southeast Asia share their key learnings in 2022.
(The comments are arranged in the alphabetical order of the names of the respondents)
Ami Sugiyama of Secai Marche says after Malaysia’s COVID-19-induced movement control order, the company experienced many challenges in 2022. “It took a lot of work to raise funding and accelerate compared to previous years because of the economic recession, which is the time for us to be patient. We realised that unit economics is always essential to be sustainable. Under this economic recession or any unexpected situation, a startup should establish a firm footing in our market and achieve a healthy growth curve.”
Amit Saberwal of RedDoorz says that the past three years have brought to the forefront the importance of resilience and agility. “The pandemic taught us the significance of technology in diversifying revenue sources. It forced us to find new sources of revenue as occupancy rates dipped, travel restrictions came in, and these same avenues are still going strong as rooms all around start filling up again.”
Swiftness in the decision at the onset of a crisis could make or break a company
“The second learning was that swiftness in the decision at the onset of a crisis could make or break a company. We became transparent with our team and hotel partners about the gravitas of the situation. This led to all of us working in a united manner to overcome every obstacle that came our way,” he adds.
According to Anggia Meisesari of TransTrack.ID, organisations need to build a viable business model focused on generating revenue in the long run while controlling unit economics and burn rates. “Recognise the balance sheet to keep informed about the company’s financial standing and make strategic moves to improve its financial health. A balance sheet can help identify trends in a business’s finances, particularly regarding relationships with customers and suppliers.”
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“We must make sure to allocate our funds properly and have a solid plan for spending our money. Make sure to have someone who understands startup finances on our team to help make sure we are making the best decisions with our money,” she adds.
Asheesh Chandra of Kristal.AI mentions that a sustainable business model with robust unit economics trumps the temporary high of obtaining high valuations in private markets – the focus must move from valuation to revenues and cash flows.
“Both 2020 and 2022 have taught very different lessons to the world. As any startup treads these economic scenarios, the leaders and managers in every role need to adapt to the new normal and send consistent messages across their teams,” he shares.
Adapt to the new normal and send consistent messages across your teams
Chandra asks businesses to be the closest to their clients in the toughest times. “This is especially relevant in the wealth management industry (though relevant to all) as clients face unfavourable portfolio movements with inflation and geopolitics creating tremendous uncertainty.”
Benjamin Harris of watchTowr remarks that in the early days of any business, job descriptions and roles are fluid — you will never accurately capture a role and its many aims or what it will become within a couple of months. “Therefore, I’ve always held the mantra of ‘hire clever people, do clever things’. I enjoy hiring people who will naturally be able to handle this level of fluidity, this level of change and this level of unpredictability because they are intrinsically smart, intelligent people.”
“In our early days, we created roles and filled them once a problem had been identified and was already a big enough problem to need solving yesterday. This created challenges; without quick action, it can reduce speed.”
Deepansh Jain of Scooterson believes that year 2022 taught the company that a strong community could inspire and motivate them. “This keeps us going despite the multiple hurdles. We received incredible support when giving regular updates.
Since moving our office and operations to the JTC Launchpad @One- North, we have found a particularly collaborative community and a heavy sense of belonging. Within a short period of opening the Launchpad, we connected and collaborated with others in the vicinity to work on Rolley’s (Scooterson’s first smart scooter model) electronics,” he says.
Georg Steiger of BillEase says: “When it rains, it rains, and the market climate can shift quicker than you expect. As a founder, it’s essential to be agile and adaptable in the face of changes in the market. We learned that it’s crucial to have a strong team around you that can weather the storm and continue to execute your vision even when times are tough.”
This is a good time to improve margins and unit economics
“This year, we observed less aggressive customer acquisition and subsidies, so this is a good time to improve margins and unit economics. At the same time, growth can be cheaper than at peak times. It’s also an excellent time to attract great talent. We made a few key hires over the year to build our team,” Steiger adds.
Heinrich Wendel of iPrice Group says that the sentiment in the market can turn rapidly within a few weeks. It’s essential to read that correctly. When burning hundreds of thousands of dollars per month, every week makes a massive difference to your future run rate.
“Ideally, your company is set up for elasticity, but if not, making the hard decisions as early as possible is better for everyone. Every week extends the company’s run rate by multiple months, and the chance for people to find new jobs quickly increases before layoffs trickle through the economy,” Wendel says.
“Cash is king. The best time for M&A discussions is when business is good and/or financial markets are good. When market conditions are bad, any M&A will discount synergies and purely focus on economic evaluations since everyone needs to focus on their run rate and can squeeze you,” he comments.
According to Ilya Kravtsov of PouchNation and Ringkas, launching a business in more challenging macroeconomic conditions will force every founder to focus on what matters the most, to be true to themselves and listen to their customers and stakeholders more. Funding will never be an issue if the problem you are solving is big enough and will generate an opportunity for many.
“Focusing on true impact will motivate not only the founder, but people who will join your business, clients who will buy your product, and ultimately investors who will invest in you during the downturn,” he says.
Ivan Yeo of Avium says in 2022, two key lessons stood out: first, the importance of risk management during a bull market. De-risking when things get too frothy is vital so one can be more aggressive during the quiet bear market.
“And second, it’s crucial to pursue business fundamentals instead of fundraising metrics. It’s a perspective we’ve been focused on at Avium because startups that chase their next fundraising could eventually be in a precarious position,” he believes.
Jakob Rost of Ayoconnect remarks that the first learning in 2022 is that run rate is the new sexy. With the forecast of global economic growth decreasing from 6 per cent in 2021 to 3.2 per cent in 2022 and 2.7 per cent in 2023, having enough cash in the bank to weather the potential storm in 2022/23 outbids hypergrowth. Focusing more on your core business and customers is also the takeaway I have highlighted in recent times.
“Secondly, keep yourself thin on a manageable number of projects and ideas. More often than not, it might seem exciting to start a new project and shift focus to the latest trend, but getting the right core business had to be the main focus,” he says.
Ayoconnect continues to focus on growth, particularly in building the Open Finance ecosystem in Indonesia. While Open Finance is reasonably well-established in Europe and the US, the industry is still very young in Southeast Asia but is proliferating. In Indonesia, hundreds of millions are embracing new digital services while many still need access to essential financial services like bank accounts.
There is huge potential for Open Finance in the region and many opportunities for the sector to grow further
“As such, there is huge potential for Open Finance in the region and many opportunities for the sector to grow further. We’ve been excited to see the activity in space and to be playing a role in helping move the ecosystem forward in 2023,” he says.
For Julian Artope, Zenyum, key learning is that the best companies outperform the market. “Listed companies in our space took a big hit, and smaller players in our space in the dental category got wiped out during the multiple crises of the last years. One note stuck with me, though: ‘Complaining won’t help. The best managers outperform the market.’ We made this a mantra and started detaching from external circumstances, consistently growing against all odds and celebrating record quarters. As Formula One Driver Ayrton Senna said, ‘You cannot overtake 15 cars in sunny weather… but you can when it’s raining’.”
The best managers outperform the market
“Also, discipline breeds creativity: Going into the year, we read the signs of a challenging environment early and asked our teams to do more with less. The result? We were able to 5x our marketing ROI since the beginning of this year by being more disciplined, operating a more diversified channel mix, and focussing on creatively opening up channels that otherwise might not be available to our category easily,” he adds.
He hopes to make many people smile more in 2023.
Kelvin Lee, Alta (formerly Fundnel), says: “Our key learning this year is to focus on our vision and double down on it. While it is likely that the macroeconomic climate will remain tumultuous for the near future, Alta is building the rails for wealth creation opportunities that had not previously existed for most investors.”
“Never stop building and growing what you believe in,” he adds. “These past few years have been challenging for everyone, and they have been a real test of resilience. I am reminded that some of the most resilient businesses today are the ones that weathered the storm and never stopped pushing forward, even when times were tough.”
According to Kelvin Teo of Funding Societies/Modalku: “Our key learnings in 2022 is that we had to make hard decisions, sometimes unpopular to some stakeholders. However, once you show results, everyone becomes friendly again because people want to be associated with a winning team. And even if you’ve gone with the popular decision and bad results ensued, the people who advocated for the decision may not be there to support you.”
Secondly, we must always stay focused on our north-star vision. “As founders, we face significant pressure from investors. But investors can be fickle. Many business models have received tremendous funding with theses that were either unproven, or we couldn’t understand. Following them could lead us to the wrong or unsuitable path,” he comments.
Lee Yen Ming of PolicyStreet feels that given the dynamic market demand, it was essential to remain agile and pivot our business direction.
“Understanding pain points and refining unique value propositions are also important. In the efforts to innovate and develop products and services that address the demand, PolicyStreet has kept open channels of communication between all stakeholders. After analysing the market and the stakeholders, we’ve found that partnerships with industry giants are critical in creating a comprehensive ecosystem that helps to reduce the protection gap,” he notes.
Manish Bhai of UNO Digital shares: “When you build a business, be ready to give your all and aim for the best, but also keep an open mind knowing that the worst could happen at any given time. Not everything will go as planned, and the business environment can dramatically change without warning.”
“Secondly, I used to believe that strategy is 90 per cent execution, but I realised it is actually 99.5 per cent. This means that you must be prepared to show tangible traction and differentiated speed when producing outcomes for your stakeholders. Effort should always translate to results because that’s what you’ll be measured against,” he says.
Michele Ferrario of StashAway believes that building a company requires resilience, particularly when the environment is very volatile. In such a context, any founding team needs to have high conviction in what it’s building, and the roots of this conviction need to be very deep for every team member to keep making the sacrifices required to build something truly unique.
Cash is always king
“Also, the importance of balance sheet strength is obvious: cash is always king, but it’s even more so when markets become jittery. We have always paid strong attention to building a sustainable business. Despite the changing dynamics and volatility, we continued to remain cautious, especially when it came to marketing expenditure and resources,” Ferrario says.
Mohd Wassem, Easy Eat: “We should not stop experimenting; if something doesn’t produce the intended result, do not hesitate to kill it. This is not a cost but an insurance premium toward building the next great thing and not repeating the same mistake. The key here is learning from this process.”
Experiment and fail fast
“Don’t be over-ambitious: Entrepreneurs should prioritise liquidity overvaluation in the current investment market. If needed, take a marginal hit on valuation and pick up the available funding but do not wait for that highly lucrative offer; it may be too far in the future. No explorer could ever make it to Eldorado,” he says.
Nay Min Thu of iMyanmar Group says the proptech company underwent two unfortunate events in the recent past: the military coup and COVID-19. However, we survive by making some of the harshest decisions one could imagine.
“Fortunately, our strong brand and deep customer relationships helped us recover swiftly. Today, our revenue and profitability are back to pre-pandemic levels. We have managed to remain profitable every year since 2019. Our headcount is growing again,” he says.
“The key lessons we learned are (1) to always remain adaptable in an ever-changing environment and (2) to seize market control with your strengths. One of my favourite mottos is ‘Do whatever you can, with what you have, right where you are. Be adaptable! Don’t go the way of dinosaurs!’” he adds.
“I always take an optimistic view of life. I believe 2023 will be much better with our new business initiatives and expansion plans. The global economy might be going into recession in 2023. But my experience tells me that the best business ideas are born, and the best opportunities are seized when the market goes through a rough patch,” he comments.
The best business ideas are born, and the best opportunities are seized when the market goes through a rough patch.
Naysan Munusamy of MoneyMatch: “Our first learning in 2022 is that this is the right time to be bold and seize all opportunities to scale up. With most Southeast Asian countries opening up and China about to open up soon, there has never been a better time to join in and be part of the solution to empower these Asian businesses to grow.”
“Another key lesson we learned is to be steadfast in our thinking and processes and not to doubt ourselves. Whether in product innovation or business development, we have found it key to be steady and persistent in our actions amidst the shifting economic conditions and focus on what we do best to scale that up regionally,” Munusamy adds.
Rishi Randhawa, Enjinstarter: “A key learning we made is to have a clear roadmap and meet the milestones. What differentiates a good project from an excellent one is the ability to show that there is a plan and that we have been and are going to deliver. This builds confidence in our community and shows them that investing their time and energy in us is met in kind. The point here is that the mint is just the beginning, and what happens after makes all the difference.”
My hope for 2023 is that brands will continually challenge the status quo and continually evolve and experiment with new tools and methodologies.
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“We have seen some great examples of how brands and their customers can unite around the vision of decentralisation and how giving them some level of ownership can supercharge the entire ecosystem with vested participation,” he adds.
Rob Schimek, bolttech: “As an enabler of the wider industry, collaborating with our partners has been the key to unlocking new business opportunities while meeting more customer needs.”
The second learning is the importance of financial discipline: Being proactive about expense management has established a solid financial foundation to build a future-ready business.
“The third is about building resilience: We need the right culture to ensure a resilient business. We’ve identified ways to best empower our team to achieve their full potential while adapting to the fast-changing external environment.”
Sanjay Uppal, finbots.ai: “One of the key learnings was that startups should prioritise building a path to profitability and commit to creating value. Additionally, global thought leaders view Artificial Intelligence (AI) as the solution to challenges that have persisted with legacy methodologies across many areas of fintech, including Know Your Customer (KYC), insurance, investments, lending, and credit management. While many startups and technology companies are innovating in this space, most solutions remain in the R&D phase, with only a handful in mainstream business activities. This is changing. 2022 saw regulation start to catch up.”
Victor Lim, Kraver’s Canteen: “Customer loyalty will always be #1, particularly for the F&B industry. Ultimately, marketing is only a temporary solution; if our products don’t generate enough value to sell themselves, it will be impossible to win in the long run.
Additionally, online-only doesn’t work for the retail/F&B industry. Offline strategies must tie into the company’s overall strategy and& direction.
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“The post-COVID consumer world is an entirely different battlefield, and strategies across all industries worldwide have been disrupted over the last few years. It’s the perfect time for pioneers to pave a new way,” he believes.
Warren Leow, Inmagine Group: “Three learnings I have made in 2022 are the market changes very quickly and that keeping an eye on the future to go with disruption is essential. Secondly, be decisive in making choices, especially in volatile markets. Third, during times of significant change, one has always to show a brave face and move with conviction to inspire, push and motivate the team.”
Warren Woon, Xctuality: “Often, startups and MNCs pursue financial metrics to satisfy shareholder demands. At times, these pursuits may lead to achieving short-term goals but at the expense of fulfilling their long-term vision. Having the right goals and ample resources will enable any company to achieve its aims.”
Climate changes, disease, disasters, conflicts and wars affect how we live and the sourcing and security of much-needed resources. “Suppose we don’t find a way to live harmoniously with one another and develop a symbiotic relationship with Mother Nature. In that case, our future generations will not inherit the blue skies we once knew. No matter our economic background, we can each do our part.”
In 2023, Woon expects greater acceptance and adoption of the Metaverse and Web3. “We also like to see more innovative solutions and government-led initiatives that significantly impact our social and environmental pain points in the next three to five years.”
Xander van der Heijden, UNL: “Vision is essential to building healthy well-oiled organisations: Bringing disruptive innovation to life, especially deep-tech, which doesn’t follow the traditional SaaS startup lifecycle, calls for ambitious rockstar talent and complete alignment between teams. Your company vision is the magnet, glue, oil and filter to an organisational machine that delivers on courageous plans.”
“From investors and partners to clients and top-talent souring, networks are invaluable for the success of startups. A good quality network significantly impacts a startup’s growth at any stage. This is especially true in a down-turn market and our current challenges,” he adds.
Yat Siu, Animoca Brands: “Many of the failures in the decentralised economy as we know it today resulted from too much centralisation. The dishonest and greed-driven behaviour that caused so many problems for crypto during 2022 must be counterbalanced by a desire to drive positive change.”
True decentralisation and transparency would have prevented much of the damage caused by the FTX crisis
A key learning is that true decentralisation and transparency would have prevented much of the damage caused by the FTX crisis; more prevalent self-custody would have secured our digital assets against many unnecessary losses, he adds.
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“We need to resist the urge to view influential elites as saviours. The FTX crisis was made much worse because many people viewed its founder Sam Bankman-Fried and his companies as the rescuers of the crypto industry. But the strength of crypto has absolutely nothing to do with reliance on famous personalities, which is an old-fashioned Web2 mode of thinking,” he remarks.
Ying Cong Seah, Glints: “One of our key learnings in 2022 is that unit economics and operating efficiency have become the name of the game. In an era of rising interest rates, investors have many more options and will increasingly demand a higher hurdle rate for their investments. Internally, this means taking a cold hard look at the fundamentals of our business model, reining in more uncertain and good-to-have expenses, and beaming a laser focus on unit economics and business efficiencies.”
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The labour market is a mixed picture: “As a mirror of the wider funding environment, the labour markets, especially for tech talent, are coming off a breathtaking multi-year crunch. We began 2022 catching up on exploding tech salaries but are now ending it with a rise in inbound applications from tech workers hit by layoffs and hiring freezes,” he comments.
Zelia Leong, PraisePal: “The impact of giving personal recognition in work and relationships has been phenomenal. It’s surprising how small acts of appreciation can boost someone’s day or even get them out of a dark place mentally. Be sincere and generous with giving recognition when it’s due.”
A key leaning is that fancy titles might only sometimes mean true substance. “When faced with a new challenge, my first reaction was always to look ‘outwards’ and find someone beyond our company who could help. However, I learned (painfully) that even if someone has a fancy title on LinkedIn, they still need to be capable of rolling up their sleeves to work on actual problem-solving,” Leong adds.
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