As ASEAN countries recommitted to the Regional Comprehensive Economic Partnership (RCEP), our contributors were quick to share its impact on SMEs and the startups in the region.

As we draw closer to the end of the year, the battle against COVID has intensified and all ‘online-only’ life has given rise to other challenges like data management, customer retention, the traditional role of sales guys, etc. Thankfully our contributors have shared some of their tips on how to handle these.

Read on for a full lowdown!

Impact of ASEAN’s trade agreement

Leveraging new tech to propel SME trade in ASEAN  by Luc Hovhannessian, Managing Director, Asia Pacific, Finastra

“One positive for trade in ASEAN is that amidst the global uncertainty, the Association of Southeast Asian Nations (ASEAN) and its major trading partner countries have reiterated their commitment to the Regional Comprehensive Economic Partnership (RCEP).

Despite their contributions and importance to the region’s economy, SMEs continue to face significant barriers that prevent them from being adequately represented in international trade.”

How a multilateral agreement will have important ramifications for Asia’s trade fraud landscape by Jesse Chenard, CEO at MonetaGo

“The establishment of one of the largest free trade deals in history– the Regional Comprehensive Economic Partnership (RCEP), marks a major step towards a seamless trade landscape in Asia Pacific, akin to the European Union.

With RCEP posed to bring Asia closer to becoming a coherent trading zone, we will see a flurry of activity in trade across the region. While the economic benefits of this are inarguable, another direct consequence of an uptick in activity is an increase in fraudulent activity.”

Role of regulation

Why neo banks are better than digital banks by Vincent Fernando, founder and CEO, Zero One Partners

“Banking has been one of the more slow-moving industries for disruption due to regulation and the type of people historically selected for leadership roles (‘rule-breaker’ personalities aren’t typically favoured to lead banks!). This is an extremely important distinction when one considers how fintech will transform banking in the coming years. ‘Digital banking’ is a widely used term with wildly different definitions.

Traditional banks launch slick mobile apps with a cool new brand and call it digital banking. New online-only banks emerge holding bank licenses and funky names but offer mostly traditional banking services called digital banking.”

Why only regulation can solve cryptocurrency’s perception problem by Vanessa Koh, CEO of Fincy Singapore

“When it comes down to it, the average person just does not trust cryptocurrency enough to integrate it into their lifestyle. And this is by no means an unfair risk assessment. On the contrary, people trust fiat currencies because their value is backed by the issuing authority. Five dollars is five dollars because the government says so.”

Continue to battle the COVID effect

How data can help the global fight against COVID-19 by Geoff Soon, Managing Director, South Asia at Snowflake

“Every day, new data sets become available for free to help ensure a safe society in the months and years ahead after we gain control of COVID-19 and others like it.

However, these data and solution providers are asking their own questions to make this happen: How do we enable the consumers of these data sets, and at what pace? What data security measures do we need to take? What about data governance and data privacy? How much information can we share and how should we do that?”

Paving the way for capital markets in the post-COVID-19 era by Julian Svirsky, CEO of UVAS.COM

“Many companies were struggling to access capital even pre-COVID-19 despite interest rates being at historically record lows globally, meaning that this problem wasn’t triggered, but only exacerbated by the pandemic.

One of the main hurdles standing between companies and investors is their inability to access capital available via public offerings and listing on stock exchanges due to incredibly high listing and maintenance fees, which only the largest enterprises can currently afford.”

How startups can consistently acquire new customers post-COVID-19 by angel investor, Marcus Ho

“Over the last few months, the global crisis has virtually wiped out supply chains, thus crippling most startups. Most startups rely on the latest technology to streamline their operations, and any hitches in supply chains affect operations.

While things are tight in the startups’ business landscape, this also presents an opportunity to rethink business models and find ways to survive. There seems to be no respite in sight even as countries start reopening cautiously.

If you own a startup or you plan to launch one in this environment, there are some factors to consider to acquire new customers. Take a look.”

The startup world

Why Seoul is emerging as Asia’s hottest startup hub by Nathan Millard, founder G3 Partners

“Startupblink ranked the city 21st overall in 2020, up a staggering nine spots from the previous year.

And Seoul might only be getting started as the city aims to become one of the world’s top five startup hubs, and it’s backing that ambition with over US$ 1.7 billion through 2022.

Seoul has clearly become venture capital pay dirt. But why?”

From 30 to 400: TNG Fintech Group founder and CEO Alex Kong shares how to grow your human capital by Billy Yuen, founder of StackTrek

“This week, I chat with Alex Kong, founder and CEO of TNG FinTech Group, Inc – a Hong-Kong based company that provides next-generation financial services to 1.2 billion unbanked individuals throughout Asia.

Kong incorporated the company in 2012 but launched its services in November 2015. At that time they were less than 30 people, and today they have close to 400 employees across 14 countries.”

The only guide to being a remote-friendly salesman every startup needs by Edward Senju, Regional CEO at Sansan Inc

“If there is one function that has been fairly challenged due to the pandemic, it is sales. A recent global Saleshacker report of sales workforce reveals that a majority of respondents are closing approximately 30 per cent lower deals due to the pandemic.

Considering social distancing will be here to stay for a long time and the fact that there is no playbook to do new business in the current times, business managers are now trying to figure out how to attract business interest in the remote age.”

P.S. Don’t forget to take note of the newly launched Contributor badge that will help you spot our regular contributors easily.

Better still, if you want to earn one, share your opinions or ideas and earn a byline by submitting a post.

The post From our community: Remote-friendly salesmanship, neo banking, RCEP trade agreement and more… appeared first on e27.

COVID-19 wreaked havoc on practically every economy, worldwide. Countries have seen dramatic GDP declines, leaving their businesses with turnover and margin erosion and in desperate need of streamlined access to capital. This situation is being tackled by generous cash injections from central banks, which are largely allocating money “printed out” for this very occasion.

In this century, central banks have ubiquitously resorted to this method, as a universal economic problem cure-all, yet it can hardly be considered a viable long term solution. In fact, numerous examples in history demonstrated that similar approaches can lead to a lack of trust in the national currency and the eventual rise of inflation which at times turned into hyperinflation.

Many companies were struggling to access capital even pre-COVID-19 despite interest rates being at historically record lows globally, meaning that this problem wasn’t triggered, but only exacerbated by the pandemic.

One of the main hurdles standing between companies and investors is their inability to access capital available via public offerings and listing on stock exchanges due to incredibly high listing and maintenance fees, which only the largest enterprises can currently afford.

At the same time, institutional investors who prefer liquid assets to private equity or retail investors who could provide the capital needed by companies, are having a hard time diversifying into alternative assets, which for the most part remain within the purview of high net worth investors and funds. 

Also Read: How blockchain enabled startups to raise capital

Regulatory stalemate

The described stalemate is largely caused by regulators who forbid certain assets to be sold to retail or less sophisticated investors unless very stringent compliance requirements and prospectus filings are met. Nonetheless, while their intentions are good, they don’t prevent many of the frauds which manage to pass these hurdles such as backdoor listing scams of accounting scandals, as they are typically conducted by well-funded players.

Also, adhering to the stringent requirements consumes substantial amounts of time as well as capital and is partially responsible for the high fees of going public, stifling economic activity. Most companies naturally prefer dealing with institutional and professional investors, which is a cheaper route and a less time-consuming option for them.

The dilemma here might resemble the COVID-19 situation – if the spread is exponential, do lockdowns that harm business, and their owners, as well as employee livelihoods, outweigh doing nothing?

Meanwhile, retail investors are eager to generate passive income through investing which is evident in their growing participation in very risky assets such as options, and especially unhedged options. Not content with large stock volatility, many trade leveraged derivatives that can move in one day more than more traditional assets move in a year, which per current regulatory framework is allowed, yet it’s near impossible for them to participate in smaller company investments.

This kind of dissonance is tough to rationalise if investor protection is the desired outcome.

Inevitable change

One of the main inefficiencies of the current regulatory landscape imposed on stock exchanges is a need to settle trades via Central Securities Depositories (CSD). Presently, there are only 23 CSDs across the whole of EEA, with many of them being country-specific.

This oligopolistic and in some markets monopolistic situation in the market creates fertile ground for extreme inefficiency, human error, and legacy systems with old APIs in the exchanges post-trade process resulting in outrageous settlement and custody fees, which exchanges typically pass onto the issuers. 

Luckily, some regulators seem to be getting up to speed with the latest technological advancements and are working to build an environment where streamlined capital market infrastructures can thrive. The US SEC recently allowed Alternative Trading Systems (ATS) to take part in the settlement process, European Commission proposed a regulation where Multilateral Trading Facilities (MTF) can fully take over the CSD role, and in Singapore, the regulator now allows for blockchain settlement without a clearing license. 

Also Read: How data can help the global fight against COVID-19

Capital markets in less than five years

History has taught us that crisis accelerates progress and innovation and we think that this time is no different, the current situation is likely to fast-track what are currently outdated practices in an important global industry. We believe that in less than five years’ time, we could witness a completely reinvented capital markets process and infrastructure.

Should the recent trend continue, the future will feature democratised capital markets with many more exchanges run by banks/startups that will trade currently illiquid and opaque assets that now trade over the counter (OTC) or don’t trade at all. Such systems will mainly benefit SMEs and individual investors, as opposed to a plethora of brokers and middlemen of today charging high fees for inefficiency and little added value. 

With all of this in mind, our team built a platform embodying the upcoming change. It was designed to onboard customers globally and allows them to trade via an intuitive widget-based user interface, while also enabling institutional access via APIs.  We aim to democratise capital markets because with our improved exchange, OPEX is reduced by 90-95 per cent and these fees can be passed on to a whole greenfield of new potential issuers.

Even though our tech has been fully ready to launch for some time, we have faced and are still struggling with significant challenges on the regulatory front. Despite the considerable investment banking and hedge fund experience of our core team members, we don’t have an extensive board of directors, and former colleague staffers regulators are used to from current licensees, as we are still a startup.

This said we hope that we will soon overcome these challenges, as our lean operation, together with our world-leading tech, brings a much-needed industry shift that can completely change the way investors think about investing and companies raise funds.

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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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MDI Ventures, the VC arm of Indonesia’s Telkom Group, announced today it has partnered with European VC firm Finch Capital to launch a new early-stage investment fund.

As per a press note, the Arise fund will be run under a joint venture and seeks to invest in Indonesia-focused tech startups in Southeast Asia.

The newly-launched fund has a target of US$40 million in assets under management, and aims to support the next generation of regional founders to emerge from the current economic crisis.

The average investment ticket size will be US$250,000 to US$3 million for startups in the post-seed to Series A range.

Arise claims it differentiates itself from other funds by actively working with portfolio companies to achieve product-market fit. Leveraging on the global portfolio of both firms, the fund claims it would be able to advise companies with effective go-to-market strategies.

The fund seeks to provide portfolio companies with a clear roadmap to validate, grow, scale, and eventually exit.

The launch of the fund generates optimism for early-stage tech companies in ASEAN. As the pandemic has roiled markets worldwide, tech startups in the region have experienced a tangible funding drought.

A recent report by Cento Ventures shows that local tech investing fell to US$5.6 billion in 2020, a 13 per cent drop compared to the same period in 2019.

Meanwhile, investors that have remained active continue to fund companies at the Series A stage and beyond. This results in startups in the pre-Series A stage struggling to secure funding.

Also Read: Why COVID-19 isn’t slowing down this VC from helping businesses scale

According to reports, overall pre-Series A funding saw a 20 per cent plunge in 2020, coming after a plateau in the last few years.

While the region was once known as a hotbed for seed investing, early-stage funding has stagnated in recent years. The first generation of successful seed investors has gone on to raise larger funds and is now shying away from early-stage deals.

Meanwhile, the next generation of high-quality founders is emerging. Local entrepreneurs are still building startups that tackle complex problems that have the potential to become unicorns.

“A disproportionate allocation of capital makes it even more challenging for promising early-stage companies to secure investments during the region’s economic slowdown,” explained Aldi Adrian Hartanto, Partner at Arise.

“Many of these seed startups already show great early traction, but they have yet to really get their names out there and require further support in accelerating their product-market fit in order to raise proper Series A rounds,” he added.

Ririek Adriansyah, CEO at Telkom Group, said: “This is a key component of how we build the strongest national economy possible in Indonesia and establish a truly modernised state-owned business sector.”

According to Hans De Back, Managing Partner at Finch Capital, Indonesia is already ASEAN’s largest economy but it is now also poised to become the region’s largest tech hub by 2025. “We expect to see the birth of many tech companies riding a new ‘digital wave.’ Arise is ready to support these companies.”

Also Read: Investors will shy away from startups that have no exit plans

“Startups backed by Arise should ideally go on to receive investment from Centauri Fund at the Series A stage, MDI Ventures at Series B and later stages, and finally see a meaningful exit via acquisition with Telkom Group as one of the potential buyers or IPO,” Hartanto concluded.

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Image Credit: Arise

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Singapore-registered Hi-So Co., which runs a food delivery and online shopping platform for restaurant foods, groceries and daily necessities in Myanmar, has bagged a new round of equity investment from a clutch of investors based in Japan, Singapore and Malaysia.

As many as seven investors participated in the round, including Kotaro Tamura, an Asia Fellow at the Milken Institute and a former Senator of Japan.

The fresh investment, which was closed in October 2020, takes place almost 10 months after Hi-So announced a “six-digit funding” from several unnamed individual investors in January.

Also Read: Setting new rules for the food delivery industry in a post-pandemic world

“Unfortunately, the details of the amount raised in this round cannot be disclosed. We just want to mention that this is our second funding this year and we look to continue our growth,” Kenta Takada, Founder and CEO of
Hi-So, told e27.

“We will utilise the funds to carry out various marketing activities and app renovations to further increase the number of users and partner stores,” he added.

Launched in October 2019 by Takada, originally from Japan, Hi-So allows users to order any items from its Hi-So Mall app (available on iOS and Android). Users can also place orders through its website, over the phone, or Facebook.

Hi- So was originally conceived in December 2018 as an on-demand delivery service using bicycles. It added a product purchasing function to its service in October 2019.

Since the launch of the food delivery and online shopping service, the firm claims the number of its monthly deliveries has grown by two-digit on a average. Currently, there are more than 1,200 partner stores on the Hi-So app.

Takada added that since its launch, it has steadily expanded the number of users and partner stores.

Hi-So’s service is currently available only in Yangon, and it plans to expand into other regions in the future.

The company is primarily competing with Yangon Door 2 Door and Food2U in the food delivery sector in Myanmar.

Also Read: Understanding the economics of food delivery platforms

According to Takada, COVID-19 made a huge impact on Myanmar society, and many people are still forced to stay home. “In this situation, as an essential service provider of food, dietary and household products delivery, we have supported the livelihoods of many people affected by the pandemic,” noted Takada.

“Although there is no sign of the end of the COVID-19 crisis, we will continue to provide services that will enrich the lives of people in Myanmar and contribute to the development of Myanmar through the expansion of our business,” he shared.

Hi-So Co. is a spin-off of Hi-So Mall, an e-commerce platform owned by Myanmar’s Htun Khaing International, which was also founded by Takada.

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Image Credit: Hi-So

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The art of salesmanship is the absence of salesmanship I have heard time and again. The truth is that if you really believe you can help your customer, you are poised to become a superb sales or business person by establishing yourself as a problem-solver, rather than just a person trying to sell something. Now is perhaps the time to test this.

If there is one function that has been fairly challenged due to the pandemic, it is sales. A recent global Saleshacker report of sales workforce reveals that a majority of respondents are closing approximately 30 per cent lower deals due to the pandemic.

The fuelling pump behind any business, the sales teams, have typically relied heavily on the face to face meetings, industry conferences, and customer site visits for engaging clients and prospects. But due to the trend of remote work, business managers are rethinking the way they are doing new business and adopting virtual platforms instead.

Broadly, COVID-19 has pushed the world to adopt remote working protocols especially the traditional industries. Even though video conferencing and instant messaging are allowing for business continuity, mental fatigue has crept in and several challenges have emerged.

Developing trust and a working relationship has always been an important part of kicking off any new business engagement. Mostly the executives have depended on physical interactions or face to face meetings to develop a camaraderie.

Considering social distancing will be here to stay for a long time and the fact that there is no playbook to do new business in the current times, business managers are now trying to figure out how to attract business interest in the remote age.

Also Read: Nektar.ai raises US$2.15M to build a sales collaboration platform for B2B firms

There needs to be a way to foster a stronger bond at the very beginning of the conversations. Physical meetings coupled with digital outreach shall create a hybrid sales model that will set the course for the future.

Closer to home just like the rest of the world, the sales bell hasn’t been ringing enough and continues to lack momentum. The country’s open and trade-dependent economy has been hit hard following lockdown measures around the world aimed at slowing the spread of the coronavirus.

Recently, Singapore’s government allocated another S$8 billion (US$5.8 billion) to support the economy that has come under pressure from the coronavirus pandemic.

Singapore retail sales fell 8.5 per cent in July as COVID-19 continues to pummel certain sectors. While the retail, travel, and hospitality sectors have suffered heavily owing to coronavirus induced restrictions, the technology companies are able to sell virtually. Despite this, it has been a challenging time, especially for the B2B sector.

They are having to devise outreach programmes that replace their traditional methods to keep their sales pipeline running. What intensifies the problem is the fact that the prospects have been postponing decision-making and adopting a wait-and-watch approach.

Thereby, a key question facing decision-makers in Singapore and beyond is how to sell successfully during the current crisis and as we head towards the road to recovery?

There have been cheerleaders for a remote selling model. According to Deloitte, the shift towards virtual sales will not only safeguard short term revenues and profit but also move companies beyond flattening the curve and enable long-term profitable growth.

Also Read: Sell a vision and not a product

Here are some easily digestible and applicable tips:

You need a clear plan of action

If you do not have a vision of where you want to go and how chances of getting there are minute. You need concrete points for planning and realistic targets to be able to overcome the tide. Expect a decrease in conversions and longer sales cycles. It is a tough game so ensure you drive your team’s motivation and commitment.

Looking inwards will help

Generally, there are two main ways of increasing the pipeline – generating new leads from external sources, and secondly, scouting for them internally within your existing company connections. When external opportunities dwindle as would likely be the case during these times, one key direction is looking inwards and executing a lead/opportunity revival campaign. To do this you need to digitise, centralise and visualise your past connections, be it business cards or referrals, analyse this data to chart categories, work closely with marketing teams for targeted nurture campaigns, and drive thought leadership and education through tools like webinars.

Virtual events and tools will set you up for the future

Virtual exhibitions with augmented reality have been grabbing a lot of eyeballs lately. In the circumstance that people cannot touch, feel, or experience the product or service physically, virtual reality experiences are helping companies keep their audience engaged through an alternate channel of interactivity. Creating such experiences for your customers can add a wow factor to your brand. As business professionals continue to adapt to video conferences, virtual exhibitions, and other digital ways of interacting, they are also adopting new-age networking tools like virtual business cards. QR code scanning is not only being used for safe entry check-ins in Singapore but also as a means of exchanging contact details during webinars. In this virtual age, foresee backup plans and shift to a phone call in case there are unanticipated connectivity problems, have pre-recorded demos, and extra communication lines.

Have the right mindset to sell remotely

Your existing customers expect you to reach out and be there for them during these tough times. Likewise, for new sales prospects, there might be requirements that you are able to satisfy remotely, thereby this needs to become the new reality. The trick is to get comfortable selling virtually. If your sales teams are awkward in their sales pitches and do not showcase confidence, your potential customers would be awkward and less trusting too. You need to keep your team and yourself at the forefront of your prospects/leads’ minds.

Raise the online profiles of sales and customer success teams

With everyone going online in these times, how do you further stand out in the digital crowd? You need a stronger digital profile. The key is to strengthen your voice when you sell. Salespeople should be visible in relevant platforms and online communities where your target market would likely be looking. To get validation of how a salesperson is doing, he or she can run the LinkedIn Social Selling Index tool to learn about their score which is measured out of 100. Beyond LinkedIn, make sure you are visible on other web platforms.

Be close to the salesforce and intensify the drumbeat

Are you organising monthly sales meetings? Make them weekly. Are you having weekly 1-on-1s with your sales reps? Turn them into short daily check-ins. Everybody will be outside of their comfort zone, so as a sales or business manager, you will have to act as a coach now more than ever.

Also Read: iSeller secures Series A from Mandiri, Openspace to expand its omni-channel sales SaaS platform

As we move forward, face-to-face interactions will be a mainstay of many industries in which there is often a costly and lengthy selling process. Even the Zoom CEO has been recently quoted as saying that the future of work is a hybrid model, not a completely remote one since that would be unsustainable.

The business executives must strive to liberate themselves from the pandemic’s trap, the key for which lies within cloud adoption and digital engagement. It is important to remember that the investors will be watching out for companies that are retooling their sales efforts to meet the COVID-19 challenges.

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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

Image credit: LinkedIn Sales Navigator on Unsplash

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Maarten Hemmes describes himself as an entrepreneur, investor, lawyer, and startup advisor. Hemmers brought over 10 years of experience in building businesses from the ground up in Europe, the US, and Asia, and now settles in Singapore focussing on running HH investments VC, an HH family office’s VC arm.

Upon his arrival in Singapore in 2014, Hemmes founded a logistics SaaS company CarPal. “Looking back, I was actively running CarPal where we raised S$4.5 million (US$3.3 million) from local investors and along the way started to invest myself with HH in early stage ventures. Now, HH is my main focus. We have invested in Southeast Asian companies such as Oddle, Drive lah, and WhyQ,” Hemmers explains.

With HH Investments, Hemmes adds that the VC is currently working on setting up a Growth Fund in Singapore. “The goal is to provide follow-on funding for the startups that we first funded in the Seed or Pre-Series A-stages. So we have been tracking these companies for several years and want to make sure that we can give them the (financial) backing that they need,” he says.

Infusing history into opinions

With his vast experience in the region’s tech and startup scene, writing and contributing his thoughts about the region becomes a natural extension of his journey.

One of the mediums where he writes to reach out to readers of the region is with e27’s contributor platform. “I typically write opinion pieces with a slight historical angle. For e27, I have been writing mainly about the lessons learned in the startup ecosystem from the perspective of an investor,” says Hemmes.

The lesson learned is where Hemmes like to focus in his writings, which is also shown in his writing titled: “The architect, the sunbird or the integrator: What kind of entrepreneur are you?”. Here, Hemmes also emphasises the historical background of protectionism and open society, and the kind of leadership needed to answer the challenges of the time.

Also Read: The architect, the sunbird or the integrator: What kind of entrepreneur are you?

A way to broaden exposure

Through his contributions to e27, Hemmes admits that he added a lot of new relations to his network as people found him and HH through the platform.

“I think contributing to e27 is a great way for me to broaden my exposure. And it’s a good exposure for HH Investments as well,” he elaborates.

As the Contributor Programme believes that each thought shared are a form of thought leadership exercise, Hemmes also weighs in on that.

“I think writing helps me in becoming a thought leader by refining it, which then leads to the next topic or better or faster execution. I’m not afraid to throw my opinion out there, even though I know I might need to refine my conclusions,” he points out.

All about the journey

Furthermore, on what makes a thought leader, Hemmes highlights the ability to cover the thinking and execution.

“To me, it’s the process of shaping a thesis and execution strategy within a certain field while sharing it (the process) with others. The end goal is important (as it brings focus) but it shouldn’t be about ‘look it did this, or I did that’,” he says

“For me, I want people to understand the journey and not so much the end result. By the time I personally get close to the goal I probably start to lose interest and have to challenge myself with a new goal. This is what I’ve been doing for the past 20 years or so,” he continues.

His thinking is translated into how HH Investments draw and advance towards its goal. “Our goal is to support 100 companies in the next 10 years as I always start by setting practical but challenging goals in my (professional) life. From there I work backward and try to solve all the problems I meet along the way,” Hemmes says.

Also Read: Podcast: Entrepreneurship is a marathon, not a sprint

“What I usually do is I read about problems and solutions in unrelated fields, find inspiration, and then try to apply them in the field or problem that I’m currently working in,” Hemmes stresses.

Hemmes then continues that it’s crucial to have focus once we set our mind to do something to be able to crack it.“Distraction is the enemy of any thought leader as you will never be able to get to the bottom of a problem and simply end up with a lot of unrefined thoughts and little execution.”

Last but not least, Hemmes encourages having a curious mind, which also applies to aspiring contributors.

“Make sure you write about topics that have a direct relationship with something you are working on in your (personal) life and dare to draw conclusions. Writing about that process is the key to a great article,” he concludes.

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Image Credit: Maarten Hemmes

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Tel Aviv, Seattle … Seoul?

South Korea’s capital — perhaps better known for corporate behemoths such as Samsung and Hyundai– is increasingly brought up in conversations about the world’s most promising startup hubs.

And perhaps it should. Quietly but surely, the bustling East Asian metropolis of 11 million people has built one of the world’s most dynamic startup ecosystems. According to Startup Genome’s authoritative 2020 Global Startup Ecosystem Report, the city placed 20th overall with an ecosystem valued at US$39 billion, nearly quadrupling the global average and early stage funding of US$1 billion.

Startupblink ranked the city 21st overall in 2020, up a staggering nine spots from the previous year.

And Seoul might only be getting started as the city aims to become one of the world’s top five startup hubs, and it’s backing that ambition with over US$ 1.7 billion through 2022.

Seoul has clearly become venture capital pay dirt. But why?

Seoul: where unicorns are born

If there’s a sign that your startup ecosystem has arrived, it’s unicorn production.

As of November 2020, South Korea had no fewer than 12 active unicorns, good enough for sixth worldwide and nearly double that of widely acknowledged tech giant Israel.

The latest company to join the list was ride-sharing company Socar, which achieved unicorn status in October on the back of US$ 52.2 million from local private equity funds SG Private Equity and Songhyun Investment.

Also Read: How South Korean startup Aqua Development is mimicking aquaculture for sustainability

Socar is the first South Korean mobility startup to go unicorn. Previous South Korean companies to achieve unicorn status include e-commerce giant Coupang, the so-called Amazon of South Korea that is valued at US$9 billion; fintech pioneer Viva Republic, the developer of popular P2P mobile payment service Toss; and biotech firm Aprogen, developer of bio-similar products.

Indeed, when you take into consideration former unicorns that have since exited through IPOs or M&A, South Korea has produced an impressive 20 unicorns, a number that compares favourably with any country not named the US or China.

The best-known ex-unicorn is Woowa Brothers, the operators of South Korea’s largest food delivery service Baemin, which was acquired by Berlin-based company Delivery Hero in a blockbuster US$4 billion deal last year.

The Baemin acquisition was a wakeup call to investors, entrepreneurs and journalists worldwide that one ignored Seoul at their own peril. At TechCrunch, Danny Crichton wrote at the time:

“While the country remains dominated by its chaebol tech conglomerates — none more important than Samsung — it’s the country’s startup and culture industries that are driving dynamism in this economy. And with money flooding out of the country’s pension funds into the startup world (both locally and internationally), even more opportunities await entrepreneurs willing to slough off traditional big corporate career paths and take the startup route.”

The second venture boom: letting the money roam free

Driving the rise in unicorn startups – and the growing dynamism of Seoul’s startup scene, more generally – is a much improved financial scene that no longer punishes risk-takers. Describing the bad old days, Andy Salmon writes at the Asia Times:

“Banks customarily lent to giant businesses with plentiful collateral; entrepreneurs who lacked such major assets were forced to take on perilous liabilities, and early-generation Korean venture capital firms were not much better.”

Also Read: South Korea’s thriving startup ecosystem: How “aggressive” VC investment, gender diversity play a role in it

But no longer. Startups now have access to money, both from local VCs and international investors – the latter playing an especially key role in unicorn creation. Even South Korea’s traditional corporate giants such as Samsung have gotten into the act, creating internal incubators to nurture and support promising startups.

Last year, new venture investment in South Korea hit record numbers, posting US$2.3 billion in the first three quarters alone. And those numbers may soon spike even higher on the back of recent regulatory changes that allow major corporations to establish venture capital funds, freeing them to invest in startups directly.

The government takes an active role

In addition to regulatory changes, the government is aggressively cultivating Seoul’s startup scene as well. Startup Genome CEO Jean-Francois Gauthier told TNW earlier this year:

“The national government has multiplied policies to help it grow. Everyone knows that’s important but no one acts as boldly as the national government and the Seoul Metropolitan Government to grow startups right now. The mayor recently announced a massive investment to become top five in the world — a very ambitious goal.”

For starters, Seoul Metropolitan Government has launched a KRW1.9 trillion (about US$1.6 billion) initiative to become one of the world’s top five startup cities. The city is actively helping local startups not only overcome the COVID-19 pandemic but to use it as an opportunity to prosper.

Also Read: How South Korea’s smart city startups curbed the spread of COVID-19

For example, the city is providing US$54 million in support this year to promising startups, including support for labour costs of “10,000 technological professionals” of promising startups.

At the national level, the country has earmarked US$62 billion for a “Digital New Deal” that will revolutionise the information landscape, while programmes such as the Tech Incubator Program for Start-ups (TIPS) make South Korea a rising startup hub according to the World Economic Forum:

“South Korea’s economy is primarily driven by large conglomerates like Samsung and LG, called chaebols, which have acknowledged the importance of startups as a driver of their continued economic success. TIPS (Tech Incubator Program for Start-ups), a state-led incubation programme, discovers and nurtures promising start-ups by selectively matching them with government funding. As the government takes no equity and provides these funds without any strings attached, start-ups can aim high without having to worry about potential failure – and this has been a game-changer, especially when considering the risk averseness of South Korean society.”

Meanwhile, South Korea’s highly successful high-tech response to the COVID-19 pandemic is winning global praise. South Korea’s government is pledging to nurture the startup sector as a leader of the country’s post-coronavirus society, and US startups are now looking to South Korea as the country wins its war on COVID.

To be sure, South Korea’s big conglomerates will continue to play an outsized role in the country’s economy. But in Seoul, they no longer will be the only game in town.

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We, humans, are social creatures. We crave interactions. 

The mirror neurons within our brain allow us to connect unconsciously. For the majority of us, we are most comfortable when we connect and share our emotions. 

Human psychology plays a pivotal role in shaping retail experiences. We have realised that retail experiences do not centre around purchasing goods.

Addressing the need for people to connect when retailing, shopping malls were created in the late 1950s to bring people together.

Amenities such as indoor waterfalls and gardens serve to increase the engagement of shoppers. By enticing them to remain within the mall longer, they are more likely to increase their spending. 

While we have cracked the code for creating an engaging offline shopping experience, its online counterpart is proving a tougher nut to crack within the region.

Popularity of interactive e-commerce in China

However, one does not have to look far for successful examples of the rise in interactive e-commerce.

Also Read: Is China the new global e-commerce leader?

Led by Pinduoduo’s rapid rise since 2015, Chinese e-commerce players have started to embrace the model due to its lower user acquisition costs and high networking effects to grow their customer base.

Pinduoduo claims it has over 731 million active users on its platform. Leveraging on the universal usage of WeChat within the Mainland, the e-commerce giant has been able to incorporate it within its platform to increase engagements between customers.

By introducing gamification elements such as Candy Crush, Pinduoduo further promotes user engagement and interactions to offer customers a different online shopping experience.

“Our interactive features were welcomed by our users. Previously, the e-commerce shopping experience was solitary where the user simply typed in what they wanted into the search bar,” Frank Di, Director of International Corporate Affairs for Pinduoduo, shared in an interview with e27.

Di shared that the company has adopted a push-based model rather than a search-based one where users browse through items rather than search for a specific product.

Why creating an interactive experience is key

Pinduoduo had recognised that games play a pivotal role in improving user experience when one visits its platform. The interactive nature of games increases engagement and entices users to remain on the platform for longer periods.

Also Read: 5 reasons to work interactive video into your marketing strategy

A popular game asks the user to choose a specific tree to water regularly. To supply it with water, users need to buy from the app, share offers or invite their friends to join. When the virtual tree matures, the user wins a box of real fruits from their tree.

Through this, user-app interaction increased and new users are acquired organically through existing customers.

Importance of infrastructure

However, the rise of Pinduoduo and the rapid growth of the e-commerce industry should be attributed to pioneers within the field too, Di remarked.

Spearheaded by Alibaba in 2003, the first wave of e-commerce companies within China led to the development of the appropriate infrastructure to support online commerce.

From logistics networks being set up across the country to online payment solutions, these services form an important cog within the e-commerce industry.

He also shared that rising smartphone penetration within the nation is further fuelling this growth.

According to a Deloitte report in 2018, China ranks first globally in smartphone ownership, with a staggering 96 per cent of the population owning one.

This has led to a shift in the daily behaviours of the population. Gone were the days where computers represented the sole access to the internet.

Today, we have the internet and its capabilities at our fingertips.

The convenience of accessing a smartphone has led to what Di terms, “more fragmented time to browse our phones.”

Citing the example of one browsing through their phone while waiting for the subway, he remarked this was the key behind Pinduoduo’s decision to adopt a push-based model.

User demographics

Much has been discussed about Pinduoduo’s customer demographics and how the majority of their users reside in lower-tier cities in China. However, Di was quick to debunk the myth that Pinduoduo deliberately targets these rural cities.

“Our user distributions merely mirrors the population distribution in China. We want Pinduoduo to benefit all users. Therefore, we serve all kinds of users across China and the majority of them reside in the lower-tier cities,” Di shared.

However, he remarked that there were factors that have led to the favourable growth of interactive e-commerce within these cities.

Firstly, those residing in these lower-tier cities lead a more sedentary lifestyle compared to their Tier 1 counterparts in Beijing or Shanghai. This results in more disposable time for them to browse through e-commerce platforms such as Pinduoduo.

Secondly, the offline options in these rural cities are less desirable than Tier 1 cities. This results in a shift to online commerce as the primary option for purchasing quality goods. 

Influence of live streaming

While numerous e-commerce platforms in the region have introduced live streaming features onto their platforms, Pinduoduo embraces it on a different scale.

For its recent Singles Day shopping event, the e-commerce company partnered with a prominent local television company to host a gala night featuring performances from various Chinese superstars on their platform.

“Our users could watch the gala on the app and at the same time, purchase products on our platform,” Di shared.

 Also Read: 3 considerations to ensure viewer satisfaction with live streaming events

Given the importance of establishing trust within a customer’s retail journey, Di opined that live-streaming will represent the new normal in e-commerce.

“Mainly because of the nature of live-streaming, it’s easier for users to better understand a product. From a merchant perspective, it’s going to help the merchants to build trust with the users,” he said.

Will Southeast Asia be ready?

While the concept of social commerce has been widely adopted by e-commerce firms in Southeast Asia, interactive e-commerce remains nascent within the region.

This can be attributed to the lack of a widely-used social media platform where these interactions can occur. Unlike in China, where over 90 per cent of the population is on WeChat, users within the region have not gravitated towards a dominant social media platform.

This has resulted in e-commerce players facing difficulties integrating platforms within the app to capture the benefits of interactive e-commerce.

Although one can certainly argue that China, with its homogenous demographic and lack of competitors for WeChat, represents an unfair ecosystem for a diverse region like Southeast Asia to emulate, there have been inroads made.

Twitter has emerged as a possible platform to unite the region given its ease of posting short-form content.

Tokopedia utilised the social media platform for its #TokopediaWIB show, which had BTS fans across Indonesia interacting with the boyband through exclusive content and interviews.

According to Twitter’s recently released Global mCommerce 3.0 study, Shopee Live received 120 million views in Indonesia for its live streaming event in April, marking a new record for the brand.

Remarking that the future of e-commerce would centre around interactivity, Di suggested firms should focus on creating an engaging user experience to capture and retain users.

“Most importantly, one needs to focus on the user experience. Users always want to have deals with some element of interactive experience to it. Therefore, gamification features should be released to better serve the needs of the users,” he concluded.

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Image Credit: Pinduoduo

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Pickupp, a Hong Kong-based logistics startup, has secured an undisclosed sum in Series A investment from a clutch of investors.

The names include Vision+ Capital, Alibaba Entrepreneurs Fund, Cyberport Macro Fund, Swire Properties New Ventures and SparkLabs Taipei.

Pickupp will utilise the funds to accelerate its expansion in Southeast Asia, with an aim to serve 10 major markets within the next five years.

As per a press note, the startup will also seek to diversify its product portfolio and offerings, focusing on the retail and e-commerce industries.

Also Read: In October, logistics tech startups continued to gain investors’ attention as the world struggled through a pandemic

Founded in December 2016, Pickupp began providing customised last-mile delivery services for bulk and ad-hoc deliveries in mid-2017. It has since expanded rapidly and is now operating in Hong Kong, Singapore, Malaysia and Taiwan.

Pickupp claims it currently serves more than 50,000 users and businesses across Asia, including companies such as Charles & Keith.

“Pickupp is redefining logistics with a data-driven approach. Our technology, agility, transparency and innovation enable our customers to effectively scale and thrive,” said Crystal Pang, CEO of Pickupp.

The startup further claimed that its flexible delivery services will help retailers optimise their business strategies and enable them to understand the needs of their customer better.

The logistics startup also runs an e-commerce platform and offers free islandwide delivery for businesses listed on it.

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Image Credit: Pickupp

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