Open banking has revolutionised the financial industry, providing customers with access to a plethora of new and exciting services that were previously unavailable. This innovative approach allows for the sharing of customer data between banks and third-party providers, which has paved the way for the introduction of fully digitalised financial services by non-traditional financial institutions, such as fintech startups and neobanks.

Having been involved in the fintech and open banking industry for over a decade across Indonesia and Southeast Asia, I have witnessed the remarkable evolution of financial services being provided in the market. It is an exciting time to be part of this dynamic sector. 

The recent technological advancements in API platforms have also facilitated even more advanced financial services available, such as universal QR code payments, borderless virtual cards that can be used across currencies, and MSMEs (Micro, Small, and Medium Enterprises) lending that can securely disburse loans without requiring excessive documentation from the borrower.

Moreover, I have observed these advancements have aided in increasing the financial inclusion of previously underbanked and unbanked consumers, granting them access to better funding and financial services that were previously unavailable.

Also Read: Finance beyond the numbers: CFO resolutions for 2023

In my opinion, open banking is, and will undoubtedly continue to be, the future of fintech and the financial services it can offer. Here are a few reasons why:

The rapid growth of smartphone and internet users

The proliferation of matured smartphone and internet penetration rates has been a significant driving force behind the continued rise of open banking as the future of fintech. According to Statista, the number of smartphone users has surged by 53 per cent from 3.2 billion in 2016 to 6.3 billion in 2021, while global internet users grew from 3.2 billion to 4.9 billion in the same time frame.

Given the expected global population growth to more than 8 billion in 2023, it is estimated that approximately nine in 10 people will be equipped with a smartphone worldwide. Additionally, internet user growth is expected to continue increasing steadily.

The widespread adoption of smartphone applications and the rise of digital literacy have created an environment that facilitates the seamless integration of open banking-based, mobile financial service apps in our daily lives. I believe this trend will continue to move in this direction, inclusive of fintech, neobanks, and other non-traditional financial institutions.

More opportunities to provide more innovative services

Given the widespread use of smartphones and the internet, the stage is set for the development of a digital financial ecosystem. This, followed by the core of open banking that helps facilitate the sharing of financial information between financial institutions and third-party providers through APIs, makes it a promising path for the future of fintech.

It allows for the development of new and innovative services beyond traditional banking, proving to be particularly significant in countries with a large unbanked and underbanked population. For an extended period of time, this population has faced barriers to accessing financial services due to a lack of accessibility and documentation.

In the APAC region, countries such as Indonesia, India, China, Vietnam, and Thailand have demonstrated the potential of open banking-based services in fintech to drive innovation and promote financial inclusion in the last couple of years. According to AppsFlyer, there are 2.7 billion fintech app installs recorded between Q1 2019 and Q1 2021 across APAC, with Indonesia and India being the key contributors.

In particular, e-wallets have emerged as a dominant force in this region, gaining popularity over traditional payment methods like credit cards. Leading players like GoPay, TrueMoney, and GrabPay have enabled users to transact without bank accounts, with wide acceptance by merchants both online and offline. 

Also Read: Giving a boost to business through finance automation

In my view, as the market continues to demand alternative payment platforms and financial services, open banking’s openness and adaptability offer significant potential for the development of new and unique services that have yet to emerge.

The willingness of traditional financial institutions to collaborate

In recent times, it has become evident that banks and other conventional financial institutions are becoming more receptive to collaborating with fintech companies in developing open banking-led services.

As per a 2022 survey conducted by Economist Impact on behalf of WSO2, more than 48 per cent of the 300 global C-banking suite executives interviewed stated that their financial institutions had embraced partnerships with fintech startups over the past three years, driven by the need to remain competitive and innovative in the market. 

Collaboration between banks and fintech is mutually beneficial, where banks have the advantage of consumer trust and brand recognition, while fintech can offer more flexible and innovative financial solutions, as well as more access to the unbanked and underbanked market in developing nations. This partnership can help reach a larger consumer base and create better financial services with higher trust, security, and cost-efficiency in the long run.

In 2022, we engaged in fruitful collaborations with two of Indonesia’s leading banks, Bank BRI and Bank Mandiri. With Bank BRI, we implemented a direct debit solution that empowers BRI’s merchant partners to conveniently collect payments from their customers’ accounts with consent.

Similarly, our partnership with Bank Mandiri enabled the integration of over 300 digital products from more than 1,000 billing companies into their super-app, Livin’. The aim of these collaborations was to promote financial inclusion, enhance the affordability of financial services, and optimise the overall customer experience.

Additionally, another successful example is the German neo-bank N26 and UK-based financial exchange company Wise’s collaboration in 2016, where they teamed up to offer hassle-free international money transfers. They have since extended their partnership in 2020 to include a broader range of transfer options following the rising popularity of international money transfers. 

The growth of open banking in the fintech industry has been remarkable in recent years, with increased acceptance from consumers and financial institutions alike. Looking ahead, the potential for open banking to continue to evolve is immense as the fintech sector relentlessly seeks innovative ways to provide the best possible services to consumers. 

I believe that secure and transparent sharing of data between parties will remain a top priority in the financial services industry, focusing on convenience and efficiency for an increasingly tech-savvy and financially literate society. Truly excited about the future possibilities that lie ahead!

–

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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Singapore-based indie game publisher The Iterative Collective (TIC) has secured US$1.2 million in a seed funding round led by Cocoon Capital and unnamed angels.

The Iterative Collective will use the capital to expand its publishing and marketing capabilities.

Today, game engines like Unity and Unreal Engine have made it easier for independent developers to create high-quality games. According to a recent report, the global PC and console gaming markets are expected to reach a combined revenue of US$104 billion by 2026.

However, commercial success is not guaranteed despite the ease of game development. Over 50 per cent of self-published PC games generate a lifetime revenue of less than US$4,000, which poses a significant challenge for independent studios.

Also Read: ‘The SVB collapse almost damaged the trust level in Silicon Valley’

The Iterative Collective is addressing this issue.

The company was founded in 2020 by Matthew Quek and Haskel Chua.

Quek brings a deep understanding of technical game development and distribution gained from his years as a Senior R&D Engineer at Virtuos and Director of Technology at Epicsoft Asia. Meanwhile, Chua brings valuable experience from his successful career at JoyDash where he was credited with successfully launching two games and leading his game development studio, PseudoPixels.

The Iterative Collective has built an ecosystem for independent game studios. By providing talented developers with resources and support, TIC helps them turn their creative game concepts into profitable businesses.

TIC’s debut game, The Signal State, has become a commercial success with thousands of paying players. The startup will showcase its current and upcoming games at PAX East 2023 in Boston, the US, from March 23-26, 2023.

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Echelon Asia Summit 2023 brings together APAC’s leading startups, corporates, policymakers, industry leaders, and investors to Singapore this June 14-15. Learn more and get tickets here. Echelon also features the TOP100 stage, where startups can pitch to 5000+ delegates, among other benefits like connecting with investors, visibility through the e27platform, and other prizes. Join TOP100 here.

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Singapore-based Holistics.io provides a cloud-based business intelligence platform that empowers data teams to create and manage a self-service reporting solution for their organisation.

The data analytics company was one of the contestants of the TOP100 in 2018.

In this interview with e27, Holistics.io’s Co-Founder and CEO, Vincent Woon, shares his experience and the key learnings he made from the TOP100 event.

Excerpts:

What is Holistics.io?

We provide an online platform that allows data teams to design their data models and business logic to provide high-quality data to business users. With Holistics, non-technical business users can go beyond viewing static dashboards and create their custom reports from the centralised data warehouse, reducing their reliance on the data team for ad-hoc data requests.

What prompted Holistics.io to apply for Top100 in 2018? What were your expectations from the contest?

When we decided to apply for TOP100, our primary motivation was gaining exposure and increasing awareness of Holistics within our target market. Specifically, we wanted to reach data teams working for tech companies, particularly startups.

Also Read: These four Echelon TOP100 winners prove why Singapore’s ecosystem is still the crowning jewel of Southeast Asia

We saw TOP100 as a valuable marketing opportunity, as it provided us with a platform to showcase our product and services and a chance to refine our pitch and messaging.

Can you talk about your TOP100 experience? What were your key takeaways?

Participating in TOP100 was a fantastic experience. The event was well-organised, and I found the concept refreshing and innovative, especially considering it took place in 2018.

One of our main benefits was the opportunity to refine our pitch deck and receive feedback from industry experts. We could also showcase our product to a broader audience and connect with potential customers.

Did Top100 help you get new connections like investors, partners, and customers?

Yes, participating in TOP100 provided an excellent opportunity to meet and connect with a wide range of people in the startup ecosystem. We could showcase our platform to other participants, startup exhibitors, and some investors who stopped by our booth.

Did you go on to raise external investment post-TOP100?

No, our participation in Top100 was not directly related to raising funds. At the time of the contest, we were self-funded and were enjoying the freedom and flexibility that came with that. And we still do.

How did Holistics survive multiple crises like COVID-19 and the economic slowdown?

At Holistics.io, we were able to weather multiple crises, including the pandemic and the recession, thanks to several key factors.

Firstly, our company culture was already conducive to remote work, with a strong focus on collaboration, writing culture, and investment in automation tools. This made the transition to remote work during the pandemic relatively seamless for our team.

Additionally, we were fortunate to have a good cash buffer in place, which allowed us to continue operating as normal despite the economic uncertainties brought about by the crises. It also gave us the confidence to hire the right team members to support our growth.

While some of our customers needed temporary help during the pandemic, we also saw increased interest from companies looking to re-evaluate their analytics tool budget. This presented us with new opportunities to expand our customer base and solidify our position in the market.

Overall, our ability to adapt quickly, maintain our company culture, and leverage new opportunities helped us survive and thrive during the crises. It was a challenging time, but it also served as a valuable reminder of the importance of being flexible, resilient, and prepared for the unexpected.

Did you go for job cuts during these crises?

No, Holistics.io did not resort to workforce reduction during the pandemic or the recession. One of the reasons for this is that we have always been very mindful of our expenses and have prioritised sustainable growth over rapid expansion.

Another reason is that we had the advantage of being cash-flow positive, which gave us stability and flexibility during those challenging times.

Did you ever think of quitting? If yes, how did you survive such situations?

Like many founders, I have experienced my fair share of challenges and setbacks throughout my time at Holistics. There have certainly been moments when I felt frustrated and discouraged, but quitting didn’t cross my mind.

During those difficult times, what helped me most was leaning on my support system. This included my wife, co-founders, a few close friends, and a coach. Talking through my struggles with people I trust and know me well was incredibly helpful. They provided me with a sounding board for my ideas, offered words of encouragement, and helped me maintain perspective when I was feeling overwhelmed.

What are your future plans? Do you plan to expand geographically out of SEA?

Currently, Holistics.io have over 350 customers in 40 countries worldwide, and our team of 50 people is spread across eight cities globally. While our focus has been primarily on the SEA region, we have already achieved some traction globally.

Looking ahead, our vision is to make analytics less effortful for both the data team and business users of our customers. We believe this is a critical need for businesses of all sizes and industries, and we are committed to continuing to innovate and develop solutions that meet this need.

Also Read: ‘The SVB collapse almost damaged the trust level in Silicon Valley’

We plan to expand geographically beyond SEA as part of our growth strategy. While we will remain focused on serving tech companies, we see a tremendous opportunity to bring our solutions to businesses worldwide. Our unique approach to business intelligence, combined with our strong customer focus and commitment to innovation, will make Holistics the preferred choice for companies looking to make data-driven decisions.

Any message for young and budding founders?

As a founder, it’s important to constantly listen and learn from your customers, industry trends, and feedback from your team.

Ensure you’re creating a culture of open communication and collaboration where everyone feels empowered to share their ideas and insights. Don’t be afraid to pivot or change your business strategy based on what you hear from the market.

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Echelon Asia Summit 2023 brings together APAC’s leading startups, corporates, policymakers, industry leaders, and investors to Singapore this June 14-15. Learn more and get tickets here. Echelon also features the TOP100 stage, where startups can pitch to 5000+ delegates, among other benefits like connecting with investors, visibility through the e27platform, and other prizes. Join TOP100 here.

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The Vietnamese government considers healthcare to be a major priority in the national digital transformation strategy and program. This makes sense given that the “hottest” social security issue — and a top priority in developing countries in Asia like Vietnam — is always the provision of healthcare for the public at large.

Technology for healthcare is content that has been frequently mentioned on forums and mass media in recent years, making the community both curious and confused, not sure what technology has and is doing for medicare or, more specifically, for taking care of people’s health. 

Vietnam is fully capable of adapting in the era of “Smart Healthcare,” which will assist in optimising the operating system, reduce costs and resources, and at the same time, save money and resources to apply digital technology to medical examination and treatment services. It benefits both customers and service providers in equal measure. As a result, Vietnam has likely witnessed a sharp rise in demand for healthcare apps.

The reality of the healthcare in Vietnam

The Organisation for Economic Cooperation and Development (OECD) recently carried out a survey, and they found that individuals in Southeast Asia consistently spend a lot of money on healthcare. The ASEAN nations, which include Vietnam, Singapore, Thailand, the Philippines, and Indonesia, are set to increase their total spending to close to US$800 billion over the next five years.

In Vietnam, the number of startups in this healthtech field is still very modest, just under two per cent of the total of more than 4,000 medical technology startups in Asia. Only a few names appear on the market, such as eDoctor, Mosia, Jio Health, BuyMed, and Bsgiadinh. The reason is that the medical industry is very diverse in terms of operation forms, many participants, and many types of techniques and objects.

Also Read: The thrills of online shopping: Exploring Vietnam’s e-commerce haven

The patient population is both large and diverse. Meeting hospital operations requires knowledge of clinical medicine, medical organisation, medical engineering, and information technology. When talking about medical technology is also talking about two types of technology: one is techniques applied to medical devices, and the other is information technology that manages medical data.

What has been talked about recently in healthtech?

Vietnam has been using AI in healthcare since a few years ago. Currently, although AI has not been put into operation in hospitals, there are many applications to support medical examination and treatment.

When the COVID-19 pandemic occurs, the presence of AI through the Bluezone application — the application is capable of detecting close contact by automatic statistics and recording the contact between people who have installed Bluezone with each other, tell us who we have been in contact with, when, etc., to reduce the risk of disease spread.

Other healthcare apps being talked about recently have to call names of:

Jio Health

A platform for arranging clinical services in the healthcare industry online. By monitoring individual health profiles and sharing patient medical data with healthcare professionals, the platform streamlines the delivery of healthcare and enables patients to receive rapid care via doctor visits in their homes.

DOCOSAN

A startup established in HCM City is another website that links patients and physicians. The fundamental idea is to employ technology to speed up the selection of a doctor, the intake of new patients, and the management of patient records.

The business-to-business (B2B) marketplace created by Thuocsi is another creation of the Vietnamese healthtech industry. It provides automatic order matching with end-to-end logistics and links pharmacies and medical practices with authorised distributors of pharmaceuticals.

Smart health: Combining information technologies and digital health

It would be simple to conclude that technology is fast assisting in the solution of the most pressing issues in health and healthcare if one were to only pay attention to the information flow regarding trends and forecasts. In actuality, though, things are not as simple.

The national coordinator of the Vital Strategies Health Data Initiative, Mr Tran Hong Quang, commented on Vietnam’s digital health ecosystem, saying: “Health is a sector with hurdles to entry in the business with excellent calibre. Even globally, major technology companies like Google, Microsoft, and Apple struggle to break into the healthcare industry.”

The use of healthcare apps on mobile platforms in the medical field has ushered in a new healing trend.

Patients, pharmacists, and even doctors may prefer healthcare applications over in-person consultations thanks to virtual consultations with a team of specialists, online drug delivery process optimisation, and more.

Also Read: How Vietnam is climbing to the throne of fintech among Asia Pacific countries

The idea of online pharmacies focused on providing prescription and over-the-counter (OTC) drugs is accepted through email inboxes, delivery units, or online pharmacy web portals. Line.

Using a health-related app, Ms M, a mother of a three-year-old child, expressed her satisfaction. She said, “I can save a lot of time by booking an appointment for my child or simply Long-term test results I can check immediately on the app.”

Mr V said that ever since applications to buy medications online were released, he could save a ton of time. “You can regularly check to see if the medication you require is in stock, saving you time from having to drive around looking for it.”

A bright future for health-tech development in Vietnam

Technology is an effective instrument for making significant changes that can quickly revolutionise an industry or area of the economy. Using technology to its fullest potential is essential. Health, on the other hand, cannot be hurried.

It’s critical to support and further publicise activities and investments in healthcare technology. Only with significant and enough investments will the market have the chance to choose for itself appropriate and crucial solutions and goods to support the growth of services to serve society.

If there is a need to give a specific suggestion, it would be to prioritise the use of technology to make people’s lives more convenient while also assisting medical facilities in running efficiently with their resources.

–

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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

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Web3 isn’t easy.

For all the talk about Web3 revolutionising the way we work and play, the reality is that most people find it hard to understand what blockchain technology is. Not only that, but they also run into problems because Web3 apps (or dapps, which is short for decentralised apps) are not as user-friendly as Web2 platforms.

Think about how easy it is to create a Twitter or Facebook account. Then compare this with the technical and convoluted onboarding process for Web3 – from creating a crypto wallet to loading it with cryptocurrency to connecting it to a blockchain game or NFT (non-fungible token) marketplace like OpenSea. 

No wonder the average internet user is intimidated by Web3. 

Why Web3 isn’t mainstream 

The numbers certainly don’t lie. According to Singapore-based blockchain firm TripleA, the estimated number of crypto users worldwide is 420 million, which represents a mere 4.2 per cent of the global population.

Clearly, if we want Web3 to become mainstream, we have to do a better job. 

As I’ve said in a previous article, what we need to do is to make Web3 disappear. This involves two equally important steps. 

Also Read: Malaysian startups, MNCs have started recognising the importance of Web3: Jasmine Ng

The first is to focus on the customer benefits, not the technology. Consumers don’t really care how the technology works and will only get bored by all the technical jargon. Instead, what they want to know is how Web3 will make their lives easier and what benefits they will get by using it.

Knowing, however, is only half the battle. Instead of putting the burden on consumers, Web3 companies should simplify the process. If it’s hard to use Web3, don’t expect people to flock to it. Remember that the same thing happened before during the early days of the Web when email clients were too clunky, websites were too simple, and internet connections were too slow.

Addressing the pain points 

“While looking at all the potential, we also see some of the limitations of the crypto market right now because it has a very high barrier to entry. For example, if I want to go into DeFi (decentralised finance), I would have to create my own MetaMask wallet, I would have a ledger with me, and I would have to record my mnemonic code and keep it safe,” said DEFED DAO (decentralised autonomous organisation) Initiator and Core Contributor Mechbill.

Mechbill, who has a PhD in Physics and has worked in the fintech industry for over 10 years, entered the world of crypto in 2020. He understands what the pain points are because he has experienced them first-hand.

“I used to play a blockchain game, and I opened a special wallet for it. But then, after a month, I didn’t play. I forgot the mnemonic code, and I lost my assets. It was gone,” he said.

Mechbill, of course, is referring to the fact that when you create a crypto wallet, you need to record a seed phrase to recover your account in case you forget your password. This mnemonic code, which consists of 12 or 24 random words, is the only way for you to regain access to your account, as the wallet provider does not store your password.

Imagine explaining this to the average user and expecting them to take that risk.

Of course, since then, improvements have been made. For example, crypto wallets with settings that allow you to click on View Secret Recovery Phrase. Still, this is just a band-aid solution that does not address the need to make the process more user-friendly for consumers.

Instead, what Mechbill wants is to make it as easy to create a Web3 account as it is to sign up for Web2 platforms. Recently, DEFED launched version 2.0, which allows users to create an account using their email address. They can use this to interact with DeFi and other smart contracts on the blockchain.

Also Read: How to launch collaborations that grow communities: A guide for Web3 founders

This means their customers will no longer have to worry about forgetting their seed phrases and losing access to their accounts and digital assets. Just as in Web2, they can simply reset their passwords via email and regain control over their assets.

Best of both worlds

Mechbill emphasised that consumers should be able to reap the benefits of Web3 while also enjoying the same kind of convenience they are already used to in Web2.

“During the DeFi Summer, all those products offer opportunities for generating a lot of wealth, so they are very attractive for people who are willing to make money. So even if there are high barriers to entry, they will jump in,” he said.

He pointed out, however, that this is not sustainable, especially in the current bear market, which is known as Crypto Winter in Web3. As the market matures and Web3 becomes more mainstream, the space cannot just target traders with a high appetite for risk or rely on rewards such as high APR (annual percentage rate) to attract users. In fact, Mechbill said that traction is decreasing, but the barrier to entry remains high. So what is needed is to lower the barrier to entry to Web3.

That is why apart from letting users easily create accounts using their email addresses, DEFED also makes payment so easy that it is almost like tweeting your friends. This is because they have integrated chat into their system so that customers can easily transfer their DEFED balance to each other instantly when messaging their friends online. 

Moreover, DEFED acts as a Web3 super account that lets customers connect their assets to different dapps so that they can avail of different services, whether it’s depositing to earn interest or borrowing with credit.

“We are not just focusing on the evolution inside the current market. We are trying to open a new market from Web2. So we’ve created a super account system, and we want to build a superapp in the future to let customers get Web3 functions but with Web2 usability,” Mechbill said.

Asked to share his vision for DEFED and Web3, Mechbill replied: “I have two visions. One is for our product itself which can benefit our customers and increase the Web3 population. And for the organisation, in the future, I would like to run our product as a DAO. That is like a social experiment, and we are trying to find a way for people from different locations and different cultural backgrounds to collaborate. That, to me, is interesting. I am not sure if it will succeed or not, but it’s worse not to have tried.”

At the end of the day, the benefits of Web3 should be made available to everyone. Together, we can open the doors to more people.

–

Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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

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Author’s Note: Insights shared here are taken from the CFO Mixer and Investor Panel held on February 2023 in Singapore hosted by Stripe, featuring a panel with Jason Edwards of January Capital and VentureCap Insights and Insignia Ventures’ Yinglan Tan, as well as a conversation with former Slack CFO Allen Shim. 

Highlights

• Venture-backed private companies now face a crossroads in fundraising (i.e., to raise or to not? To take a valuation hit or not? To raise equity or debt or some combination?). This is compounded by the need to extend runways to survive in the case of some companies or the pressure to capitalise on their competitive advantages in the case of others.
• From the investors’ perspective, especially late-stage investors, where the correction’s impact is more severe, the bars are higher. The challenge is more pronounced for companies that raise at too high (or attractive) of a multiple and are now faced with potentially getting penalised for their last-round valuation.
• The crossroads companies face in this market could be illustrated in four or five possible scenarios: Already cash-rich, get to profitability or 36-month runway, take a down round, find a buyer, or fold under pressure.
• Five practices for healthier cash flow management: You can’t address what you can’t measure,  robust finance function begins with solid bookkeeping, better to hire one slowly at 110 per cent than many quickly at 80 per cent, when it comes to marketing spend, get alignment on what you’re actually measuring, it’s not only equity on the table, but these alternatives (like debt, venture debt, and revenue-based financing) are not for everyone.

From fundraising heydays to fundraising correction

“What we’ve seen leading up to the correction in the public markets was that there was an enormous amount of money coming into the startup ecosystem in Southeast Asia. And that was really caused by a number of factors,” shares Jason Edwards of January Capital.

These factors included many overseas investors investing massive amounts in the region for the first time, from the likes of Jeff Bezos to Sequoia pouring as much as US$50 million into first-time meetings. This flush of money in the year post “first-generation unicorn-minting” (the likes of Gojek, Traveloka, Grab) to the pandemic-induced digitalisation rush (2018 to 2021) shifted the fundraising value chain in two ways.

Also Read: Cashflow and financing: what companies need to know

Late-stage investors were forced to move earlier because the prices went up in later rounds, while smaller funds that were able to raise much larger funds on top of the Southeast Asia potential sought to fuel larger fundraising rounds.

This capital influx closed the well-documented “growth-stage funding gap” in the region as money chased investments. Edwards adds, “For founders, at that time, it was a heyday. You just had so much money chasing investments, and people were raising more than they needed. And the valuations were, I think, higher than they should have been.”

New market, new rules

Now the script has flipped with the public markets correction, and venture-backed private companies now face a crossroads in fundraising (i.e., To raise or to not? To take a valuation hit or not? To raise equity or debt or some combination?). This is compounded by the need to extend runways to survive in the case of some companies or the pressure to capitalise on their competitive advantages in the case of others.

From the investors’ perspective, especially late-stage investors, where the correction’s impact is more severe, the bars are higher. In particular, Tan points out two key questions: “When you talk to the late-stage investors, they ask you two questions. One, are you profitable? The second question they ask you is, do you have audited financials to fundraise?”

The standards for product-market fit have also changed, as Tan adds, “…the founders that have succeeded in the past five years could raise 10 million on a PowerPoint deck and could give subsidies to grow. They will not be the founders that will succeed in the next five years because the environment has totally changed, right? You have to show economics much earlier in the process. You have to have products that actually have product market fit. And when I say product market fit, it’s not just growth, transactions need to be EBITDA positive or really unit economics positive.”

The durability of cash has also changed. Before, 12-18 months would have sufficed to ferry through another round and generate enough growth to make the markup justifiable, but now that may no longer be enough for most companies.

It also takes much longer to raise money, given the more rigorous due diligence expected by investors. Given the higher bars for fundraising vis-a-vis price adjustments, Tan advises getting to 36 months or a three-year runway, if not profitability.

The challenge is more pronounced for companies that raise at too high (or attractive) of a multiple and are now faced with potentially getting penalised for their last-round valuation. As Edwards puts it, “The challenge I think that really brings about is if you’re a good company that’s doing well at a late stage, and you’ve raised when the times were really good, you would’ve raised at a really attractive multiple. And that’s not gonna happen now. It’s all changed.

“So how do you avoid being penalised by what’s happening in the markets if you are performing well because you don’t want to have flat rounds and down rounds? So I think part of what you have to think about is managing that with the ability to raise…How do you make your runway work? That’s one thing people should think about.”

The fundraising crossroads

With this in mind, the crossroads companies face in this market could be illustrated in four or five possible scenarios. First is that if the company is already cash-rich (profitable and/or has a three-year runway), then it’s time to be aggressive. If the company is not in that position yet, the obvious alternative is to make that happen.

So second is to focus on cutting burn to create a longer runway or, even better, refocus the business towards profitability. In some cases, the company is able to safely raise a bridge round or a decently priced follow-on to add to this cash “cushion” as they refocus the business. If the company has already done these measures but is still not in a safe position at the least, taking a down round may be necessary, or considering other instruments (venture debt, debt, and other revenue-based financing instruments) as we share later in the article.

If these measures still don’t work, it may be time to find a buyer to inject a significant amount of cash in exchange for ownership of the company. Depending on the founder or management, this may actually be the optimal choice to ensure the product or service continues to be delivered and also relieve the pressure of having to navigate the bear market alone. That said, there needs to be buyer interest, to begin with.

Also Read: Bite-sized advice on cashflow in time of crisis for startups and SMBs

Ultimately not all businesses will be caught within the safety of this crossroads, and others will fold under pressure, some more spectacularly than others.

While there are external factors to account for, how an entrepreneur can make it through this crossroads begins with a realistic and thoughtful response. As Tan puts it, “…what I see nowadays is that the more mature, thoughtful founders say it’s a great time. “We got fed last year. Now we are going to, more or less, see our productivity per employee. We made the hard decisions.”

Five practices for healthier cash flow management

The crossroads just illustrated above is not a hard fast decision tree that applies to every company. This is just a simplified heuristic to illustrate the importance of building up healthy cash flows and runway if the company is to continue growing sustainably in this market.

With that in mind, we list down five practices covered both in the panel previously mentioned and in a conversation with former Slack CFO Allen Shim that followed the panel. These practices go beyond fundraising and pure finance and apply to various aspects of company building, from internal communication to hiring and marketing.

Note that these are practices (and not remedies) which means they are best applied as part of a company’s operating principles and management ethos rather than as one-off actions.

Read more about the five practices for healthier cash flow management on Insignia Business Review.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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The post Oh my cash: Navigating cash flow management in today’s market appeared first on e27.

Dear Pro member,

The collapse of Silicon Valley Bank (SVB), a major lender to some of the world’s leading tech startups, is the hottest story of the past few days.

While a crisis has been averted for now, thanks to the intervention of the US government, the global startup industry fears its full impact will likely manifest only in the coming weeks. Having said that, the event will unlikely impact Southeast Asian startups as they don’t have much exposure to SVB.

According to some experts, SVB’s failure is a classic case of having too much on the table and getting complacent over past successes. Abhishek Agarwal, Managing Partner Rockstud Capital, says that the asset liabilities mismatch is the worse example for a financial institution.

The startup industry may take some cues from this event, and they cannot afford to be complacent and overconfident about their growth prospects.

We are talking to a few VC experts in the region to learn the possible impacts of the SVB failure. Stay tuned.

Let’s also look at the other top stories of the past 3-4 days.

Have a good day!

Sainul
Editor.

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HSBC acquires Silicon Valley Bank UK, says all depositors’ money is safe
The deal is a massive relief to the UK technology sector, which was highly exposed to the collapse of both SVB and its UK arm; The quick turnaround of the deal will be seen as a signal of the government’s support of tech.

GoTo to shed 600 workers to focus on core operations
It will trim down certain parts of Mitra Tokopedia, its platform for small businesses, as it moves away from non-core businesses to help accelerate growth; It aims to turn profitable on an adjusted EBITDA basis within Q4 2023.

Binance moves US$1B from FTX recovery fund amid SVB collapse
Binance CEO Changpeng Zhao said the move comes amid “the changes in stablecoins and banks.”; He also shared the wallet where the US$1B in Binance USD comes from and specific transaction details.

Indonesia’s insurtech startup Qoala’s losses more than doubled in 2021
The losses ballooned 2.6X to US$10.36M on the back of significantly higher expenses; Qoala focuses on retail insurance, which includes protection for cars, bikes, homes, and health.

VCs see SG as ‘stronger haven’ for startup capital after SVB fallout
Yinglan Tan, the founding managing partner at Insignia Ventures, says collapses will boost acquisition momentum and affect certain companies’ and funds’ buying or investing power.

500 Global-backed Monnai raises US$6.5M, tapping into SEA for growth
The investors include Tiger Global and Better Tomorrow Ventures; Monnai’s platform integrates data from various sources worldwide and offers tools to help clients solve fraud and regulatory challenges.

Vietnam e-pharmacy Medigo raises US$2M Series A
The investors are East Ventures, Pavilion Capital, and Touchstone Partners. Medigo helps users order medicine from trusted pharmacies close to them.

Indonesian lending firm Pintek shifts focus from students to businesses
Tommy Yuwono, Pintek co-founder and president director, said the startup has worked with distributors and suppliers and “will be focusing on expanding this line of business,” moving beyond the education sector.

AI-powered Betterhalf aims to make online matchmaking easy for urban Indians
Betterhalf has integrated online matchmaking services assisted with human matchmaking, background verification, astrology, and horoscope matching.

We can always earn money, but we can never bring back our youth: Justin Chin of e27
The Head of Business Development at e27 shares the importance of embracing life to its fullest and aiming to go out to experience the world.

Why Liminal sees compliance as the way to go for the crypto industry
Liminal aims to build an efficient and compliant wallet operating system where users can securely use various digital assets and blockchains.

‘There’s a lack of urgency among companies in achieving net zero targets’
Unravel Carbon’s Grace Sai also said the increased connectivity within the ecosystem from f2f engagement can create significant economic value during tough times.

How an accident kickstarted my entrepreneurial journey (quite literally)
Discover how an accident led to the start of my entrepreneurial journey and the lessons learned along the way.

Navigating challenges and opportunities in the Malaysian robotics industry
Explore Malaysia’s growing robotics industry and learn how experts overcome obstacles to drive innovation.

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Echelon Asia Summit 2023 brings together APAC’s leading startups, corporates, policymakers, industry leaders, and investors to Singapore this June 14-15. Learn more and get tickets here. Echelon also features the TOP100 stage, where startups can pitch to 5000+ delegates, among other benefits like a chance to connect with investors, visibility through e27 platform, and other prizes. Join TOP100 here.

The post Ecosystem Roundup: GoTo to shed 600 staff; HSBC acquires Silicon Valley Bank UK; Monnai, Medigo raise investments appeared first on e27.

This is the first article of a series of essays aimed at providing guidance for entrepreneurs in Southeast Asia who are seeking to secure successful fundraising.

When I moved from Denmark to Indonesia in 2016, many of my European friends looked at me incredulously. Why would I move to an emergent market? Why would I give up on the high standard of living, excellent infrastructure, world-class education, stable governance, and healthcare support Denmark offers?

Yet, over time, the narrative has changed. People started praising my (at the time) contrarian bet. Asking for tips on how they could make similar moves. The change in perspective was fueled by the incredible growth Southeast Asia experienced in such a short period. A growth that translated into publicity, success cases, and studies that reached every corner of the planet.

Southeast Asia’s digital economy is projected to reach $1t GMV by 2030. Not too shabby, given how underdeveloped Southeast Asian countries were just a decade ago.

Every time I visit my family in Bulgaria, it blows my mind how digitally nascent most European countries are. Just one year ago, my brother was boasting about the rise of food delivery startups in Bulgaria.

Also Read: Tech firms in Southeast Asia poised to ‘leap’ forward with gender equality

A service Southeast Asia has been enjoying since 2015. In fact, e-commerce, food delivery, and digital financial services alone are expected to reach US$360 billion by 2025. The region’s success cases Go-Jek and Grab have married affordable workforce and mobile technology. Creating convenience at a price that’s rarely seen in other parts of the world.

All that while generating a significant economic opportunity for the local workforce. Going back to the examples of Go-Jek and Grab. Their drivers have received access to jobs that:

• Pay better
• Have low barriers to entry
• Are most likely better than what they used to do.

But unless you live in any Southeast Asian country, it’s hard to understand how compelling the opportunity is. So let me offer a few insights:

• A population of 589 million
• Internet penetration of 75 per cent, 440 million internet users
• 350 million digital consumers
• Digital financial services are flourishing and expected to continue growing:
  • Remittance flow – currently at US$17 billion, +18 per cent by 2025
  • Lending loan book – currently at US$39 billion, +31 per cent by 2025
  • Digital payments – currently at US$707 billion GTV, +13 per cent by 2025
  • Insurance (APE/GWP) – currently at US$3.2 billion, +30 per cent by 2025
  • Investments (AUM) – currently at US$33 billion, +29 per cent by 2025

The more I read on the topic, the more obvious it seems that Southeast Asia has built a great foundation for a thriving startup ecosystem:

• Market size – Pretty large given that nine per cent of the world population resides across Indonesia, Malaysia, Thailand, Philippines, Vietnam, and Singapore
• Consistent growth – The digital economy is expected to grow as high as 10x during the 2020s
• Access to capital – There is a record high capital, poised to spur even more investments into the startup ecosystem

• Talent is perhaps the only area where most Southeast Asian countries have struggled to get great results:
  • That’s especially prominent with engineering jobs, but where isn’t it? Fortunately, markets like Indonesia and Vietnam are becoming emerging hubs for tech talent
  • Singapore is the only country within the region that has consistently done great work attracting talent
  • Founder talent has been improving given the return of overseas-educated Southeast Asians (known as “sea turtles”)

Also Read: SEA needs to grow together and produce more quality unicorns: Vertex Ventures’s Carmen Yuen

Growth in the digital realm has a snowball effect across other sectors as well. That has been the case in all countries where I have resided, i.e., Indonesia, Malaysia, and Singapore. Roads are getting bigger and better. New highways are popping up frequently.

The ever-improving infrastructure goes hand in hand with a thriving construction sector. In fact, I like to joke about how fast-paced construction in Asia is. How every time I visit my family in Europe, a new skyscraper gets completed in Jakarta or Singapore by the time I am back.

The frantic construction leads to frequent changes in cities’ skylines, which is incredible to witness. So naturally, that dynamic makes you feel optimistic about what’s ahead.

Final thoughts

In conclusion, Southeast Asia has made significant strides in building a foundation for a thriving startup ecosystem, and its digital economy is projected to reach $1T GMV by 2030. The region’s success cases, such as Go-Jek and Grab, have created convenience at an affordable price, generating significant economic opportunities for the local workforce.

Southeast Asia’s consistent growth, access to capital, and large market size make it an attractive destination for startups. Although talent remains an area for improvement, emerging tech hubs like Indonesia and Vietnam are attracting overseas-educated Southeast Asians.

The snowball effect of growth in the digital realm is also extending to other sectors, such as construction and infrastructure, making Southeast Asia an exciting region to watch for in the years ahead. As someone who moved to Southeast Asia from Europe, I can attest to the incredible progress the region has made and the opportunities it offers.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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The post Thriving Southeast Asia: The unstoppable rise of growth and prosperity appeared first on e27.

Indonesia, the largest economy in Southeast Asia, has seen the value of its digital industry grow from US$41 billion in 2019 to US$77 billion in 2022. The value of the country’s digital industry is poised to grow even further to US$130 billion by 2025, driven primarily by e-commerce followed by financial services, online travel, online media, and transport and food.

Indonesia’s economy experienced tremendous digital transformation in the past few years, accelerated largely by the recent pandemic. As with the rest of Southeast Asia, Indonesia saw its digital economy growing rapidly according to a report by Google, Temasek, and Bain & Company (2022), with the region’s overall digital economy growing by 67% from 2020 to 2022.

Also read: These 15 startups might just be part of this year’s TOP100

The country’s digital economy experienced rapid growth due to digitally-savvy consumers and increased online consumption, among other contributing factors. High mobile penetration has enabled frequent use of social media and e-commerce platforms, while digital payments have facilitated easier access to brands with just a few clicks. Moreover, the government’s active support for the country’s digital infrastructures has paved the way for new digital trends.

To cater to changing consumer behaviour, companies need to equip themselves with the tools and insights necessary to build strong customer relationships in the digital age.  The last leg of CleverTap’s Roadshow in Jakarta titled “Indonesia Retention Pinnacle: Identifying Meaningful Customer Journeys with AI Technology” will offer unique insights on how to keep customers engaged by harnessing the power of AI.

Using AI to bolster customer engagement strategies

CleverTap predicts that the economic slowdown caused by the pandemic, competition, and shifting consumer preferences, will impact digital consumer brands in different ways depending on the nature and severity of the slowdown and their unique characteristics. But with challenges come opportunities, to rethink brand strategy and adapt to the changing times.  With the power of AI, companies can now come up with creative ways to bolster and embolden their strategies.

,  Five strategies you can combine with AI to help your company reach  new heights:

1. Hyperpersonalise your experiences – One of the most effective strategies used by marketing leaders, this requires an extensive amount of detailed information about how your customers interact with the brand and using tools like AI to harness that information for future customer engagement. 
2. Watch your ROI – Digital consumer brands should adopt a more strategic approach to marketing and advertising decisions. One effective way to do this is omnichannel marketing, leveraging AI to understand customer motivators, and creating a consistent and positive experience at every touchpoint throughout the customer lifecycle. 
3. Diversify your products – To reach new customer segments, diversification with scalability in mind is key. Carousell, a Singaporean online marketplace, exemplifies this strategy by identifying “affinity categories” that share psychographic traits with their existing customers, successfully achieving cross-category acquisition and expanding their reach.
   
4. Create loyalty programs – Loyalty programs have been widely successful as it is an effective way to reward consumer behaviour and drive further demand from long-term users. AI tools can help companies create a seamless rewards experience.
5. Amplify social responsibility – As customers become increasingly aware of their impact, they seek out companies that prioritise sustainability and social responsibility. To meet these expectations, companies must integrate these values into their products, services, and decision-making processes, augmenting their approach to sustainability with the help of AI-powered data analytics.

In summary, businesses must adopt a multi-channel approach to retail and utilise innovative methods and technologies such as AI to yield better customer experiences.

There is a ready-made event specifically to share practical insights with industry experts

Whether you are a small business owner or a marketing professional, Indonesia Retention Pinnacle: Identifying Meaningful Customer Journeys with AI Technology will prove to be an inspiring resource for building valuable, long-term relationships with your customers in today’s competitive market.

The event will provide actionable strategies for building strong customer relationships, reducing churn, and maximising customer lifetime value. This playbook covers a wide array of key elements needed for customer retention, customer engagement, and monetisation, as well as case studies of successful digital marketing campaigns.

Also read: Bolstering Malaysia’s vibrant business landscape with the retention playbook

There will also be interactive workshops and exercises that will enable you to put learned strategies into practice, while Q&A sessions and engagement with speakers will help you address company-specific cases. Participants also get to join fun and engaging team-building activities and learning opportunities with peers and fellow enthusiasts. Join us at “Navigating the Indonesian Digital Landscape: Becoming Digital Marketing Leaders of 2023” in Jakarta on March 16th and don’t miss this opportunity to learn from industry experts.

Register for The Big Leap Roadshow Jakarta here.

The post Is accelerated growth possible with our increasingly unpredictable market? appeared first on e27.

As any entrepreneur can attest, the road to success for a startup is often fraught with challenges. From securing funding to gaining traction in the market, the odds are often stacked against early-stage companies. But in recent years, a new challenger has emerged in the venture-building ecosystem: the government.

Traditionally, the role of government has been to regulate and oversee various industries, ensuring that businesses comply with regulations and protect consumers from harm. They also act as growth engines through the provision of grants and building infrastructure and ecosystems.

However, in recent years, the Singapore government and its linked entities have begun to take a more active role in the startup ecosystem by creating their own startups to compete with private ventures. Furthermore, the government has been actively recruiting top talent to work for their startups, creating a new set of challenges for private entrepreneurs.

Bring forth the Titans

Some of the biggest movers behind government-linked ventures are Temasek, GovTech Singapore and FairPrice Group. The recently formed minden.ai, a venture backed by Temasek, is a good example.

Minden.ai is the team behind the yuu app, which is a loyalty and rewards platform that counts 7-eleven, Cold Storage, Guardian, Breadtalk, Food Junction and Food Republic as some of their merchants. This is a large segment that covers major heavyweights in the convenience, supermarket and food sectors.

Positioning yuu as a replacement of disparate rewards systems builds significant economies of scale and allows for cross-selling and an expansion of your customer base – a scenario smaller startups can only dream about.

Achieving this kind of critical mass is not easy if you are a private startup – without the funds and reputation, you will burn cash faster than you can say, “build me a unicorn”.

Just ask Perx Technologies. They started in this space way back in the early 2010s, providing a similar solution. After realising the challenge of building a rewards programme without sufficient backing from major retail players, they made a major pivot in 2017 to relaunch as a B2B2C marketing and rewards campaign platform.

Also Read: How Asian governments are leading digital health promotion

It is without a doubt the yuu app will be successful – DFI Retail Group and Breadtalk Group are also corporate investors in it. Positioning yuu as a replacement for disparate rewards systems builds significant economies of scale and allows for cross-selling and an expansion of your customer base – a scenario smaller startups can only dream about.

Bigger ambitions

Even at its scale, yuu app is dwarfed by NTUC Fairprice group’s ambitions. The group has made serious headways in building its own super app. As of the end Feb 2023, the Fairprice app was ranked 1st on data.ai (formerly App Annie), ahead of Lazada and Shopee.

Late off the starting line, the Fairprice app gained ground during COVID-19. Between September 2019 to August 2020, NTUC FairPrice managed to achieve an annual sales growth of 68 per cent and grew its customer base by 44 per cent, while its online unit also saw annual sales growth of 44 per cent.

With more than 700,000 app users, their target is to grow to 1.8 million in the next few years. Currently, online sales make up about 10 per cent to 15 per cent of total FairPrice sales  – on par with global players with lots of room to grow.

This is no easy feat, especially for a behemoth like Fairprice. Their ability to move fast and manage change is admirable. This was “made possible through the infusion of new tech talent with hands-on e-commerce experience, combined with training existing staff on cutting edge topics in digital marketing, product development and machine learning”.

They are also embarking on an extensive change of leadership and talent. Their current group CEO, Mr Vipul Chawla, joined in Apr 2022. Before that, Mr Vipul was president of Pizza Hut International, a brand under the American fast-food company Yum! Brands and had previously worked at consumer goods company Unilever. Overall, Fairprice grew its headcount (based on LinkedIn numbers) by 16 per cent over the past two years and 23 per cent growth over the last year on engineering talent alone. More on this later.

From groceries to banking

Not only does Fairprice has its own super app, but it also has another even bigger giant waiting on the sidelines – its joint venture with Standard Chartered in Trust Bank. In the short four months since launch, the digital bank has gained 400,000 users who have performed over 6 million transactions.

Their acquisition strategy was simple – convert Fairprice’s Plus! Rewards’ existing 2.3 million users with a low-cost hook that came with a bit of a whip – the loss of your points if you didn’t apply for a new credit or debit card from Trust registers for a Link Rewards card or download the FairPrice app.

While this was great for Fairprice, this move also resulted in the termination of the long-term partnership with OCBC – which is now turned into a rival with Fairprice’s foray into banking.

The ability to see how your customer earns, saves and spends is the holy grail goal of any fintech company, and Fairprice is on the way to achieving this.

Trust Bank’s growth is a lot faster than its peers like GxS or Maribank, the two digital banking licensees awarded by MAS in 2020. Both don’t have a large enough user base with a sufficiently strong pain/gain impetus to create an account with the new banks. Incentives will be needed to entice this, an option both are hesitant to take in the current environment.

On the other hand, there are still almost 2 million Fairprice points owners who haven’t made the switch to Trust Bank. Furthermore, restrictions apply to the Digital Full Bank licensees that do not encumber Trust Bank, which has a Full Bank License through Standard Chartered. Trust Bank is only just getting started.

With the Fairprice app, Trust bank and other technology developments like Scan N Go, NTUC Fairprice’s strategy is an impressive combo of venture building and digital transformation. But more crucially, it is more about building an entire ecosystem powered by technology and revolving around spending and saving money. The ability to see how your customer earns, saves and spends is the holy grail goal of any fintech company, and Fairprice is on the way to achieving this.

Hiring with gusto

With bigger ambitions comes an increased appetite for talent. A review of LinkedIn employee numbers shows that Fairprice undertook a whopping 23 per cent YoY engineering talent binge. Engineering still only forms five per cent of its total headcount, compared to Operations, which forms 14 per cent. Even then, Operations also grew by 13 per cent YoY.

NCS, another large government-linked business with a strong focus on engineering and IT consultancy, clocked a 21 per cent YoY growth in Engineering and 11 per cent for IT. Fairprice, NCS and GovTech saw YoY overall hiring at the pace of between 10 per cent to 16 per cent, far ahead of general employment growth numbers of seven per cent.

GovTech is the folks behind SingPass, TraceTogether and about 80 different publicly-accessible APIs available through their platform. They play a critical role in enabling government-related functions through the use of technology. Not only are they hiring aggressively, but they also rank well on Glassdoor, an employer review platform powered by anonymous employee posts.

Also Read: Changing with the climate: How environmental risk is influencing government and corporate investments

With a 4.0 rating and more than 700 reviews, it holds its own against more well-established tech firms like Grab (4.3), Lazada (3.6) and Shopee (3.7). As an employer of choice, GovTech definitely ranks amongst the top choices. GovTech also pays well – a comparison of salaries on Glassdoor showed competitive compensation.

Supporter or competitor?

Overall, the move by government entities into venture building is to be celebrated. After all, competition is supposed to be good for consumers and the economy as a whole. But when the government becomes a player in the startup game, it creates a new set of challenges for private entrepreneurs.

One of the biggest challenges is the threat of government-linked ventures acting as direct competitors to private ventures. With a larger pool of resources at their disposal, government-linked startups can quickly dominate a market and drive out private competition. This is especially true in industries where startups rely heavily on government contracts or subsidies, such as defence or renewable energy.

Funding becomes more challenging, too – should these startups raise private equity, they will often be seen as a safer investment than private startups. This denies funding for other private ventures.

Moreover, government-linked startups often have an unfair advantage when it comes to recruiting talent. Since they have the backing of the government, they are often seen as a safer employer than private startups. This is particularly true in today’s environment, where tech firms are going through rounds of layoffs. This can make it difficult for private ventures to attract and retain top talent, which can in turn, hinder their ability to compete.

The larger implication… is that startups competing head-on with government-linked ventures will have a harder time succeeding.

Another challenge is the disruption caused by government-linked startups. When a government creates a startup, it often has a specific agenda in mind, whether it’s promoting a particular technology or advancing a social cause. This may lead to the government undercutting private startups that are pursuing similar goals, disrupting the market and making it difficult for private ventures to succeed.

Govtech’s Parking app is a good example of competing with private innovation. The app, launched in 2017, solved a ton of problems with the old traditional paper coupon system – anxiety over expiring coupons, littering of coupon buds and a general waste of paper.

However, a similar app was already developed as early as 2013, and the team that built the app even won second place in a competition. It was deemed as unviable by relevant agencies, only to have Govtech launch the Parking app several years later.

While it can be argued that such an app should be developed and managed by a government agency, such an experience can leave a bad taste in a startup’s mouth. A more conciliatory approach would have been to engage the team as consultants or offer to acquire the app or business. It would have costed very little but do very much to preserve the private-public cooperative trust and spur further collaborations.

The larger implication of this development is that startups competing for head-on with government-linked ventures will have a harder time succeeding. The value of a large number of startups building from the ground up is that diversity and creativity are allowed to bloom and develop. “May the best idea win” no longer holds true when a large enough venture stifles out the others before they have a chance to prove themselves.

Lastly, as a grant provider and builder of infrastructure, the government adds tremendous value to the ecosystem. Everyone benefits from a strong and reliable environment that is unbiased and objective. In this sense, the government needs to be clear on its role and impartial in its execution of it.

A large government-linked venture may have the better ability, knowledge and support in applying for grants or figuring its way around the bureaucracy and hence have a better chance at benefiting from the perks. The administrators of the bureaucracy need to preserve the neutrality of the system but yet acknowledge that private ventures may be less well-equipped to handle the processes.

Strategies for competing with government-linked ventures

So what can private startups do in the face of government competition? One strategy is to double down on innovation and differentiation.

Private startups may not be able to compete on price or resources, but they can differentiate themselves by offering unique solutions or technologies that the government has not yet considered. This is where having a thriving ecosystem which breeds diversity and creativity can be crucial to creating differentiation.

Also Read: Thai startup GoWabi aims to be the go-to platform for all health and wellness services in SEA

Another strategy is to build relationships with the government. While it may seem counterintuitive to form partnerships with the competition, as per the earlier Parking app example, working with the government can actually be beneficial for private startups. By demonstrating the value of their products or services to the government, startups can secure contracts or subsidies that can help them compete.

Of course, the necessary guardrails should be put in place to protect such sharing to ensure the startups’ IPs and rights are protected. Frameworks like sandboxes and government-sponsored hackathons can be an arena to build cooperation and trust.

Startups should also double down on understanding the customers and their wants and needs and work to out-serve. Government-linked ventures will often have a national agenda to serve and may not be as concerned or nimble with attending to customer needs.

Lastly, private startups should focus on sectors or industries that are overlooked or deemed less critical or under-represented by government involvement. Establishing a beachhead in these industries before moving up to fight with the titans may be a viable Go-to-Market strategy in view of the presence of government-linked ventures.

Conclusion

Venture building is no longer solely the domain of private startups. Ultimately, the rise of government-linked startups and their recruitment of top talent is going to be the new norm for private entrepreneurs.

But with the right strategies and a focus on innovation, nimbleness and strategic planning, startups can still succeed in a market that includes government disruptors. As the startup ecosystem continues to evolve, it’s up to entrepreneurs to adapt and thrive in the face of new competition.

After all, adapting and pivoting have always been the name of the game.

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Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic

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

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The post An unfair advantage – How government-linked ventures are giving startups a run for their money appeared first on e27.