Most Aussie startups look west and only really consider the US and Europe as potential expansion markets. But some regionally aware entrepreneurs have expanded their lens and found success looking to our immediate north.
"The ‘low-hanging technology fruit’ [has been] well picked in developed Western markets."
Josh Tanchel, Partner, Deloitte Private
With more than 600 million consumers and in excess of $A2 trillion in GDP Southeast Asia will be the only region in Asia to achieve GDP growth in 2016 according to the Asian Development Bank.
Australian startup Freelanceris already enjoying enviable results in Southeast Asia, growing its user base by 39 per cent, 30 per cent and 26 per cent in Singapore, Malaysia and Indonesia respectively in 2015.
Freelancer’s regional director for Southeast Asia Evan Tan says people are realising the potential of online and ‘mobile’ work, especially those who live far from cities, with less access to traditional work.
In Myanmar and Vietnam there are just 3.1 and 3.8 bank branches available for every 100,000 adults in each country.
With millions of consumers having never been exposed to the convenience and facilitation of traditional banking services these markets are ripe for fintechs to offer basic banking services through varying technology channels.
This could also become a valuable banking beachhead for fintechs to then offer these new banking consumers more sophisticated banking products in the medium and long-term.
As smart phone penetration and internet speeds vary across and throughout these countries, offering a suite of technology solutions under one brand will be necessary to take significant market share across the broad Southeast Asian region.
This varying technology channel and solution strategy will be important across many industries in the region.
The Philippines has a teacher shortage and the Government has shown it is willing to significantly invest in attracting high quality graduates to teaching qualifications.
With the success and growth in the online learning industry in Australia coupled with time zone similarity the opportunity for our education technology companies to help train more Filipino teachers and fast track their learning is huge.
Australian ‘Edutech’ companies can expedite the shift from ‘textbook’ to classroom training, which will help bring down the critical ratio of teachers to students faster.
With only one doctor per 3,333 people in Indonesia, plus the complication of six thousand inhabited islands, tele-health and e-health solutions will be in high demand as the telecommunications infrastructure in remote areas improves.
The universal health care scheme (JKN) introduced in January 2014 strengthens the imperative to quickly leverage technology solutions like that offered by Indonesian startup HaloDoc.
The JKN also offers many opportunities for companies using technology to improve the efficiency of the scheme as well as distribute its resources.
Southeast Asian venture capital investors are more willing to take educated risks on startups. Success in foreign markets hinges on finding the right local partners, and in particular local market venture capital (VC) investors.
VC dollars fund expansion but the critical VC asset is deep local market knowledge and ongoing support as a company expands and new roadblocks emerge. Finding the right VC willing to put significant ‘skin in your game’ is essential when it comes to being put in a position to be successful.
Pitching ideas to investors at the Tech in Asia conference, Robin McGowan, co-founder of Institchu, an online Australian tailoring startup, says Southeast Asian investors are more willing to invest in businesses with clear growth potential but yet to generate profit.
Their Australian counterparts tend to favour profit and traditional metrics when assessing opportunities, McGowan says.
Big venture capital dollars are being mobilised to focus specifically on Southeast Asia. Serious VCs are setting up in the region. VCs from Slipi-con Valley in Jakarta for example are clearly signalling to the market the technologies and industries they want to invest in.
Telstra Ventures recently invested around $A10 million in Southeast Asian venture fund Monk Hill’sfirst fund as a limited partner. This shows both its perception of the potential in the region and understanding of the need to partner with local assets in markets with which it is not familiar.
Australian startups which fit regional VCs’ target lists, needs to put themselves on the radar in South East Asia.
Successful startups eventually reach a certain size and need to expand into overseas markets for:
• Larger markets to reach more customers
• Funding to expand operations
• Talent for expansion
Southeast Asia will not be the right move for all startups, but the region needs to be in the conversation when weighing up potential expansion destinations in the next engine room, -or more accurately the next server room - for world economic growth.
Josh Tanchel is at Partner at Deloitte Private
You can read more on the changing startup landscape in The fintech revolution: slower burn or slowly burning?
A version of this story originally appeared on Deloitte Private
The views and opinions expressed in this communication are those of the author and may not necessarily state or reflect those of ANZ.
12 Jul 2016
05 May 2016
25 Jul 2016