A startup ecosystem can be a complex beast, given the web of connections binding people across different industry verticals, sectors and segments. Entrepreneurs, investors, incubators, accelerators and governments are constantly jostling and aiming to advance their interests. Simultaneously, they are helping to grow the size of the ecosystem, developing their communities and enabling more opportunities while maintaining their niches.
Competition is a good thing. But excessive competition isn’t necessarily good. In fact, it can hamper effectiveness and lead to market inefficiencies and failure, which does not necessarily benefit the ecosystem nor the various agents within.
The examples in the global IT sector, like Unix, Sun Microsystem and AMD illustrate this perfectly. These were firms that got so involved in competing directly with the others in their category that their products got displaced and the market often passed them by (e.g. Linux vs Windows and AMD vs Intel).
The lesson? It’s critical to focus on the goal, rather than the competition. You must be able to counter the competition, while aiming for optimal results – a healthy market share and loyal, recurring customers. There’s a reason Blue Ocean Strategy was formulated – to bypass competition where possible.
But this intense competition also causes entrepreneurs and investors to overlook opportunities. So what are some of the most promising areas they can be revisited in 2015?
Online Platforms for Different Segments
2014 was the year of e-commerce platforms. From RedMart to Flipkart and Zalora, everyone wanted to dive in, with millions of dollars in funding for e-commerce platforms throughout the region. With a market capitalisation of $21.8 billion, a figure that’s only set to grow, the appeal is obvious.
But some niches have been overlooked. Online platforms, by their very nature, are disintermediating, minimising the role of the middlemen and multiplying distribution channels. This also results in higher market transparency, usually leading to more efficient markets.
One segment that few have looked at in Southeast Asia are Mergers & Acquisitions (M&A). M&A tends to be highly opaque market, but US-based Exitround, founded by Jacob Mullins and Greg Dean is changing that, at least in Silicon Valley.
Advertising themselves as a “private, anonymous marketplace for buyers and sellers of technology companies, from the small to mid-market”, Exitround aims to provide efficiency and intelligence to buyers and sellers of technology firms looking to expand their holdings or sell of their investments, with a broad user base that includes corporate and private equity partners.
The M&A process is highly dependent on social capital, cultural literacy and human networks, often leading to an opaque market. While M&A is traditionally done through highly connected personal networks, Exitround disintermediates the entire M&A process and directly connects buyers and sellers.
The challenges in Asia facing them? The US is a single large market, with a single language, legal system and a certain cultural way of doing things. Southeast Asia itself is highly fragmented, with no unified legal system, different business codes and regulations, different cultures and different business practices. The M&A field in different countries is also often dominated by large institutions, with a few key players dominating the market in different segments.
But it reveals an opportunity as well. With the number of Small & Medium Enterprises (SMEs) and startup ventures present in the region, as well as numerous Japanese and European firms looking for new growth markets in the region, why isn’t there an online portal like Exitround targeting the SME and startup venture segments? Why not apply it to brick & mortar businesses as well? Why not for food businesses and retail services?
A platform like that could could disintermediate the M&A space in the region, increase market transparency and multiply the number of opportunities for investors, entrepreneurs and businesspeople, in a highly opaque market.
The Maker Movement & Hardware Design
While 3d printing endured tremendous hype, followed by no small amount of marketing fatigue through the 2013-2014 period, it also served to distract people from the emergence of digital fabrication technologies, the Maker culture and the Maker movement that uses them and hardware design as an emerging force in the region.
Techopedia defines it as “the increasing number of individuals and teams that employ do-it-yourself (DIY) and do-it-with-others ( DIWO) techniques and processes to develop unique technology products, using digital fabrication technologies at places termed makerspaces or hackerspaces.”
The proliferation of makerspaces – community-operated facility where people can gather to share resources and knowledge, work on projects, network and build products – reflects the growth of this maker movement.
The TechShop brand is a commercial outgrowth of this movement, while Singapore has seen the establishment of the Sustainable Living Lab (SL2), hackerspace.sg, One Maker Group, Silicon Straits, Mettle Work and the Home-Fix Experience Centre (XPC) in the past few years.
While still in it’s nascent stages, companies like the Hyperflow Group and Simplifi3D, led by William Hooi and other entrepreneurs, are building the infrastructure needed to grow the ecosytem, as well as building the commercial brands needed to sustain the movement, in the form of events like Makers’ Block, the Singapore Maker Festival and Makers’ Villa, which were held in Singapore and Penang.
In the US, where the maker culture originated, certain startups like SeedStudio (open hardware platform), Formlabs (high-resolution 3d printers), BlinkM (multi-coloured, programmable LED lights) and BioLite (wood-fuelled stove that generates electricity) have arisen from this movement.
MNCs are also growing strategic partnerships with entities existing in the maker ecosystem. Autodesk has partnered with the consumer 3D printer manufacturer Makerbot, making simple and intuitive 3D design tools as part of its larger business strategy. General Electric sponsors the Maker Faire, a global design festival, and has been working with Maker Media, the parent company of the Maker Faire brand and publisher of MAKE magazine.
While not directly tied to the local maker movement, a number of hardware designs have also emerged from Singapore in 2014. From sex toys to 3d printers, touch-enabled projectors and and 3d printing pens that solidify their ink with UV light and an automatic roti prata/roti canal maker, hardware design has grown in parallel with the maker movement in Singapore and Southeast Asia.
A small community of biohackers has emerged in Singapore and Indonesia. With US trends predicting biotechnology emerging as a strong growth market and Y Combinator, a North American seed accelerator, investing in Glowing Plant, a synthetic biology startup, this is a domain that investors and entrepreneurs may want to investigate further.
2015 promises a tremendous amount of potential in any number of areas, especially as the cost of innovation decreases and the capital efficiency of startups increases, along with the spread of lean startup methodologies. From online platforms to the Maker movement and hardware design space, there exists any number of opportunities for investors to capitalise on and for entrepreneurs to explore.