South East Asian (SEA) based startups cannot afford to miss Malaysia – both due to its sizeable market and the links it has beyond the regional space, says Turkish venture capitalist Dmitry Levit.
Levit, who is the founding general partner of Singapore-based Digital Media Partners, said Malaysia’s higher level of development and cultural factors work in its favour, as a venue for startup to go regional.
“We don’t invest in any particular country in SEA but Malaysia keeps coming up as an pretty interesting market in our portfolio in different contexts. First of all, we are comfortable with the market size; and the market is sizeable so no investor should miss it,” he said during a panel session at the recent Echelon Malaysia 2014 conference.
Levit said Malaysia has proven to be a strategic operational hub for some of the regional expansion stories in Digital Media Partners’ portfolio, which focuses on consumer internet business in emerging markets.
The firm invests largely in Indonesia, Middle East and Africa, but Levit pointed out that the call centres are based in Malaysia, where the chunk of development is.
“If you want a market that speaks multiple languages, if you want a market that you can bring a high performance team into that will survive the regime, it’s Malaysia.”
Levit added that Malaysia is also one of the countries that punches a little beyond SEA, with a links to central Asia, in terms of education which central Asian students come to Malaysia for, and an obvious link to the Middle East.
In respect of maturity of the market, Levit said that Malaysia “is just right, at the middle stage”.
“If companies try to build solutions for advanced markets, then good luck trying to enter into it,” he said, but added that Malaysia is slightly ahead of the curve compared to many other countries, especially in the travel or financial services.
“There are quite interesting needs that can be satisfied in Malaysia today. The demand for these is guaranteed to go up in parts of Indonesia, and other countries,” he informed.
To that, Proficeo Ventures Sdn Bhd co-founder and chief investor Dr V Sivapalan agreed, adding that Malaysia has both sophisticated and unsophisticated markets, which founders can build technology for; although the e-commerce and financial software space is fairly sophisticated already. “The one thing we want to see (in startups), is a business model that works in Malaysia and is scalable”
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Sivapalan believed that now Malaysia needs its next generation of startup success stories.“We are still talking about iProperty and Jobstreet, when we need the next generation of great companies. Malaysia is a great place to look for companies and a great place for companies to start as well,” he said.
Other emerging sectors to keep an eye on are, the media and technology companies, Takeshi Ebihara, founder of Rebright Partners opined.
“Technology is relatively easy to go global even from day one, as long as the good technology has a solid difference from its competitors,” he said, “But with the media startups like vertical media, portal site, e-commerce site; it is very hard to have a solid difference.”
Ebihara’s advice to expanding startups was that local talent is always stronger than foreign talent in different markets that they are looking to enter.
‘To go global is a super hard game. It takes time. Be good in one country before going into another one,” he advised.
Rebright, a Japanese incubator based in Singapore is currently mostly invested in Indonesia, with only one Malaysian Investment in iMoney.my.
Erman Akinci, director of business development of Catcha Group highlighted at the panel session that it was important for startup founders to acknowledge the fragmentation of the SEA market.
“It is phenomenally fragmented; there are different languages, currencies and cultures. Founders need to keep that in mind during expansion,” he said