Startup accelerator Mekong Innovative Startup Tourism (MIST), which provides mentorship to tourism companies in the Greater Mekong Subregion (Cambodia, Laos, Myanmar and Vietnam), recently completed its first year of operations. The accelerator, a joint venture between Mekong Tourism Coordinating Office and ADB-backed Mekong Business Initiative (MBI), announced four startups that will receive grants totalling $31,000 from it.
In an interview with DEALSTREETASIA, ADB senior economist and MBI head Dominic Mellor explains that MIST is uniquely positioned to help startups forge strategic partnerships and attract funding from investors.
“We will become a pipeline of the best startups across the region. Without this aggregate, it is very fragmented, and it is hard to find qualified startups,” he said.
Citing the benefits the tourism industry in the region can reap by leveraging technology, especially in the MICE (Meetings, Incentives, Conferences and Events) segment, he said, “Some of the destinations in Mekong are great locations to hold events, thanks to natural geographic beauty, affordability and connectivity to major financial hubs like Singapore, Hong Kong and Bangkok. There is a lot of potential for technology companies to attract more corporates to come to this region by making it easier to do logistics.”
How do you view the quality of the startups in the first year of MIST?
The programme had two tracks. One was for early stage startups where we had about 250 applications. The second track was the Market Access Programme, which is for more mature startups that are interested in expanding in Mekong. For that track, we had about 60 applications.
When you look at the ecosystem of the four countries that we are focusing on (Laos, Myanmar, Cambodia and Vietnam), although the tourism industry is growing rapidly, tourism tech is relatively underdeveloped. In smaller countries like Laos, there may not be many tourism tech startups, but in Vietnam we have quite a lot of interesting ones. Cambodia is also quite vibrant and we have good quality. Myanmar is still very new and upcoming. We did not have many, but those that we had were good quality companies.
Startups in the Market Access Programme were very good. Overall, we are fairly happy with the interest in terms of the number for our first year.
Can you talk about the accelerator’s financing structure?
We provide grants through our sponsors, the Asian Development Bank and the government of Australia. But the prize money is not what makes us unique. The key thing for us is that our programme has a strong relationship with the industry. We work with strategic partners, one of which is the Mekong Tourism Coordination Office that represents the national tourism associations of six countries (Cambodia, Laos, Myanmar, Vietnam, Thailand and China). Through these networks, we host the MIST event at the largest private sector-driven industry gathering in the region, the Mekong Tourism Forum. It is a very high concentration of industry leaders in hospitality, hotel, airline and OTA as well as government leaders.
When we talked to the startups after the event, they realised that the main benefit to them was the relationship and partnership they developed, which can help accelerate their businesses. The prize money is a nice bonus.
What about the Market Access Programme?
The Market Access Programme is not for early stage, it’s for startups that have already generated profits or break-even in their own market. They can be from any market in the world with an interest in expanding into the Mekong region.
Last year, we went on roadshows to Thailand, Malaysia, Singapore, Korea and Hong Kong. We had a few applicants this year from Malaysia and we look to expand it next year.
For the finalists, the prize they get is the market access tour. We plan an itinerary for them to come to the one market of their choice and meet with suitable partners that will accelerate their interest in the market. We cannot guarantee it will be successful, but we make that process easier and less daunting.
Tell us about the partnership with Gobi Partners.
When we look at startups, we use two main criteria. One is commercial viability of the business. Will they attract investment? Do they have a scalable business model? Do they have a team to execute? The second aspect is whether the business model has a positive impact on the tourism industry.
Ultimately, it is not enough to be social, you need to be a viable business that can be invested in. So it is important that we have the perspective of the investor throughout the whole process. Gobi was a partner that was involved in programme design, and screening startups that we selected for the bootcamps and for the final.
They are also a partner that is potentially interested in investing. This was just the first year, while ours is a long-term strategic partnership. We will become a pipeline of the best startups across the region. Without this aggregate, it is very fragmented, and it is hard to find qualified startups. So, they see us as a platform to make the search for the best startups more efficient.
Do you plan to call for more investors and sponsors?
This year was about developing the product, and I think we now have a solid one in terms of value proposition and ideas for sources of funding, which is not limited to grant funding. We see a lot of potential for corporate sponsorship funding, more diverse grant funding, as well as revenue that can be generated in the future from the Market Access track.
But to make the programme successful going forward, and to ensure sustainability, we need a more diverse range of partners, both local and regional. For MIST 2018, we will be focusing on building and developing those partnerships with more local incubators that have an interest in the tourism industry, and regional programmes that we can potentially fit our best startups into.
If the programme produces good quality startups, the investors will come naturally. We have one or two anchor investors but I believe, over time, other investors will come.
What are the specific criteria for other programmes to partner with MIST?
If they have an interest in tourism and some added value, the incubators can partner with us in two ways. We see ourselves as the second step. For example, in Vietnam, we have already provided a new tourism incubator programme in Danang with a lot of applicants for MIST that were not quite ready for the next step. At the end of their programme, maybe some of the startups will be ready to re-apply for MIST 2018. So, it’s a two-way feed.
Our regional partners such as AirAsia, which has a tourism accelerator called Tune Labs, are very interested in the Mekong region. Some of our best startups can potentially enter into those regional or global programmes. So, we are the regional or second step between local and global.
There were a few institutional investors that are interested, like Gobi Partners, Monk’s Hill, Amadeus Next and Mass Challenge. There were also some angel investor syndicates.
How can technology disrupt the tourism industry?
We have already seen in other markets in the world the benefits technology can bring to tourism. It makes travel a more enjoyable experience by enabling the customers to develop an itinerary or to make the booking in the most efficient way. It can also make tourism more inclusive. It enables product and service providers at smaller scale or in more remote areas to promote their products to people who otherwise would not know about them. It’s not just about the hospitality vertical, it will also serve business travellers and the MICE industry (Meetings, Incentives, Conferences and Events). Technology can make event planning, logistics and transportation much more efficient.
So what are the new opportunities other than OTA?
One example is the MICE industry. There are more business travellers and events organised in the region. Some of the destinations in Mekong are great locations to hold events, thanks to natural geographic beauty, affordability and connectivity to major financial hubs like Singapore, Hong Kong and Bangkok. There is a lot of potential for technology companies to attract more corporates to come to this region by making it easier to do logistics. That’s an example of an important vertical, and we had a Thai applicant in that area.
There was an applicant that was very different from others, BorderPass from Malaysia. What they do is replace paper immigration forms with online profiles, which are sent to the destination country in advance. Passengers using BorderPass can skip the immigration queue at the airports. This is a business-to-government company; they need a very strong government support. Now the government of Malaysia is helping them and they’ve already had some “magic doors” at Malaysian airports enabling passengers to get through very quickly. Now they want to expand this to other ASEAN countries.
A Vietnamese applicant called Chameleon City provides online concierge service. When a traveller, or even a corporate, arrives in a country, sometimes they don’t know where to get the information. The startup matches travellers with local experts in real time.
And there’s the sharing economy. There is a lot of possibility to reduce costs for travellers through sharing.