Factors that Can Make Startup Ecosystems more Valuable in Asia

Opinion28.03.2017
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Asia’s got its big startup ecosystem players like Singapore, Japan, and South Korea that have seen significant rise in startups as well as government support in strengthening their startup ecosystems. In fact, 2015-2016 saw the biggest increase in value for the 30 biggest startups, after investors had thrown a lot of money at highly promising “dream big” startups during the past couple of years.. In Asia, these include such giant startups like Malaysia’s Grabtaxi, Vietnam’s VNG, Thailand’s Lazada, and Singapore’s Garena and Razer. Valuation of startups is important at every stage development and growth and different factors can affect the value of a startup in those different stages. Market conditions, investor environment, political environment, and government support are just some of the broader factors that influence the value of startup ecosystems. For Asia, building and maintaining an open investor environment, strengthening digital infrastructures and government support are key to increasing the value of the region’s startup ecosystems.

Open Investor Environment

Startup ecosystems thrive on external investments. For startups in Asia, it’s the smaller players that will define the sustainability of the region’s startup scene. It is often the smaller startups that struggle the most to get off the ground with their ideas when shadowed against bigger players. Having an open environment with relaxed laws and incentives for external/foreign investors to come in and help smaller startups take off is therefore crucial. The region has witnessed a shift in investment strategies by investors with more focus given to the growth progress and sustainability of their investments. We can look to Singapore in how this investor environment has been nurtured and even expanded beyond geographical borders. Governments therefore need to assess the types of international diplomatic and investment relations that need to be fostered with countries that house strong candidates for investments for their own startup ecosystems.

Strong Digital Infrastructures

It is no surprise that the countries in region that are most progressive with their startup ecosystems are also ones where digital infrastructures are very strong. For countries that want to see their startup ecosystems thrive and their startups increase in value, governments need to give priority to strengthening their digital infrastructures and invest in research and development for their technology sectors. Tech-startups or even the biggest startups rely heavily on digital platforms that help them multiply their user base at a rapid pace. Therefore, in order for smaller startups to tap into the digital economy and use digital platforms to maximize the value of their business (and increase their user base), a strong digital infrastructure is imperative. Beyond this, governments also need to consider the ease of doing business in their digital economies and how best to attract potential entrepreneurs to easily engage in the digital economy and set up their tech-startups.

Government Support

Countries that are still catching up with the startup scene and would like to see their own startup ecosystems grow need to create a strong base for entrepreneurs to set up their startups. This includes building their own internal capacity to provide the support and services to their startup ecosystems whether through setting up startup complexes, big data support, capital support, etc. One only needs to look at Singapore to understand the ROI from governments taking initiative in ensuring that their startup ecosystems have a strong base to grow on. And it is something that other countries that are still catching up can start thinking about and create a strategy for.

Ultimately of course, the success of a startup really depends on that one brilliant idea that delivers on its promise. But brilliant ideas in a highly competitive environment sometimes need all the help they can get in order to turn them into reality and take off as a fully formed business. While both entrepreneurs and governments need to work together in growing their startup ecosystems, governments can play a more defining role in ensuring that the right pieces are in place in order to attract the right investors and encourage smaller players to take part in the startup scene.