Startup Nations Asia

May 13th
2014
1
STARTUP NATIONS ASIA
MEETUP
WITH STARTUP KOREA ROUNDTABLE

 This material is the result of collaborative work of the Bank
Foundation for Young Entrepreneurs and the delegates of
Asian countries that participated in the event.
 The contents herein are based on publicly available
information and the delegates’ experiences/knowledge.
 Please refer to ‘Startup Nations Asia Meetup’ when you use
this material
2
DISCLAIMER

1. Understand Asia’s current startup ecosystems
2. Share insights on development of startup ecosystems
3. Devise ways to collaborate and learn from each other
3
PURPOSE OF OUR MEETUP
Asia Startup Ecosystems Presentation
Panel Q&A
Group Discussion

5
ASIAN STARTUP ECOSYSTEM?
- London: the largest hub
- Paris & Berlin: active
entrepreneurial places
- 8 of the top 10 startup
ecosystems in North America
- Exemplary startup ecosystems :
Silicon Valley & New York City
- Tel Aviv: 2nd best startup ecosystem
- Highest density of tech startups
thanks to funding from government
Benchmark others?
Understand & design our own?

 Economy: Rapid growth
 GDP growth since ’09:
China ~9%, SEA ~6%
6
ASIA OVERVIEW
The World Bank, IMF Data
 Potential for Startup hotspot
 Immense Human resources
 Untapped local markets
 Incoming foreign investments
“Technology advancements are making
ideas travel faster and faster than ever
before… In the coming years, ‘made in
Asia’ will increasingly become ‘invented
in Asia’.”
Rebecca A. Fannin,
Author of Startup Asia

 6 basic pillars with 3 major research data sets
APPROACH
Key reference reports (Publisher): Doing Business 2014 (The World Bank / IFC), 2013 Global Report (Global Entrepreneurship Monitor), Global Competitiveness Report 2013-2014 (World Economic Forum)
Regulation Market / Infra
Finance Technology Talents
Culture

 Each countries evaluated based on statistics & surveys
8
FOUR GROUPS OF STARTUP ECOSYSTEMS
IN ASIA
Market
/Infra
Regulation Financing Talents Technology Culture
China 1 2 2 2 2 2
Hong Kong 2 1 1 1 1 2
India 3 3 2 2 2 2
Indonesia 2 3 2 3 2 2
Japan 1 2 3 2 1 3
Korea 1 2 3 1 1 3
Malaysia 1 2 1 1 1 3
Philippines 3 3 3 3 3 1
Singapore 2 1 1 1 1 2
Taiwan 2 1 1 2 1 2
Thailand 3 2 2 2 3 1
Vietnam 3 3 3 2 3 1

FOUR GROUPS OF STARTUP ECOSYSTEMS
IN ASIA
Market
/Infra
Hong Kong 2 1 1 1 1 2
Taiwan 2 1 1 2 1 2
China 1 2 2 2 2 2
India 3 3 2 2 2 2
Vietnam 3 3 3 2 3 1
Japan 1 2 3 2 1 3
Korea 1 2 3 1 1 3
Market
/Infra
China 1 2 2 2 2 2
Hong Kong 2 1 1 1 1 2
India 3 3 2 2 2 2
Japan 1 2 3 2 1 3
Korea 1 2 3 1 1 3
Taiwan 2 1 1 2 1 2
Vietnam 3 3 3 2 3 1
 Finding similar patterns among different countries
 Grouping the countries into four categories

 Hong Kong
 Malaysia
 Singapore
 Taiwan
10
GROUP 1

 Easy incorporation  Relatively affluent funding
I. ATTRACTIVE & MATURE ENVIRONMENT
TO START A BUSINESS
- HONG KONG, MALAYSIA , SING APORE, TAIWAN
0
10
20
30
40
50
60
Starting a business - Days
0
10
20
30
40
50
Starting a business – Cost
(% of income per capita)
(0)
(20)
(40)
(60)
(80)
(100)
(120)
(140)
Venture capital availability (Rank)
(0)
(20)
(40)
(60)
(80)
(100)
(120)
(140)
Ease access to loans (Rank)
11

 Case of Malaysia
 “Economic Transformation Program”
 Entrepreneurship as a lever to develop national
economy
 Starting in 2010, by Performance Management and
Delivery Unit
 ‘Vision 2020’
 Openness and innovation and emphasized
 Government Initiatives to support funding
 “Cradle Fund”
 Since 2003, by Cradle Fund Sdn Bhd
 Currently managing $50M (almost 500 pre-seed projects)
 Tax break to individuals investing in startups
 Establishment of trade body for angel investors
12
TO START A BUSINESS

 Case of Malaysia
 Malaysia’s noticeable improvement in regulations since 2009
13
TO START A BUSINESS

 Relatively weak entrepreneurial
spirit
 Efforts to promote
entrepreneurial activities
 Case of Singapore
 Case of Hong Kong
 iStartup@HK : one-stop shop for
entrepreneurs
14
TO START A BUSINESS
* HK data not available
0
10
20
30
40
50
60
70
80
90
Entrepreneurial intentions

 Will educational programs be effective in building
entrepreneurial culture in these countries?
 How does ‘being business-friendly’ in general differ from
‘being entrepreneurial’?
15
I. I. ATTRACTIVE & MATURE ENVIRONMENT
TO START A BUSINESS

• Japan
• Republic
of Korea
16
GROUP 2

 Technological advancements: base for innovative startups
 World leading technology oriented companies
17
II. TECHNOLOGICAL CAPABILITIES NOT YET WELL-
SUPPORTED BY BUSINESS ENVIRONMENTS
- JAPAN , REPUBLIC OF KOREA
(0)
(20)
(40)
(60)
(80)
(100)
(120)
(140)
(160)
Availability of latest technologies
(Rank)
(0)
(10)
(20)
(30)
(40)
(50)
(60)
(70)
(80)
(90)
(100)
University-industry collaboration in R&D
(Rank)

 Lack of ability to attract new talents
 Capacity to attract < Capacity to retain
18
(0)
(10)
(20)
(30)
(40)
(50)
(60)
(70)
(80)
(90)
(100)
Country capacity to retain talent
(Rank)
(0)
(10)
(20)
(30)
(40)
(50)
(60)
(70)
(80)
(90)
(100)
Country capacity to attract talent
(Rank)

 Obstacle: Difficult funding  Case of Korea
 Efforts for better financial infra
 Korea Fund of Funds: $1.6B
 “Growth Ladder Fund”: $6B
 Small and Medium Business
Administration’s various
funding schemes for startups
 “Future Creation Fund”: $0.5B
of public-private partnership
 Increased tax break for angel
investors and technology
oriented M&A deals
19
(0)
(20)
(40)
(60)
(80)
(100)
(120)
(140)
Ease access to loans (Rank)
(0)
(20)
(40)
(60)
(80)
(100)
(120)
(140)
Venture capital availability (Rank)

 What role could the large tech corporations play for the better
startup ecosystem?
20

• Indonesia
• Philippines
• Thailand
• Vietnam
21
GROUP 3

 Entrepreneurship as a viable and prominent career option
 Being optimistic, outgoing & aggressive: Entrepreneurial
22
III. ACTIVE AND OPTIMISTIC CULTURE SPURS
ENTREPRENEURIAL ACTIVITIES
- INDONESIA , PHILIPPINES, THAILAND, VIETNAM
0
10
20
30
40
50
60
Perceived Opportunities
0
10
20
30
40
50
60
70
80
Perceived Capabilities
“…An aggressive and hungry mentality in a post-communist landscape…”
Tech in Asia,
‘10 reasons why Vietnam’s startup scene is the most aggressive in Southeast’
Sep. 2013

 Case of Indonesia
 Young 5 million registered startups
 Workforce of 67% of entire population
 Mean age of workforce below 30 years old
 Over 3,000 universities, 1 million graduates every year
 Ciputra Foundation
 Founded by Indonesia’s 5th largest conglomerate Ciputra
 Universitas Ciputra Entrepreneurship Center
23
“Entrepreneurship and Startups are key to save 1 million young college graduate
jobless people and many youngsters who cannot find work”
Ir. Ciputra

 Active involvement and
successful startup cases
 Leaned towards startups
with limited growth potential
 Success cases focusing on
simple e-commerce model
 Local market oriented
 Already proven business
models or products/services
24
0
5
10
15
20
25
30
Early stage entrepreneurial activity (TEA)
“Indonesia’s consumerism is expected
to grow further and e-commerce
continues to play a critical role in it.”
Andy Surja Boediman*
*Comment rephrased

 What kind of education program is in need to help this
entrepreneurial culture become sustainable businesses?
25

• Beijing/
Shanghai
• India
26
GROUP 4

 Case of India
 Success Cases
 Government’s Initiative
 Startup Village in Kerala
 Case of China
 Success Cases
 Government’s Initiative
 千人計劃
27
IV. ABUNDANT HUMAN RESOURCES ARMED WITH
KNOWLEDGE AND EXPERIENCE
- BEIJING/SHANGHAI, INDIA
 Superstar cases stirring up hype for startups
 From copied foreign services to its own innovation
 Initiated by elite group and immense human resources

 Yet meaningful differences between China and India
28
(0)
(20)
(40)
(60)
(80)
(100)
(120)
Burden of government regulation
(Rank)
(0)
(20)
(40)
(60)
(80)
(100)
(120)
Fixed Broadband internet
subscriptions/capita (Rank)
 Internet penetration
 India 13%, China 42%
 Cost of starting a business
 vs. OECD average:
India 13x, China 0.6x

 What are the most important pillar that China and India
should strengthen to leverage its large size?
29

Answers to the
question(s) for
each group
30
PANEL DISCUSSION

 Will educational programs be effective in building
entrepreneurial culture in these countries?
 Singapore: Need to apply experience in mentoring and coaching
 Malaysia: different programs need to be designed differently as there
is a difference between rural and urban areas
 Taiwan: The role of VC is required. Often VCs request up to 80% of
equity and it does not help nurture startup ecosystem. In order to
resolve the issue, mentoring for VCs and startups are called for.
 How does ‘being business-friendly’ in general differ from
‘being entrepreneurial’?
 Malaysia: Being entrepreneurial is more innovation-driven and more
agile, thus lead to higher growth
31
I. I. ATTRACTIVE & MATURE ENVIRONMENT
TO START A BUSINESS

 What role could the large tech corporations play for the better
startup ecosystem?
 Japan: Highly educated workforce still prefer working for large
corporates such as Sony. So the large corporations need to be more
active in partnership with startups to change people’s perception on
entrepreneurship.
 Korea: Corporates such as Samsung could partner with startups to
share their downside risk as well as upside potential.
32

 What kind of education program is in need to help this
entrepreneurial culture become sustainable businesses?
 Vietnam: Should help understand what startup players are – VCs,
accelerators, incubators
 Thailand: Need to focus on improving competency. The level of
computer science talents produced through universities is not
sufficient.
 Indonesia: Need to teach “fail fast, fail cheap, fail often.” Should not
education just to educate. Education should inspire, train then linked
to incubate
33

 What are the most important pillar that China and India
should strengthen to leverage its large size?
 India: Need better infrastructure (business centers, internet
penetration, regulation)
 China: Culture that encourages youth to go into entrepreneurial space
and respect failure. Also, copycats that allows easy money is not
helping.
34

 What is the best way of collaboration between public and private
sectors for entrepreneurship?
 David Chung(HK), Buke Cuhadar(Startup Nations), Inse Hwang(SK), Bomi
Kim (SK), Kyung Lee(KISED), Linda Mostrup Pedersen(Malaysia),
Jaeyoung Park(KOEF), Ivan A. Sandjaja(Indonesia)
 How can we help developing more vibrant startup community?
 Amarit Charoenphan (Thailand), Jinyoung Chung (SK), ), Hoon Jung
(Startup Alliance Korea), Jaesun Jung(Seoul Business Agency), Dongyeol
Lee(Japan), Hay Nguyen(Vietnam), Mukul Pasricha (India),
 What are the education program that entrepreneurs need?
 Jorge Azurin(Philippines), Denny Bernardus(Indonesia), Yoonchung
Chey(SK), Rebecca Hwang(Rivet Ventures), JJiaojiao Lu(Shanghai)
 How can we overcome the barriers that entrepreneurs face in
terms of investment?
 Serb Jodha(Malaysia), Eugene Kim(Sparklabs), David Kuo(Taiwan), Hugh
Mason(Singapore)
36
PARTICIPANTS OF GROUP DISCUSSION

37
PUBLIC & PRIVATE PARTNERSHIP
Voice from the discussion Potential next step (Ideas)
• What is difficult from private’s point of view
when working with public?
− Different work protocol and customs
(paper writing, needs for numbers, etc.)
− Competition among organizations and
politics
• What is important to make the partnership
successful?
− Government needs cause and logic
− Multi-parties relationship can work
(including global companies, Indonesia)
• What can we do for better and more efficient
partnership?
− Helping governments to build network
and learn from each other
• Encouraging government
officers to participate in
Startup Nations Summit in
November
− Workshop for
government officers
followed by co-
workshop with private
sector leaders

38
STARTUP COMMUNITIES
• How can startup communities be activated?
− Diverse small groups need to be
connected in different ways, especially
among the ones who are in different
fields
− Emergence of ‘community curators’ will
bridge across different communities to
create synergy
− Push-pull approach is needed where
startup ecosystem is not strong
• Is there any best practices that can be
shared?
− Co-working and Co-living concept
community in India
− Korea’s SK HCL Lab gathers different
people gather for a new projects
• Build a space sharing
program
− Startup programs/ co-
working spaces of
different Asian
countries can be
shared across borders
− Build online
community for the
purpose

39
EDUCATION
• What are the different types of educational
programs?
− Motivational lectures from successful,
experienced entrepreneurs
− Training programs that actually push
participants to start a business
− Providing problems/issues to solve that
leads to students launching a business
that solves the problem
• How can we make educational programs
more effective?
− Build entrepreneurial spirit as early as
possible so shy culture of Asia can be
overcome (in K-12 programs)
− Leverage already available resources
• Build archive of
educational programs
− Publicly available
videos or materials
that are worth sharing
− Programs designed
and executed in
different countries to
the participants can
benchmark each
other

40
INVESTMENT
• Why should investor communities
collaborate?
− Asia has many success cases that are
worth sharing
− Investors need to build confidence in
market by reinforcing each other
• What are the benefits of educating investors?
− Facing overflow of money available to
startups in Asia, traditional investors
lacks understanding in the area
− Making them understand the virtuous
cycle of startup ecosystem will
encourage more successful
entrepreneurs to act as investors
• Sharing ways to sort our
Zombie startups given the
current situation of
boosting startups
− Constantly update
investors in other
countries with cases
from each country
− Share successful
funding cases

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