Expanding into Asia can be a very attractive but complicated process for first-time entrepreneurs, and some subtle but important factors often go unnoticed. Asia is a very heterogeneous continent with a wide variety of languages spoken, numerous cultures, religions, and many more nuances that are important to consider. The most common question is: “Where to start?” In this post we summarise tips we brought back from our recent Hong Kong trip from local players to help entrepreneurs jump-start their businesses into this attractive new marketplace.
Earlier this year we announced an exciting partnership with Hong Kong’s Blueprint accelerator, powered by Swire Properties. This relationship is in-line with our ethos to support the growth of Asia’s exciting startup ecosystem, as our very own former Investment Manager, Hilary Szymujko, runs the accelerator program at blueprint.
After a successful series of intensive workshops run in January, last week Carlos Espinal, Partner at Seedcamp, returned to Hong Kong, to continue this constructive partnership in our attempt to meet and support ambitious startup founders.
The agenda kicked off with the new cohort of Blueprint startups pitching to Carlos for early feedback and the week worked its way up with a series of workshops Carlos delivered on brand identity and positioning, the fundraising process, and common failures points during company building.
While being there we thought of organising a Seedcamp Meet & Greet event to explain to the Hong Kong startup scene who’s behind Seedcamp, what types of teams we look for, and all the support we provide to entrepreneurs with a global mindset.
We couldn’t have left without meeting local key players in the investment ecosystem, such as Tytus Michalski, Managing Director at Fresco Capital and Bay McLaughlin, Co-Founder at Brinc.io. And while we were on it, we’ve put together a Seedcamp Podcast Series focused on Asia, reporting their suggestions and tips for founders ready to expand into Asia.
Here’s a summary before you hit the play button.
In the first of a two-part Asian Podcast series, Carlos Espinal talks with Tytus Michalski, Managing Director at Fresco Capital. After discussing his background, how he became involved in investing, Tytus offered his insights on what founders should consider when expanding into Asia and the risks and challenges of not taking into account the cultural differences.
From an ecosystem perspective, Tytus explains the Chinese market is very different from Europe and Silicon Valley and offers founders recommendations on what mistakes to avoid when approaching the Asian market by having the right mindset:
- Hire the right people: local and entrepreneurial “If you’re expanding into Asia then don’t lead it from your own country. Hire a local person who is able to drive the expansion, who knows the rules of the game and how the local ecosystem works.”
- Adapt your business model “Some business models such as SaaS (software-as-a-service), that find success elsewhere, don’t always work in Asia. Locals are not used to paying for software through a monthly subscription unless they own the license. Consumers have the habit of buying products. So one approach to adapt to the local mindset could be to bundle hardware with software and get higher value in terms of revenue.”
- Prioritize the top markets (i.e. countries or cities) across Asia that you would like to target “Think about how you can adapt your business model to that market or pick the market that best suits your business model, and set up the right plan for engaging with your customers.”
Part-two of our Asian Podcast series continues the discussion about the Asian investment ecosystem with Bay McLaughlin, Co-Founder at Brinc.io. With nearly a decade of experience in startups and at Apple, Bay decided to move to Asia, learn about the local startup ecosystem through his partner’s network and experience, and start supporting the new generation of hardware entrepreneurship.
We asked Bay what are the challenges for hardware entrepreneurs in penetrating this geography and what are the best ways to do so successfully. So Bay… Where to start?
- Partner with local businesses “We tend to tell the entrepreneurs we work with that they can accelerate the time needed to take their product to market by focusing on partnerships with local businesses. Partner first, get mentors, and then bring on board the talents you need.”
- Look at your team and the competences you need in your team “Hardware is not hard as it seems! But the experience that you actually need to do a fiscal product development is undeniable more complicated. You need to look at your team and the competences that you need in your team.”
- Be open-minded and learn from locals “The founders that are most successful are those who are open-minded and really learn from the locals. Coming to Asia with the mentality that you are going to run your business in the same way you did in the West is not the right approach. You have to learn how the local ecosystem works, you can’t deny or not to pay attention to the Asian way of doing business.”
We’re wrapping up our Asian series by interviewing Xania Wong, CEO at JOBDOH, a Hong Kong-based, Seedcamp-backed company that links short-term workers with employers. JOBDOH’s vision is to transform the way we work and live. They target the hospitality, exhibitions and promotions markets, of which all are growing strongly in Asia with a large demand of fluctuating daily workers. Xania shares her experience launching her first business in Hong Kong.
To founders who want to expand to Asia, what would you recommend? What’s the key thing to keep in mind?
- Team background and local ties “The team background is critical to the business success. All founders have both local and international experience and networks. Combining a foreign know-how, domestic roots, and networks in Hong Kong, Singapore and Thailand helps fasten the market entry.”
- Business model fit “The adoption to technology in Asia tends to lag behind Europe and US a few years, so innovation we witnessed in the West is now being rapidly applied and accepted. For example, Uber just launched in HK last year, and many uber for X models or marketplaces are now starting to spread across India, Indonesia and HK.”
- Recognize the local culture and customs “It’s important to recognize that culture and customs in specific Asian countries can be vastly different, even those across China are not homogeneous. While China is attractive due to its potential market size, the challenges in penetrating this market can be paramount. It’s very important to have local partners in these places. Also being able to speak a few words in the local language (and to drink!) will help build relationships sooner.”
We are seeing a rapid growth in the Asian ecosystem. Co-working spaces, funding programs, accelerators and incubators are popping up rapidly, making this geography more and more attractive for Western founders. But it’s clear that tapping into the Asian market is still a challenging process. Above all, it requires entrepreneurs to be open-minded, learn local rules, and adapt to the local culture.
Hopefully you’ll find the advice and the podcast series insightful! Remember that after all… opportunities reside where things are not necessarily obvious!
If you run a disruptive startup with global ambitions, we want to hear from you! View our events page to apply to the next Seedcamp Week or meet with the Seedcamp team in advance. Don’t forget to follow us on Twitter for the latest news. Best of luck!