Singapore is described as a very comfortable place to live in and do business. But with a small domestic market of 5.5 million people, it is difficult for Singaporean entrepreneurs to fully develop their business potential.
Thus, they will look to venturing abroad to seek growth. But venturing overseas is fraught with new challenges and facing the unknown. How does one prepare for this new adventure? I asked five young Singaporeans, who have taken the bold step of building their business overseas, for their insights.
Oversaturated market in Singapore, opportunities abound elsewhere
Competition is intense in Singapore in many industries. But what might not work in Singapore, there are other markets out there where the opportunity is ripe for the taking.
Training and development consultancy in the Philippines
“The training market is saturated in Singapore, operating here was being like a tiny fish in an overcrowded pond,” points out Michelle Leong, Managing Director of TenTen. Her company is a People Management and Strategic Business Consultancy that provides services ranging from corporate trainings and youth development programs to brand consulting and providing business solutions.
She looked out into the Philippines and after doing her market study, she realised that the training market was under developed in Iloilo City in the Philippines, especially in the area of leadership and management training programs. With her local Filipino partner, she started a branch office to capitalise on the opportunity.
Higher education financing in Malaysia
“Singaporeans are comforted to know that there are many financing and funding options for students in the major universities such as NUS, NTU and SMU. However, this is not the same in other countries of Southeast Asia,” observed Syakir Hashim. His co-founder, Tengku Syamil, who studied in Malaysia, noticed the lack of higher education financing among his peers.
This caused the duo to research further and to discover that the lack of funding had deprived students from potentially advancing their studies.
To resolve this issue, the team started Skolafund, a web platform that enables undergraduates to crowdsource their scholarships from friends, families, corporates and foundations. Their mission were to match deserving underprivileged undergrads with funders.
Social media app in the US
Paul Yang founded Lomotif, a social video app now used by millions worldwide. It is a new form of video expression which surrounds shareable and reusable clips. Paul boast that two videos are created every second on Lomotif.
It was by strategic positioning that Lomotif decided not to stay in Singapore. The sheer market size and early adoption of consumer apps was the reason he took the jump to the US.
He explains, “In terms of market size, the US have 318m people, about 58 times more than the population of Singapore. As a consumer app, we feel the US provides the potential for explosive growth. American youths are typically the earliest adopters of social media. They’re also usually more receptive when experimenting with new and different forms of expression. In the US, Lomotif took a life of its own since video is an already popular medium. In comparison, Singapore is now the 39th country by user base, contributing to only thousands out of millions of our Monthly Active Users.”
Real estate Ethical and Islamic crowdfunding in Indonesia and Malaysia
Umar Munshi saw the sheer size and demographics of the neighbouring Indonesia and Malaysia as the main factor of expanding out of Singapore.
He explains, “Our target market is Muslims and Ethical Investors. There are 200million Muslims in Indonesia and 20million Muslims in Malaysia. Singapore has only 5.5 million people and much less in terms of Muslims.
Furthermore, we also have access to a larger pool of specialised talent with knowledge and expertise in Islamic Finance and Islamic Economics. The cost of setting up and operating in these territories is also much lower, allowing us to have more resources on a lower budget.
In terms of real estate, there is a much greater abundance of real estate-related social impact projects available in these countries.”
Umar founded and is Managing Partner of EthisCrowd.com, which focuses on crowdfunding direct investment into real estate development projects. EthisCrowd has thus far matched crowdfunded funds to projects in Indonesia that will eventually provide a total of 5,000 subsidised low-cost houses.
Bringing music as a branding tool into Southeast Asia
Jerry Chen believes in-store background environmental music enhances brand recall for merchants. He founded Express Melody, which provides audio branding solutions that maximizes revenue with brand recall optimization. The patented cloud technology allows management control of in-store background environmental music, which have helped merchants achieved higher sales, increased productivity, costs savings and legal assurance.
He found Singapore going through a retail fatigue. Merchants were complacent and were unwilling to make changes, especially in in-store background music. However, as he travelled to emerging markets in Southeast Asia, F&B players were eager to know more about how they are able to develop their business. In terms of using music as a branding tool, they are much more receptive to ideas and recommendations from Express Melody. This confirmed his decision to operate in new markets.
Challenges operating in a foreign market
Cultural differences in consumer behaviour
Coming from Singapore, Paul needed to adapt to the US cultural norms in order to grow his user base. “Most of us are not your typical selfie-loving, American teenager. We had to make conscious effort to start using Snapchat although few of our friends were on it. We follow and respond to our users on social media so I think we’re making headway in this, and insights from our user are now helping to shape our product on a daily basis.”
Umar found that investing online is relatively new, compared to Singapore. “For both Malaysia and Indonesia, investing online is still new and common only among early adopters. We have had to organise physical talks and briefings to educate our crowd.”
Syakir echoes the importance of understanding the mindset of the new market. He says, “Every country, especially in Southeast Asia has its own unique culture. This affects the way we conduct our business in terms of the product, marketing and the nitty gritty legal issues. We had to spend some time understanding the culture and psyche of the Malaysian society. This helped us in the messaging of our platform and creating a product that can be used by all Malaysians.”
Operating and setting up a business uniquely different from Singapore
Syakir continues, “Setting up a company and settling the nitty gritty issues like incorporation, bank accounts and visas can be a huge headache at first. It is different and more complicated from the way that Singapore operates.”
Michelle agrees with this assessment. For her, it took her months to integrate in with the Filipino way of doing business. She explains, “There were many unspoken cultural norms that I had to pick up in order to gain the trust of the locals. I had to adjust things like work hours (strictly 9am-6pm, and 21 days of mandated public holidays leave, to name a few) in order to adapt to their local expectation of work-life balance.
There were a few times I accidentally flouted the laws without even realising it. No matter how much you research beforehand, there will still be all those nitty gritty things that just add to the learning curve.”
For Umar, he faces unclear regulations, especially in new verticals like crowdfunding. “In Indonesia, crowdfunding and P2P is not yet formally regulated, while in Malaysia we had to go through the highly intensive and expensive process of applying for a license from the Securities Commission. In order to operate, our platform has so far matched investors directly to project owners, without facilitating the flow of investment through our platform.”
Keeping the fighting spirit going
The entrepreneurs share that it gets lonely and discouraging when building their startups overseas. So what do they rely on to keep that fighting spirit going?
Getting a boost from the local startup networks and IE Singapore
Paul describes the benefits of being connected closely to the startup community. Based out of SF, he emotionally describes “the startup community’s pay-it-forward culture is so tangible here and it is what enables us to do more with less. Blk71SF provides more than free office space, but also enables us to connect to likeminded entrepreneurs whose couches we sleep on, and whose shoulders we cry on from time to time!”
The Lomotif team also participated in a platinum-tiered accelerator, StartX. The resources and access to networks provided by the StartX community has augmented how Lomotif operates in the Valley, and given his team valuable mentorship from some of the best minds in consumer tech, including top-notch founders and VCs. Even after graduating from the accelerator, the team still reaps the benefits and our network is growing stronger.
As for Skolafund, the team was fortunate to have received support from key players of the Malaysian startup ecosystem such as the ASEAN Centre for Entrepreneurship (ACE) which is a part of MaGIC, the Maybank Innovation Group and many other organisations in Malaysia who were very welcoming and helped connected them to the Malaysian startup ecosystem.
While Jerry did not connect with the local startup community, he is grateful to IE Singaporeand the NRA grant. “The officers were very helpful in Indonesia and especially Myanmar. Not only did they offer support financially, but other crucial assistance such as the right connections and market access. Through them, we were able to gather valuable insights from local F&B players, not as prospects but to understand the local market.”
Family and friends who believed and supported
Syakir describes how bootstrapping the company in another country can get stressful. He credits his family and friends, as well as friends of Skolafund on social media and also the helpful Malaysian startup community who helped pull them through the difficult times. He specially highlights Dato’ Fazley Yaakob and Imran Ajmain who used their social media influence to help publicise Skolafund in Malaysia.
For Michelle, she honestly felt the biggest support came from family and friends who not only journeyed with her, but also invested financially into TenTen.
Staying true to conviction
In addition, Michelle believes in her cause which keeps her going. She shares her convictions, “TenTen’s vision is to Inspire Lives and Transform Communities. So even though transformation comes at a cost, I am willing to pay the price. No matter how tough times get, it is knowing that our company would be inspiring the staff, clients and the communities around us.”
Umar has a similar conviction. “The ability to create huge social impact, and the great need for such efforts would be the main motivation for me. Our money in Singapore can go a long way in a country like Indonesia. For example, when we provide crowdfunded bridging finance of S$100,000 to a developer in Indonesia, that fund can be used to build 30 houses for 150 people, with leverage from the local bank.”
Making every day count
Paul shares the personal pain of being away from Singapore. “To be in SF, I sacrifice a lot of time with my family and team back home. There’s just so much opportunity cost to being here, that it reminds me to make every day count. When the day is over, we will never get it back, and our chance to move the needle for our business that day is gone. Of course this applies whether you’re working overseas or Singapore, but that reality is so much more pronounced here.”
Advice to Singaporeans venturing overseas
Singapore companies who want to scale up has to go out of Singapore eventually. So what advice do the startup founders have?
Syakir advises, “In entering new markets especially in this region, it is important for us to be humble and spend time to understand the local people and their cultures. Additionally, it may make your journey easier if you are plugged in to the startup ecosystem by building lasting relationships with the key players.”
Paul says, “While It’s great to understand where your natural market is, as you’re more likely to hit some sort of inflection point when you find users and customers who are as excited about your product, and will help you spread the word.
Having said that, for a resource-strapped startup, I don’t believe it’s important to be physically present in your target market 24/7. There are other ways you can reach out to your users digitally, and form an authentic bond. Although I’m in the US most of the time, our team in both Singapore and US Skypes daily that I don’t feel that I have left.”
Michelle highlights the need to “be prepared for anything and everything. So make sure that when the going gets tough, you have friends who remind you of your WHY.”
Jerry talks about the Singaporean mentality of metrics. “When I was in Cebu, I heard the Filipinos say that ‘Singapore is a country of metrics’. We habitually use numbers and statistics and we have proof, evidence that everything works. Use this mindset to boost your credibility.”
Umar advises on leveraging Singapore’s reputation. “Singapore has a good reputation and credibility in many countries. Singapore entrepreneurs can use this to their advantage, as long as the business is able to uphold the high standards of efficiency and productivity expected of them. The key thing is to identify local communities, organisations and resources that you can align or collaborate with. Having good local partners and collaborators will help open up doors, opportunities and new market segments.”
As we celebrate Singapore’s first of the next fifty years, it is a timely reminder that Singapore’s economic success was founded on entrepreneurship and determination. And as a nation to continue its relevance in this globalised world, may it continue to grow a new generation of entrepreneurs who are delivering change and impact to the world around them.
These Singapore entrepreneurs have shown that it is possible to launch out in another market. And may they be an inspiration to Singaporeans to reach for new heights.
To all Singaporeans, wherever you are, Happy 51st National Day!
This is the fifth article of the Heartware Singapore series, where the author shares on different topics to spur the Singapore startup ecosystem.
This article first appeared on Tech in Asia.