Raising money all the way to IPO. Possible?

Ending the morning session of Echelon Day 1 was a panel discussing trends in the global investment markets and the challenges that startups face in establishing their business as a compelling investment case.

With so many seed funding schemes available now, is it almost as if getting funded in early stages is becoming a fad. Therefore, how can startups gain enough traction and progress all the way to a successful exit? Could it be the immaturity of the investment ecosystems, the market infrastructure, or simply, the lack of scalable startup business models?

Moderated by Mike Holt, Managing Partner of Get2Volume and G2VAccelerator, the panel consisted of familiar names, McClure เดฟ, Founding partner of 500 startups, Vincent Lauria, Managing Partner of Golden Gate Ventures, Chua Kee Lock, President of Vertex Venture Holdings, Yasuhiko Yurimoto, Founder of Global Brain, and Yasuyuki Konuma, Director of Business Development of the Tokyo Stock Exchange.

The session started with a common acknowledgement that mature markets all over the world are working on IPO phases. แต่, there is still a long way for Asian to reach that maturity. Nonetheless, there are significant movements in Asia that are beginning to help guide companies from seed all the way to IPO.

Tech startups aren’t global from the start. Can Southeast Asia and Singapore startup go global?

While Dave and Vincent felt that markets with low Internet penetration signify an exciting potential for growth, Kee Lock mentioned that the biggest challenge of the SEA markets is the diversity of different cultures in small collectives. เช่น, markets such as Malaysia, สิงคโปร์, Thailand as an independent market is too small and too different to target at once. Therefore, he felt that startups should start aiming for bigger markets such as China and India first before narrowing down to markets with a much smaller population.

แต่, Dave had a differing opinion and emphasized on the natural advantage of the local. “China may be a harder market to enter as compared to Vietnam or Thailand just because of the amount of competition in China. Sometimes, I think that people go global too fast before taking advantage of their local market in which gives them a substantial advantage over anyone else outside. If you have a 40 to 50 million user market, you can do quite well in your local markets before going global too.”

Beyond what is happening in the markets, are ecosystems improving at all?

ในสิงคโปร์, there are definitely great opportunities for startups to get funding. The governments have also increasingly encouraged people to take on entreprenership as a career option. แต่, Kee Lock felt that there is still a Series A crunch in SEA. Unlike places like U.S. และ อินเดีย, startups are unable to raise money from 2.5 to 10 million. And this is possibly because of the limited population that turn investors away.

Dave added on to say that the biggest problem is not just finding access to seed stage capital but having an ecosystem that is able to lead the startup all the way through to a successful exit. Specifically, a 250k to 2 million dollar fundings are lacking in many markets.

ดังนั้น, are these seed funding schemes useful or detrimental?

“I’m worried when the founders are too focused on the funding schemes, grants and not the customers themselves. A 500k funding can last you for 6-12 months, but at the end of the day, you still need a business model. It is a means to an end, but definitely not an ultimate goal to keep thriving for funding.” says Dave.

Yasuyuki went on to add that great business models do exist. He gave examples of how innovations are kicking off in schools and in corporation divisions in Japan. แต่, funding schemes have yet to take opportunities to invest in these ideas and simply let these innovations go unnoticed and undeveloped. This is one area where he mentioned that the Japanese can work on.

Nonetheless, all the panelists felt that grants are always good. The SEA investment and VC markets may not be as mature as the ones in U.S. but Asia is catching up. We must not forget the time lapse, afterall, the U.S VC market took 40 years to get to where it was today. Asia is just getting started.

Advice to entrepreneurs looking to raise money

Dave: “Focus on customers and marketing your product as much as possible. Emphasize simple revenue models and good Internet marketing, not creating the next new sexy technology out there.”

Vincent: “The region is full of potential in its e-commerce market because it has yet to mature. Entrepreneurs who can tackle payments gateways with as much innovation as those in the U.S., look for me.”

Kee Lock: “Three things. Be clear on what you want to do, know your start and end point. Address a pain point and a market that actually exists. And lastly, create clear milestones that address the future. Work on the future.”

Yasuyuki: “Businesses are globalizing. This about regional-based ecosystems such as Japan. Entreprenuers are rising and governments are starting to listen to them while trying to recover the economy at the same time. Markets such as Japan are opening up to more English speakers, and international people.”

Yurimoto: “There is a business chance because many Japanese VCs are looking to enter the SEA markets. ASEAN startups should take advantage of these Japanese corporations and their assets, form an alliance, and increase the growth of SEA exponentially.”

Featured image credits: Shutterstock

This is a live coverage of Echelon 2013, Asia’s largest tech conference. Follow the hashtag #echelon2013 to join the Twitter conversation. View the full coverage ที่นี่.

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