Perspectives on the SEA Tech Ecosystem

I started on this journey of mine way back in July 2007 when I joined the team at Infocomm Investments (IIPL).  I was excited to be part of a skunkworks project to attempt to do the impossible – jumpstart the tech startup ecosystem in Singapore, by attracting and anchoring 100 R&D teams by VC-funded startups in 5 years.  We were operating IIPL like a startup, and like most startups, it took us a while to figure out the core utility of our ‘product’ (non-dilutive reimbursement grants to subsidize engineer salaries), its initial distribution (cold calling of funded startups by permutating and guessing emails), the pitch (Singapore as a destination) and once we got them interested, the eventually implementation (playing host and and helping teams get set up in Singapore).  I remember many things with great fondness; the leadership and team camaraderie we enjoyed, the aspirational tagline I coined that’s still in use today (“Build tomorrow, today.”) and the pride and validation our closely-knitted team felt when we read Paul Graham’s article, more than a year after we started on what had initially seemed like Mission: Impossible.

Even though I’ve since moved on from IIPL, I still feel very much a part of that family, and resonate very strongly with its mission.  I tell people I wear two hats; first as an Investment Manager of Neoteny Labs, and second as one of the many gardeners of the Southeast Asia (SEA) tech startup ecosystem.  I feel very lucky to be able to blend one of my hobbies with my profession.  In my free time, I think about and try to work on the bottlenecks our entrepreneurs face.

My Original Perspective

Recently, I’ve been obsessed with the lack of a critical mass of startup-friendly software engineers in the Singapore tech startup ecosystem.  It’s a bottleneck our second-decade tech startup ecosystem is facing, that I think has been exacerbated by easy money such as government micro-funding programs, however well-intentioned they may be.  Suitable candidates for founding engineers in Singapore-based startups that have raised financing can only get harder and harder.  I wanted to do something about it, and for starters, decided to invest some of my time with the Singapore chapter of the non-profit organization, Startup Roots.  You can read the recent article at e27 if you’d like more background on what we’re doing.  I see this as a long haul thing, but I believe its long tail net positive effect is important enough for us to start working on it now.  Interestingly enough, hackNY (which is similar in intent to Startup Roots) also got started recently as reported by TechCrunch.

To address the immediate needs of funded startups, I’m running a small experiment using StackOverflow’s recently announced Careers page, by having some of Neoteny Labs’ portfolio companies run jobs listings (work visas guaranteed!) to see if its community can provide us with a source of hirable engineering talent.  My hypothesis is that it won’t work as well as I’d like it to, but I’ll be happy to be proven wrong.

I’m also toying with the idea of lobbying for easily disbursable government grants (S$50k?) to support a portion of outsourced engineering by Singapore-based startups, with software development best practice leaders like Pivotal Labs, to encourage on-the-job training and skills transfer through paired programming.  I’m not sure how receptive the Singapore Government will be, but I’ll try.

And so I continue to fret about the shortage of hirable engineering talent, until I was given a fresh perspective by Steven Goh on Thursday afternoon when I called upon him at the Migg33 office.

My Refreshed Perspective

Steven proposed that the SEA tech startup ecosystem faces 2 key bottlenecks; namely the lack of plug-in monetization channels, and the lack of exits.

On the lack of plug-in monetization channels, Steven compared Southeast Asia with the maturity of the digital advertising ecosystem in the US, and the ease with which the tap can be turned on in the US once you’ve gotten some traffic.  I don’t think Steven’s wrong on this, but perhaps a better way to think about this is that the channels in SEA are a lot less transparent and less obvious than in the US or Europe for that matter.  Right now, the trick to unlocking monetization in SEA is to make sure you know the right folks holding on to the right keys.  Telecom operators, with their control over the phone bills of their hundreds of millions of subscribers here, is a natural first candidate that comes to mind.  How well telecom operators can function as monetization channels depends on how forward thinking and gung-ho their managements are.  Enterprise startups might be willing to spend a ton of their energy integrating with telecom operators’ systems, but certainly not consumer internet startups.  Other key holders are also in a good position to build a nice empire.

On the lack of exits, Steven said we’re going to need a bunch of >US$20 – 30m exits and young entrepreneurs driving around in their Ferraris to start attracting more students to study Computer Science, pick up Ruby/Python and Linux hacking on their own and quit large firms to join startups.  Steven also talked about the need for large corporations in the region to start acquiring startups to inject liquidity and infect the system with a little bit of greed, and for investment syndicates and private equity funds to push companies to IPO in this region.  OpenTable wasn’t ready for an IPO, but got pushed out of the door anyway.  And then a whole bunch of large-corporation acquisitions started happening in the US, which brought much life back into the Valley and restarted much of the recent “bubble”.  Something like these need to happen here.

I still think my original perspective holds water.  But so does Steven’s.  Hmm…

Post image courtesy of Robert Pagani – a look through lens

About James Chan

James Chan is an entrepreneur, investor, geek, photographer and husband/father based out of Singapore. Apart from frequent travels to Vietnam, Myanmar and Indonesia for work, James can also be found online via his trusty 15" Retina MacBook Pro or iPhone 6+.