THE biggest gap in South-east Asia’s startup scene lies in talent, said a top executive at Singapore’s Economic Development Board (EDB). Even as opportunities abound, the region lacks senior product managers and engineers partly because it does not have a history of building “brilliant” tech systems.
“So we need your Travelokas and Tokopedias (two of South-east Asia’s unicorns) to really grow, and once they’ve had the experience in working alongside the top engineers who have built the Stripes and Facebooks, that’s where they will learn,” said Chng Kai Fong, EDB’s managing director.
“Hopefully, you get a good exit, and then you get a ‘mafia’ that can propagate more startups. I think that's how the cycle has to work,” he said, making reference to the “PayPal Mafia”, a group of former PayPal executives who went on to found companies that became some of the biggest names in tech.
Mr Chng said that to address the lack of talent, South-east Asians have to “work hard to tell the story that there is opportunity here”, as well as keep a close eye on South-east Asians working in overseas tech hubs.
“The truth is, many people don't know what's happening here. They still see this place as a backward place. They still think, ‘Oh, it's very dangerous. I don't know who I can work with here.’ What they don't see are opportunities.”
That said, many South-east Asians who were educated in the US are coming back home to start companies, and this story is seen across all countries in the region. South-east Asians are also “very well-represented” in tech firms in Silicon Valley, with more taking on senior product engineer positions, said Mr Chng.
“I think the key is to use that – to work with them, to keep in contact with them, and to bring them back,” he said.
Mr Chng was speaking during a fireside chat held during the 10th anniversary celebration of East Ventures, a Singapore-based venture capital firm known for being the early backer of Indonesian startups Tokopedia, Traveloka and Kudo. The event was held in Jakarta on Monday.
On the opportunities for startups in Indonesia, Mr Chng remains bullish, especially in the areas of infrastructure and financial inclusion. He pointed out that the administration has focused on building the country’s infrastructure, encouraging foreign direct investments, and making the economy business-friendly. Ministers are also getting involved in the startup scene.
But there are also a few dangers to watch out for, he said. Trade tensions between the US and China have weighed down on the economy, and companies in the supply chain industry, such as those manufacturing semiconductors, have begun to experience a slowdown in demand. That said, Vietnam has benefited from the trade war due to their strong manufacturing base.
And then there is the increased public scrutiny of tech firms in the US, such as those of Uber and WeWork. Just a week ago, WeWork’s parent company filed to withdraw its initial public offering following weeks of backlash over its spotty track record of corporate governance, lofty valuation and unsustainable business model.
“So there is a certain headwind that we have to be careful of,” said Mr Chng.
He emphasised that despite the headwinds, South-east Asia is on a path of growth. "It’s largely because of the demographics, but also because people are reaching the point where they are starting to consume more. It's no longer just basic necessities – it's about aspirational goods.”