Launching a startup can be daunting enough – let alone taking the business into a foreign market.
And when that market is on your doorstep, it can be easy to let it slide off your radar.
So for eight UTS Hatchery Accelerate startups, a whirlwind recent trade mission to Singapore and Indonesia has proven to be the eye-opener they needed to kickstart their businesses in South East Asia — and make 2018 their breakthrough year.
Caroline says she initially wasn’t sure if Singapore would be a good market for her business. But after taking part in the trade mission, run by UTS, with involvement from the NSW Government, Landing Pad and Austrade, she’s now ready to set her sights on our northern neighbour.
“I realised that the food sector is big in Singapore,” notes Caroline. “It’s well-regulated like in Australia, the rent is high, and people love food. It’s exactly what we need to launch in a new market. Depending on your business, Indonesia could also be a great market, as it has a very young and big population. You just need to find a way to adapt your business model to this market.”
Forecast for growth
When it comes to business potential in South East Asia, the data, of course, speaks for itself. Singapore is in the world’s top 20 startup ecosystems, with GDP per capita hovering at around $69,000 and a mobile penetration rate of nearly 150%. And in Indonesia, according to the Indonesian Statistics Office, GDP per capita is set to increase by nearly 60%, from IDR48.7 million in 2016 (around $4,700) to IDR77.1 million in 2021 (around $7,400). The number of bank account holders, smartphone users and citizens in the middle class are all set to nearly double in that time frame.
Yet rather than numbers in a table, it’s firsthand market insights that could be game changing for Australian startups like Cookitoo, and fellow Hatchery Accelerate alumni Carrots Money.
“The financial services industry in Indonesia is moving at a rapid pace and there are a series of regulatory revisions being created to aid financial inclusion and stimulate fintechs. Indonesians are incredibly digitally connected, but levels of financial inclusion are low. It represents a huge opportunity for fintech,” says Sarah Nguyen, co-founder of the money saving app.
While expanding to South East Asia wasn’t initially a top business priority for Carrots Money, Sarah says the trade mission has given her and her co-founder food for thought.
“The ease of doing business in Singapore, the existence of the Landing Pad and other Australian networks makes it a lot more feasible and attractive. The market opportunity of Indonesia is attractive for us in the longer term,” Sarah explains.
“The market size in Indonesia is overwhelmingly large — and growing at a rapid pace. The estimate is that the middle class will reach 141 million people by 2020. When you compare that to the market size in Australia, it’s astonishing.”
Similarly, Sebastian Jacobs (pictured below), CEO and co-founder of customer relationship management platform Conexie, also a Hatchery Accelerate 2016 alumni, admits he hadn’t previously considered Indonesia as a place to visit, let alone one to expand to, thanks to media-generated perceptions of the country.
After absorbing key learnings while on the ground, those perceptions have more than changed — Conexie could be ready for business in Jakarta in 2018, with AusTrade brokering a potential licensing partnership on the startup’s behalf.
“My team and I were taken aback by the professionalism and wherewithal the Indonesians have around technology,” says Sebastian. “They’re a rapidly evolving bunch of people and seem open to anything new.”
The power of personal connections established while on the trade mission has in fact proven to be the gateway to new opportunities that would otherwise be challenging to uncover.
“Without the support of existing networks, it would be pretty tough to break into the market,” acknowledges Sarah from Carrots Money.
“The opportunity to visit these emerging markets, network and meet with people heavily involved in the startup ecosystem can’t be overstated. Being connected with local contacts would be invaluable for any startup looking to explore a new market.”
As Andrew Barnes, Austrade’s Trade Commissioner in Jakarta, explains, it’s not about blindly launching businesses into the country, but building collaborative relationships.
“This is not like a traditional commodity market we can simply sell things to from a distance, but instead an opportunity to participate and create new businesses here alongside Indonesian entrepreneurs, adding our own creativity and resources,” he says.
Caroline from Cookitoo agrees that while the South East Asia market is ripe for Australian business expansion, the doors are best opened by in-market contacts.
“I realised that there are a lot of people that are ready to help us to expand to Singapore, from the Landing Pad to the team at Austrade, and even investors that we met were ready to connect us to some of their contacts,” she reveals.
“It’s great that universities can facilitate opportunities and connections between graduates and relevant organisations. Many graduates don’t even know that these organisations exist and if they do know about them, it can be very difficult to contact them as an individual. Going overseas as a group helped us to create those connections, which was very valuable.”
Making waves in South East Asia in 2018
For Cookitoo, Conexie, Carrots Money and their Hatchery Accelerate peers, the trade mission is hopefully the start of the next chapter of their business journey.
As Austrade’s Andrew Barnes enthuses, the region is brimming with potential — and it’s time for Australian startups to harness that in the right way.
“From our vantage point in Jakarta, we see every day how exciting this international, fast growing part of Indonesian business is — but also that Australia is actually punching well below its weight,” he states.
“It’s exciting to see the next generation of Australian business beginning to discover what Indonesia’s digital economy could mean for Australia in the future.”
Sign up to the Hatchery newsletter to be the first to know when Hatchery Accelerate 2018 applications open. Contact firstname.lastname@example.org to find out more about international startup engagement opportunities.