startup ecosystem
Auto Added by WPeMatico
A close look at Singapore’s thriving startup ecosystem
Singapore is home to fewer than six million people, making it one of the smallest ASEAN countries, in terms of population. It is a young country as well — having gained independence in 1963 — and resides in a neighborhood with far larger economies, including China, Indonesia, and Vietnam. When the country first became independent, its mandate was to simply survive rather than thrive.
So how does a country evolve from a position of relative uncertainty, with comparatively few resources, to one that leads the ASEAN region in venture capital investment and has been home to 10 unicorns?
Countries around the world examine Singapore’s ecosystem from a distance, hoping to learn from, and emulate, its story. The World Bank Group recently published a report, The Evolution and State of Singapore’s Start-up Ecosystem, documenting the country’s experience in building its startup ecosystem and the challenges facing it.
This article presents an overview of the report’s key findings and offers a few key recommendations on what other countries can learn from Singapore’s experience, as well as what Singapore itself can do to maintain progress.
A glimpse into Singapore’s current startup ecosystem
As of 2019, Singapore had over $19 billion in PE and VC assets under management, more than twice that of neighboring Indonesia, Philippines, Vietnam, Malaysia, and Thailand combined. In that same year, the country was home to an estimated 3,600 tech startups and nearly 200 different intermediary and supporting organizations (accelerators, co-working spaces, coding academies, etc.) – some which have a multinational presence, such as Blk71, whose Singapore headquarters has been referred to as “the world’s most tightly packed entrepreneurial ecosystem.”
While assessing the size and strength of startup ecosystems is an evolving method, Start-up Genome priced Singapore’s ecosystem at over $25 billion, five times the global median.
Arguably, the most eye-catching hallmark of this ecosystem is its population of current and former unicorns. Collectively, Singapore has been home to ten unicorns, three of which have offered an IPO (Nanofilm, Razer and Sea) and two of which have been acquired – one by giant Alibaba (Lazada) and one by Chinese streaming powerhouse YY (Bigo Live). The remaining five are Trax, Acronis, JustCo, PatSnap, and Grab – the ASEAN region’s largest unicorn to date.
The education sector is also prominent in Singapore’s ecosystem. Universities like the National University of Singapore (NUS) and Nanyang Technological University (NTU) are deeply embedded into this ecosystem, helping with R&D commercialization linkages, incubation, talent/knowledge transfer, and other areas.
So, how did Singapore’s startup ecosystem come to be?
Numerous factors have contributed to building Singapore’s startup ecosystem, with government intervention and leadership being the dominant driving forces. The government has spent more than USD60 billion over the past several decades to enhance the country’s R&D infrastructure, create VC funds, and launch accelerators and other support organizations.
Powered by WPeMatico
How Pariti is connecting founders with capital, resources and talent in emerging markets
According to Startup Genome, Beijing, London, Silicon Valley, Stockholm and Tel Aviv are some of the world’s best startup ecosystems. The data and research organisation uses factors like performance, capital, market reach, connectedness, talent and knowledge to produce its rankings.
Startup ecosystems from emerging markets excluding China and India didn’t make the organisation’s top 40 list last year. It is a known fact that these regions lag well behind in all six factors, and decades might pass before they catch up to the standards of the aforementioned ecosystems.
However, Pariti, a Kenyan B2B management startup founded by Yacob Berhane and Wossen Ayele, wants to close the gap on three of the six factors — access to capital, knowledge and talent.
These issues, specifically that of access to capital, is heightened in Africa. For instance, only 25% of funding goes to early-stage startups in Sub-Saharan Africa compared to more than 50% in Latin America, MENA and South Asia regions.
“We wanted to build a solution that will help startups be successful that otherwise would not have been able to get the resources they needed,” CEO Berhane told TechCrunch. “This problem is especially acute in Africa because it’s particularly nascent, but this platform is designed for founders across emerging markets. So basically anywhere that doesn’t have a mature, healthy startup ecosystem.”
So, how is the team at Pariti setting out to solve these problems? Ayele tells me that in one sense, Pariti is like an unbundled accelerator.
In a typical accelerator, founders will need to go through an intense program where they are loaded with information on all the things a startup will likely need to know at some point in their growth. Whereas with Pariti, founders get the needed information or resources that are immediately relevant to helping them get to the next stage of the business.
A three-way marketplace
When a founder joins Pariti, they run their company through an assessment tool. There, they share pitch materials and information about their business. Pariti then assesses each company across more than 70 information points ranging from the team and market to product and economics.
After this is done, Pariti benchmarks each company against its peers. Companies in the same industry, product stage, revenue and fundraising are some of the comparisons made. The founder gets a detailed assessment with feedback on their pitch materials, the underlying metrics that they can use to develop their business and their ability to raise capital down the line.
“This approach gives us an extremely granular view of their businesses, its strengths, weaknesses and allows us to triage the right resources to the founder based on their particular needs,” Ayele said.
It doesn’t end there. Pariti also connects the founders for one-on-one sessions with members of its global expert community. Their backgrounds, according to Ayele, run the gamut from finance and marketing to product and technology across a range of sectors. Pariti also provides vetted professionals for hire from its community if a founder needs more hands-on support building a product.
Ayele says founders can continue to go through this process multiple times, getting assessed, implementing feedback and connecting with resources and talent.
On another end, Pariti allows investors to sign up on its platform, thereby collating data on their preferences. So once a startup wants to raise capital, the platform matches them with investors based on their profile and preferences.
“We’ve built an algorithm-based matching platform where we curate relevant deals to VC investors. We also simplify the investor reach-out process for founders, which is a huge pain point — especially in this ecosystem,” Ayele added.
Pariti’s investor platform
In a nutshell, Pariti helps founders connect with affordable talent, access capital and develop their businesses. Professionals can find interesting opportunities to mentor startups and get paid gig opportunities. They also get more exposure to the early-stage ecosystem while tracking their progress, verifying their skills and increasing earning potential. Investors can run extremely lean operations with access to proprietary deal flow, automated deal filtering and on-demand experts to support due diligence, research and portfolio support.
According to the COO, the company has seen a tremendous amount of value built through the platform so far. A testament to this is an experience shared by Kiiru Muhoya, founder of Kenyan fintech startup Fingo Africa with TechCrunch, on how the platform helped him raise a $250,000 pre-seed round.
He said that after going through Pariti’s assessment ahead of a planned fundraiser, he realized that the market he was targeting was too small. Also, he needed to learn more about what VCs were looking for to be successful.
Muhoya decided to switch to being at the other end of things. Joining the expert platform on Pariti, he began to review companies and provided feedback to other founders. This led him to take some months off to pivot his business based on Pariti’s first feedback and what he had learned from the expert platform. He took his startup through another assessment on the platform and thus closed the round.
The company has made significant strides since launching in 2019. It has over 500 companies across 42 countries, 100 freelance experts and 60 investors using its platform. Berhane also adds that five funds currently use Pariti’s operating system for their deal management.
“For us, I think we’re building the rails for how ventures are built and scaled in emerging markets. We have partners in place across emerging markets, including Latin America and India. We also have a strong interest in the United States, where we see a real need for our platform,” Berhane said.
It charges a subscription model for investors, but Berhane wouldn’t disclose the numbers. He says that Pariti will begin to charge a subscription fee for founders as well. Another revenue stream comes when investors or founders pay a certain transaction fee when using Pariti’s freelance experts for projects. The same happens when there’s any fundraise executed from the platform.
Talking about fundraising, the company recently secured an undisclosed pre-seed capital from angels and VCs like 500 Startups, Kepple Africa and Huddle VC.
But it hasn’t been smooth sailing for Pariti, as one issue that has stood out in dealing with founders and investors is trust. Berhane says founders have shared some horror stories about engaging with investors, while investors have shared trust concerns about founders reporting false numbers.
Pariti tries to address this by providing NDAs for both parties where the company will not share founders’ data with investors until they want it to be shared. And investors won’t get deals that Pariti hasn’t thoroughly vetted.
Both founders are of East African descent — Berhane from Eritrea and Ayele from Ethiopia — and crossed paths a couple of times but took different routes to be where they are now.
Wossen Ayele (COO) and Yacob Berhane (CEO). Image Credits: Khadija M Farah & Rebecca Ume Crook
Ayele started his career at a consulting shop with offices across East Africa before moving back to the U.S. for law school. There, he got his first exposure to the early-stage startup world and worked with an emerging markets-focused VC fund.
“I could see how technology and innovation could play a role in helping communities — whether it’s through financial inclusion, access to essential goods and services, connecting people at the base of the pyramid to markets,” he said.
Upon graduation and completion of his legal training, Ayele headed back to Nairobi to get involved with its growing African startup ecosystem, where he and Berhane founded the company.
The CEO who studied finance and investment banking in the U.S. moved back to Africa to start a pan-African accelerator in Johannesburg, South Africa. While he has worked in managerial positions for companies like the African Leadership University and Ajua, Berhane spent most of his time brokering deals for them, which ultimately led him to start Pariti.
“After helping businesses raise more than $20 million and seeing how that money led to job creation and upward mobility for employees, I knew there was a path I could have that would be meaningful within finance. I continued to think about the growing asymmetry of access to capital, talent and knowledge in the startup ecosystem and the lack of infrastructure addressing it. Pariti was how we wanted to solve it,” Berhane said.
Early Stage is the premier “how-to” event for startup entrepreneurs and investors. You’ll hear firsthand how some of the most successful founders and VCs build their businesses, raise money and manage their portfolios. We’ll cover every aspect of company building: Fundraising, recruiting, sales, product-market fit, PR, marketing and brand building. Each session also has audience participation built-in — there’s ample time included for audience questions and discussion.
Powered by WPeMatico
Call for EU state aid rules to flex for startups
European startups are calling for more flexibility in EU state aid rules to allow national governments to provide liquidity for the region’s fledgling digital businesses during the COVID-19 crisis.
In a joint letter addressed to Commission EVP Margrethe Vestager, more than a dozen startup associations from across the bloc have called for rules to be adapted to ensure digital businesses are not blocked from receiving any emergency state aid.
In March the Commission applied an update to EU state aid rules clarifying how Member States can provide support to homegrown businesses during the coronavirus emergency.
However the startup association representatives co-signing the latter — which include reps from Coadec in the UK, France Digitale, Germany’s Bundesverband Deutsche Startups, Startup Poland and several others — are concerned the framework is being too narrowly drawn where digital upstarts are concerned.
They point out that startups may be intentionally operating at a loss as a calculated bet on gaining scale down the line, making the current rules a poor fit.
“Startups across Europe report that the Temporary Framework for State Aid is not yet giving enough flexibility to Member States to support startup ecosystems,” they write. “The definition of an ‘undertaking in difficulty’ is intended to apply to loss-making businesses. Such a definition will often be enough to deny support being given to such a business. However many startups are loss-making by design in their first years, as they are taking a calculated bet on exponential growth and associated job growth that will emerge in the following years.
“Only taking the current cash flow into account belittles the economic potential of these startups and prevents them from receiving much-needed support. In doing so it can undermine the post COVID-19 recovery, as it is today’s loss making startups which will be the driver for economic and job growth in the future.”
The letter goes on to call for startups to “receive the support that other economic actors are also receiving”.
“Startups provide a key opportunity for our economies and societies to recover as we come out of COVID,” they suggest, adding: “They will play a central part in re-growing our economy and crucially in doing so on a more carbon-neutral footing.”
We reached out to the Commission for a request for comment but at the time of writing it had not responded.
While it might a bit of a contradiction for VC-backed tech businesses which may choose to operate at a loss during ‘normal’ times to be calling for liquidity help now, Benedikt Blomeyer, EU policy director at Allied for Startups — one of a number of startup associations signing the letter — told us the argument is simply that Europe’s startups should be able to expect the same kind of support that is being extended to other types of businesses.
A number of EU Member States have laid out major support programs for startups to date — such as France’s $4.3BN liquidity support plan, announced in March; and a match fund revealed last month in the UK (which remains an EU member until the end of this year).
But the contention appears to be that liquidity isn’t flowing to all the European startups that need it, nor arriving in a timely enough way.
“For startups, loss-making doesn’t mean that it is necessarily a failing business,” Blomeyer told TechCrunch. “The bigger picture is that we are looking at startup ecosystems as key providers of jobs and economic growth coming out of the crisis. Some startups will fail, just like other businesses. But the question is whether startups should be able to access the same kind of support that other companies can to help them survive this crisis. We believe they should.”
Commenting on the issue in a statement, Paolo Palmigiano, head of competition, EU & trade for law firm Taylor Wessing, agreed the EU state aid rules may struggle to accommodate Internet businesses.
“The criteria introduced by the Commission in the Framework that a company must be viable as of 31 Dec 2019 makes sense in the old brick and mortar world. A company which would have gone in any case bankrupt, even without the current crisis, should not receive aid. The criteria start to be more complex and causes difficulties for tech companies which might not be profitable at the time although they could be in the future,” he said.
“The state aid rules were created in the 60s at a time when the single market did not exist and Europe had a lot of old-style industries (like steel). We need to see how the Commission react but I can see them struggling – how do you distinguish a loss making tech company which in any case would have gone bankrupt from a loss making company that will become profitable in the short term?”
Asked how it believes the Commission should replace the current viability criteria and assess which startups merit help and which don’t, Allied for Startups’ Blomeyer called for a blanket exemption for startups founded over the last half decade or more.
“There could be a clear exemption from the UID test for companies that have been set up in the last 5-7 years,” he suggested. “We need to underline that this is an unprecedented crisis that requires extraordinary measures. So while in normal times a regular process of assessing whether/how to assess startups might have worked, now the ecosystems that built them are melting away before our eyes because of the barriers. The basic conundrum is that it is unclear whether a loss-making startup is indeed not a viable business. This needs resolving.”
In what now feels like an earlier age late last year — as European Commission president Ursula von der Leyen was taking up her five-year mandate — tech-driven change was identified as one of her key policy priorities, with digitization and a green deal taking center stage, alongside a push for European tech sovereignty and support for homegrown startups to scale up.
So if Europe’s startups are feeling overlooked now, in the middle of an unprecedented economic shock, that hardly reflects well on the Commission’s claimed high tech policy goals.
Powered by WPeMatico
As Kubernetes grows, a startup ecosystem develops in its wake
Kubernetes, the open source container orchestration tool, came out of Google several years ago and has gained traction amazingly fast. With each step in its growth, it has created opportunities for companies to develop businesses on top of the open source project.
The beauty of open source is that when it works, you build a base platform and an economic ecosystem follows in its wake. That’s because a project like Kubernetes (or any successful open source offering) generates new requirements as a natural extension of the growth and development of a project.
Those requirements represent opportunities for new projects, of course, but also for startups looking at building companies adjacent that open source community. Before that can happen however, a couple of key pieces have to fall into place.
Ingredients for success
For starters you need the big corporates to get behind it. In the case of Kuberentes, in a 6 week period last year in quick succession between July and the beginning of September, we saw some of the best known enterprise technology companies including AWS, Oracle, Microsoft, VMware and Pivotal all join the Cloud Native Computing Foundation (CNCF), the professional organization behind the open source project. This was a signal that Kubernetes was becoming a standard of sorts for container orchestration.
Surely these big companies would have preferred (and tried) to control the orchestration layer themselves, but they soon found that their customers preferred to use Kubernetes and they had little choice, but to follow the clear trend that was developing around the project.
Photo: Georgijevic on Getty Images
The second piece that has to come together for an open source community to flourish is that a significant group of developers have to accept it and start building stuff on top of the platform — and Kubernetes got that too. Consider that according to CNCF, a total of 400 projects have been developed on the platform by 771 developers contributing over 19,000 commits since the launch of Kubernetes 1.0 in 2015. Since last August, the last date for which the CNCF has numbers, developer contributions had increased by 385 percent. That’s a ton of momentum.
Cue the investors
When you have those two ingredients in place — developers and large vendors — you can begin to gain velocity. As more companies and more developers come, the community continues to grow, and that’s what we’ve been seeing with Kubernetes.
As that happens, it typically doesn’t take long for investors to take notice, and according to CNCF, there has been over $4 billion in investments so far in cloud native companies — this from a project that didn’t even exist that long ago.
Photo: Fitria Ramli / EyeEm on Getty Images.
That investment has taken the form of venture capital funding startups trying to build something on top of Kubernetes, and we’ve seen some big raises. Earlier this month, Hasura raised a $1.6M seed round for a packaged version Kubernetes designed specially to meet the needs of developers. Just last week, Upbound, a new startup from Seattle got $9 million in its Series A round to help manage multi-cluster and multi-cloud environments in a standard (cloud-native) way. A little further up the maturity curve, Heptio has raised over $33 million with its most recent round being a $25 million Series B last September. Finally, there is CoreOS, which raised almost $50 million before being sold to Red Hat for $250 million in January.
CoreOS wasn’t alone by any means as we’ve seen other exits coming over the last year or two with organizations scooping up cloud native startups. In particular, when you see the largest organizations like Microsoft, Oracle and Red Hat buying relatively young startups, they are often looking for talent, customers and products to get up to speed more quickly in a growing technology area like Kubernetes.
Growing an economic ecosystem
Kubernetes has grown and developed into an economic powerhouse in short period of time as dozens of side projects have developed around it, creating even more opportunity for companies of all sizes to build products and services to meet an ever-growing set of needs in a virtuous cycle of investment, innovation and economic activity.
Cloud Native Computing Foundation projects. Photo: Cloud Native Computing Foundation
If this project continues to grow, chances are it will gain even more investment as companies continue to flow toward containers and Kubernetes, and even more startups develop to help create products to meet new needs as a result.
Powered by WPeMatico
How other cities can benefit from Silicon Valley
Startup ecosystems are taking root across the country, and they’re all looking to copy the formula Silicon Valley made so successful. While these startup ecosystems are growing, nothing compares to Silicon Valley. So the question these cities must ask themselves is, “How can we tap into Silicon Valley’s resources to improve our economy?” Read More
Powered by WPeMatico
How Early Exit Disease Stunts The Growth Of Midwest Startup Communities
There is an unnamed epidemic slowly traveling through the middle of the U.S. This epidemic goes by many names, but our venture fund refers to it as “early exit disease.” This disease spreads when founders realize sub-$20 million exits. Many of these exits could have grown much larger. Instead, early exits have been quietly devastating the Midwest region’s startup… Read More
Powered by WPeMatico
Where Vancouver’s Tech Ecosystem Goes From Here
Compass recently published its second report on the global startup ecosystem. The report is the result of more than 200 interviews with entrepreneurs from 25 different countries, 11,000 startup surveys and insight from data partners like CrunchBase, Deloitte and Dealroom, as well as more than 60 local partners. Our CEO, Ray Walia, was also quoted; he summarized Vancouver’s strengths in… Read More
Powered by WPeMatico