4 Questions to Claus Karthe, Program CEO German Accelerator Southeast Asia
German Accelerator is taking startups to India for the first time in March as part of Next Step Asia, a deep dive discovery tour to explore potential new markets. Tell us the reasons behind the decision, the goals, and what makes India such an interesting market for German startups and the Mittelstand?
Two years ago, when we first launched the 5-month long German Accelerator Southeast Asia program, startups that we spoke to acknowledged that Asia is a region that has a lot of potential to scale to, but they know very little of the opportunities available or how to approach specific markets. Founders and entrepreneurs have busy, challenging schedules so while they may find Asia an attractive market, they may not be fully confident to commit to a long-term plan without first immersing themselves into the local ecosystem.
With the support from the German Federal Ministry for Economic Affairs and Energy (BMWi), we launched Next Step Asia to help German startups take their first steps into this dynamic market. This shorter 9 day bootcamp will give them a first deep-dive into the markets before deciding if they will expand to Asia. It will address the misconceptions, raise awareness of the specific markets in Asia, such as Singapore, India, South Korea or Japan, and make connections to potential customers and partners.
One such misconception is that a market like India is only attractive as a location for an outsourced IT or back office function. India is now the world’s fastest growing tech hub and 5th largest economy worldwide according to a IHS Markit report. It has a very vibrant ecosystem for startups and VCs, with close to a quarter of its startups leveraging deep tech.
Some of the largest R&D centers of companies like Google, Microsoft, and Apple are located in India, making India one of the top R&D centers in the world. These leading IT companies are also attracted to the wide availability of strong scientific research and tech talent in India.
This is why, as Asia becomes an important region for startups building a global strategy, India should not be overlooked. There is a high-demand for enterprise and emerging tech solutions from many multinational companies in India and we believe this is where German startups should come to showcase their solutions and access new business opportunities.
Where do you see the biggest potential challenges for German startups in their attempt to enter the Indian market and how can German Accelerator help with the Next Step Asia format to overcome these challenges? What would be the goal for a startup after having joined one of the Next Step Asia in market bootcamp?
When it comes to navigating any new business environment there will definitely be challenges, and probably not just a few. Let me highlight the most important ones in relation to entering the Indian market and the essential steps to scaling their business there.
My first advice to founders and entrepreneurs would be to come with an open mind and be respectful as there are vast cultural differences. As communication and relationship building is key in India, we will help startups understand the cultural do’s and don’ts of doing business and how to engage effectively with new business contacts and corporates.
Secondly, as in any new market, startups would not have a network or key contacts to tap into, but this would be important to kick-off any customer acquisition strategy. We will help startups build professional networks with industry experts, mentors, and partners to establish useful connections.
Lastly, a unique market like India requires a whole new outlook and approach. As part of Next Step India, we will spend ample time reviewing the startups’ business models and identifying aspects that might need adjustments to fit the local market. Through the customized one-on-one interactions, startups can validate their product’s market value with Indian customers faster and be able to localize their offerings better.
In 2019 you introduced Next Step Asia, having taken startups to different Asian countries. What were the learnings there, what is the feedback from the startups that have participated so far, and have some of the participants actually performed the “next step” and have started their businesses in Asia?
Having concluded two editions so far, what participants find most useful is when we give them first-hand access to the important connections they need to know or meet, especially from one-on-one meetings with potential customers and partners.
The positive takeaways from the startups validate that our market bootcamp fills a need to support German startups with the right starting point in their Asia expansion and to educate more startups about the vast market opportunities in Asia.
I see this as an important first step to expansion and Next Step Asia fulfills the research and awareness stage. When the timing is right, and they make a decision on which specific markets they want to expand in, this is where our extensive 5-month German Accelerator program in Singapore comes in to build their business models and support them in their expansion journey on the ground.
You are a German living in the Philippines, leading the German Accelerator Southeast Asia program based in Singapore, traveling and working globally but with a main focus on Asia. What are the top three trends you currently see in the Asian markets that are most relevant for German startups and SMEs?
I have been in the Asian startup ecosystem for over 10 years now and the entrepreneurial nature of the people is incredible. You find the entrepreneurship mindset ingrained across Asia, and in Filipinos or Indonesians for example. It is second nature for them to sell and develop products and services, it’s a natural part of their makeup because their economies are still developing and they are thrust into this environment of ‘survival of the fittest’. Whereas in Germany, we have a stable economy with comfortable, well-paying jobs that don’t drive would-be entrepreneurs to action.
Another observation is that Germans tend to be risk averse and obsessed with ‘getting it right’. As a consequence, we sometimes over engineer things. This leads to indecision, and in the startup world, making a wrong decision to move things forward is better than no decision and stagnation. This impasse could cause your great ideas to be overtaken by a more agile, risk-taking startup from Asia, who is more willing to go to market with a simple product or service and continuously iterate rather than wait for the perfect solution before even allowing it to be launched.
Lastly, the governments in Asia, and especially in Singapore, play a bigger role in building the startup ecosystem. There are many support programs, funding initiatives, and even infrastructure in the form of startup hubs like JTC Launchpad in Singapore and True Digital Park in Thailand to help grow and strengthen the ecosystem.
Do you want to find out more about Next Step Asia? Take a look here.