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Top Three Tips to Scaling a Startup in Southeast Asia

With a population of around 83 million people, Germany offers a sufficiently large market for young startups to generate substantial revenue once they have found product-market fit. However, if German startups want to scale their business and become global leaders, they need to look beyond their home country and even beyond Europe – they need to look at global markets such as the U.S. or Asia. But what does it take to build an internationally competitive startup?

Solve an actual problem

According to Dr. Thorsten Lambertus, Head of AHEAD, Europe’s largest tech transfer and company building program from Fraunhofer Venture, solving an actual problem in the target market is one out of three factors in building a successful startup, especially in the deep tech space. You also need to have the right people on your team, and a world-leading product or solution. However, there is a certain level of “hype danger”, meaning that a startup’s business model demonstrates a technology behind a problem, but the technology doesn’t exist or actually solve a problem.

German Accelerator Southeast Asia’s founder and CEO, Claus Karthe, who is an experienced entrepreneur and an investor, feels that a startup can spend a lot of money on R&D, but if the problem is not actually resolved, then the hard work becomes almost irrelevant. This is one of a few key criteria considered in the selection of startups for German Accelerator Southeast Asia’s program: does the startup solve an actual problem in the region, the strength of the team, coachability, and commitment to expansion in Southeast Asia.

Adapt to the new market

It is not a secret that different places in the world are associated with different strengths: Germany’s skills, for example, are very specific in areas such as electro-mechanical engineering, and Singapore has its strengths in areas such as software.

During a recent panel discussion with Claus Karthe (German Accelerator Southeast Asia), our mentors Sian Wee Tan (Finaxar) and Chris Aw (Pandan Ventures), as well as Singaporean startup co-founder Yaoqi Jia (Zilliqa), the consensus was that, combining different technologies to create new application layers is crucial to creating a good startup, and awareness of market fit is essential. For example, if you are looking to build and grow in deep tech, you have to ensure that your target market is ready to adopt deep tech and has the talent and infrastructure for it in order to achieve the velocity needed to get the company off the ground.

A major trap for startups that are beginning to internationalize is the tendency to simply “copy and paste”. Many startups believe that their success formula that worked in Germany will automatically work all over the world. Sian Wee Tan elaborated that expanding into new markets such as Southeast Asia has to be done in a custom way. Although some existing processes in a startup’s home market can be replicated, startups must “smart paste” and be willing to adapt to the local nuances and challenges in order to succeed.

This ties back to having an understanding of the local problem, the existing local solution, and then adapting the value proposition for the market.

Leverage existing networks

“Every time you enter a new market, you’re starting a whole new business. You just have some of the variables filled in. Suddenly you don’t have your network to help you make the connections you need.” – Chris Aw

The need to build new connections is also a common challenge startups face during their international expansion. Startups need to keep in mind that, once they enter a new market, all of the personal connections and business relationships that can be relied on in their home market are mostly nonexistent.

Another obstacle arises from the simple question: Who can you trust in the new market? For startups in Southeast Asia, German Accelerator has helped to forge new connections in a timely manner, which would usually take decades to build in their home country.

Bonus tip

An awareness of different cultures, regulations, markets and other potential complications must also be taken into account. Being culturally adaptable in Southeast Asia is key, and having some knowledge of the local language and culture will help you connect better in a professional as well as social setting!

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