The uneven playing field of startups in Asia

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One selling point of doing startups now, is the level playing field of the Internet. To launch a mobile app, all you need is an idea, a computer, some quality time, and an Internet connection to publish your app.

This has been true since 15 years ago. It started with websites, then debut with the Palm Pilot, and eventually established with the iOS and Android. We built a software company in 2002 from Cebu, selling mobile software for the Palm Pilot. At a time when mobile development was not popular, and a mention of Symbian and Java ME are often met with blank stare. Those were the times.

There’s a new level playing field, and it has been brought here by the lower cost of travel and visa-free entry between countries. Traveling to SG and HK, feels just like going to Manila. It’s that easy that one can probably travel to SG many times in a year without going broke.

Together with easier traveling is the rise of seed funds nearby. The argument used to be that, to start a business is very hard in Cebu because there’s no one around to fund it. You either have to be rich already, or somehow endure countless days of starvation while you bootstrapped your way.

Seed funds are now available in Manila, in SG, and some funds even just hover around South East Asia, that if you have a compelling offer, it’s just 1 or 2 LinkedIn connections away.

These new developments now brings the un-even playing field.

A startup team in Cebu can formalize their idea and build the co-founding team locally. Build initial traction to get some validation, and tap into mentors from the local community for support.

Once they are ready, they can then pitch to apply for formal seed funding. From there they continue to build their startup, while going through the incubation program. Incubation is a good time to get mentorship from experts and build connections with potential partners and customers.

After incubation, which normally last for 3 to 6 months, they can then opt to go back home to Cebu, to build their base. And here comes the unfair advantage.

It’s known that SG is an expensive place to build a business. Hiring is also tough, where a lot of bigger and more established companies (likes of Google, Facebook, etc.) are competing for the talents. Salaries are higher there, just because the cost of living is expensive and the salary rates are very competitive.

Compare that to Cebu. A well built team here in Cebu will rival other software teams in the world. A programmer from Cebu will have equal access to any technical resource and knowledge to learn from. In Cebu, hiring is tough for the highly skilled people, but not so with the junior ones.

With a good hiring, on-boarding, and continuous training strategy, it will be fairly easy to build a backend team in Cebu, while maintaining a front-end startup in SG. But front-end rarely need to be a physical office, the website or the mobile app should be the primary front-end. JFDI offers a co-working space, which can be used as the front-end from SG.

If a startup has the option to a lower cost of operations, it will always have an unfair advantage over the competition, since it will be able to do more for the same amount of capital. Lower cost is also a big advantage in an ever changing market, where the cost of change can sometimes prohibit companies from adapting. A lower cost, means a startup can slowly build a second track to pivot, while maintaining the legacy traction for a while.

I get very excited when i think about this opportunity. I can think back to 15 years ago, the first time i heard about Ayala IdeaFarm, a sort of incubation program that was in offer before. From that time, it felt like it was the only option (it certainly was from my perspective, since we didn’t know there were other ways), that if we don’t make the cut, then we’ll just contend with making accounting and HR applications for a living.

So this is my call to action for local startups in Cebu and nearby cities. Now is a good time to dust off those ideas and participate in the local startup community.

A few Startup Weekends are coming soon and we just kicked off the first Founders Friday last night, which are both good events to be involved in. This year, we have a few programs in the plans, under the Founders banner together with TechTalks.ph.

I am excited about the new startups that will turn up this year, and will go on to make the cut for seed funding in SG or in Manila. Lets put our advantage to good use.