Russian entrepreneurial experience is trickling its way into Southeast Asia, but sometimes the path is a bit bumpy
Author Viola Serdyukova is a tech-savvy blogger interested in startups. With an experience in the Skolkovo Foundation and a University-based business incubator, she chanced to meet daring Founders throughout the world. In 2015 while studying in Boston University she got deep insights about how the startup culture in Boston and NYC has evolved.
Do you know what motivates startups to jump on the path towards global growth?
Many Founders are put in humble economic circumstances, restricted by the local market, creating a vested interest to expand the business, find new investors and clients or even challenge their entrepreneurial stamina.
For Russian startups, the Asian market may serve as a tantalizing prospect for success due to a growing economy and high investment flows. Over the last nine months, the venture market in Asia has exploded up to US$28.3 billion, thus justifying it as a good place to make a mark.
But the question is, are Russian brands out-innovating their Asian counterparts and those in the West?
The story of ibox and tech-fueled cashless payments
In Vietnam, there has been a boost in the use of compact card readers — plugged into a smartphone or a tablet to convert them into devices savvy for card payments. Fascinatingly, the iconic Ben Thanh market with local cuisine, artisan souvenirs and textiles has been fueled with mPOS (mobile point-of-sale) technology that is helping the local merchants to follow the trend towards digital.
Russian mPOS startup, ibox, is a trendsetter in a Vietnamese cashless society. With 85 per cent of credit/debit card penetration, a high concentration of SMEs (there are almost 18.5 million of them) and a steady rise in purchasing power Vietnam gives a certain degree of confidence to the company’s future success.
Being technologically expedient, ibox from the very beginning emphasised small and micro businesses with a timid turnover (less than $1000 a month).
Most clients come from hospitality and taxi service fields (Beirut Restaurant & Bar, Pho24, Highlands coffee, Mai Linh Taxi), although e-commerce retailers, courier services, trade and insurance representatives (Prudential Finance), as well as banks (BIDV, OceanBank, Techcombank) are also ibox-users.
US-based venture capital firm Almaz Capital Partners and InVenture Partners led $1.3M investment to the company in 2015 making it possible to boost its market presence in Southeast Asia.
Initially ibox operated on the Russian market, then merged with the local company 2can in 2015 and became the largest mPOS provider in Russia with over 50 per cent market share.
With the established good impression and proved efficiency, ibox plans to expand to Malaysia, Indonesia and Philippines, a move which will inevitably lead them into a faceoff with the Asian-based counterparts like Softspace, Managepay, Ezetap.
With the goal to disrupt the Philippine market, the company has already reached the agreement with Digital Paradise Inc. (operates and franchises a chain of Internet cafes) and Viet Thai group (the leading food & retail company in SE Asia).
A Russian entrepreneur with the gumption to challenge Google.
Bound together by geographical proximity to ibox, the startup Cốc Cốc also introduced the innovative business proposition to the local market – a browser and search engine that encompass any imaginable option.
It was founded by the Russian entrepreneur, who had previously worked in Mail.Ru Group (a Russian Internet Company). His name is Victor Lavrenko.
Search engines are great, but solving an inorganic chemical equation is not exactly its bread and butter. Cốc Cốc helps you to get a balanced result for FeS + 2HCl, explaining step-by-step the given formula. This special feature along with many others (like simplifying the search process for Vietnamese tones) significantly differentiates Cốc Cốc from Google.
Vietnam is a society with a digital multitasking young population and high internet penetration rate (39.8 million use Internet — 44% of the total population).
Cốc Cốc made a bold move by deciding to set up business in 2010 to out-perform Google and Chrome in Vietnam and today it is rated in the top 5 desktop browsers because it developed helpful features for its users (faster downloads, ability to bypass DNS blocking, etc). The result is a massive audience (18,211,640 active users as of publishing) and attracted investments from the Germany- based Media Company Hubert Burda Media.
The browser also runs on parallel B2B and B2C options.
Why? The country has one of the fastest e-commerce growth rates in Asia-Pacific over 2010-2014, thus encouraging brands to emphasize on online presence (ads, banners, icons, etc), hence Cốc Cốc claims 2500 brands monthly, including Coca-Cola, Sumsung, GrabTaxi, Oppo, etc. as advertisers.
As mentioned above, Cốc Cốc has a system that automatically predicts and adds Vietnamese diacritics, detects spelling mistakes and suggests corrections with 99 per cent accuracy.
Which brings us right back to the core element – Lavrenko had the audacity to challenge Chrome and Google and win the game in Vietnam. I will just leave it here: Cốc Cốc outperforms Google Chrome’s spell-checker in 97 cases out of 100.
This travel startup survived a bumpy lift off
To blow the competition away in a crowded segment is not an easy task.
‘Making the mark’ is a reasonable-sounding motto, but only when a startup introduces a genuinely innovative product and adjusts it to the cultural context.
To put it bluntly, Eastern Europe’s No.1 travel search engine Aviasales (launched in 2008 in Russia) failed to succeed on the Chinese market due to characteristic region’s patterns: government regulations (to be rated on Baidu the website needed to get licensed) and local mentality (in rough numbers only 8% of the 1.4 billion population travel abroad and even they prefer group tours to individual adventures).
However, Aviasales learned from its mistakes and successfully pivoted to the Thai market — bringing innovative travel solutions to the local population.
It did so by working over the last year to build a recognizable consumer brand called JetRadar.
The company has differentiated itself with new services tailored to a user’s lifestyle (for example, any order can be paid via LINE or at 7/11 stores).
It offers flight deals to any place in the world and collaborates with the reputable partners like Skyscanner, Wego and travel agencies in Thailand, Singapore and other regions.
Furthermore, the steady growth of tourism in Asia has fueled travel industry sales and online travel penetration – about 38% of Internet-users book flights online. It is a leading travel market. Tourism accounts for more than $24 billion GDP in 2015 (in comparison with North America that follows at $19,5 billion).
In only a year, JetRadar has tripled its audience and reached more than 3 million users. With a US$10 million investments from iTech Capital Fund the company plans to gradually expand the business to Southeast Asia (mostly to Indonesia and Philippines).
But for now introducing its service to a new market will be backed up with an endurable brand and good experience gained from the business failure in China.
A Russian traffic management company finds success in New York, and investment from Singapore
Across Asia, smart cities initiatives are becoming an increasingly important ‘field’ for entrepreneurs to come in and thrive.
BaseRide Technologies Pte Ltd, a company focused on providing efficient solutions for passenger transit in a smart city, moved its head office from Russia (Nizhniy Novgorod city) to Singapore in 2014.
BaseRide’s pain point is world’s most ‘amazing coincidence’ – every megalopolis in the world faces a problem with congestion level, traffic jams and need for better transport navigation.
One example of BaseRide technology is from 2013. The company launched a service for New Yorkers that enabled citizens to track buses on an online map and calculate the best route through a mobile app.
In 2014, the company raised investments from a Singapore-based investor group IncuVest, moved its office and began its Asian story.
To smoothly organize public transport schedules and maximize fleet utilization, BaseRide analyzes people motion analytics based on cell operator data and the quality coverage of public transit lines.
The technology’s magic results in beautifully visualized reports for government entities and useful apps for passengers.
BaseRide’s success outlines that Asian businesses are increasingly using cloud computing technology to improve business efficiency and save costs.
Logistics is not the only IoT-influenced field: post and leasing operators, FMCG (fast moving consumer goods) and retail companies, delivery services, taxi, transportation and freight companies, municipal and private public transit players, community and housing companies, tech specific fleet, eCommerce – all of them are adjusting their businesses to the solutions provided by companies like BaseRide.
As estimated, global fleet management system revenues will grow from $9 billion to $28 billion by 2018.
Will a public transport ride be a fun and delightful journey in the near future? I do believe so.
The views expressed here are of the author’s, and e27 may not necessarily subscribe to them. e27 invites members from Asia’s tech industry and startup community to share their honest opinions and expert knowledge with our readers. If you are interested in sharing your point of view, please send us an email at sainul[at]e27[dot]co.
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