The sink-or-swim, fix-or-fail world of tech startups has had its ups and downs this year; we look back on the wins and losses in the ecosystem
The tech startup ecosystem is, as Aldous Huxley (referencing Shakespeare) says, a brave, new world. Each week could bring a new innovation that could change the way the world does things and, hopefully, make the people who came up with it some money.
Unfortunately, it is not a world made up exclusively of uplifting success stories and happy endings. Promises can be broken and expectations might end up unmet.
We have compiled a list of this year’s hits and misses in tech startups as a sober reminder of the year that is about to end, and as a guide for 2016, which will undoubtedly have its own stories of heartbreak and happiness.
1. E-commerce and China Singles’ Day
This can be said for e-commerce in general this year, but China’s Singles’ Day has transformed from a sort of reverse Valentine’s Day to a shopping event that e-commerce companies have fallen in love with.
In 2015, sales on Alibaba hit US$5 billion in the first 90 minutes of the massive sale event, with sales at US$11.29
billion by the evening of November 11.
Rival JD.com was shy with details, but gleefully announced over Twitter that it had “topped our 2010 sales in 2 mins after midnight, 2011 sales in 15 mins, and 2012 sales in 36 mins.”
It has also crossed borders, with Flipkart in India taking advantage of November 11 falling on the same day as an ongoing sale for Diwali. In Southeast Asia, Groupon, Lazada and Zalora launched similar promotions.
But e-commerce sales promotions are not limited to Singles’ Day, with Indonesia’s Harbolnas (National Online Shopping Day) on December 12 had 140 e-commerce companies participating, up from just 70 in 2014.
2. Ride-sharing regulation
Ride-sharing services like Uber and GrabCar will soon no longer operate in the grey areas of public transportation, with guidelines already in place in the Philippines and in Jakarta, Indonesia. While this may mean hassles in the short-term, government recognition and regulation is expected to mean better service for commuters.
Regulation has seen some hitches, with Uber, for example, getting scolded by the Governor of Jakarta for saying that he has allowed Uber to operate there.
Both sides have made clear that Uber, and rival GrabTaxi, will need to comply with government guidelines before they are given the green light to operate.
Uber has also opened an office in Central Jakarta after registering as a foreign investment company. Prior to this, Uber said, it did not earn anything from operations in the Republic.
A Philippine court has also ordered a temporary halt on accepting more registrations for Uber and GrabCar units after a group of regular taxi and van operators filed a petition saying the new category of public-utility vehicle has cost them half their income. If the mad rush for cars in Metro Manila, and surge pricing of around 2.2x, this month is any indication, however, the megacity needs more ride-sharing cars, not more.
There is money to be made in money, it seems. This year saw Indonesian government-owned Bank Mandiri set up a VC with US$37 million in funds to invest in fintech startups.
“Seeing the potential of local startups in developing e-cash businesses, we just cannot wait to start investing in them,” says Budi G Sadikin, Managing Director of Bank Mandiri.
Meanwhile, Amar Bank, also in Indonesia, is trying to become the country’s first fully-digital bank. Run as a “startup” under the corporate Tolaram Group, Amar Bank’s Tunaiku brand deals with loans, applications for which can be processed online.
In Korea, Kakao and KT have already been granted licences to run Internet-only banks.
4. On-demand services
Many in Asia do not have the time or energy to look for and screen service providers, much less perform the tasks that they want to hire house cleaners and handymen to do.
From beautician booking services to ones that help you get the laundry done, on-demand service startups have been popping and many are getting funding. India’s Housejoy, for example, has just closed a US$22.4M Series B led by Amazon.
The trend has become a boon for customers who can be assured of getting their chores done by skilled and trustworthy providers and for those in the service industry who want to make some extra cash.
Also Read: 10 consumer tech trends that will define 2016
1. Foodtech in India and Vietnam
Although it hasn’t quite gone sour yet, food tech has seen a lot of layoffs, especially in India, where Zomato and TinyOwl have laid off almost 300 employees. Those in the space say the layoffs are due to foodtech being a very complex vertical.
“You can do so many things so differently in this space — for [example], you can have your own kitchen or you can list others, you can sell Indian cuisines or hundreds of other possible cuisine options, you can do delivery on your own or give it to third-party firms, you can make it a daily meal platform or premium food platform. The
possible combinations are endless and that makes it tough to crack,” says Kumar Setu, Co-founder of Petoo, a quick-service restaurant that can track customers’ food habits and order volumes.
Investments are still coming in and the dine-out market is expected to grow in coming years, but those who have lost their jobs have certainly left with a bitter taste in their mouths.
Rocket Internet’s foodpanda Vietnam has, meanwhile, been sold to rival Vietnammm. Although management issues may have more to do with that than with customers losing their appetite for food delivery.
Pirate3D, which was supposed to deliver a low-cost 3D printer to Kickstarter funders, is one of the notable failures of the year, with CEO Brendan Goh himself admitting that the company bit off more than it could chew.
“The product is a good product and [the media] appreciated it in the articles; it is just that we messed up in other areas of the business,” he says in an interview with e27.
With funding coming in unpredictable spurts, it became difficult for Pirate3D to handle recurring expenses while also trying to keep the price of the product down.
Pirate3D is not giving up, however, Goh says, “[W]e need to go back to basics: Build a machine that we can sell well, generate profit for the company, and out of the profits, we will do the fulfillment. We need to look at this from the long-term point of view and not short-term, because if we do short-term, this issue will keep cropping up.”
3. Malaysian Global Innovation & Creativity Centre (MaGIC)
Although MaGIC CEO Cheryl Yeoh, who announced her impending departure from the Malaysian Ministry of Finance-run agency this month, herself says she is not leaving because of pressure, as first reported in a Digital News Asia report, the loss of a CEO is always cause for concern.
Add to that the talk that the programme, which was geared to support ethnic Malay entrepreneurs, had been criticised for having someone who is not an ethnic Malay at the helm and for focussing on tech.
“There was no ‘mounting pressure’ at all. The Board meets quite frequently and we always tell [them] what we are going to do and they are fully supportive of our plans. There has not been any push-back to focus on other types of entrepreneurship,” Yeoh insists.
A recent piece on e27 argues that Yeoh’s departure is not so much a loss for startups in Malaysia because “[t]he Malaysian ecosystem is not simply MaGIC, there is a diverse set of people working to support entrepreneurship in the country. It is high time to empower the people who value performance, sustainabilty and growth
projections over the ethnic background of the founding team.”
4. Li-Fi, the ‘Wi-Fi killer’
This is less a miss for the technology, which is supposed to transmit data through light, and more one for the tech press, which reported the development as one that will shake a world that relies heavily on Wi-Fi.
As has been repeatedly pointed out, the infant technology has to surmount many challenges, and there is only “one place to use Li-Fi in its current iteration: one cold dark room filled with LED lights.”
In any case, for many parts of Southeast Asia, just getting electricity is still a problem and so is getting reliable Wi-Fi connections.
Also Read: 5 things that you won’t see happening in technology in 2016
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