Fortune's Unicorn List
Despite being a tiny red dot, Singapore has certainly made its mark on the map when it comes to business. According to Fortune’s The Unicorn List, the lion city is home to three startups valued above US$1 billion, placing it within the top 5 incubators of Unicorn businesses in the world1.
Even though all 3 companies share a mutual claim to entrepreneurial triumph, their stories and journey to this massive achievement varies greatly.
Understanding the local market
Unsurprisingly, the second local unicorn is one you’ve heard of, and probably use. Grab, a Singapore-based Taxi booking app has accumulated a net worth of US$1.6 billion since its inception four years back.
Unlike Singapore’s top-billing unicorn Garena, this startup was entirely self-funded. The app’s success came from being familiar with the machinations of the Asian market and its consumer base.
“There is a clear advantage of being local” he states, explaining that Grab and its regional partners benefit not only from understanding local customers, but local statutory requirements and competitor practices as well2.
For example in Singapore, taxi operators take a 40 cent cut for every booking. Grab disrupts the traditional system by taking a lower cut of 30 cents, their lower rates hence making them more appealing, not only to customers but to drivers.
Tan explains that his previous experience running the family business “taught him how to work with governments, as well as with people of different nationalities and cultures”. This attributes to not only Grab’s ability to disrupt the local market, but its ability to build strong partnership with similar businesses in the region. By providing customers with a seamless Grab experience across regional countries, the need for them to look to other ride-hailing apps is eliminated, making the startup a front runner among SEA transport providers.
Putting the customer first
Another business that benefits from focusing on regional growth rather than global expansion is Southeast Asia e-Commerce giant Lazada. Having established the company in 2011, Maximillian Bittner strove towards creating what is now touted the “Amazon of Southeast Asia”, resting easy at a $1.3 billion valuation.
Lazada implements this through a loyalty system—the Net Promoter Score (NPS). This business tool offers customers an index, for example from 1 to 10, upon which they indicate how likely they are to recommend the service to others. By keeping track of customer satisfaction, Lazada positions itself as a dependable source of reliable products.
Although Bittner has since moved on to other ventures, his successor Martell Hardenberg ensures that the customer-centric business model that contributed to the company’s immense success is still in play.
With a value of US$2.5 billion, the video game company Garena is the highest valued local startup to date. The internet and mobile platform is the brain child of Forrest Li, a Stanford University graduate. Li harnessed his connections as a Stanford alumni to connect with industry frontrunners like Skype Cofounder Toivo Annus, and Kuok Khoon Hong, CEO of Asia’s leading agribusiness organisation Wilmar, through mutual friends. These powerful connections became angel investors in Li’s first venture-GG Game.
Despite the initial startup falling short of expectations, Li’s investors gave him a second chance, with an added US$1 million in funding. As Li himself explains, “For angel investors, they bet on people, and they feel that someday you can make something happen.”3
Armed with this new experience and funding, Li then founded Garena in 2009. The capital enabled him to effectively spearhead the creation of what is now a leading mobile and online gaming platform in SEA, enabling gamers to connect and play PC games. Garena has since branched out into e-commerce, social networking and even F&B franchise ventures, thus becoming one of Singapore’s biggest success stories.
While you might not have the contact of Ivy-league venture capitalists at your disposal, Li’s method of capitalising on profitable connections and expanding his business from there shows how far networking is capable of taking you.
Given the current economic climate, propelling your small business to growth may often be a seemingly impossible battle. Seeing what these startups-turned-unicorns have accomplished within less than a decade however, shows that with the right opportunity and strategy, it can be done.