Startup scene in Singapore not quite Silicon Valley

Entrepreneurs and venture capitalists negotiate a different landscape at the DEMO Asia event for startups

The growing startup scene in southeast Asia is a bit different than its counterpart in Silicon Valley.

For one thing, the salaries are lower -- chief executives typically make less than US$9,000 a year -- and people don't get very excited about stock options.

"Asians don't really understand working for equity," said Pierre Hennes, who is chairman of a local group of startup investors and also runs two venture capital funds of his own.

Hennes spoke Wednesday on the sidelines of the DEMO Asia conference, which takes place this week in Singapore. This is the first time that DEMO, a series of conferences for emerging technologies that helped launch names like Palm, ETrade and Salesforce.com, has held an event in the region, outside of China.

The main show, which begins Thursday, will feature about 75 startups in various stages of infancy from more than a dozen countries and from single-person Internet plays to advanced medical device ventures. Fees for a booth on the showroom floor or the chance to present in front of media and venture capitalists start from SGD$1,500 (US$1,200), a large sum for the smaller companies, although some financial assistance is available.

In Singapore the government has actively moved to sponsor budding local entrepreneurs through bodies like its SPRING agency, which eases their way through the local bureaucracy and sponsors local events and grants aimed at early startups. The tiny island country has a long history of international trade, operating some of the busiest ports anywhere, and is well-suited culturally to work with the world's current tech powers -- over a third of the population speak Mandarin and about a fourth speak English.

But local investors say that many locals who start companies tend to think small, or choose straightforward Internet commerce sites because the barriers to entry are low. The SPRING website devoted to its entrepreneurship projects features designers of "eclectic messenger bags" and a machine to automatically make Roti, a type of Indian flatbread.

At a small event before the main DEMO conference, pitches included a site to match students with teachers in specific subjects and an online tool to help market researchers find test subjects. When one was asked how she would protect against copycat sites, she said simply "I can't."

"It's a little bit of everything. You might see some copies of things that exist in other places," said Jeffrey Paine, the director of local incubator BattleVentures.

Local entrepreneurs and venture funds looking to draw financing from Asian investors can find it more difficult than in the West. With lucrative opportunities to invest in regional real estate, currencies and local stock markets, which regularly pay out double-digit returns, pitching the hit-or-miss nature of startups can be a challenge.

Negotiating salaries and contracts can also be tough for outsiders, who aren't used to the frugality of the locals.

"In Asia they don't like to pay much, and they bargain like hell," said Hennes.

(One of the principal producers of DEMO Asia is IDG Enterprise, a subsidiary of International Data Group (IDG), parent company of the IDG News Service.)

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Jay Alabaster

IDG News Service
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