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Wednesday, 27 May 2009

Southeast Asia: Untapped potential

I am always of the view that Southeast Asia is an unpolished diamond in terms of market opportunities for startups. Scott Rafer articulated the same view beautifully and I encourage readers to read his entire post if you are interested in this area.
As always, I’m going to look for opportunities where there’s a good-sized market that’s not super fashionable and therefore not overcrowded. Southeast Asia fits that profile a lot better for me than South Asia or Greater China.

To add to his commendatory, I would like to share my views on what are some key opportunities in this region. Things that might be dull but has the potentially to create lots of value and in the process make lots of $ : )
Mobile services
Mobile is definitely an important area to focus on. Many of the users here are likely to use mobile than the pc and it is logical to cater to this market. I mention FrenClub before but it is worth repeating. They are a mobile social networking service that is based on simple SMS technology. They have only 2 million users but are aleady grossing US$2.3 million in revenue. Imagine if you can create a more popular service that brings in, say 10 million users. How much would you be earning?

As additional facts, consider Philippines in its use of mobile services:
In the Philippines it is for example not unusual to receive your whole paycheck paid to your mobile phone account. And you can then make various payments and money transfers via SMS. The various TV show interactivity that we see with American Idol for example and the politicians using SMS in their voter drives - these have been staples of the Philippine market for this whole decade. The Philippines is definitely the most advanced country among the developing world by far, when it comes to mobile telecoms.

So mobile applications and services definitely have potential in Southeast Asia.
Digital advertising
When I say digital advertising, I am referring to online or mobile advertising. By references, digital advertising only constitute a small percentage (less than 5-10%)of the overall advertising spent in many Southeast Asian countries. This a huge opportunity. Ad networks, Ad exchanges, Brand monitoring, Services that help companies listen. All these are wide open areas for startups to take a crack at it.
Online classified
Related to advertising is online classified. In the US, craglist is the dominat player but we have no such companies in SouthEast Asia. This is good news for startups as it implies the availability of markets opportunities. To give you a sense of the market size, let's look at JobsStreet, which is the key player in the Job classified markets for Malaysia and Singapore and maybe part of Philippines. Within one vertical and a couple of countries, they are already a 100M ringgit company. What about other verticals such as car, property, dating, education/tution in other countries? How much are these untapped market worth?

SME market
Many SMES are relatively unsophisticated in their usage of technology. In Singapore alone, only about 20% of SMEs have a basic website. That implies untapped markets in terms of entreprise software. In terms of areas, basic company needs like payroll, accounting, inventory, CRM etc are all good areas to pick on. Alternatively, you can also analyse indiviudal sectors and see what kind of software can deliver value to the SMEs within that sector.

There are many more opportunities than the ones I listed here. I shall go deeper into these in future posts. In the meantime, what other big areas do you see?