| | JUNE 2025 8OPINIONIN MYThe market has reached a consensus that the failure rate among startups is extremely high; in many cases, 90 percent is quoted as the default failure probability. Such statistics, while painting a gloom and doom outlook on the prospects of startups, reflect only part of the story. The truth is startups that have true product-market fit can be primed for success through proper cultivation of market access. Small and medium enterprises (SMEs) account for 99 percent of firms in countries under The Organization for Economic Cooperation and Development (OECD). Such SMEs are usually battle-tested, resilient and have a keen sense of where the market opportunities are. At FVC, it is a priority to engage with SMEs to acquire valuable insights into market opportunities and tap such companies for market access on behalf of our portfolio companies. Early-stage startups lack market access in their initial days of inception, while SMEs lack the talents and technology to tap into market opportunities they identify and can access with ease. Bringing the startups and the SMEs together could not be a better fit. Their interactions, from our experience, when moderated by a third party, such as an investment provider, could yield meaningful and lucrative collaborations that empower the SMEs to partake in market opportunities while helping the startups realize their value through the actualization of market access. Creating a Robust Feedback LoopIn almost all cases, FVC consults with a wide network of SMEs in Southeast Asia to glean insights on market opportunities available to startups we are looking to invest. SMEs provide us with robust feedback that we loop back to the startups and help to further refine product-market fit for potential investees, creating post-investment market access plans with the investees. This allows us to be intimately involved in the success of our portfolio companies as enablers for their success vis-à-vis active participation in facilitating market access. Facilitating Investments and Potential ExitsThe bigger and better-funded SMEs among those consulted are often potential acquirers and/or investors in our portfolio companies. It has been important since day one to create the potential synergistic relationships between such SMEs and our portfolio companies to ensure a smooth transition to potential lucrative exits for us over an accelerated time frame. It is not by design that we seek fast exits, but due to the nature of our work, we are usually able to obtain strong indications of exit potential within the first 2-3 years post-investment. The Missing Link in the Innovation EcosystemIn our pursuits for innovation and the next big thing among startups, we often overlooked the established SMEs in our own backyards that have the potential to constantly reinvent themselves and adapt to market changes. These SMEs could be tapped for a strong, potent driving force of growth that could accelerate innovation pursuits and help startups get through the dreaded `Valley of Death.' While not necessarily the most innovative or most resourced corporations around, SMEs are nimble and adaptable. SMEs have developed a keen market sense to go with the flow of changes to survive. By Jason Su, Chief Investment Officer, Farquhar CapitalSYNERGISING THE MARKET ACCESS POTENTIAL OF SMES TO HARNESS THE GROWTH OF PROMISING STARTUPSJason Su
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