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As startups progress from seed to early-stage and then growth and late-stage funding, they must recalibrate between profitability and growth.
FREMONT, CA: According to an analysis by KPMG and HSBC, startup investments in the Asia Pacific (APAC) region are anticipated to not surpass the record-high USD 193.7 billion pulled in last year. Some industries are experiencing more pessimistic emotions than others, such as the once-hot-ticket cryptocurrency industry, which has halted its growth since the crypto crisis and worldwide headwinds of this year.
Investors are obviously shifting their attention to profitable and sustainable expansion in the face of weakened emotions and a capital slump in 2022–2023. Here are a few things for companies to keep in mind as they try to expand well amid challenging times.
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It seems obvious, but knowing the competition and target market inside and out is crucial to determining where a firm should fall on the profitability-growth continuum. In the midst of the pandemic at the start of 2020 in Delhi, Convosight was founded as a platform for community creator monetisation. Lockdowns made online communities a prime target for fast-moving consumer goods (FMCG) brands, so the time was perfect. Two years later, Convosight is used by more than 500 million members across 50,000 communities in 75 different countries.
Tamanna Dhamija, co-founder and CEO, said that being first movers, most of their early work was spent teaching the market. On the demand side, they educated companies on the value of online communities and the migration of users to websites like Facebook and Reddit. On the supply side, organisations gave community builders new skills and training to conduct campaigns and maintain their communities, which benefits brands.
For instance, when Funding Societies/Modalku launched as an alternative lender in 2015, Asia was in the midst of the P2P tsunami that swept the continent from 2013 to 2018. As a result of zigging while competitors zagged and understanding key distinctions in the SME finance landscape between markets in Southeast Asia, China, and India, the Singaporean startup is currently Southeast Asia's leading SME digital financing platform.
Co-Founder and Group CEO of Funding Societies/Modalku Kelvin Teo stated that they made decisions that were different from their counterparts on purpose. While other overseas competitors focussed on growth, first prioritised compliance and regulations. Next, the decision to go regional, become a one-stop shop for finance and invest in data and technology before competitors. Over time, these small decisions to diverge from the standard have helped us establish themselves as a market leader.
Accredify, a Singapore-based business that provides digital verification services, is avoiding the funding slump that is hitting other blockchain startups by identifying and catering to its target markets. According to CEO and Co-Founder Quah Zheng Wei, Web3 startups had great years in 2020 and 2021. The current funding application process for Web3 is more drawn out. Accredify illustrates the special advantages of what platform, TrustTech, can achieve for clients in document and identity lifecycle management and verification rather than discussing blockchain.
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