November 22, 2024

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[THE INVESTOR] Southeast Asia has been the buzzword in Korea’s startup scene since last year as venture capitalists and startups began prowling outside the country for new business opportunities. 

It is comprised of 11 countries and represents 650 million people. Some unwary investors may see it as a unified region, but each country has vastly different cultures, infrasystems, policies and languages, meaning it may appear as one region, but has many gatekeepers.

One investor I met in Singapore warned never to regard Southeast Asia as a single market.

It all becomes simple when thinking about countries in Northeast Asia. While people from outside the region might have a difficult time distinguishing Koreans, Chinese, Japanese and Mongolians, everything except looks are different. From our political systems to societal norms and economies, nothing is the same. We also cannot communicate without translation.

This means that what works in China won’t necessarily work in Korea, or vice versa.

But there seem to be misconceptions that Southeast Asia is indeed one market, and that Singapore is an easy, convenient gateway. Granted, Singapore is probably the most accessible destination with relatively little red tape and low language barriers. Indeed, quite often I hear in Korea that startups either have set up an office in Singapore or plan to open one as part of their expansion to Southeast Asia.

So I was surprised when multiple sources including CEOs and investors told me that they have not seen many Korean startups and VCs in Singapore. 

A shopping center in Singapore Park Ga-young/The Investor

Where is everyone? Where are all the Korean VCs who are looking to make money outside Korea?

One source in Singapore thought cultural and language barriers are discouraging Korean entrepreneurs. “We have brought some Korean startups through incubating programs, but it didn’t work,” he said. “They look at the overseas markets with very Korean perspectives and it could be quite difficult if you cannot open up.”

Another source said they don’t have enough patience.

“They do come -- quite often without dispatching actual people. They do some research on the market for a few months, get disappointed at the potential setbacks and leave,” an industry source familiar with the situation told me on the condition of anonymity.

He also pointed out that it is because they are in too much of a rush to “make it.”

“Building a network and earning trust are crucial building blocks, and achieving this can take some time,” he said. “Once things don’t seem to move as fast as they anticipated, they just pack up and leave.”

He stressed that it takes more than research, and that real people have to come to Singapore in order to see what works and what doesn’t.

Some Korean startups bring the exact same ideas and practice which made them successful in Korea and hope they work magically elsewhere, said another investor based in Indonesia.

All of this adds to two lessons for those wanting to enter Southeast Asia: be hands-on and be patient.

Once you’ve decided to have a go at it, don’t despair or give up just because things don’t turn out exactly the way you expected. If you are planning to branch out, make the effort and devote yourself.