Entrepreneur

10 Trends That Could Make Or Break Startups In The Malaysian Scene For 2017

2016 was definitely a year full of ups and downs for the local startup scene.

We’ve seen startups secure funding as validation of their ideas, to those unfortunately seeing the downfall of their business leading to them either shutting down completely or pivoting in an attempt to reach the market they need. It was definitely a rollercoaster ride for all.

So what does 2017 have in store for us?

Besides our own observations and predictions, we took to asking a few people involved in the ecosystem for their opinions. Here are 10 predictions of trends that we’re think we’ll be seeing in the Malaysian startup ecosystem next year.

1) Corporate bodies will become more involved with startups.

It’s always encouraging to see corporate bodies provide their support for the local startup scene in any form. Whether it be through accelerator models or investments and acquisitions, corporate bodies are now keen to find newer enterprises to collaborate with.

After all, startups have the mobility and flexibility to shift and adapt in ways a large conglomerate can only dream of. Recognising this, corporate bodies seek startups to help them carry out fresh ideas that can benefit both sides.

Examples of this include OffPeak getting a strategic round of funding from Yahoo Japan for their plans to double down on their current markets in Southeast Asia and Axiata’s recent major funding of RM4 million to Katsana for their new feature called Katsana Insight that deals with driver behaviour analytics.

So in 2017, it is hoped that more corporate bodies will gain interest in the startup scene to bring forth more collaborations and partnerships that can benefit the majority.

2) The accelerator model in Malaysia will survive on a smaller scale. 

Image Credit: MaGIC

After attending the demo days for both MaGIC’s Accelerator Program Social Enterprise Track and ASEAN Track for Cohort 02 and 03, one thing stood out. There seemed to be quite a lack of variety when it came to the types of startups entering these programmes as the cohorts progressed.

We also noticed that the same startups were entering different programmes through the year.

This could be due to the pool of startups eligible for the accelerating being limited. All the programmes do have a certain screening process, and if a startup does show promise, it is more likely to keep being chosen.

An example would be Local Usher, a travel agency startup who attended not only Cohort 02 for MaGIC’s Accelerator Program ASEAN Track, but also the Alliance Bank Bizsmart SME Innovation Challenge 2016 and Digi Accelerate 2016. That’s a total of 3 accelerator tracks joined just for this year alone.

There might be less activities using the accelerator model and instead, organisations may choose to focus on investments and acquisitions. Which leads me to the next point.

3) Merger & acquisition activities to increase.

Image Credit: Webrazzi

There was the news of Delivery Hero acquiring FoodPanda that further strengthened their position as an online food ordering and delivery service as well as Carousell acqui-hiring the WatchOverMe team, bringing in key members to their company.

8Spaces was also acquired by FlySpaces, deciding to join forces and work together rather than become direct competitors. KFIT’s acquisiton of Groupon played the same roles where the integration is set to boost their other app called Fave.

Shamsul Shafie from PitchIn predicts that this trend will continue for the next year. More merges and acquisitions will occur, even if it means that not all of them would be openly publicised.

4) Equity crowdfunding to grow exponentially.

Image Credit: amanz.my

2016 saw the breakthrough for a lot of young startups through equity crowdfunding.

According to Shamsul, there’ve been about 21 companies who raised their funds through this method and it is expected that the number will grow about 2 or 3 times in the next year.

This year alone saw Running Man, who managed to raise RM175K of funding as well as Kakitangan who managed to get RM1 million from investors seeking to improve their services.

In fact, even an ex-Ah Long managed to make use of this platform when he gained RM5 million from crowdfunding for his startup, Fruiti King. So it’s probably safe to say that this platform will continue to see success in helping out startups for funding in 2017 as well.

5) More focus will be given to the artificial intelligence, machine learning and IoT.

Image Credit: JomHack Facebook

The Smart City concept is quickly gaining traction all over the world. In Malaysia, various organisations and ventures have started realising the potential it holds.

This year saw many hackathons dedicated to IoT, either debuting for its first year or returning as a key focus. One of the hackathons include JomHack which has run 4 events throughout Malaysia. This in itself has seen the rise of many individuals coming up with different solutions for IoT management.

On another front, Mark Zuckerberg’s version of Jarvis is yet another story of AI being developed that can potentially be used by and benefit everyday users.

Closer to home, at JomLaunch 4.0 this year, many programmers pitched their ideas involving chatbots specifically geared to help users with certain daily necessities. For example, Telebuzz essentially allows you to create a bot with Telegram.

JustAsq is also another example where the app connects you to local businesses, experts and knowledgeable chatbots that can answer pertinent questions.

The potential this industry holds is vast, thus more enterprises and companies may be inclined to invest their efforts into these sectors for 2017.

6) Death to hit many startups.

Though 2016 saw the emergence of a handful of new startups, will 2017 see the same?

Although there may be the same volume of new startups popping up in the market, there will also simultaneously be quite a number of startup deaths too.

Some statistics show how startups mostly die after about 20 months or so. This is most likely due to oversaturation within the industry. Can’t blame them, competition exists everywhere and only the fittest can survive.

This year itself saw the death of a few startups, including Hello Roaming, whose founder pointed out that lack of funds was the main reason they had to close down.

A good thing from this though is that the cream of the crop will survive as only the outstanding ones can stay alive.

7) Less demand for concierge services.

Image Credit: expatgo.com

Compared to last year’s prediction where it was expected that concierge services would reign, the opposite may happen for next year.

This year saw a slow rise for the concierge industry, whether it be for new ventures or older ones. There hasn’t been much innovation in the scene but this could primarily be because of how demand has slowed down significantly with not enough volume of requests made.

Most of the original ones who started off offering concierge services for the community decided to pivot and find something else to focus on.

An example would be NeonRunner. When asked about their situation back in October, they informed Vulcan Post that they were now primarily doing B2B work and that their focus would be more geared towards corporate clients.

Another one that mentioned pivoting was Be Malas. They shared that they were now scaling down on their B2C components such as e-commerce and concierge services to focus on their B2B platform built with chatbots and will be servicing clients in Malaysia, Singapore, and Indonesia.

GoGet just celebrated two years in operation, but their model of crowdsourcing the “GoGetters” who run the errands has proven to be more sustainable than maintaining a team or fleet to carry out orders.

So for 2017, I predict that demand more concierge services will most likely be lessened. It might just mean that Malaysians actually prefer doing things on their own rather than paying someone to do it for them.

8) Social enterprises will gain more public awareness and recognition.

Image Credit: GE Community Facebook

At the recent Global Entrepreneurship Community, Prime Minister Najib Razak announced an official certification will be given to social enterprises. One of the benefits is that this will allow their businesses to be accredited. This means that banks and investors can easily check if the social enterprise is legitimate.

Besides that, the Prime Minister also announced a new initiative that ensures the inclusion of social enterprises in corporates’ vendor procurement pipelines to ensure these corporates purchase more sustainable products and services.

With these two initiatives taken by the government, hopefully the social enterprise scene will flourish in terms of recognition and involvement from the public. MaGIC’s director, Dato’ Ashran Ghazi also shared that impact investing will become more prominent in 2017 where more corporates will begin involving themselves with the local social enterprise scene.

2017 might be the year where social enterprises come further into the limelight and receive the awareness they highly deserve from our community.

9) It might be difficult for new fitness startups to survive. 

Image Credit: BookDoc

Fitness and wellness have also been gaining traction this past year.

However, those who have plans to step into the fitness scene for 2017 might need to think things through as I predict competition would be very tight.

The reason? There are two big giants dominating the market today.

KFIT has always been a big name for those in the fitness field but with their recent acquisition of Groupon Malaysia in order to build up their app Fave, they’re definitely a force to be reckoned with.

Joel Neoh also has his finger in another pie, which is BookDoc. With the funding and partnerships they’ve received in 2016, they’ve now decided to also ride the fitness train with the launch of BookDoc Activ which rewards users with discounts for just being healthy.

This shows their large influence in the startup ecosystem and strengthens their position as dominating forces within the industry. It’ll be a challenge for new fitness apps or services to set up shop and compete for the upcoming year.

10) Possible influx of food recycling enterprises. 

Image Credit: astroawani.com

The food wastage issue that continues to plague our society has been the calling a few enterprises needed this year to start their venture.

It seems that many enterprises have decided to combat this problem along with the social dilemma of poverty and come up with a business model that is beneficial to all.

Such examples include Grub Cycle who introduced their platform for people to buy or sell surplus food that can go to better places rather than being thrown away.

The ResQ Club app created by a Finnish startup is now venturing to Malaysia with a similar concept where they allow people to purchase surplus food for a cheaper price point.

Sime Darby recently launched Robin Food, an app created by a group of teens who entered their Young Innovator Challenge. What the app does is connect supermarkets with surplus food to organisations or charities that deal with families living in poverty or the homeless community. This is also seen in The Lost Food Project who shares the same vision in helping those in need with supplying them surplus food from supermarkets.

With the influx of enterprises beginning to get involved with this issue, this trend may continue in 2017 where more entrepreneurs will decide to take a leap of faith in the same space.

Feature Image Credit: Compiled from gettyimages.com, drwealth.com, themalaymailonline.com, and lifestyleasia.com

 

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