Many, if not most startups view overseas expansion as a milestone to hit, but it goes beyond simply expanding one’s customer/user base.
There are countless of factors that one needs to take into consideration before finally being able to say that your firm is now one that is ‘globally present’.
What’s more, having offices around the world is one thing, but how does one ensure that business is running smoothly at all these markets?
We reached out to several Singapore startup founders who have successfully managed to venture beyond our shores, and got them to share more about why and how they managed to do so.
theAsianparent
Singapore-based media platform theAsianparent completed an Series C funding round in July this year with an 8-figure sum raised.
Investors included Chinese family-focused conglomerate Fosun, China’s largest retailer JD.com, ATM Capital, Redbadge Pacific, and returning investors like Global Grand Leisure and WHG Holdings.
With the funds, theAsianparent revealed plans to continue driving expansion into new markets in Asia and Africa and accelerate development on their recently launched mobile app.
Plans to launch Africaparent.com, as well as an online store that will carry a line of products safe for expecting mothers and babies were also revealed.
Roshni Mahtani, Founder & Group CEO
Q: What are key considerations you have when choosing countries to expand to?
Our considerations can be summed up in three broad categories, namely:
- Demographics – Not only are we looking for markets with parenting base, but more importantly high birth rates that would ensure continual demand for theAsianparent. We also look at the cultural diversity of a market, which would determine our confidence in being able to fully localise our platform.
- Digital consumer behaviour – As we place more focus on our app, we are exploring expansion into new markets with high internet and mobile penetration rates, which in turn will have an impact on the digital advertising budgets of brands.
- Competition – We do a detailed market analysis on existing players (if any), taking into account cost considerations for operating in that market.
Q: What’s the biggest challenge you face when expanding overseas? How do you overcome it?
Finding the right talent that can execute our strategy remains our biggest challenge.
We overcome it by:
- Leveraging on the expertise of different countries (for example, Indonesia is our design hub, the Philippines is our content hub and India is our tech hub); and
- Having our regional heads located in the respective expertise hubs, which in turn encourages collaboration and promotes efficiency.
This mitigates risks and enables us to collectively execute our strategy across all our markets.
Q: What’s some groundwork you think is crucial when it comes to overseas expansion?
- Conduct thorough market analysis to ensure that there is a market for your product or service, and to size up your competition.
- Confirm market demand by ensuring that your product or service is able to fulfill a gap in the market.
- Determine whether you are able to hire good talent to help grow market presence.
Q: What’s a piece of advice you have for startups who are deciding whether or not to expand overseas?
A business can be analogise to a stool, of which its legs represent Market, Product and Talent.
All three are essential to support business growth.
Set your sights on overseas expansion only when you have all three verticals in-place.
We The People
We The People (WTP) was founded by Singaporean Kickstarter creators, and is a Kickstarter retail chain which aims to help close the ‘doubt gap’ between creators and consumers by letting consumers get a hands-on feel of the products before buying them.
Beyond providing an offline retail space, WTP also assists creators by teaching them about crowdfunding, and aiding their marketing pushes.
They opened their first store at Orchard Central in September 2016, and currently run 4 outlets locally.
Late last year, they ventured beyond our shores and opened an outlet in the United States and Malaysia.
Ryan Sim, Managing Director & Co-Founder
Q: What are key considerations you have when choosing countries to expand to?
We The People’s mission is to empower people to take the leap of faith and create. Our stores not only serve as sales channels and discovery points. They are centers for inspiration.
We look for tier 1 cities like Singapore where the population flow can provide great exposure and potential revenues. Our expansion into the USA is a great way for us to gain recognition in the market where crowdfunding got popularised.
Key considerations:
- Tier 1 City/Region
- Demographics of region in terms of types of businesses. What are the other businesses anchored there? What businesses are also looking to set up shop in these locations and why. This is gives insight into the ecosystem, mindset and spending power.
- What benefit would having presences is said locations, bring to the entire brand? Positioning is key. For example, we’re opening a store in Silicon Valley in March 2020, this will definitely one of our most exciting presences ever. Great way to connect with the community and creators. Local creators now have the chance to have some foothold in a key location.
Q: What’s the biggest challenge you face when expanding overseas? How do you overcome it?
Understanding cultural nuances and buying mindsets are difficult.
For example, in Singapore, chattiness can be considered a buying indicator of a customer. In the US, however, it isn’t the case. Failing to realise this fast would be detrimental.
Also, as a startup that has only ventured around Asia, hunkering down in the US for extended periods of time alone is challenging. We had to build a presence from scratch.
It’s exactly like running a business from scratch but in a market that you aren’t 100% familiar with. It was a great lesson in learning to adapt fast, or die.
Q: What’s some groundwork you think is crucial when it comes to overseas expansion?
You must spend some time there yourself and not rely on other people telling you what’s what.
Fly there, mingle, make friends.
DO YOUR DUE DILIGENCE. Research on the government and the infrastructure of the state/country. Laws are different, taxes are different. The last thing you want is for some unforeseen high cost coming and catching you off-guard.
Q: What’s a piece of advice you have for startups who are deciding whether or not to expand overseas?
If you’ve managed to spend some time in the target country – not for holiday, but to survey – then you’ll be able to make a more informed decision.
Understand that it will not be the same and you will have to adapt on the fly. Read those contracts and agreements 100 times before you sign them and don’t worry about asking for changes in terms.
The best way to decide is to immerse yourself in said location’s society. Localise yourself as much as you can. Knowledge is power.
As Sun Tzu says:
“If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb in every battle.”
Zilingo
Singapore-based fashion platform Zilingo was founded in 2015 by Ankiti Bose and Dhruv Kapoor with an investment of US$30,000 each.
Since then, it has evolved from a fashion marketplace to a B2B platform that aims to empower small businesses across the entire supply chain.
Earlier in February, Zilingo announced that it had raised US$226 million in a Series D funding round, and part of the new funds will be used for expansion into new markets.
Later in October, Zilingo shared that they are investing US$100 million across the US, with the investment including the hiring of sales and product teams. This comes after the firm opened US offices in New York and Los Angeles.
Dhruv Kapoor, Chief Technology Officer
Q: What are key considerations you have when choosing countries to expand to?
We start with our mission – to help businesses grow by optimising their supply chain operations, which includes improving their ability to procure and sell, access financing, and more.
For us to want to launch in a new market, we try to measure the impact we could have when we execute there on our core mission.
There are several key questions we ask ourselves to try and measure that impact:
How are the network effects? How would this new market help with Zilingo’s overall strategy, and can the partnerships we build here with brands, suppliers, and factories strengthen our presence in existing markets as well?
For example, we are currently scaling our Vietnam operations – this helps us access a booming Vietnam economy (middle class population of over 30 million), serve Vietnamese factories with software, and provide Vietnamese sourcing to clothing brands in the West.
What kinds of product/service gaps do we see?
Before entering a new country, we always ask how our technology and services can uniquely add value for businesses and consumers.
How well do we understand that market right now?
We feel that solving for the unique characteristics for that market and building incredible teams within the market that are passionate about the mission are key elements to scaling and succeeding in a new market.
When we feel that we don’t yet understand a market well enough, we tend to take a step back and spend time doing more groundwork before we take a call to expand to that market.
How much can we scalable in the near-to-medium term?
South and South-East Asia have a number of growing economies, and we’re incredible excited about the opportunity here.
At Zilingo, we follow a 10X culture – we want to enter markets at the right time, where there’s an opportunity to build significant market share and scale usage, supply and/or sales substantially.
Q: What’s the biggest challenge you face when expanding overseas? How do you overcome it?
The biggest challenge for us when we add a new market is also our biggest opportunity – building strong local teams that believe in our vision of a more fair and connected supply chain, and are excited about being part of our team.
This is challenging since early on, finding the right set of people is tough, and your first few hires have an oversized impact on how the rest of the team in any given geography shapes up.
At the same time, this also presents us with a huge opportunity. When we hire the right set of people, we’re also bringing in a massive diversity of ideas and knowledge. That helps us hugely in all aspects of our business, not just in things pertaining to growth in a new market.
As an example, we spend a lot of time before launching a new market understanding the differences in how our product should serve customers. We’re always able to take away lessons that matter to us in our other geographies as well.
Besides building a new team, we tend to spend time understanding differences in legal frameworks – doing focus-group studies with potential customers and more. But most of this tends to follow from first building an amazing team that understands the market.
Q: What’s some groundwork you think is crucial when it comes to overseas expansion?
We strongly believe that growth in each geography is driven by passionate, talented teams that believe in our mission to help businesses, especially SMEs, grow by optimising their supply chain operations, and we are excited about broadening our impact in the world.
We spend time finding and growing teams before we launch in a new market, and at Zilingo we have an inclusive culture that welcomes people in our newer offices and makes them feel at home.
We also believe that, even in our increasingly globalised world, each market is unique and different.
Understanding these differences and anticipating the work we need to put in – adapting our product, working with legal & regulatory partners, etc – is crucial to successfully launching and scaling in new markets.
Our philosophy around growth into new markets is reflected in our approach to technology and building products. Zilingo’s technology platform lets businesses procure from and sell to other businesses, access financing, and much more. Crucially, our core technology is modularised so that we can serve the unique nature of product needs across geographies.
These differences in product features includes the way payments and logistics works, how we store customer data, in many cases data science models that are specific to each market, and much more.
We spend time before launching a new market understanding these unique differences and building technology to solve for that and serve our customers better.
Q: What’s a piece of advice you have for startups who are deciding whether or not to expand overseas?
The world today is increasingly globalised and connected. I feel that the time where companies could look at their operating environment and customer base as two sets of users – their ‘home market’ and ‘rest-of-the-world’ – is a thing of the past. This is less surprising with SaaS/cloud companies that inherently scale across geographic boundaries easier.
However, consider startups like Uber that provide hyper-localised services but still dominate in multiple geographies around the world. In addition, you also see startups like Airbnb which are predicated on being able to connect consumers traveling from any one part of the world to homestays and experiences on any other part of the world.
Similarly, with Zilingo, while a large share of our transactions and shipments are within a country, we also leverage our relationship with over 6,000 apparel suppliers and factories to help provide brands with more tech-enabled procurement from suppliers or factories that may be, in some cases, located in another country.
To make this happen, we’ve always focused on developing a culture where we simultaneously hold two viewpoints that at first seem at odds.
First, we believe that there’s no ‘home’ and ‘rest of the world’ or ‘offshore’ market, and second, we believe strongly that each market is complex and unique in its own ways.
An inherently globalised view of the world does not mean painting each market with the same brush, and we spend a lot of time understanding the unique challenges of every new geography we approach.
This also has an implication on your product – you have to build technology that can scale across multiple countries and have robust systems in place to customise the experience for each country where it makes sense to do so.
In addition, it’s important to understand data privacy and data localisation laws in each country fairly well.
This culture of looking at an increasingly globalised world is a key foundation to growing to multiple markets. When we consider setting up shop in a new market, we start with why – how does this further our mission of helping businesses grow by optimising their supply chain operations.
We also spend a fair amount of time understanding that market in depth and learning all the new things each market offers to teach us.
What’s also been a very crucial element of our growth across multiple countries is building strong local team led by incredible leaders who know their markets in-depth and are equally passionate about our mission.
This, in our view, is by far the dominant factor to grow and succeed in a new market, especially in the more localized spaces of ecommerce and supply chain.
Ohmyhome
Singapore proptech company Ohmyhome, founded by Singaporean sisters Race and Rhonda Wong, announced in July their expansion into Greater Kuala Lumpur, Malaysia.
This marked the firm’s first venture overseas, as they also revealed plans to expand into other parts of the country, including Johor.
They also announced a cross-border service which helps buyers and sellers in Singapore simplify property transactions in Malaysia. This service is offered on both their DIY platform and as part of their agent service.
Malaysia users can also use Ohmyhome to manage their housing transactions on their own.
In September 2018, Ohmyhome raised US$4 million and were eyeing expansion to Malaysia and Thailand.
Rhonda Wong, CEO & Co-Founder
Q: What are key considerations you have when choosing countries to expand to?
Key factor 1: Does the city require your solution and is it big enough?
In selecting cities and countries to expand, it is first and foremost important to know that our solutions are able to solve the problems in those territories.
We have personally transacted real estate transactions in over 7 countries before starting Ohmyhome and it didn’t take us long to realise that while localisation is extremely important in each city, the overarching issues and pain points are very similar when it comes to real estate transactions.
Since our solution is applicable to all markets, market sizing naturally becomes very important to make the right selection.
Usually a large country with a huge population is very attractive to most industries, but it isn’t always the case for real estate.
Size of the target market, gross merchandise value, transaction payout, real estate liquidity as well as how densely or sparsely concentrated are the properties are all part of the equation as to whether we should enter the country.
Key factor 2: Is the city able to accept your solution?
We then look at a bunch of statistics including rates of tech adoption, internet and smartphone penetration, time spent online, preferred medium, demographics of transactors, competitive landscape, infrastructure etc, and send a few staff members on the ground to fact check our assumptions and research.
Nothing beats experiencing the ground by yourself.
Key factor 3: Will it be profitable?
Now that we know our solution has a high chance of working and that people are welcoming towards it, we start simulating and forecasting the cost of operations and run through the entire sales cycle down to traveling time, planning out the cash flow and manpower requirements.
The unit economics has to make sense, if not today, then at least for the foreseeable future.
This stage is extremely important because it helps the business defines what success looks like, and when to cut losses if it goes south.
Q: What’s the biggest challenge you face when expanding overseas? How do you overcome it?
The challenges are not very different from building Ohmyhome in Singapore. Every new market requires one to navigate and understand the local market, build new networks and introduce Ohmyhome to a new market.
The biggest challenge for us is speed, and how can we do that fast with the least cost incurred.
While we have perfected our model in Singapore, as a newcomer, we need to earn the trust of our audience, adapt to Malaysia’s local policies, property landscape, and market needs.
Starting out in any city always comes with the challenge of being a newcomer without local traction and coming across as unreliable.
We spent 12 months preparing for our entry into Greater KL, and 6 months on the ground preparing for our official launch, introducing ourselves to all the industry key stakeholders.
Taking a real interest to understand the consumers and the industry stakeholders, abiding by their rules and respecting the way things are done in the market are all important.
All of these behind-the-scenes hard work will eventually translate into the real work that people see, and that’s when they make the judgement that “even though they are new, they are very good”.
From the date of our launch in KL, it took us 1 month to reach the same number of customers as we do today in Singapore.
Q: What’s some groundwork you think is crucial when it comes to overseas expansion?
With each city that we expand into, conducting extensive market research and laying the ground-work early is exceptionally important. We need to know the market extremely well, the customer profiles, their cultures, government regulations, transaction processes, etc.
Ultimately, we want to provide these markets with the same simple, fast and affordable experience that our Singapore users experience.
To succeed we need to think local.
Hiring the right people to be our first ground team is very close to hearts for us and we do that personally. We have an amazing culture at our offices both in Singapore and Manila led by the right people and we want that to continue for each of our new teams.
Getting connected to the people and companies who are important to your business takes a lot of effort and while it may not always have business collaborations outcomes, it always helps to have friends.
It could be directly related or complementary businesses. Usually they have lots of market insights to share, pitfalls to avoid and I have always enjoyed learning from their experiences.
Q: What’s a piece of advice you have for startups who are deciding whether or not to expand overseas?
Focus on getting your service model right, before you consider expansion.
While speed to market is important for certain businesses to secure a first mover advantage, doing things right before hastily expanding can greatly save you the time and cost of making the same mistakes multiple times across your expansion journey.
For our industry, real estate is often the most expensive purchase in one’s life, so we made sure that we got the formula right before expanding.
JustCo
Founded by Kong Wan Sing in 2011, JustCo is a coworking brand that now has 17 centres in Singapore.
In May, they entered Taiwan, opening three new coworking centres in major Taiwanese districts Xinyi, Songshan, and Zhongshan.
Currently, they have close to 40 outlets globally, and are also located in cities like Jakarta, Bangkok, Shanghai, Seoul, Sydney, and Melbourne.
In 2017, JustCo raised US$12 million from Thai developer Sansiri in their Series B round, brining the company’s valuation to US$200 million, a figure which has since increased, according to Business Insider.
Kong Wan Sing, Founder & CEO
Q: What are key considerations you have when choosing countries to expand to?
One of the key considerations when choosing the country to expand to is the ability to establish strong positive relationships with local landlords/developers or strategic partners. This will allow us to gain a stronger foothold in each new market, as well as greater credibility and industry positioning.
For example, the investment of US$177 million from Singapore’s sovereign wealth fund GIC and multi-national property company Frasers Property Limited has given us an edge to leverage on their local market networks and tap on a common pool of resources.
The partnership has allowed JustCo to scale and grow within the region. We were able to secure prominent new centres located in buildings owned and/or managed by both GIC and Frasers Property.
Similarly, in Thailand and Indonesia, JustCo also joined hands with Sansiri, a key player in Thailand’s real estate sector, and Gunung Sewu, one of Asia’s largest business players.
With this partnership, JustCo is able to leverage strengths of our partners such as local market knowledge and local operational expertise.
Q: What’s the biggest challenge you face when expanding overseas? How do you overcome it?
Securing of Prime Locations
At JustCo, scale is crucial for us and we want our members to fully harness the collaborative energy in a coworking culture. Hence, securing prime locations in new markets is one of the key challenges we face and it is important for JustCo to establish and maintain good relationships with local partners and landlords while recognising the requirements and culture differences of each local market.
As mentioned in Q1, our partnership with local partners across the region has also given us an edge to leverage on their local market networks and tap on a common pool of resources.
Hiring of Local Talents
JustCo understands the importance of localisation and we have our very own local teams in each city to operate and run our business on a day-to-day basis, allowing us to better understand our local clients and their business’ needs.
With localisation and better understanding of each market, it enables us to gain a stronger foothold when entering new markets and continually redefine flexible workspace experience for our local members.
However, as the coworking industry is relatively new, there is a limited number of people we could hire and it is difficult to hire the ‘right’ ones.
Typically, we get many candidates who are not familiar with the co-working structure. Hence, we are constantly on a lookout for local talents who are resourceful, understand the co-working market well, have good knowledge of our competitors and more.
It has also been our practice to devote more time and attention in grooming our internal employees.
We would coach and provide them with the necessary guidance, which has proven to be effective over time.
Q: What’s some groundwork you think is crucial when it comes to overseas expansion?
Asian Hospitality
When expanding into regional markets, we ensure that JustCo’s Asian Hospitality is replicated across all cities.
Our dedicated community teams across the region deliver the same friendly and personable service by responding to the needs of our members and ensuring that they find comfort and the same JustCo hospitality, no matter where they are.
Localisation of the Business
In addition, localisation and understanding of each market and its local nuances is very important for us. As mentioned in Q2, JustCo has its very own local teams in each city to operate and run our business on a day-to-day basis – allowing us to better understand our local clients and their business’ needs.
JustCo also adapts and customises various elements of collaborative workspace design for each local market.
For example, in Australia, coffee has formed an essential part of Australia’s workplace culture, so our JustCo centres feature an in-house café/barista for members to make a quick coffee run.
The centre was also designed to feature spacious hot-desking areas and ample collaboration areas as Australians enjoy socialising and they tend to keep things casual in a business setting.
In Taiwan, as a tribute to the national drive towards sustainability and upcycling, recycled materials has been creatively incorporated in the design and furniture within the space.
At every JustCo centre, we strive to create a workspace that is productive and conducive to members; enabling them to network, establish strategic partnerships and find collaboration opportunities that will help drive success and innovation to each other’s businesses.
Q: What’s a piece of advice you have for startups who are deciding whether or not to expand overseas?
Be focused on consistency and always value-add with a product or service that can solve the problems of consumers.
Similar to when JustCo first started out, we were driven to add value and ‘make work better’ for individuals and businesses, by redefining collaborative working and connect businesses of all shapes and sizes in open and creative workspaces – which further enables us to stay ahead of our competitors.
As a leader and entrepreneur myself, it is important to have a resilient mindset and agile attitude, as you are bound to meet with roadblocks and obstacles.
Some of these obstacles can be opportunities that will result in a positive turning point for the business.
- Do you have any questions for entrepreneurs about starting up or running a business? Let us know!
