Photo: Google Images

The VC landscape varies significantly across the different ‘Valleys of the East”, the Silicon Valley type areas that have started to develop across Asia.  Shaped by their respective economy, culture, business climate, market dynamics and opportunities, the startups also tend to have a different focus. Let’s explore how some of these are tapping into opportunities presented by their local market dynamics.

India – IT, BPO, and the skill gap

India is an emerging economy with specific dynamics and challenges that are caused by the mere size of the country and its population. The fast growth of the IT and Outsourcing industry has driven the requirement for “Learned” manpower. There is a massive gap between high-skilled jobs and low-skilled labor, and some people believe that this could adversely impact India’s economic growth.

Enter Classle, a startup that provides an online social learning platform. Build on the Amazon Web Services cloud, Classle offers online Academics, Projects, Quizzes, and more, all backed by an analytics engine that creates personal profiles and scorecards. This enables students to experience a social and fun way to learn and make their talent visible to employers. For employers in the IT and Outsourcing industry, it offers them a way to identify and hire talent faster and easier, with less risk as they have access to in-depth profiles & analytics on the candidates. Classle is a great example of a company that is born out of the needs of the local market, but could grow to address similar challenges in other emerging economies.

Singapore – high-end manufacturing

Singapore has developed incredibly fast in the last 40 years and now combines a high GDP with steady growth. Its economy leverages their location and port to be a main trading and financial hub. The country has also developed its high-end manufacturing industry, which helped it to become a prime location in the chip industry. When designing chips, a large part of the time and costs are actually spend on hardware and software to run simulations.

Plunify recognized this problem and built a smart platform for ‘Cloud-accelerated Chip Design’. On top of Amazon Web Services’ cloud infrastructure, they built algorithms and an integration layer around different software tools for various stages of the chip design process. Altogether, this delivers a platform that drastically reduces the cost of the chip design process, while significantly accelerating the time to market. As such, they are potentially playing a key role in the growth and modernization of the chip industry in Singapore.

China – powerhouse of game developers

China is not just growing fast as an economic power-house; it also grows fast as a tech-savvy, connected society, with a very large and active community of engineers and developers. Many of these are based in the Zhongguancun area in Beijing (see my previous post) and focus on developing social games.

A great example of a successful social game developer in China is FunPlus Game, a leading social gaming company that currently ranks as one of the Top 7 game developers on Facebook with over 3 million daily active users (DAU).  In Europe, they are the top game developer on the leading social networks and the Netherlands and Germany and their farming game is the number one game in the Arabic version of Facebook. FunPlus games runs on AWS. “With our social game growing from 1 million to 3 million in 3 months, we can spin out more than 300 servers quickly, only managed by 1 engineer”, says Yitao Guan, CTO of FunPlus Game. His company continues to develop great games, leading to fast growth across the world.

All three companies are examples of innovation, entrepreneurship, and an ability to spot opportunities presented by local market dynamics. And these are just 3 of many…

About Pieter Kemps

Pieter works for Amazon Web Services and interacts closely with leading VC’s and fast growing tech startups in Asia. He is passionate about startups that combine product innovation with strong business model economics. Amazon Web Services is a Supporting Sponsor at Echelon 2012.

Disclaimer: The opinions expressed in this article are the personal thoughts of Pieter Kemps and do not reflect the views of his employer or their associates.

These guys all have phones.

Despite all the discussion about 4G, 3G usage has been growing fast in China as smartphones become more prevalent. This morning, Ministry of Industry and Information Technology vice minister Shang Bing said that China now has more than 152 million 3G users nationwide, and more than 370 million mobile internet users (many are still on 2G networks).

If you want some other numbers, Mr. Shang had those as well. China now has more than 1.3 billion phone users, including over a billion mobile phone users. It has 158 million broadband internet users, and a total of more than 520 million total internet users. That’s a lot.

[via Sina Tech, image source]

Without GPS technology, we would all be lost — increasingly, that’s a literal truth. China’s “Big Dipper” GPS satellite system has of course been in operation for a little while already, but major expansions were announced yesterday at an exhibition in Guangzhou.

This year, an additional three Big Dipper satellites will be launched to assist in a network expansion that will see the Big Dipper system covering the entire Asia-Pacific region by the end of this year. These three new satellites will join the 13 already in the sky, and they likely won’t be the last to go up. The ultimate goal for the Big Dipper system is for it to be a high-tech, open global positioning system with full global coverage by 2020.

China is also cooperating with all the major international players — Russia, the US, the EU, Japan — to integrate the Big Dipper system with their systems and to meet international standards for aviation and maritime navigation.

[China Youth Daily via Sina Tech]

GMIC sees Dou Dou winning G-Startup and leading Internet companies share the importance of mobile platforms in Asia.

The Global Mobile Internet Conference (GMIC) is an annual three-day conference organized by the Great Wall Club of China. GMIC is now in its fourth year and is growing from strength to strength. The conference recorded an attendance of 5100 participants and with almost a quarter of that from international participants.

Having spoken to many participants, the general sense is the conference is one of the most well organized events in the tech sector of China. It is largely unique because of its international representation of participants as well besides the participation of a good mix of Chinese startups and large internet players.

The conference is divided into three trackes, i.e. the Main Stage keynote presentations, the G-startup track and the AppSpace track.  The Main Stage keynotes are largely invited speakers from a mixture of Chinese and international players. Notably some speakers of the Main Stage included Pony Ma, founder & CEO of Tencent, Lei Jun, CEO of Xiaomi, and Phil Libin, CEO of Evernote.

Meanwhile the G-Startup was a startup contest that saw various international and Chinese players pitching to a panel of international judges from various investment and startup background. There was an ongoing track on various topics organized in forum format, mostly on topics related starting up.

For the AppSpace track, there were experience-sharing sessions from successful mobile Internet firms and also presentation of platforms by the  more established platform players and content aggregators.

One of the key observation points from the GMIC conference is that it is obvious that the next frontier for the Chinese Internet players are the mobile Internet and the war has already arrived. Tencent and Sina were both going all out  to show in style and might their ambitious plan to create their own mobile Internet eco-system. Their platform initiatives include publishing roles that they openly court games and content startups to work with. In one of keynote presentation, Taobao, the leading Internet auction player in China, shared that as much as 55 percent of their daily traffic comes from a mobile device now.  The message was overwhelmingly clear and loud … the mobile Internet is now as important as the Web.

On the G-Startup front, Chinese startup DouDou won the first place while Korean startup Between* won the second place. DouDou is a parents and teachers communication app that facilitate interactive communications between the parties with regards to the child’s development in school. Between* is a messaging and photo-sharing app for couples. Between* has recorded more than 750,000 users since launch and is about to test its revenue model soon. Notably both winners have simple concepts, but their products are well designed and well thought of.  The judges must have had a lot of real world experience to realize that it is mostly about execution when it comes to startups that could make it versus those that couldn’t.

In the conference venue, notably some of the international companies that had struck partnership with Chinese companies are also making their presence felt. Halfbrick, the Australia-based maker of the successful Fruit Ninja game has set its eyes on the Chinese market.  Flipboard, the magazine-styled news and social feed app has a ongoing strategy to focus its first international expansion in China. Founder and CEO of Flipboard Mike McCue was the founder and CEO of Tellme Networks, a voice portal that was sold to Microsoft for US$800 million back in 2007. It will be interesting to see where Flipboard intends to go with their simple but intuitive app.

About Kin Wai, Lau

Kin Wai is a serial entrepreneur, investor and corporate advisor.  Juggling among a few roles he actively pursues, he is currently a partner at Fatfish Medialab, a Singapore based mobile app incubator.

Last week at GMIC in Beijing, I sat down with UCWeb’s Yu Yongfu to learn more about UCWeb, but in addition to Mr. Yu, I also got a chance to talk with Evernote’s Ken Gullicksen (VP of corporate development) and Vodafone’s Jonathan Bill (Senior VP of innovation and business development). Yu, Guliksen, and Bill have plenty of Asia experience between them, so I thought while I had them all in one place, why not ask them each to share one piece of advice for aspiring entrepreneurs in Asia? Here’s what they told me:

Ken Gullicksen (Evernote):

“Don’t focus on anything other than making the world’s best product.” That was Ken’s advice for young startups in Asia. He stressed that it doesn’t matter what local standards are; app stores are global and your app needs to live up to the world standard, period. That might be intimidating for some Asian startups, but it also means that anyone has a chance at success. “App stores are global and there’s relatively frictionless entry now, so if you can be the best at providing your service, you can succeed,” Gulicksen told me.

Yu Yongfu (UCWeb):

“Spend all your money on your product and your team.” Mr. Yu told me that back in the early days of UC Web, there were only two people on staff who weren’t developers: himself and the receptionist. “Spend all your money on R&D,” he told me. “You don’t need marketing, and you don’t need sales.”

Jonathan Bill (Vodafone):

“Anyone that is not developing for the feature phone base today is missing an enormous opportunity.” As a resident of India, Bill has has ample opportunity to see this first hand. And as he pointed out, the rewards can be tremendous in the long run. Feature phone apps may not help you hit the big time financially, but introducing those users to your app means you get to them early, and when they upgrade to a smartphone, they’re going to seek out your app because they know it and understand it. That means you don’t have to compete with the millions of other smartphone apps out there for attention; your customers will already know and love you. “Unfortunately, the fascination with smartphone development masks that massive opportunity,” Bill said.

So the new big thing for tech giants in China is to make smartphones, it seems. Shanda (NASDAQ:SNDA), also the creator of the famous Bambook e-reader, is set to launch its long awaited Android-based smartphone on June 6 this summer, according to a TechWeb report.

While reports of the specifications vary, the price looks to be fixed at 999 and 1,199 RMB, which is about US$190 on the high end. No specific name for the phone was announced yet. But given Shanda’s experience and success with the Bambook e-reader, the phone should be an interesting one to watch.

It is also interesting to observe all the other tech giants venturing to make Android smartphones in China. Baidu has one coming with its Android-reworked Yi OS, and Xiaomi hit it biggest so far claiming $156 million in monthly revenue. Alibaba also has smartphones to offer with its Aliyun mobile OS. We also reported earlier this morning on Samsung’s low-cost Android based phone with a starting price from 1,158 RMB (US$183).

There will be a lot of cheap smartphones available in China, and overall that’s a good thing for the Chinese consumers. But each phone will be packed with it’s own lineup of services. For example, Xiaomi is pre-installed with Miliao (rather than the more popular WeChat) while Baidu has its Ting and Maps apps installed. Aliyun phones are integrated with Alipay and Aliyun Mart to spur mobile commerce, I believe. While iPhones are still luxury phones in China, Android OS is more likely to get the love of the masses in China.

Folks have always said that mobile is going to be a big huge in China. So I guess there’s no harm for the tech giants to splash a little budget to get a slice of the smartphone pie. The main business isn’t about selling phones, it’s more about promoting the services inside the them.

Is there a bubble in the startup industry? It looks like it. At least that’s according to a discussion panel at GMIC, which included Robin Chan (founder and CEO at Time Machine Ventures), Bao Fan (founder and CEO, China Renaissance) and Huoy – Ming Yeh, (managing director of Silicon Valley Bank China).

It’s the same familiar points, but worth noting. Stupid money is being invested in companies, with no revenue at most times. But few acquisitions are happening in China and Asia. Most investors can’t find the 50x returns they are looking for. And because there’s an excess of capital, more folks are coming out to build startups, raise money, and hoping to be the next Facebook, Google, or Instagram. But you see the disconnection. There’s a lot of money and startups, but very few exits in Asia. That’s how I interpret it.

That said, Bao Fan pointed out that it is a natural cycle of the mobile and internet industry. The next bubble burst and dry spell would test the companies’ true strength. It is good in that sense as the industry somehow needs that. Those who survive are likely to do well. Robin Chan specifically pointed that the gaming looks to be on the downside. He didn’t explain why, but his comment does bring some weight as he previously founded XPD which was acquired by Zynga, which eventually became Zynga China. Chan has also angel invested in Twitter, Square, and Foursquare.

In China, he invested in Xiaomi, which I believe is now a billion dollar company. He is also skeptical about funding mobile applications as he sees no exit in China. For him, only a few companies in China can compete globally. And guess what? He pointed Xiaomi as one. And he noted that Weixin (now WeChat) was another. It’s important to note that Weixin is part of Tencent. Bao Fan did point out others, including Dianping, Youku, Renren, and YY.

While there’s excess capital to invest, I thought Huoy-Ming Yeh gave a good alternative view on investing in startups. Most investors in China are investing in trending industries – or basically clones – and that is fine of course. It’s their money. But new and bold ideas should also be invested as she believes that it would help push innovation, and hopefully, also nurture the next “Yao Ming” within the Chinese tech industry.

[Image: phitolandia.com]

As GMIC winds down for the year, this afternoon Aiko Tanaka, a co-founder of Infinity Ventures Partners moderated a discussion with some of the biggest names in casual gaming: David Roberts (Senior VP at PopCap/EA), Henri Holm (senior VP at Rovio), Narry Singh (CBO at Outfit7), Phil Larsen (CMO at Halfbrick), and Diana Moldavsky (CRO at Zeptolab).

The discussion began with the panelists reflecting on Disney, which resulted in exactly the sort of self-congratulatory idiocy you might expect at an event like this from a few of the panelists. Roberts and Moldavsky stayed out of the fray, but the other panelists expressed skepticism about Disney that spiraled until we reached the point when Narry Singh actually said this sentence, referring to the makers of casual mobile games: “We’ve destroyed traditional storytelling.” My guess is the purveyors of more traditional kinds of storytelling — for example, the filmmakers behind The Avengers, which made more than $200 million this past weekend — would have some issues with that claim. But let’s move on.

From there, the panelists began talking about brands, and how each company has dealt with its game becoming a brand. Both Roberts and Moldavsky said that building a brand wasn’t really their focus, but that their companies eventually saw from the responses of fans to the game that there was demand for additional products and brand licensed products. Larsen pointed out that most of these companies got their initial boost from a single product — in his case, Fruit Ninja — and that Halfbrick has had success building its brand by expanding that product in a way that’s thoughtful and targeted.

This was also the moment when Mr. Singh came back down to earth, where he remained for the remainder of the panel. “I didn’t realize we were a brand until we got invited on this panel,” he joked, adding: “But are we sustainable brands? Time will tell.”

Merchandising has been a big project for many of these companies over the past year, but none more so than Rovio, which has been pumping out everything from stickers to Angry Birds underwear (which is big in Australia, according to Holm). Holm says it’s all about fan engagement for Rovio, which has now been doing merchandising for nearly two years. Merchandising in China is obviously especially important since it’s much harder to sell games here than in other markets, and Roberts illustrated this by pointing out that PopCap has been merchandising in China for more than a year, but just started merchandising elsewhere around a week ago.

Speaking about piracy in China, Roberts put the blame squarely at his own company’s feet, saying that when gamers pirate a game it means that the company has failed to properly connect its game with the market. That’s one reason PopCap just announced a China-focused Plants vs. Zombies expansion — the initial success of PvZ in China took PopCap by surprise and the game hadn’t been designed or properly introduced to this market.

Tanaka — who was an excellent host — pushed the panelists on China. Are they making much money in the Chinese market? All of them admitted that while they have huge user numbers in China, overall, it doesn’t make up a significant portion of their revenue. But all of them also expressed hope that that would change. The phrase “huge potential” was mentioned more than once.

Roberts closed the panel with some good advice for anyone interested in making globally popular games: “Make the best game you can make, and take as long as you can to make it great.”

This post is a part of our coverage of GMIC 2012.

This is part of our coverage of the 2012 Global Mobile Internet Conference (GMIC) in Beijing. See our interviews and reports from the event here.

In a discussion panel at The Global Mobile Internet Conference late this morning, three women – Gong Haiyan, CEO of Jiayuan.com; Tina Tao, COO and partner of Innovation Works; and Wang Hongyu, CEO of Panguso.com took to the stage to discuss women and entrepreneurship in China. The panel was moderated by Shen Yin, who is the founder of NTA Creative Communcations Agency — and also a male. I thought his presence was very much suppressed by the female leaders, and this was a little refreshing after the rest of the day, which someone less polite than myself might call a sausage fest.

Tina Tao told the audience that out of over 40 startups Innovation Works has invested in, none have female founders. So is it an issue where females are not suited for entrepreneurship or the tech startup eco-system doesn’t favor females? I’m sure this isn’t just the case here in China, but likewise in Silicon Valley — the idea of entrepreneurship, although it’s growing, isn’t getting much love from females.

Raising the point of more female owners now on Taobao, Tina pointed out that there are actually more females participating in entrepreneurship. I would think there are actually more females within the areas of social and e-commerce (perhaps because most of us would love to have an infinite wardrobe) but not so much in the tech-focused startups.

What impedes most females entering the grueling entrepreneurial journey is probably the familial responsibilities. As much as the equality gap between men and women is narrowing, women are still very much influenced by traditional values. It clashes with the realities of today’s entrepreneurial route. The role of a female is traditionally portrayed as a virtuous wife and loving mother, and often, the idea of a career woman is seemingly uncaring and strong-headed. However, Haiyan thinks she’s able to juggle her roles well, and thinks she’s a good mother too.

There are definitely certain industries which females are more suited for. But I think they should participate more in building products since majority of the applications for social networking sites and e-commerce have mostly female users. Ladies are (generally speaking) more willing to interact with people, they are more emotional, and this presents a fit for many women to enter entrepreneurship. But Haiyan pointed out that most females are sacrificing their entrepreneurial dreams for the sake of the family and society. So if you come across a female entrepreneur, try to give them more support because it certainly isn’t a very easy decision.

Hongyu thinks her gender does not come into play given her role as a CEO at Panguso. Moreover, she possesses a technical background, which makes understanding their product much easier. In fact, she prefers working with technical people because they are simple and straightforward. A lot of unnecessary communication is cut away, which makes working together much more efficient. But that also contradicts our innate need to communicate too.

Hongyu also spoke that the value of a CEO lies in the value of the team. She draws parallels between a screw in a building structure to the smallest role within a company. It matters. A female leader provides a more holistic approach to building of a culture within a team, given female need for communication.

Tina also spoke about females shouldering more responsibility in UX/UI design, taking up the role of a product manager. She cited an example, where her ex-employee went on to join Taobao. Apart from designing the product where it included general information, she added elements like horoscopes, which allows Taobao to understand the user even better. Females tend to pay attention to details, and men might think that our considerations are incessant. We show more empathy and are more sensitive towards the user, there is a better user experience, which makes the product even more reliable and preferred by users. I concur, but having a good mix of males and females within the team is even better.

Hongyu also added that males are more focused on the technical details, where females are more aesthetically-inclined. Females are more concerned whether the application is easy-to-use and reliable, as compared to males.

Haiyan also hopes that the Chinese society would be open to the idea of having more females pursuing their career and entrepreneurial dreams, and not show biases towards them. They should be ditching favoritism towards males over females. This note was followed by applause from the audience, with myself included.

I don’t really know how long this culture within China will take to change, but certainly we’re seeing more women coming out to pursue a career instead of purely staying home to take care of the family. This is already an encouraging step here in China. I guess with these three ladies leading by example, perhaps, there will be more women inclined to take the entrepreneurial path in China.

Photo: Google Images

It is hard to find an industry that is as highly centralized as the Venture Capital industry: centralized in the US, and specifically in one street in Silicon Valley: Sand Hill Road in Menlo Park. However, this is gradually changing as the VC industry is developing fast in many sometimes unexpected places. You might call them ‘Valleys of the East’: Silicon Valley type areas that are emerging across Asia Pacific and present a huge opportunity for technology innovation and investments:

Fortitude Valley and the Silicon Beach initiative in Australia Bandung’s developers that feed the startups in Jakarta, Indonesia Silicon Gulf around Davao City, and the outskirts of Makati & Manila in the Philippines Bangalore Valley in India Zhongguancun in Haidan district, Beijing, often referred to as China’s Silicon Valley.

The largest of these are obviously in India and China. Bangalore Valley is a vibrant hub of innovation and startups, which has grown out of the many companies that specialize in R&D, electronics, software, and BPO. During the dotcom boom, Bangalore’s IT industry saw the emergence of many local and global IT companies, which helped to lay the foundation for the tech eco-system of universities, R&D centers, developers, and component suppliers.

Photo: Google Images

Like Bangalore, Zhongguancun started out a hub for electronics and IT and was referred to as ‘electronics avenue’ in the 1980’s. The area was labeled “Beijing High-Technology Industry Development Experimental Zone” in 1988 by the Chinese government. Different than the more organic process that led to the emergence of Bangalore Valley, the support of the government has helped to build the eco-system that led to the boom in developers, innovation, and tech startups in this area.

The more mature Valleys of the East have also developed a booming VC industry, and it is interesting to see how these differ from each other and from the more established VC sector in the US:

In terms of the size of VC market, the National Venture Capital Association (NVCA) in the US stated that $22B was invested in the US in 2010, while $12.3B was raised by VC funds. For the same hear, Zero2IPO Research Center shows very different numbers for China: $5.4B was invested and $11.2B was raised. Hence, the amounts of money raised are quite similar but the value of actual investments in China is only about 25% of those in the US.

Another interesting difference is the risk profile of the various markets. This is closely related to the size of Early Stage investments, i.e. Seed Series A. The NVCA has calculated that the dollar value of early stage investments in the US is about 32%. In China, this is a mere 6% according to Zero2IPO.

You can see how these markets differ significantly across various key variables, but tend to align well to their local markets, which in turn vary by orientation, culture, and industry focus. Like the VC’s, the startups differ significantly across the various regions. More on that later.

About Pieter Kemps

Pieter works for Amazon Web Services and interacts closely with leading VC’s and fast growing tech startups in Asia. He is passionate about startups that combine product innovation with strong business model economics. Amazon Web Services is a Supporting Sponsor at Echelon 2012,

Disclaimer: The opinions expressed in this article are the personal thoughts of Pieter Kemps and do not reflect the views of his employer or their associates.