BEYOND just starting a business, a startup company’s main purpose for being is to offer a product or innovation that addresses a problem.
As one investor puts it, a truly innovative product will solve a customer’s problem that has not been solved before.
But one of the challenges of introducing a new product or innovation is that it has not been tried or tested. Naturally, the market may be slow in embracing such an innovation.
Additionally, startups rarely have the capacity or network to tap into new markets to bring their products out.
As such, investing partners, with their strong networks and deep pockets, play an important role in the startup ecosystem by providing the kind of market access needed by startups to reach potential customers.
Corporations, investors and even the government are increasingly recognising this need and are providing platforms for startups to tap into, beyond just early and growth-stage funding.
For example, early last year, Telekom Malaysia, the Multimedia Development Corporation and StartupMalaysia.org collaborated on an accelerator programme focusing on getting startups to market quickly.
More recently, telco giant Axiata Group Bhd and Malaysia Venture Capital Management Bhd (Mavcap) recently signed an agreement to establish a RM100mil venture capital fund, the Axiata Digital Innovation Fund (ADIF), to help companies with innovative products in the digital-services space markettheir offerings.
ADIF will focus on revenue-generating companies that may still require support to grow in terms of funding, know-how and market access. Axiata noted that digital-services entrepreneurs will have unprecedented access to regional partnership opportunities among other things, thanks to its extensive market reach of over 13 million customers in Malaysia and over 250 million across Asia.
Given Axiata’s many years of operations in the region, these startups are also able to leverage the telco’s in-depth knowledge of the regional market.
Likewise, Alliance Bank’s SME Innovation Challenge 2014 programme provides participating startups with an opportunity to be coached by corporate titans, a platform to network through, and access to markets.
When new products are launched, startups and their investors concentrate the bulk of their initial efforts on educating the market about what the products offer.
But entrepreneurs understand that having an innovation with little visibility and access to markets does no good.
Startups are now seeing the need for opportunities to tap into existing networks and markets, coaching, exposure and resources, offered by incubation and accelerator programmes.
In other markets where the startup ecosystems are more mature, the private sector and governments have introduced programmes to tackle market-access issues for startups.
These include the US Market Validation Program run by Silicon Valley-based tech accelerator, US Market Access Center, and the Market Access Grant administered by the Irish government to incentivise companies to develop viable and sustainable market entry strategies for new products and markets.
While such efforts have yet to become well established here, different players in the local ecosystem are becoming more aware of the need to provide startups with market access to ensure better chances of success.
■ This is the seventh instalment of MetroBiz’s tie-up with Malaysian Global Innovation and Creativity Centre (MaGIC) to explore startup ecosystems.