Asia’s tech scene is booming. Here come the consultants

20 May 2015

In the tech world, startups are the stars of the show. Books are written and movies are made about garage companies that make it big, rather than the famous venture capitalist that backed them. Scrutinizing financials doesn’t capture the public’s imagination the same way that Jack Ma’s charismatic speeches do. But even Jack Ma could not have been successful without support from a range of services: law firms, investors, agencies, and yes, consultants.

Tech and startup consultancy isn’t new. Technology is complicated, and implementing it in the real world even more so. Consultants come in and fill the knowledge gap. But what’s new is the fact that Asia’s tech scene is booming. And along with this trend, boutique consultancies are entering the market in droves.

The word “consultancy” has been so overused that it sometimes loses meaning. Broadly speaking, consultants are simply people with specialized knowledge who offer advice for a fee. Consultants come in all stripes, from global firms like Accenture to lifestyle entrepreneurs running one-man shows. Their scope of work varies. Some just give strategic advice. Others go into the trenches with their clients.

What we’re focusing on are specialized consultants that zoom in on the internet sector – and that encompasses ecommerce, payments, product development, and operations. We’re finding that lines are getting blurrier. Some consultancies function like agencies and vice-versa, some agencies act like product companies, and some investors do consulting on the side. More on that in a second.

Consultants sometimes carry a negative connotation. After all, there’s the black sheep who gives advice that don’t benefit a business, charging exorbitant rates for the meager value they’re providing. Ultimately though, survival of the fittest comes into play: effective consultants get more business. Charlatans fade away.

Digital sherpas

Tech industries succeed due to a circulation of talent and knowledge. Some successful entrepreneurs or tech executives become investors or consultants. The latter often serves as a transition stage between commitments. An entrepreneur who achieved a soft landing and finished his term in the acquiring company might do some consulting before moving on to the next startup.

Consultancy is also a destination for entrepreneurial-minded folks who don’t want the risk associated with a bona fide tech startup, yet still want to strike out on their own. They do have some risk appetite, giving up plump gigs and tightening cashflow in exchange for the upside of getting early equity in the next Facebook or Google. Or in Venturebean’s case, the next Flipkart.

Anjana VivekAnjana Vivek (right) runs Venturebean, a pioneering startup consultancy in Bangalore that has been around since 2007. A chartered accountant, Vivek offers her finance and management expertise to entrepreneurs in what was a nascent startup ecosystem. The company provided classroom sessions on venture capital funding, funding strategy, deal terms, and valuations, as well as consulting services on business strategy and execution.

“We work with startups across all stages, from idea to growth, funding to exit. Services are a mix of fee-based and success-based, including equity. We have a base fee for business planning for early stage companies. Startups find significant value in this as it helps them in strategizing, go to market planning, and setting out a step-by-step action plan,” Vivek tells Tech in Asia.

Clients of the firm included a cleantech entrepreneur, a startup building technology for low-cost mobile phones, and the investment arm of a large education company, where Venturebean mentored its portfolio companies.

While doing startup consulting might seem like a no-brainer in India now, things are always crystal-clear in hindsight. “I remember a time when people said that the same consulting service provided to a large corporate could fetch significantly more revenue. Those working with startups were viewed as foolish,” says Vivek.

“Today there are many consultants jostling for a piece of the startup valuation pie. Some are competent and understand the domain, some are there because the hype has drawn them in. Some have even made their money elsewhere and are investing time and money and providing advisory services. Specialized consultants are entering the space. Hence entrepreneurs have a much wider choice today of whom they should go to. Consultants also have many more entrepreneurs with potential to work with. It’s exciting times ahead.”

Dawn in Southeast Asia

Southeast Asia does not have the venture capital muscle of China or India. But optimism in the region is high, more money is coming in, and mobile adoption in emerging markets is growing fast. Sure, older firms like CyberSource have already been doing consulting on Southeast Asia for a while. But in recent years, the region has experienced an ecommerce boom. Well-funded giants like Alibaba, Rakuten, and Rocket Internet have set up local businesses, making it possibly the largest segment of the tech sector. And that means a larger pie for consultants.

Here’s why ecommerce is an ideal spot for consultants: it involves a complex web of specialized knowledge, spanning logistics, inventory, last-mile fulfillment, app development, digital marketing, and payments. That’s the tip of the iceberg. Combine that with the uncertainty of operating in Asia, and you get an environment where consultants can add tons of value.

The immense challenge of doing ecommerce causes players with deep pockets to enter the market, while those without stamina get out of the way. These people can afford consultants, but some are so new to ecommerce that they don’t know how to run the show. As such, consultants in this space have to play a more hands-on role.

This unique environment produced Thailand’s aCommerce, a hybrid not-quite-startup that’s more of an agency/consultancy using proprietary technology to manage the whole range of ecommerce operations for clients. Founded by Paul Srivorakul, a pioneering ecommerce entrepreneur who began with daily deals site Ensogo in 2008, the firm has managed to grab customers like The Body Shop, HP, and Kiehl’s.

Another hybrid company is Stridec in Singapore, which started in 2001 and gradually evolved into an ecommerce, digital marketing, and business processes firm. It does both consulting and operations.

Outside of pure ecommerce, Singapore-based consultancies like Alpha7 – which just raised S$500,000 (US$370,000) in seed funding – and CxO have come out to offer services targeted at small and medium enterprises and startups respectively.

Alpha7, started by Lynette Seah, the former vice-president of finance operations and strategy at Salesforce Singapore, curiously calls itself a “COO as a service” firm, a play on the moniker “software-as-a-service”. But it’s unclear how much of a tech firm it is. Seah didn’t offer specifics when asked by Tech in Asia, except to say that it has an “internal and proprietary technology platform that provides automation and fast execution time.”

Nascent startups probably can’t afford to engage these firms though. Alpha7’s services start at S$2,000 (US$1,481) a month, while CxO’s clients are typically startups with external funding. But why bother? Pre-seed startups shouldn’t have to rely on consultants to find new insight and create a product the market wants. Unless of course you consider Singapore accelerator JFDI’s Discover program or Founder Institute, which offer a hybrid of a structured education program and one-to-one mentorship, to be consultants.

People living outside and even within Asia find the region a black box. Politics is a minefield for some tech companies, and can even destroy their expansion plans.

Now multiply that by the varied regulatory environments, infrastructure, consumer behavior, and maturity of startup ecosystems. This presents a need for sherpas to guide startups to the right people and strategies. Ultimately, consultants can have a more prominent in Asia than they do in Silicon Valley.

Source: https://www.techinasia.com

Author: Charlie Custer