Deep tech companies face many challenges due to the complexity of technology commercialization.
You can place them in four broad categories: long development timelines; complex value chains; limited availability of physical and social infrastructure; high capital demand.
This is true for all deep tech startups in Singapore. Each founder of the Little Red Dot takes into account the details of the local ecosystem. They display both exceptional strengths — the quality and efficiency of science, modern government, and a fair amount of weaknesses — small domestic market size, limited depth in the local B2B market, and large science to the market gap.
Local entrepreneurs might encounter barriers in building their venture if they face obstacles on each of the four fronts (i.e. If local entrepreneurs face obstacles on all four fronts of building their venture (i.e. customers, value chain,, and talent availability), their chances of creating a global success story and beating the competition will diminish quickly.
Singapore-based founders who are pursuing the difficult deep tech path will have no other choice than to create a central position within a highly interconnected network of global players.
This global outlook quickly makes you an asset. You can pursue the most promising markets and form strategic partnerships with top-quality technology partners.
Investors and advisors may see an early international presence in the US, EU, or China as a risk to defocus. In many other cases, however, being competitive means crossing national borders to target major economies on at least one of the sides of your business. This could be a go-to-market, talent recruitment, or raising capital.
Venture founders are well aware of the challenges of doing business across borders and building capabilities. They often start with the GAFA and regional unicorns like Grab in Southeast Asia and Revolut in Europe.
Hard tech is driven by market timing, market sizing, and scalability when constructing an international strategy. Each step of the deep tech entrepreneurial journey requires trust-building interactions with high-quality industrial players who are looking to get into the right spot in the value chain.
Due to the complexity of productization and the scientific background required, there are high barriers to entry, maturation, and scaling. However, the rewards for a successful go-to-market are equally attractive.
High-tech development and the combination can present risks that founders can mitigate by being methodical and systematic in informing key cross-border partnerships. This includes finding the right equipment manufacturer and prototyping workshop, as well as developing long-lasting collaborations.
Although these relationships are often referred to as client-supplier relationships they are far more complex and rarely solely commercial. These industrial key players are often referred to as Tier 1 targets. They include North America, Europe, Japan, South Korea, China, and India.
While Southeast Asia is leapfrogging at an incredible speed, even leading in certain niche markets, it is structurally still considered Tier 2 when it comes to hard tech intensity and depth.
Although the economic and technological landscapes of the world may look completely different in a decade, there is a shortage of deep tech professionals in the region that requires young entrepreneurs to focus their efforts on expanding abroad.
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It is both a strategic necessity as well as a schizophrenic task to decipher these cross-border value chains. To create positive impact founders must navigate a complex network of stakeholders. They need to constantly evaluate and understand both the final users and intermediaries of the startup’s product/service.
They make decisions about how much energy, time, and money they want to invest. This will determine how they approach intermediaries, such as asset managers, corporate sponsors, or advisors, who act between their venture’s future customers and partners.
Intermediaries can be a bridge but they can also cause barriers. It can be crucial for a startup’s success that an intermediary is willing to help founders create and evolve a strategy.
This strategic approach and the associated cross-border process go hand in hand with better control over development timelines, go-to-market, and funding in long term.
There are many pitfalls and obstacles that must be overcome when traveling across borders. This means that there are many legal systems to navigate, different partners to start the dynamics, and eventual pushback from either the local government or the original entrepreneurial ecosystem.
Entrepreneurship has been based on the idea that national distances can affect the performance and conduct of businesses operating across border borders. This notion has been at the heart of entrepreneurship for decades.
These are three tips founders can use to avoid some of these pitfalls.
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International success begins as soon as the venture has been incorporated. Globalizing a company does not happen at the start. It happens at the founders’ desks. They need to find the right support in advanced markets, large markets, and top industrial ecosystems. Then convince them to get involved.
The future expansion of the global market is at risk if the founders don’t abandon their obsession with building a global player.
Mistiming the internationalization strategy, forgetting the root causes of global success, hiring the wrong leaders and over-delegation of the international developments by the founders are typical mistakes to be avoided.
It takes many iterations and humble experiences to become a cross-border company. Each business model is different and requires a different approach.
The founders of a venture should take the time to prepare their version, which will serve as the single source for truth and provide the most recent information on how the venture can grow globally.
It is a fact that very few Singapore-born deep-tech companies are multi-geography. This means that not many people have actually faced the challenges of growing businesses across borders.
Because so few people have actually been there, this knowledge is scarce. It’s therefore difficult to find expertise once you make the decision to follow that path.
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A company that is a deep-tech company hires an executive. The executive becomes part of the business’s network. A team will be staffed quickly by great executives. It is also true that executives who have weak networks waste time building their teams.
Deep tech ventures need to hire a Sherpa who will work with the core team and someone who is familiar with the market. They also need someone who has an international network. This Sherpa can help you gain knowledge about markets, prospects, and the capabilities of your competitors on a global scale.
The founders will be able to attract more talent over time. A winning combination is to hire senior local employees in targeted markets and long-term company employees.
Finding the right people is the first step. Setting them up for success, the second is the most important. The organizational structure of the venture must be continuously adapted to allow key executives to work efficiently.
This article was originally published in a longer form on Medium on July 30, 2021, and is accessible here.
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