Mr. Manmeet Singh is Expert-in-Residence and Mentor at Chinaccelerator. At the UP Venutre Conference he participated as a moderator in the Early Stage Investments. As he is relatively new to our venture and startup environment, his inputs and inquiries were unbiased and curious. We met him after the closing keynote in one of the conference halls and asked him about his impressions of Central Europe, challenges we face and other topics.
As far as I know you are new to Central Europe. Is there anything that especially surprised you? What is your first impression of the environment?
Over the last 2-3 years I have been coming a lot to Ukraine and starting from there. Now here in Austria – obviously linked with Slovakia – what I am particularly impressed by is the level of the companies, entrepreneurs, investors and people within the ecosystem. The maturity of their understanding of the business models, of the opportunities that are out there. I think that´s the same as what we have in Asia as well.
What i think – and this is maybe just my own bias – what we are severely lacking is an engagement with Asia. Naturally, when you talk about venture business or early stage entrepreneurs or midstage or so and you look at companies anywhere in the world they always tend to look at the US as the first big market to target. And that´s natural. The US has many advantages and very mature system, so that certainly makes sense. Alongside that, I think they should start looking at the Asian markets. And they would see a very vibrant, growing ecosystem and economy. You have a very rapidly raising middle class there, wealth levels are growing. So there is a huge consumer story and it also makes us an industrial story that´s been built up in Asia.
I wonder if that isn´t a very interesting hotbed of opportunities for entrepreneurs here to build businesses for Asia. Taking a lot of the learning from mature markets that you have here in Europe and mature consumers and seeing where are the gaps in the Asian growth model and trying to fit something in there.
To follow up – what do you think are the key ingredients for a startup or business to be successful on the Asian market or specifically in China?
If you are talking about China you have got to be in China. You have got to sit there and understand it. In order to invest in China, basically you´ve got to invest your time, effort, energy in China, to think of being successful there. And it´s going take its time. It´s not going to be an immediate success story. It´s very rarely if ever.
That´s something that has to be taken into consideration. Even for us at Chinaaccelerator for instance, we had companies, even the overseas companies that came and spent at least three months with us for the batch programme. They are there the entire three months working with us in our offices.
We fundamentally believe that that´s a very important element – to be there, to understand local market. You can get some ideas by reading books and articles and watching videos but it´s a whole different ball game if you have to be sitting in that country and seeing it first hand and understanding the nuances and picking up a lot of the cultural variances, etc.
If you gonna to look at Asia, you´ll have to very seriously consider having a strong presence there. It has to be a key component in your strategy.
Do you think that knowledge of local language comes along with that as well?
China is relatively unique and it´s very important to know the language, especially if you have to understand your local clientbase. But if you are in India, for instance, where 30+% of the population speak English, you already have a significant representation. Plus with a couple of other languages in India we can find enough talent that is bilingual or trilingual or multilingual. It´s relatively easier to survive and even thrive just knowing English.
In China that is less and less true. You have to have understanding of local language. That´s how you pick up the local culture. Otherwise, forget it. You´re not going to get the essence of the local culture dynamics without having appreciation for the language.
You can try it but the success rate is not as high, I would say.
Coming back to Central Europe, are there any challenges you see that we are facing or we will face in near future from the entrepreneur ecosystem perspective?
I am not so sure. I couldn´t tell exactly because I haven´t had as much experience yet to be able to really pick up on a lot of that.
But a few things that I can say is that I think what we have in Asia – which we developed very quickly – is an increasingly mature understanding of what it means to be an entrepreneur, what it means to start a business, who is a VC, what is their motivation, what are the economics of a VC fund, what does it mean to bootstrap versus take VC or angel or somebody else´s money and gamble with it.
Increasingly, we´ve got much more mature about it. Our entrepreneurs are becoming more and more mature about that over time. So their discussions with VCs are very challenging. It´s not just about the money. It´s like “Hey, Mr. VC, what value do you really bring me?” except of just the money. So I think that maturity is extremely important for the success of the industry.
That makes both the funding side of the business and the entrepreneur side of the business much more enriched. So they are working in a far more integrated and smarter manner and that´s important. Right now, I´m not sure if I´m seeing that level of maturity on the entrepreneurs´ side at this point. There is a lot of entrepreneur education that has to happen in some shape or form, maybe some development through the educational system.
And I haven´t seen a lot of your typical accelerators up here which are very valuable or or programmes that sort of constantly churn out these entrepreneurs. You push your companies through a three months nose-to-the-grind-wheel kind of programme and they learn something. Whether they succeed or not eventually influence many factors. But at least they learn something. Whatever it is they do next or even in the next stage of their existing business they´re going be that much smarter, much more educated. And not just the founder but the entire team that went through the programme.
That´s the first push.
Exactly, and then they learn a lot. We have couple of hundred mentors at Chinaaccelerator that are easily accessible by all the teams based on what they want. That depth of knowledge and experience that is easily accessible that they can learn from is the huge value to companies. I´m not sure if we have a lot of that here yet. Conferences like these are fantastic opportunities for the entrepreneurs that were here to network with all these people to gain that knowledge and experience. But I don´t know what else exists. They might exist and I´m just not aware of them. I´m looking forward to discover more.
What might be interesting for Chinese investors? Why would Chinese investors come to Europe to invest?
Usually it would be either because of the interesting technology behind it or it´s something that has a very strong opportunity in China. Transplanting some of that model into China. I think that would be your first level drivers.
What are the opportunities for China? What exactly do you mean? Or can you name some?
We´ve got a very strong growing Chinese consumer class for instance. So there is tons of basic e-commerce. I think that could be interesting place.
Or even in terms of technological place. Anything in big data, analytics. all the buzzwords that you can think of…AI, IoT, big data, fintech, you name it. Anything that is of interest, unique, with meaning and is not easily replicable.
If they can replicate it they´re not gonna come here and invest in a company or buy it out. They will just replicate it. Because they can throw money at it, they can put talent behind it.
If there is something truly defensible then it´s really sexy.
Is there any startup from CEE that got your attention lately or that is especially interesting for you?
Although these are not really in some way startups but today I think I really liked the two keynotes we had – the Aeromobil or InPost. That´s truly impressive.
To get better picture about the UP Venutre Conference, you can check our article here.