Mr. Ryota Yamazaki is the Director of IGPI Singapore. Before joining IGPI, Ryota worked in Deloitte Consulting in Singapore, where he was a leader in the areas of Consumer Business and Supply Chain & Logistics in Southeast Asia. His areas of expertise are Strategy & Operations, such as market entry, Route-to-Market (RTM) strategy, business due diligence, and PMI. He started his career with A.P. Moller-Maersk Group as a management trainee and also worked for Kurt Salmon, where he had vast project experience, especially in Supply Chain & Logistics for the retail and consumer goods clients. Ryota graduated from the Faculty of Economics at Keio University.
Mr. Zhi Hao Thean is an Analyst in IGPI Singapore. Zhi Hao started his career with IGPI. He graduated from Singapore Management University with a Bachelor of Business Management, majoring in Finance. During his penultimate year, Zhi Hao embarked on an internship in Corporate Advisory, where he was engaged in M&A, financial due diligence, and valuation projects across various industries. He also worked as a Research Assistant at SMU, where he performed academic research on real estate investment trusts. Zhi Hao is proficient in English and Mandarin. He enjoys keeping up with the latest developments in consumer technology such as smartwatches and mobile operating systems in his free time.
Industrial Growth Platform Inc. (IGPI) is a premier Japanese business consulting firm with a presence and coverage across Asian markets. IGPI was established by former members of the Industrial Revitalization Corporation of Japan (IRCJ) in 2007. IRCJ, a US $100 billion Japanese sovereign wealth fund, is known as one of the most successful turn-around funds supported by the Japanese government. In 2017, IGPI collaborated with Japan Bank for International Cooperation (JBIC) to form JBIC IG, providing investment advisory services and supporting overseas investment. In 2019, JBIC along with BaltCap jointly established Nordic Ninja, a €100 million venture capital fund to focus on deep tech sectors such as autonomous mobility, digital health, AR/VR/MR, artificial intelligence, robotics and IoT in the Nordic and Baltic region. In 2019, IGPI established IGPI Technology to focus on the area of science and technology. The company invests in technological ventures and provides hands-on management support. The company also provides business development support for the commercialisation and monetization of technologies. IGPI Australia is a branch office of IGPI Singapore. The latter, which was established in 2013, focuses on management consulting and M&A advisory in Southeast Asia across various sectors. We act as a bridge between Japan and wider APAC, having advised on market entry strategy, potential target search, valuation, due diligence, M&A process management, post-merger integration and change management for leading Japanese clients. In addition, we have helped businesses in Southeast Asia enter Japan and acted as sell-side advisors for SMEs and private equity funds looking to divest. IGPI Australia was established in 2020 with a dual focus of helping Australian businesses enter and grow in ASEAN / Japan and attracting Japanese investments into Australia. We have since successfully helped to connect multiple Australian businesses with Japanese businesses within IGPI’s network.Get in touch with us on internationalisation, strategic planning and fund-raising-related topics!
This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute advice. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness, and accuracy of such information. All rights reserved by IGPI.
SUNRICE – One of Australia’s leading food exporters with 30 brands in 50 countries
About the company : One of the largest rice food companies in the world and one of Australia’s leading branded food exporters
Mode of entry : In 2018, SunRice accomplished the acquisition of a rice processing mill in Dong Thap Province to establish a fully vertical integrated supply chain in Vietnam.How it solved issues : The investment helps to introduce advanced production know-how accompanying agronomic expertise to upskill and improve the quality, safety standards and reputation of Vietnam’s rice exports.
|CBH Group – Western Australian grain grower co-operative About the company : grain grower’s cooperative that handles, markets and processes grain from the wheat belt of Western Australia Mode of entry : Created a joint venture (Interflour Group) with another regional player through the acquisition of six flour mills in Indonesia, Malaysia and Vietnam12. How it solved issues : Using grain from Australian and around the world, Interflour supplies better quality flour to Vietnam domestic market for baking, noodle and confectionery production and malt to supply Vietnam’s drinks industry|
|Icon Group – Australia’s largest dedicated cancer care provider About the company : Reshaped cancer care by integrating distinct treatment disciplines. It has expanded globally, including some Asian countries such as Singapore, China and Hong Kong16. Mode of entry : Entered partnerships with two of Vietnam’s leading healthcare providers – The National Cancer Hospital in Hanoi (the K Hospital) and the Military 175 Hospital in Ho Chi Minh City. How it solved issues : The partnership helped upgrade Vietnam’s cancer care infrastructure to a larger scale, applying an international standard in medical excellence across hospital management and utilise innovative technologies to provide remote care as necessary17. They have also brought in experts from Icon Group’s Australian and Singaporean businesses to assist the Vietnamese healthcare providers.|
|Raiz Invest Limited – an Australian fintech startup About the company : Australian fintech startup operating in Australia, Indonesia and Malaysia that allows customers to round-up everyday purchases and pool their spare change to invest in equities, bonds and other securities. Mode of entry : It is expected for Raiz to enter into strategic partnership with a local player similar to their strategy in Malaysia where they partnered with a local unit trust player How it can solve issues : Raiz provides a platform that increases the access to capital for the users (e.g. access to larger sum of money for investment).|
|RMIT University – an internationally recognised Australian university of technology, design and enterprise About the company: Innovative university in Melbourne, recognized for its study and research in technology, design and enterprise23. Mode of entry: In 2001, RMIT entered Vietnam by investing directly and opening its first campus in HCMC with services and facilities mirroring the Melbourne campus. A second campus opened in Hanoi in 2004 and in 2017, an English language centre opened in Da Nang. How it solves: RMIT Vietnam is assisting in the development of human resources capability in Vietnam. Degrees are awarded by RMIT University in Australia, allowing Vietnamese students to receive an overseas education without having to leave home.|
|English Learning Company (ELC) – an Australian award-winning English language school About the company: ELC offers a range of major English courses which are supplemented by a choice of electives. ELC has partnerships with a number of Australian universities and education providers. Mode of entry: In 2017, ELC entered Vietnam via a partnership with HUTECH University (Vietnam) to establish ELC Vietnam in HCM City to meet the demand for English in Vietnam. How it solved issues: Operating as a private English language centre, ELC Vietnam aims to provide students with a quality on-campus option for English language lessons. ELC works with a number of educational organisations in Vietnam to offer a paid teaching internship working in local primary and high schools with competitive prices for all English programmes.|
Kohki Sakata Chief Executive Officer +65 81682503 email@example.comRachit Khosla Country Manager – Australia +61 414 433 572 firstname.lastname@example.org This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute as advice. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness and accuracy of such information. All rights reserved by IGPI. __________________________________________________________________________________________
1. Validating that the idea is feasible with lesser resources involved Companies undertake various steps to test the solution before fully committing to the development and production of the final product. These steps include the PoC, Prototype and Minimum Variable Product (MVP). PoC is one of the first steps undertaken to ensure the idea is practical and feasible at a reasonable cost. It is also completed within a relatively shorter timeframe than a prototype or MVP. (Note: PoCs validate the feasibility of an idea, while prototypes are made to demonstrate how the idea can be developed.)
2. Uncovering potential issues and obstacles during the product launch PoCs help to identify any potential problems that might occur when production or implementation takes place. Potential problems can be related to technical, legal or functional aspects or the like. They should be resolved before the product is launched in the market. By conducting a PoC, companies are able to identify risks and obstacles and find ways to eliminate, mitigate and address these problems. This increases the likelihood of success when launching the products.
3. Helps to determine chances for scalability When proposing an idea on a new solution to key management, one of the main questions frequently asked will likely include: “how scalable is the end product?”. Through a PoC, companies can understand if the proposed solution complements their current product portfolio, or can be sold to different customers across different categories, geographical region, etc.
A PoC can also help companies assess their current capacity and capabilities in meeting the escalating demand of the products. It prompts companies to reflect on how to go about growing and mass-producing the product taking into consideration things like production capability, human resources, workflow standardization, among other things. This results in better planning and preparation for the production stage.
4. Helps gain funding from stakeholders After the PoC is conducted, the project team can better illustrate the usability and profitability of the idea to the stakeholders. They can support the idea of the new solution in detail with illustrations and sufficient data. A PoC serves as evidence to stakeholders that the idea proposed is practical, attractive for the target market, and achievable for the company. It helps to convince stakeholders that the investment is worthy, and to get their approval for more resources and funding to develop the proposed idea.
Kohki Sakata Chief Executive Officer +65 81682503 email@example.comRachit Khosla Country Manager – Australia +61 414 433 572 firstname.lastname@example.org This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute as advice. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness and accuracy of such information. All rights reserved by IGPI.
Figure 1: Statista, World Bank
1.) Small home market size and notion of ‘far away’ makes the journey to achieve scale tougher
⇒ Australia is a developed country with a respectable GDP and economic track record over the past decades. However, its small and scattered population for this massive country (land size wise) makes for a humble ~0.3% of the global population2. As a result, there is a concrete ceiling on the scalability of the Australian startups for most industries if they only focus on domestic business. This coupled with Australia’s (distant) location to other major markets makes the journey of scaling a startup even longer as there is a notion of ‘far away’ associated with it (which also implies issues such as time zone differences). As per World Economic Forum’s Enabling Trade Report, Australia ranks 127 out of 136 countries in foreign market access rankings, based on aspects such as trade barriers and margin of preference in destination markets3. This gives some flavor of the challenges faced by conventional Australian businesses in general when it comes to accessing foreign markets and adds to the notion.
⇒ Even if one would argue for the selective lucrativeness of the Australian markets, e.g. startups in mining/METS that are targeting and catering to Australia’s mega-mines have potential to do fairly well domestically without having to rely much beyond the Australian borders, there is a growing focus away from resources and such startups should also look at building more use cases with their capabilities in mid to long term. And those new use cases may not have lucrative markets within Australia and will sooner or later also feel the need to internationalize to achieve their true potential. This view can have applicability to other startup areas too – after all we live in a globalized world! Therefore, apart from fueling growth, scaling up beyond Australian shores is always healthy from a risk diversification perspective too.
2.) Lack of funding pushes many startups into the valley of death
⇒ By developed world standards, Australia is considered quite risk averse4 as a country unlike its counterparts such as USA where startup culture is celebrated and VC investing is quite common (and fashionable) – especially early stages. The risk averse behavior can also been seen from the proportion of investment received by early stage companies as compared to more mature/established counter parts5 (see figure 2). As per a survey shared on StartupDaily, more than 70% of the VCs in Australia said that their average deal size in 2019 was in excess of A$ 1 million6 which reflects the graveness of the situation in especially in early stages. If we look at macro indicators, Australians are quite wealthy by global standards7 but probably the inherent conservatism has led them to make investments in more conventional asset classes such as real estate which has worked well for many in the past and that is possibly why angel / early stage funding is not as common as it ideally should be. Also, focusing on Government sources such as grants may not be the ideal answer to address this issue which primarily requires private participation and risk taking. This is the issue from the ‘supply side’ of early stage capital
Figure 2: Australia Bureau of Statistics
⇒ If we also evaluate this from the other side i.e. ‘demand side’ of the capital and look into the type of Australian startups and compare with the Silicon Valley, there is a higher percentage of “integrator” type startups8 (Integrator startups most frequently attack existing markets by providing a product that is cheaper than the alternatives) – which are usually considered “safer businesses” compared to the ones that challenge the status quo. Unfortunately, “integrator” type businesses have lower scalability than the “challengers” provided they ‘get it right’9 (see figure 3).
Figure 3: Testingsgblog
⇒ To corroborate the risk averseness further, as per a report titled Silicon Beach: A study of the Australian Startup Ecosystem, entrepreneurs in Silicon Valley explore new opportunities/markets 15% more frequently than Australian entrepreneurs, while entrepreneurs in New York seek new markets 12% more often8.
⇒ For both investors and investees alike, such factors impact the overall VC ecosystem and can especially dent early stage investing (later stage is relatively ‘safer’ since one can gauge the KPIs more realistically) which pushes startups in the valley of death and probably unknowingly killing the potential unicorns of tomorrow. At the end of the day, startup ecosystems run on a pyramid structure where the failure rate is surely high but if funding is not adequate, then the base of this pyramid will shrink (less startups) and hence lowering the chances of reaching the top of the pyramid i.e. scaled up success stories (irrespective whether a unicorn or not!).
3.) Limited knowledge / readiness for international markets results in selective internationalization
⇒ In our experience, some key factors that make startups successful are identifying the right issue(s) to solve, understanding the dynamics of the environment (3Cs), having a game plan (strategy; including internationalization) – and of course, a solid execution (apart from conventional aspects such as funding etc.)! In this competitive world, whether one is a B2B or B2C startup, internationalization and scaling seldom hurts anyone. In the larger scheme of this journey, building a startup and trialing/POCs in an Australian state can be compared to going to high school, expanding across Australia is like going to a university, and scaling internationally in complex (also less understood markets) outside one’s comfort zone is no less than attaining a PhD in that analogy! A general on-ground observation is that several startups aspire to go to USA and Europe (probably because of a comparable ease of doing business, notion of immediate market size and initial comfort etc.) and put other growing markets (as appropriate) on the back burner (e.g. Japan or ASEAN) which require more thought on aspects such as localization/product-market fit and also overcoming wider cultural barriers. But the journey can be worth the pain – whether through the lens of potential first mover advantage, risk diversification, geo-politics (at times) or with intent to uncover full market potential. For example, Japan continues to be one of the largest economy globally and ASEAN bloc is the 5th largest economy of the world10. Despite being a trading bloc (and a rapidly growing one), based on many on-ground conversations, Japan and ASEAN are not the first ‘port of consideration or entry’ on many startups’ lists. The common reason cited is lack of market understanding, language barriers and (perceived) market complexity of these markets! Generally speaking, even many listed Australian businesses and their leadership may not be ‘Asia ready’ but that may be where the next wave of opportunity lies for many11 (see figure 4)
Figure 4: AsiaLink BusinessUsing healthtech as an example, Australia is considered to be quite promising in this sector. Healthtech startups in Australia addressing issues relating to aging or infertility can evaluate potential markets based on commonality of issues and long term potential rather than just immediate attractiveness. For instance, several markets such as Japan could be potential markets as they face aging and fertility issues too12. Another example can be in the agritech space, where some problems being addressed by Australia’s agritech can have applicability to some ASEAN markets and we see prominent Japanese companies making investments in similar spaces in countries such as Vietnam13. There is scope for Australian startups to turn to those markets, attempt to localize and engage in the race either directly or via partnering locally (there can be many ways to penetrate a market and we strongly believe it can’t be a “cookie-cutter” approach especially in Asia).
Kohki Sakata Chief Executive Officer +65 81682503 email@example.comRachit Khosla Country Manager – Australia +61 414 433 572 firstname.lastname@example.org This material is intended merely for reference purposes based on our experience and is not intended to be comprehensive and does not constitute investment, legal or tax advice. This should not be regarded as an offer to sell or as a solicitation of an offer to buy any financial product, an official confirmation of any transaction, or as an official statement of IGPI. Information contained in this material has been obtained from sources believed to be reliable, but IGPI does not represent or warrant the quality, completeness and accuracy of such information. All rights reserved by IGPI.
Since the country began opening up its economy in the late 1980s, Vietnam has been an attractive destination for foreign investors. In 2019, data from the Foreign Investment Agency (FIA) shows that Foreign Direct Investment (FDI) reached USD38.2 bn an increase of 7.2% compared to the same period in 2018. Japan has been highly active in the field of M&A as illustrated in the chart -below. In 2019, total Japanese inbound M&A deals amounted to more than USD 450mn in Vietnam with 12 deals*. During the same year, Japan was the 3rd largest contributor of foreign M&A deals in Vietnam in terms of deal value after South Korea and Singapore.Source: Mergermarket, IGPI analysis * For disclosed deal value to be greater than or equal to USD 5 mn and / or the target’s turnover/revenue is greater than or equal to USD 10 mn
• Information and data analytics: farmers and producers are able to plan their production according to accurate data patterns; • IoT and automation: technologies that help in automation of farming processes (such as monitoring the crop field with the help of sensors (light, humidity, temperature, soil moisture, etc.) and automating the irrigation system); • Marketplace platforms: platforms that aid in connecting small scale farmers with larger consumer markets; and • Agronomy and agricultural biotechnology: innovate inputs for crop and animal agriculture (such as seeds, pest control, seeds with new genetics) with the use of scientific tools and techniques.There are many technological opportunities throughout the value chain as illustrated in the below chart: