May 2015, Singapore
Who needs VC? 3 ways to create a successful travel startup in Asia without it
David Chambat chief executive of Villa-Bali.com, an Asian villa distribution and reservation website, shares his tips
One the biggest hurdles for new startups is getting access to capital at the right time - that’s particularly true for women founders as EyeforTravel reported last week. Venture capital (VC) groups, which identify new and exciting startups, are a popular funding option but often they search for larger projects with an already established revenue stream.
Of course, some businesses are more capital intensive than others but thanks to the internet distribution, marketing and media costs for young travel startups like ours can be kept relatively low. On our journey in Asia we’ve learnt a few lessons in how to create a successful travel startup without VC. Here are three.
Tip #1 – Go the ‘low cost’ route
The availability of low-cost services in Asia is one of the reasons that the startup market has flourished in Hong Kong and Singapore. In fact in Asia, it’s almost certainly possible to find a low cost alternative somewhere. There are lots of countries where you can develop a technology or service – such as Indonesia, Vietnam or India - for less than you would in one of the recognised financial hubs like Singapore or Hong Kong. Increasingly the entrepreneurs based in these economic districts have operational centres in other places.
At Villa-Finder.com, for example, we have built a second location in Bali, Indonesia. Here we have found high calibre talent, relatively low operational costs and a first-rate professional environment. We have 12 people in Indonesia who take care of our Villa-Bali.com location and are in charge of operations, marketing, and our tailored concierge service. Today there are very few companies in Singapore or Hong Kong, for example, which don’t have offices elsewhere to take care of client services or other such sectors. That’s another way to save and make money without relying on VC, and a business trend on the rise in many Asian countries.
Tip #2 - Use government grants wisely
Another advantage of starting your company in Asia is access to government grants. Singapore, in particular, which is being touted as the new Silicon Valley, proactively allocates funds to entrepreneurs starting their business in the city-state. Schemes available include:
· The Tourism Technology Fund (TTF): Subsidised by the Singapore Tourism Board, this grant applies to innovative travel startups, which use technology to enhance both the visitor experience and productivity. Covering up to 50% of ‘qualifying costs’of your startup, it includes assistance for training, testing, or hardware costs.
· The ACE Startup Grant: This is restricted to first-time entrepreneurs. While this used to be a government programme, and will remain funded by the government for the next few years, it has now been taken over by the private sector. The ACE programme takes no equity in a business. Instead it provides mentorship for the difficult first year, matching $7 to every $3 raised for the company.
Tip #3 - Turn to friends and family
Finally, tap your own personal and professional networks as well as private investors. The latter are extremely common in Asia where there are large expat communities; individuals often look to invest in smaller companies. The good news is that in Asia the money is there but be wary though about who you bring on board. In Asia, like most places, not everybody will have the best interests of your business at heart. It’s important to choose approachable contacts, be direct and create the right relationships. Our top tip is to rely on friends, family, former colleagues, fellow students - the people who you know and trust and who you can rely on, instead of unknown third parties.
To find out more about the opportunities in Asia Pacific why not join us in Singapore for the Travel Distribution Summit, Asia (May 20-21)
This guest post was penned by Villa-Finder.com