Responding to the changes in the startup environment

June 05, 2023 | 14:19
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Startups today face the daunting obstacles of scaling their businesses and proving their revenue models, requiring them to exhibit adaptability and articulate their value proposition in an ever-evolving investment landscape. Manisha Shah, CFO at Momo, also one of esteemed judges of KPMG Global Tech Innovator, shared with VIR’s Celine Luu her perspective on these challenges, while also offering valuable insights on the role of women in tech start-ups and the need for increased support for female entrepreneurs.

What are the major challenges that start-ups face in today's business environment? How do these difficulties differ during economic downturns compared to normal circumstances?

Responding to the changes in the startup environment
Manisha Shah, CFO at MoMo and a judge for the KPMG Global Tech Innovator

In the current business environment, start-ups in Vietnam have favourable conditions for growth, especially for dedicated entrepreneurs with innovative ideas. The primary challenge lies in scaling the business from the initial seed stage, where a good idea exists, to a more advanced stage like Series B or C. At this point, start-ups must prove their revenue model, establish product-market fit, and develop basic management systems. This process is inherently difficult, regardless of the market conditions. Momo for example, has survived through many market challenges over the last 13 years.

Compared to 2020 and 2021, the fundraising environment has become more challenging, making it a bit harder for start-ups today. Economic challenges impact both start-ups and mature businesses alike, causing many investors, employees, and customers to become more conservative. Employees may be less inclined to join a startup during a tight funding environment, and customers tend to reduce their spending. However, economic challenges also create opportunities for people and companies to explore new ventures. Historically, economic slumps have been the birthplace of many great businesses such as Pinterest, General Motors, Walmart, IBM, Groupon, and Instagram. The constraints and obstacles during an economic slowdown provide the right environment for entrepreneurs to identify and capitalise on opportunities. For those willing to bootstrap and adapt to changing market conditions, starting a business during such times can be advantageous.

How should management at start-ups respond to these changes, and what advice would you give them to secure funding for their business?

In response to the changing landscape, start-ups management needs to understand that investors have shifted their focus. Unlike the “growth-at-all-costs” mindset prevalent in the 2018-2021 period, investors now expect start-ups, even at Series A and Series B stages, to demonstrate a revenue model and engage in conversations about achieving self-sustainability. Therefore, it is crucial for entrepreneurs to effectively articulate how their business addresses a specific problem or customer pain point, exhibit product-market fit, and present a convincing revenue model. They should also emphasise their ability to adapt quickly to changing market environments and demonstrate that their growth is driven by fulfilling user needs, rather than simply spending money for growth. Of course, the models will evolve over time depending on market conditions but the mindset of the entrepreneurs needs to cover these points.

What challenges do women face in the tech industry, particularly in setting up businesses and maintaining work-life balance?

Women in the tech industry face common challenges such as the workload and limited access to capital and mentors. Start-ups demand significant dedication, which often creates an imbalance between work and personal life. Anyone starting a business should be aware that other aspects of their life, such as hobbies, family, and friends, may receive less attention during this period, necessitating additional support. It is essential to acknowledge that work-life balance is not solely a women's issue but a challenge faced by all individuals. Men also take on parental and familial responsibilities. In Vietnam, there is often access to broader family support and the ability to hire assistance more easily than in some other western countries.

Vietnam boasts numerous remarkable female entrepreneurs and managers, with high female participation in the workforce across all levels. However, the underrepresentation of female founders in tech start-ups is a global phenomenon. To address this imbalance, two approaches can be effective: first, investors should actively support start-ups founded by women, and second, we should encourage girls to pursue computer science and engineering studies. While I don't have detailed data, the percentage of women studying computer science at the University in Vietnam is lower compared to countries like India or the United States.

At Momo, we observe this when recruiting directly from universities. While we have an even split of women and men in the company, the applicants at entry level jobs in technology are disproportionately male. By promoting computer science education among high school girls, we can gradually change this trend. When there are more female engineers, the number of women starting tech start-ups will naturally increase. Currently, several funds in Vietnam focus on supporting female entrepreneurs, both in the tech and non-tech sectors, by providing investments and mentorship. Additionally, Vietnam has seen the emergence of funds founded and led by women, which bodes well for the future of female entrepreneurs in the tech industry. So, I am very optimistic about the future of female tech entrepreneurs in Vietnam.

What advice would you give to companies participating in competitions such as the KPMG Global Tech Innovator?

When participating in competitions like the KPMG Global Tech Innovator, it is crucial to approach it with strong conviction in your product and its ability to solve a customer pain point or address a user need. Your presentation should highlight not only the big idea behind your start-ups but also the short-term plans for the next 12-36 months, demonstrating how you intend to grow the business and what you need to reach the next level.

Remember that the judges not only evaluate the idea but also the entrepreneur behind it. Therefore, it is essential to showcase what sets your idea apart and why you are the right person to drive the start-ups forward. Emphasise your unique qualities, skills, and experiences that make you well-suited to lead the venture to success.

KPMG Private Enterprise Global Tech Innovator 2023 in Vietnam & Cambodia

The KPMG Private Enterprise Global Tech Innovator competition is looking for technology breakthroughs and the entrepreneurs who are ready to grow their businesses.

Responding to the changes in the startup environment

Shortlisted companies will be invited to present their innovations and pitch their growth plans to a panel of Vietnam and Cambodia’s top business, technology, and finance leaders who will provide professional feedback on the market potential for each innovation and the company’s growth ambitions.

The country finalists will be announced through local, national, and social media and will reach the attention of the region’s tech and business influencers. The winner will be invited to compete on the global stage for the KPMG Private Enterprise Global Tech Innovator crown during Web Summit 2023 in Lisbon, Portugal.

Application round: April 17-June 30, 2023

Scan to learn more about the competition:

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By Celine Luu

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