Shenzhen: visiting the world's manufacturing ecosystem

Great article by Joi Ito about the amazing ecosystem in Shenzen, one snippet:

Next we went to another kind of market. When we walked in, bunnie whispered to me, "EVERYTHING here is fake." There were "SVMSMUG" phones and things that looked like all kinds of phones we know. However, the more interesting phones were the phones that weren't like anything that existed anywhere else. Keychains, boom boxes, little cars, shiny ones, blinky ones -- it was an explosion of every possible iteration on phones that you could imagine. Many were designed by the so-called Shanzhai pirates who started by mostly making knockoffs of existing phones, but had become agile innovation shops for all kind of new ideas because of the proximity to the manufacturing ecosystem. They had access to the factories, but more importantly, they had access to the trade skills (and secrets) of all of the big brand phone manufacturers whose schematics could be found for sale in shops. These schematics and the engineers in the factories knew the state of the art and could apply this know-how to their own scrappy designs that could be more experimental and crazy. In fact many new technologies had been invented by these "pirates" such as the dual sim card phone.

The other amazing thing was the cost. There is a very low cost chipset that bunnie talks about that seems to be driving these phones which is not available outside of China, but they appear to do quad-band GSM, bluetooth, SMS, etc. on a chip that costs about $2. The retail price of the cheapest full featured phone is about $9. Yes. $9.

How to raise money

Great article from Paul Graham about the whole process of young companies raising money, and the many pitfalls. Bit long read, but very rewarding for people who are looking for support in this field. It is also filled with good common sense tips.

Readers should be aware of the following:

• It is US centric (but most advice will also hold in Malaysia or Singapore)
• It is mostly meant for tech centric, innovative companies, based in Silicon Valley, wanting to raise seed money or "Series A", say up to USD 3M (but again, lots of common sense that is also true in another environment)
• It is also partly geared towards the Y Combinator program

Y Combinator is a incubator in the US, it describes itself as:

"In 2005, Y Combinator developed a new model of startup funding. Twice a year we invest a small amount of money ($14-20k + an $80k note) in a large number of startups (most recently 52). The startups move to Silicon Valley for 3 months, during which we work intensively with them to get the company into the best possible shape and refine their pitch to investors. Each cycle culminates in Demo Day, when the startups present to a large audience of investors. But YC doesn't end on Demo Day. We and the YC alumni network continue to help founders for the life of their company, and beyond.

Since 2005 we've funded over 550 startups, including Reddit, Loopt, Clustrix, Wufoo, Scribd, Xobni, Omgpop, Weebly, Dropbox, Disqus, Songkick,  WePay,  Twitch, Heroku, A Thinking Ape, Machine Zone, Cloudant, Airbnb, Cloudkick, Stripe, Mixpanel, Listia,  Cardpool, Optimizely, AeroFS, Homejoy, E la Carte, PagerDuty, Hipmunk, Pebble, FiveStars, Parse, Meteor, Rap Genius, Codecademy, SocialCam, 42Floors, iCracked, Exec, Rescale, Thalmic, and Airware."


Both in Malaysia and Singapore the governments are quite active in trying to support the eco-system for innovative start-up companies, through the use of grant schemes, tax rebates, infrastructure, etc. I don't think it is possible to get even close to the Silicon Valley success and mentality, but the efforts should have a positive effect. Some large, high-profile successes are needed, to lift the profile of Southeast Asia in this area.

Presentation about Malaysian start-up ecosystem

Presentation by Khailee Ng of the ecosystem for Malaysian startup tech companies, which is indeed picking up and looking quite hopeful.

Malaysian Startup Life in 10 Slides from Khailee Ng

Malaysia does indeed have a few good success stories, the biggest one by far being JobStreet which has a valuation close to RM 1 Billion. People who invested in the company when it was listed will have done very well.

Malaysia also has lots of talent, the trick is to keep it in the country, and not to export it to other countries, which is what has happened so often in the past.

There are not that many angel investors compared to Singapore, but compared to other regional countries (Thailand, Philippines, etc.) it is quite ok. Recently tax brakes have been introduced for angel investors which might encourage more to follow suit. Also, a few good deals have been done, which might spark more interest.


The Securities Commission has recently revealed a framework for a platform for unlisted securities:

"to address the need of an unlisted securities platform to supply long-term risk capital and expand the financing base for innovation and local enterprises."

This might spur interest even more in start-up companies, but I am not completely convinced the platform will work in practice. A similar platform in Singapore (OTC, Over The Counter) never really took off, shares were hardly traded. With hundreds of Malaysian listed companies having low daily volume, I am scared that things might go the same way. The platform might be more useful for trading of shares of delisted companies, giving minority shareholders a venue to trade their stocks.