Why many Singapore entrepreneurs fail to think big

Photo credit: imtmphoto / 123RF Stock Photo.

“What is the total addressable market (TAM) of your product?” I asked. Joe (not his real name) was pitching to fund his new idea under our Tri5 Angels fund. He wanted to create a marketplace for home bakers to market and fulfill their orders via a mobile app.

“There are potentially 6,000 home bakers in Singapore,” he replied. I found out from HCook, a similar competitor, that a home baker takes home around US$354 a month. That translates to about a US$25 million GMV per year. If the platform charges 10 percent on GMV, that leaves it to a paltry US$2.5 million TAM annually.

Despite how energetic and excited he was, I could not support his idea for investment. Going through over a thousand pitches in the last six years, I found that many Singaporean entrepreneurs are finding pain points which have too small a market defined. So what’s the importance of defining a sizeable TAM? After all, it is just a pitch, right?

Importance of a big vision

How big your company grows is as big as you think it to be. Elon Musk dreams of colonizing Mars and being the future of driverless cars. These plans, however insane they may be, are put into action, and talented people join him in doing something that is greater than themselves. Having a big vision correlates to having a large TAM, and that gives everyone, from yourself to all stakeholders of the company, a big exciting goal to work towards.

Having a big vision correlates to having a large TAM.

It becomes a matter of optics. Would you rather wake up each day in excitement to resolve a problem that affects 100 million people or just trying to resolve a problem for 6,000 home bakers?

Put yourself in the shoes of a talented engineer. Would he be interested in trying to bank the 320 million unbanked population of Southeast Asia, or be bored building an ecommerce management system handling specifically 6,000 home bakers?

For investors, they look for the next big win to get the best returns on investment. And a TAM with limited growth potential will not be high on their list for consideration.

Resistance to thinking big

So why are a large number of Singaporean entrepreneurs not thinking bigger in their vision? I asked ecosystem members for their feedback.

Not understanding other geographical markets

Singaporeans may travel overseas a lot, but it is mainly for leisure rather than to observe and understand the differences and problems that specific markets face. After all, people go on holiday to see what the country has to offer rather than to hear the problems they have.

So when entrepreneurs return home to solve a pain point and build a business, it is still very much focused on Singapore, a market that they are familiar with. They don’t include other markets as they don’t understand how those markets work. Unfortunately, resolving pain points in a market of 5.5 million people, which constitutes 0.88 percent of the 620 million population of Southeast Asia, isn’t going to be a big problem to resolve.

Lacking heroes: The need for more successful Singapore entrepreneurs as poster boys

How to think bigger