It looks like Silicon Valley may have a new rival in the worldwide startup scene, as Southeast Asia is quickly making a name for itself as a hub innovation and entrepreneurship. In fact, more and more investors are flocking to the region from around to capitalize on the growing entrepreneurial activity and local talent.
Whether you're an aspiring entrepreneur who's local to the region or an experienced founder looking for international expansion, this post will show you why it's never been easier to launch and fund a startup in Southeast Asia.
Why You Should Launch a Startup in Southeast Asia
Over the past several years, countries throughout Southeast Asia have been becoming more and more attractive to both local and foreign entrepreneurs with numerous benefits and resources that have proved invaluable to budding startups. In the Britethink article, “Top 5 Reasons to Start Business in Southeast Asia”, Bernald Ng outlines some of the advantages of launching a startup in Southeast Asia.
1. Consumer Spending is Increasing
In most major regions, consumer spending represents a considerable part of the economy, with younger and working-age customers making up a majority of the customer base, and therefore, a huge driver in economic growth. However, in recent years, several developed markets are experiencing a decrease in the size of this demographic, pointing to a reduction in overall consumer spending.
However, Southeast Asian markets have a considerable population of younger and working-age consumers, with a number that continues to grow, forecasting an economy that’s conducive to startups that cater to the millennial population.
2. The Savings Rates are Very Favorable
Because Southeast Asia is a developing market, it comes with a savings rate that is far more beneficial to consumers compared to that of more developed regions. To sum it up, the savings rate in emerging markets is 33.5%, while the savings rate in developed markets is considerably lower, at 6.4%.
But how does this pay off for startups launching in Southeast Asia? With a more advantageous savings rate, more consumers will be more likely to buy luxury goods, like homes, cars, vacations, and more, meaning more opportunities for local startups.
3. Local Governments are More Supportive of Startups
Because of a recent rise in support and funding from venture capitalists and government programs, Southeast Asia has given birth to plenty of unicorns (private companies that are valued at $1 billion or more). As expected, all of the hype surrounding the seemingly overnight success of local companies has only led to increased government support of startups.
Several Southeast Asian governments have carried out startup-centric initiatives, with Malaysia and Singapore leading the charge in creating an environment that’s conducive to innovation and entrepreneurship with the creation of numerous incubators and accelerators.
4. Southeast Asia Has the First Regulated Crowdfunding in Asia
Hong Kong is the financial center of Asia, yet has not made the move to legalize and regulate crowdfunding. The Malaysian Securities Commission, however, has approved six equity crowdfunding platforms to operate in Malaysia in June 2015, officially making Kuala Lumpur the center of equity crowdfunding in Southeast Asia.
And as an added benefit, Eureeca.com, a global equity crowdfunding platform with an operation license and office in London, Dubai, and Kuala Lumpur, has plans for expansion and funding to allow for Southeast Asian companies to expand throughout Europe, Asia and the MENA region.
5. It’s Easy to Do Business in Southeast Asia
Several Southeast Asian countries are noted for their ease of business for foreign entrepreneurs. For example, in 2016, World Bank ranked Singapore and Malaysia at number 1 and number 18 out of 189 countries, respectively, for ease of doing business.
Southeast Asia is especially attractive to startups from English speaking countries because of high number of English proficient professionals in the region; Malaysia and Singapore are the only Asian countries to be ranked among top 15 in the world by the English Proficiency Index.
Funding Activity is Rising
Another benefit of launching a startup in Southeast Asia (so important that it warrants its own section) is that it is easier than ever to raise funding for a startup in the region, and only continues to get easier.
In the Tech in Asia article, “Startup funding in Southeast Asia has broken the sound barrier. And that’s for starters”, Terence Lee discusses the rapid increase in overall startup funding in the region in recent years, with more and more companies raising $10 million+ rounds each year.
And it’s not only increased funding from venture capitalists that are keeping the Southeast Asian startup ecosystem alive, as founders that launched successful companies several years ago are now investing their own time and money into the next batch of aspiring entrepreneurs.
So with all of these promising startups raising more money than ever before, how can you and your company benefit from this increased funding activity in Southeast Asia? Below are some of the most popular ways that startups are getting capital.
Venture Capital in Southeast Asia
Southeast Asia is home to a plethora of prestigious venture capital firms, both homegrown and those from other countries, and the number continues to rise, as seen in the Let's Talk Payments article, “35 VC Firms Nurturing the Startup Ecosystem in Asia”, by Elena Mesropyan. Below are just a few of the biggest venture capital firms that cater especially to startups in Southeast Asia:
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1823 Ventures - 1823 Ventures is focused on mentoring and incubating promising startups in Southeast Asia, Hong Kong, and Korea, with an emphasis on mission-driven companies that fill a gap.
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Golden Gate Ventures - Golden Gate Ventures is an early-stage venture capital firm investing across Southeast Asia that invests in internet and mobile startups in e-commerce, payments, marketplaces, mobile applications, and SaaS platforms. This fund is led by Jeffrey Paine, who also runs the..
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Venturra Capital - Venturra Capital is a Southeast Asian-focused venture capital firm investing in early-stage consumer technology-enabled internet businesses in sectors such as e-commerce, financial technology, marketplaces, healthcare and education amongst others.
- Right Click Capital - Right Click Capital is a Sydney, Australia-based investment firm that specialises in identifying, investing and supporting high-growth technology-based businesses throughout Australia, New Zealand, and Southeast Asia.
- Kejora - Headquartered in Jakarta, Kejora is a company-building venture capital firm that invests in bold entrepreneurs launching high growth technology companies. Their focus is Fintech, SME SaaS, B2B SaaS, logistics, ecommerce, marketplace, digital media, big data, and education.
- CyberAgent Ventures - CyberAgent Ventures invests in venture companies in Internet-related businesses with outstanding global market potential.
- Fenox Venture Capital - Fenox Venture Capital is a Silicon Valley-based venture capital firm with a strong presence in the UK, Korea, Indonesia, Japan, Singapore, Malaysia, Bangladesh, and more.
Accelerators and Incubators in Southeast Asia
Along with an increase in venture capital firms in Southeast Asia, the region is also the host to a rising number of accelerators and incubators. If your company could use a boost with some expert mentoring, the following list of Southeast Asian incubators and accelerators is worth a look.
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Founder Institute - The Founder Institute is an idea-stage accelerator and startup launch program. They are currently accepting applications in numerous Southeast Asian cities.
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Rockstart - While based in the Netherlands, Rockstart also has a program in Singapore, and participants are given the opportunity to San Francisco and New York as part of their mentorship. Rockstart primarily focuses on companies in web and mobile, smart energy, and digital health.
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MaGIC (Malaysian Global Innovation & Creativity) Global Accelerator Program - MaGIC’s global accelerator program is designed to accelerate 80 global startups per cohort to be investment-ready in 4 months, and to build a strong startup community in Southeast Asia.
- 500 Startups - 500 Startups is based in Silicon Valley, but has chapters all around the world, with a growing presence in Southeast Asia.
- Hackcelerator - AngelHack’s HACKcelerator program connects ambitious hackers with thought-leaders and experienced entrepreneurs to help them become more versatile and create fundable startups.
- Ideabox - Ideabox is a joint venture that aims to elevate the Indonesian startup scene through early stage investment funds and its award-winning accelerator focusing on internet and telecommunication sectors.
Crowdfunding in Southeast Asia
Here are some of the most popular crowdfunding platforms used by startups in Southeast Asia.
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FundedHere - FundedHere is a leading equity and lending-based crowdfunding platform for promising startups in Asia. Based in Singapore, FundedHere’s platform connects investors to promising startups who want to raise funds in exchange for equity stakes or via tenured loans.
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Funding Societies - Funding Societies is a secure online platform for SME owners to start or grow their businesses by providing access to funding from individual as well as institutional investors, with an emphasis on Southeast Asian companies.
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Crowdo - With offices in Singapore, Malaysia, and Indonesia, Crowdo connects promising companies with a global community of investors, and is the first to offer a full equity and debt portfolio to its clients.
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Zingohub - ZingoHub helps creators and innovators from diverse backgrounds fulfil their journey of becoming leading entrepreneurs by supporting indie brands, designers, artists, filmmakers, musicians and other like-minded people.
(Pins on map with focus on Kuala Lumpur city, Malaysia image by Shutterstock)
