Cautious optimism for SEA startups

For the past 10 years, ASEAN tech funding across all stages has been nothing short of phenomenal.

Starting with US$0.1 billion in 2010 and ballooning to a war chest of US$14.9 billion by 2019, SEA has had a fantastic run so far with global capital rushing in to capitalise on its young and tech-savvy population.

Couple that with massive opportunities in logistics, financial services, and social commerce just begging to be solved, the region’s thriving funding landscape will likely remain exciting in the coming decade.

Challenges abound and will stick around: a fragmented geography, value propositions that work in one market but not a neighbouring market, a changing regulatory landscape, talent shortage.

The localisation paradox for SEA startups – having to build hyperlocal products while also scaling effectively within the region to defend their positions – was and will be an interesting challenge to grapple with for any startup looking to grow here.

Knowing when, where, and how to scale is in fact often what makes or breaks emerging startups.

Indeed, partner networks, regulatory frameworks, product development needs, and consumer habits can differ wildly from one country or city to another.

Perhaps key to accurately navigating these nuances lies in hiring the right, and best, talent this region can offer.

The previous decade witnessed a blend of international leaders who cut their teeth in Silicon Valley and local management with market know-how at the helm of startups here.

The new decade could see more local founders and entrepreneurs emerge, especially with a return of the Southeast Asian diaspora educated or trained overseas.

Despite optimism about SEA’s growth prospects, WeWork’s botched IPO and Uber’s post-IPO slump may be warning signs of more disciplined times to come even for companies in SEA.

Cheque sizes may be growing bigger than ever before, but so will increased scrutiny.

Companies that demonstrate the ability to balance costs with topline growth will attract dry powder that VC funds have lined up for the region.

Founders should find themselves hard pressed, not just to tell compelling stories at every fundraising stage, but also to ensure ideas are well thought out and tested.

Growth at all costs from an increase in eyeballs or user acquisition may no longer be just as easily tolerated as before.

Equally important is the ability to demonstrate a clear path to profitability and sustainable margins.

In fact, expect investors to be more discerning about good corporate governance, a keen ability to predict and understand local consumer trends, having the right talent in the right place, and creating products that add real value.

Indeed, the previous decade has seen its share of investor exuberance, both rational and irrational, with the rise of promising unicorns in SEA.

It only remains to be seen how the tech landscape here will change in the next 10 years, even as Southeast Asia remains the place to watch and be.

3 friends turned Carousell into SEA’s next exciting billion-dollar unicorn after returning from their Silicon Valley internship in 2012. Founded and headquartered in Singapore, Carousell is an online marketplace for secondhand items.