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  • Writer's pictureTriet Nguyen

Venture Insight - SEA Startup Ecosystem on the rise

Welcome our esteemed readers to the latest edition of Venture Insight. Throughout this series, we aim to provide our readers a glance into the latest update on the Fundraising landscape as well as Startup activities in the Southeast Asia region. In this issue, we will explore some of the key findings from our recent Venture Capital trend report, conducted by our researchers at Wiziin Inc. The report includes valuable insights into the rising SEA Startup Ecosystem landscape, the reasons behind the rise as well as future projections on the development direction of the market. Let's dive right in.


Key Takeaways

  1. SEA Startup Ecosystem shows positive signals of growth amid global funding difficulties

  2. A combination of supportive government policies, infrastructure development, and a tech-savvy workforce are the main contributions to the development of the ecosystem.

  3. The signal of recovery of the economy and emerging technologies trends lead optimism in the SEA Startup ecosystem

SEA Startup Ecosystem on the rise


Numbers infographics showing Consumer confidence in the economy has begun to recover in Q3 2023. Source: Wiziin Venture Capital Trend Report
SEA Startup Ecosystem Statistics. Source: Wiziin Venture Capital Trend Report

Market overlooks

According to various sources collected by the Wiziin team, there were over 20,000 startups in total with 53 names in the list of unicorns, accounting for roughly 2%. Meanwhile in the US, the country with the highest number of unicorns, the data from CB Insight concluded is around 653 unicorns. 


Although the funding market has been under some plummet recently as we already discussed in the last issue of Venture Insight, the amount of capital running to SEA is under an optimistic view. With up to $10 billion of investment capital throughout 660 rounds, the market valuation for SEA startups is projected to reach $1 trillion in the next 2 years. 


These numbers indicate that there is a lot of money on the table in the region, and investors not only regional but also international are shifting their eyes to SEA, in the mission of hunting for the next unicorns. 


Main drivers of the Startup Ecosystem growth in SEA


Infrastructure establishment leads the shift to a more digitalization economy


Since COVID-19, technology has become the most important factor, driving success for a lot of players in the field of business. Before the pandemic, technology was widely considered as an investment that is “good to have '' if you have spare resources to put into R&D as well as recruiting talents to run the department. However, a big shift happened as the world ran into a lockdown. Transportation, supply chain, and communication are disrupted, leading to the booming of a new batch of tech startups like Zoom or TikTok, as well as the biotech giant Moderna.  


This key change paves the way for Technology to become the key focus of many businesses. Today, if your business wants to survive and attract investments, Technology is one of the biggest concerns 


In SEA, the market also experiences various changes. With infrastructures receiving a lot of investment and support from the government, from telecommunications, internet providers to transportation, players within the Tech sectors are the ones who benefit most. Startups from the region have been exposed to way better tools and opportunities for growing their tech businesses, compared to the last 5-10 years. 


Consequently, the number of internet users surge exponentially with up to 75% penetration rate. Consumers now can stay connected with their beloved brand all the time through various channels on their mobile phones, opening up opportunities for e-commerce, fintech, and digital-centrics business models.


Bar chart showing Internet Expansion and Digital Customer Growth drive development in the Startup Ecosystem. Source: Wiziin Venture Capital Trend Report
Internet Expansion and Digital Customer Growth drive development in the Startup Ecosystem. Source: Wiziin Venture Capital Trend Report

  

Digital native citizens dominate the workforce in SEA Startup Ecosystem

Gen Z - also known as digital natives, has been receiving a lot of attention from economists and media in terms of research conducted. These citizens, born from 1997 to 2012, are now turning 20s and started to join the workforce. Growing up in the established world of the internet, smartphones, and saturated pop culture, this segment of the population is exposed to a much wider view of the world around them, compared with previous generations, when technology capabilities were still limited. These young people are well known for characteristics such as a hunger for novelty, connectivity as well as innovations.


Pie chart showing Favourable Demographics in one of the contributors to SEA Startup Ecosystem development. Source: Wiziin Venture Capital Trend Report
Favourable Demographics in one of the contributors to SEA Startup Ecosystem development. Source: Wiziin Venture Capital Trend Report

Joining the workforce, Gen Z professionals bring along their understanding of technology and novelty-seeking attributes, which align well with the startup environment, especially in the tech sector. With a fast-paced and innovation-demanding environment of startups, the young generation aligns well and can adapt quickly to any changes or challenges that they may be exposed to


Looking forward - What to expect?

Economy on positive recovery signal: 

While global headlines might paint a picture of economic uncertainty, Southeast Asia stands out with its promise of resilience and rebound. Key markets like Vietnam and Indonesia are projected to exceed 5% GDP growth in 2024, injecting confidence and optimism into the startup ecosystem. 


This optimism is further bolstered by signs of rising consumer confidence in Q3 2023 across the region. Strong GDP growth, lower inflation, and a more positive economic outlook are contributing to this shift, indicating a conducive environment for startup growth and success. This fertile ground creates an attractive landscape for investors, both regional and international, eager to capitalize on the region's burgeoning potential.


A chart showing Consumer confidence in the economy has begun to recover in Q3 2023. Source: Wiziin Venture Capital Trend Report
Consumer confidence in the economy has begun to recover in Q3 2023. Source: Wiziin Venture Capital Trend Report

AI, 5G, and other emerging technologies take leads into further development: 

Southeast Asia is not just keeping pace with the global technology wave; it's riding it headfirst. As the region eagerly embraces disruptive technologies like AI, 5G, and beyond, sectors like fintech, e-commerce, and healthcare are on explosive growth. The region's young, digitally-native population and rapidly developing digital infrastructure provide fertile ground for these innovations to flourish, attracting a surge of investment and fueling a wave of groundbreaking startups.


In conclusion

Southeast Asia's startup ecosystem is at a pivotal moment, primed for exponential growth fuelled by a resilient economy, technological advancements, and a dynamic young workforce. By embracing emerging technologies and fostering a culture of innovation, the region has the potential to become a global hub for next-generation businesses and shape the future of various industries.


Want to learn more insightful articles like this one? Check out other Venture Insights and articles on www.wiziin.com/insights.


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