4 Lessons Investors Can Learn From Southeast Asia
The technology market in Southeast Asia is booming, thanks to the young and tech-savvy population in the region. According to Bain & Co research, Southeast Asia’s investment ecosystem is heading towards a new age of growth. It is expected that by 2024, 10 new companies worth $1 billion each will emerge from the region. More than 1,300 companies have received seed or series A funding since 2011 and the total deal value over the next five years is expected to reach $70 billion.
Having said that, the Southeast Asian region is tricky to navigate as it represents a culturally, economically and commercially a heterogeneous region. Yet, several technology startups in the region are successfully overcoming these challenges and going on to become unicorns.
How are these enterprises able to succeed and what can investors, planning to enter the market, learn from them? Here are a few lessons.
The first key lesson for investors from the region is to hyper-localise. Unlike markets such as China, USA or India, the markets in the region are hyper-local on the country level and within the country. Hence, if investors are looking to invest in a startup in this region, understanding the local markets and nuances becomes extremely critical for success. They should understand the regulations, connections and the important players on the local level. Some of the most successful startups have mastered their local markets and expanded from there.
Expand across borders
While it is important to hyper-localise, it is also necessary for investors to have a strategy of cross-border expansion. This is important because investors who diversify across the region tend to reduce the risk of scaling in one single economy and grow faster. Furthermore, they stand to benefit from the steady integration of Southeast Asia’s markets.
Make the best of digital technologies
Startups and enterprises worldwide are increasingly taking advantage of new digital technologies to improve their commercial performance and strategic position in the market. As such, investors looking to invest in this region should encourage portfolio companies to embrace digital technologies so that they can keep up with the changing market scenarios and manage disruptions.
Identify the right talent for leadership roles
The success or failure of a startup largely depends on its talent pool, especially at the level of top leadership. The Southeast Asian region has traditionally witnessed a scarcity of experienced talent. Yet, several investors have been overly optimistic about the availability of talent in this region. Investors should realise that it is important to have people who are cross-culture sensitive, competent, vigilant of market changes and agile in the leadership position to create value and win.
The technology market in Southeast Asia is just taking off and holds great promise for investors. However, the latter should be mindful about the key factors that will drive startup success in this region. Entities that are able to build startups keeping local markets as well as regional scalability in mind, hire top talent and make the best use of digital technologies are bound to enjoy solid returns for their investments.