Early-stage founders in Southeast Asia – now is your time

We’ve seen many large technology companies emerge from Southeast Asia’s startup ecosystem over the last several years. The ability to build large companies has changed dramatically in a very short period of time. But what we’ve seen so far is just the trailer. The movie is only about to begin.

Rajan Anandan

Published October 14, 2019

Southeast Asia’s startup ecosystem is at a tipping point.

A little more than 10 years ago, four in five Southeast Asians had little or no access to the internet. Today, Southeast Asia has the world’s most connected and engaged mobile internet users. The region’s online economy hit US$100 billion for the first time this year, tripling in size from four years ago, and several verticals – including ecommerce and ride-hailing – have played an outsized role in its growth.

We’ve seen many large technology companies emerge from Southeast Asia’s startup ecosystem over the last several years. Six years ago, there were no unicorns in the region; today, there are more than 10. The ability to build large companies has changed dramatically in a very short period of time.

But what we’ve seen so far is just the trailer. The movie is only about to begin.

Several factors are driving this unprecedented growth. A huge and highly connected internet user base creates opportunities to build digital-first businesses in every sector in every country. In addition, the first generation of unicorns and global tech companies in the region have created a pool of talent who are now starting up and launching their own ventures. This new set of founders have more experience in company building and are able to scale very quickly. Finally, the availability of risk capital has changed significantly. More than US$37 billion of venture capital has flowed into Southeast Asia’s internet economy over the last four years.

We’re going to see a wider variety of startups emerging across all kinds of verticals in the next couple of years. It’s the opportunity of a lifetime for ambitious, mission-driven founders who think big and execute superbly.

That said, building a startup is incredibly hard, and founders in this region face a number of key challenges and hurdles.

We ran a survey of 120 Southeast Asian early-stage founders attending the Tech in Asia Conference in Jakarta last week, and here’s what they said:

Seed startups are undercapitalized. While CB Insights reports that the average seed or angel round size globally is now US$1.3 million, the first check in ASEAN countries is often still small. The typical seed round in this market is under US$500,000, according to 58% of our survey respondents.

The road to series A consists of many small rounds. 65% say founders in their market go through seed and at least one bridge or extension before series A. Meanwhile, 26% say they’re going through a seed plus two bridge rounds.

Early-stage funding raising takes up too much time. 84% listed fundraising as one of their top two biggest challenges. A quarter of respondents said they spend more than 25% of their time on fundraising across angel, seed, and seed-plus stages, leading to series A.

This lines up with a similar survey we ran last year in India.

First-time, early-stage founders in the ASEAN also tell us they’d like hands-on help, perspective, and mentorship. Just over half listed the hiring of talent as their main challenge, while 37% are most concerned about tackling customer acquisition.

We’re trying to do our part to help address these challenges with Surge, the rapid scale-up program for early-stage startups in India and Southeast Asia that we launched nine months ago.

With US$1 million to US$2 million at the start of the program, founders can begin hiring and building their product right away – and have enough runway until series A. They also travel to Singapore, Bangalore, Beijing, and San Francisco, for a front-row seat on the front lines. Surge workshops and sessions tap 48 years of Sequoia tribal knowledge as well as first-hand insights from mentors like Gojek’s Nadiem Makarim, Tokopedia’s William Tanuwijaya, One Championship’s Chatri Sityodtong, Zilingo’s Ankiti Bose, and Carousell’s Quek Siu Rui.

Founders get help recruiting top-notch tech talent through Surge’s 10xE program. Assisted by our tech and talent team, a Vietnam-based startup that was part of Surge’s first 2019 cohort hired over 30 engineers.

We wanted to involve the entire ecosystem in our journey to support early-stage startups. So we designed the program with an open architecture, inviting other investors to participate in the Surge round to meet founders early in the program and take part in UpSurge. We’re heartened by the response: 80% of the startups in Surge’s second 2019 cohort, for example, have a co-investor in their Surge round.

In nine short months, Surge has grown into a community of more than 80 founders from 37 startups – including 14 startups from Southeast Asia that span a wide range of verticals including social commerce, business-to-business ecommerce, insurtech, hospitality, co-living, robotics, and direct-to-consumer brands.

Community is a big part of Surge: founders become part of a diverse group of people whose skills and experience they can draw on as they build their companies. Surge’s first 2019 cohort has bonded to an amazing degree. They continue to share ideas, offer mutual support, and meet regularly. They’re even sharing their know-how with the next generation of founders in Surge 02.

It has been exciting to watch our first set of Surge founders quickly gain momentum and traction – and make a difference in the communities they serve.

Telio, which aims to help connect and digitize Vietnam’s fragmented retail sector, has onboarded thousands of mom-and-pop shops to their B2B platform since March. Eighty percent of Indonesia-based insurtech startup Qoala’s customers quickly-growing customer base have never purchased insurance before. Singapore-based Zenyum, meanwhile, is now live in five markets with its invisible braces.

According to a recent report from Google, Temasek, and Bain & Company, Southeast Asia has gained 100 million new internet users in the last four years. There are now over 360 million people online in the region, and 90% accessing the internet through their smartphones. This highly connected user base creates unprecedented opportunities for entrepreneurs.

For founders in Southeast Asia, this is your time. To dream big. To create impact. And to build enduring companies.

This column was originally published on Tech In Asia.