Startups in Southeast Asia: Where are they headed?

MANILA, Philippines – There’s a growing startup community in Southeast Asia, and it’s one that venture capitalists are looking favorably at as it develops in the next few years.

Speaking with Rappler at the Geeks on a Beach event in Cebu on Thursday, August 21, 500 Startups Founding Partner Dave McClure talked about how the development of the world’s venture capital industry and the Southeast Asian startup sector were both points of interest.

McClure noted how venture capital enterprises are still in their infancy, and “don’t really have a very scientific or scalable process” as of yet.

He also noted that despite this, a founder doesn’t need to infuse a lot of money into a startup “to build at least the early stages of a company that has access to a lot of customers.”

While right now, global access to payment ability is pegged at around one or two billion people, another 5 or so years may bring the global access to payment ability to 3 to 5 billion people.

The startup pivot to Asia and beyond

In Southeast Asia, McClure called out the Philippines, Indonesia, and Thailand as the current places to be for finding immediate opportunities that have the potential to grow. He noted that there are around 600 million people in 4 to 5 markets in Southeast Asia, with around half accessible from the business side of things.

Additional challenges included the need to grow talent in the region, including in the Philippines, as well as the lack of capital coming in. McClure explained that the Philippines, as an example, was still growing a talent base for tech startups.

The other big hurdle was a lack of capital, which McClure says is slowly getting solved as a result of more active interest from Korea, Japan, and China. He said there was a decent opportunity for exits – getting out of an investment opportunity or cashing out an investment – and acquisitions from a variety of multinationals and local market IPOs.

Growth outside the US

With access to smartphones and payment capabilities growing, and metrics that encourage investments trending up and to the right, McClure notes that one thing that may be hindering investments would be the density of startups in places like the US and China.

He noted, however, that the growth went beyond US shores, making Asia, Latin America, the Middle East, and Africa good places to invest in.

As for the Philippines, McClure took stock of the strengths of the country, noting that it’s a good English speaking market with a lot of potential for the future. He expects his company to make more investments in the country, and with Geeks on a Beach being a good place to learn and connect startups to venture capoitalists, the future of the startup culture in the country is certainly looking bright. – Rappler.com