In a recent LinkedIn Ask Me Anything (AMA) session, Ying Cong Seah, Co-Founder of Glints, an online talent platform in Southeast Asia, provided valuable insights into achieving product-market fit (PMF) in the region. The discussion revolved around the challenges and strategies for founders, the role of resumes in the future of work and education, emerging tech talent pools, pricing strategies, market expansion, and more.

Seah emphasised the importance of considering monetisation strategies from the outset, especially in Southeast Asia’s diverse and fragmented markets. He shared his views on the enduring relevance of resumes in the hiring process and the factors that shape the tech talent pool in emerging markets.

Below are Seah’s detailed responses to the questions from the LinkedIn users:

How do you define PMF?

It’s quite hard to say because it is very situational, but typically, it shows up in higher than benchmark sales conversion and growth rates. In such cases, the bottleneck is not demand but your ability to supply. 

How do you assess/test PMF, and at what phase of the startup process do you do it?

I have not found a conclusive test that works for all kinds of products and services, but several cornerstones are based on the sales funnel; instead of thinking of it as one test, it is a series of gated tests where you don’t move on until you have passed the prior tests.

One is the emotional resonance when you describe the value offerings to your customers; you can sense if there is an actual pain point.

Also Read: Non-revenue generating jobs tend to be more affected in the current downturn: Glints CEO

The next is conversion to sign-up and activation, where sufficient customers have proven their willingness to invest time or money into your product to experience the core value offering. Depending on the natural usage frequency of your use case, you would want to compare your retention rates against benchmarks in your field.

All these checks that your core value proposition resonates; what you need subsequently is the validation of a growth channel that you can sustainably scale up for the mid-term. These are all relatively intuitive; the hard part is finding the benchmarks to determine what constitutes pass/fail. Unfortunately, these are very situational and best found by studying comparable products.

How does the concept of early adopters fit into the PMF equation, and how should they be engaged?

There’s a closely related term in go-to-market (GTM) called “ideal customer profile.” Most people know about this concept, but what’s less practised is how rigorous people are about implementation.

An excellent rule of thumb is to have two to three filters on who falls into your early adopter/ICP category (e.g. CIOs in 50-100 people startups that have just raised funding in the fintech space). How it fits into the PMF equation is that once you have hit upon a segment that resonates with your offering, narrow your sales and marketing effort to this crowd relentlessly. It takes longer than most founders think to exhaust that market; most people go too broad.

In terms of engagement, other than going above and beyond to ensure they have a stellar experience, another helpful frame is that the early adopters hold the answers for why your offerings resonate. Your job is to understand that answer as deeply as possible.

How do you factor pricing into PMF for your company’s offerings? How does pricing strategy vs PMF differ across markets?

Pricing is part of the product in PMF. In many cases, we have found Van Westendorp’s pricing model to be a sufficient enough test to get us started. It is important to understand the pricing aspects beyond the number, such as the pricing model (consumption-based, subscription-based, transaction-based), payment frequency, and who owns the budget (in B2B).

Which role(s) in an organisation is responsible for customer development for a new product/business opportunity: Business Analyst (BA), Project Manager (PM), Sales/Business Development (BD) Head, or Founders?

In our case, it is usually a combination of the co-founders and the business lead. At this time, we haven’t reached the size where we are developing new products or businesses regularly. It’s more stage-appropriate for us to deepen our current products. We have made the mistake of entering new markets too quickly and severely underestimating how much our existing markets can be deepened with more robust execution. 

Also Read: ‘Global firms are paying closer attention to SEA’s tech talent pool’: Glints CEO

In the end, BD and PMs play a role in validation from frequent direct contact with customers, but the final value offering decision falls to the business lead.

What is the relevance of resumes/CVs in the future of work/education?

People have predicted the end of CVs for a decade, but it’s surprisingly sticky, especially in the SEA markets outside of Singapore. 

I remember reading how Reid Hoffman described LinkedIn as the modern CV, but if you observe how hiring is done, CV is still a crucial aspect of the workflow. Of course, this varies from role to role; for executive positions, you place more weight on their reputation and references, and for blue and pink-collar functions, it’s more about availability and proximity.

All other roles still rely on CVs, and I don’t see any trends bucking that yet. CVs still serve as a very easy shorthand for doing a first cut, and it’s more of the interviewing methods that I have seen evolve after that cut. 

Where will the world’s next emerging tech talent pool (outside markets Glints is already in) come from? Or will AI take over the world before this next market emerges?

From our experience studying and operating in labour markets, demographics is always the dominant, long-term determinant of its vibrancy. Education policies play a close second. The reason why Vietnam has been in the tech talent pool of SEA for more than a decade now is its young demographic plus a strong emphasis on Science, Technology, Engineering, and Maths (STEM) education. 

As for AI, my bland belief is that reports of the death of tech jobs by AI are greatly exaggerated so far.

How did you assess which markets to expand first, and how has the differentiation between market behaviours informed your decision for further market expansion?

The current market size and growth rates are our primary criteria, followed by competition intensity. All being equal, the growth rate is the most promising factor because it can offset the competitive dynamics in some cases. The market sizing is a simple test, but the devil lies in how rigorously we validate that math over time.

The calculation became more nuanced over time as we layer in additional factors like the internet penetration of that particular service, the average willingness to pay, the average transaction value and frequency, etc.

Also Read: Glints banks US$50M Series D to expand its talent discovery platform to Philippines

So the logic behind market expansion orders hasn’t changed, but the rigour has deepened with a better understanding of our existing markets.

To transition from the Series A to Series B stage, what were the top three challenges you faced as a technical co-founder?

1. Adding the first management layer as we scaled the team, my job fundamentally changed from managing ICs to managing managers. It was a big shift in terms of how I spent my time and what counted as valuable work.
2. My role became cross-functional, and I had to make technological and product decisions closely intertwined with operations and marketing. Cross-functional alignment and management took up time and space when the company grew.
3. The cost of wrong decisions becomes much higher. It’s one thing to revert a decision when the team is ten people; it’s quite another when it is 50. Decisions became more expensive to revert, requiring higher-quality thinking and debate.

What are the future trends and challenges in the talent and HR tech industry in SEA?

Trends

1. Demographics and governance are the two huge determinants of economic growth; we see Indonesia and Vietnam still have very long and promising runways.
2. The white-collar talent pool will mature, more skilled, more managerial and leadership talent.

Challenges

Education in many countries still has room to strengthen, both in terms of rigour and per cent of the population reached.

Borderless hiring: with the acceleration of digital and the adoption of remote, we will see more employers open to hiring strong talent outside their home base.

At what stage should a company/startup consider hiring HR for their business?

This is a very rough guide. At Glints, we hired our first HR leader with over 100 employees, and it was far too late. We should have started that at ~50. When you are 50 people, you can probably get by with a mid-level HR manager who offloads some of the people processes from the leader. Beyond that, you need a more experienced leader to bring in some structure and processes, such as performance management, promotions, hiring and retention. This all needs full-time attention.

What advice do you have for aspiring founders in Southeast Asia looking to make an impact in the talent and community space?

My advice is to think through your path to monetisation right from the beginning by talking to companies that have successfully done so. This is more of a compensation because, firstly, one of the core challenges of Southeast Asian (SEA) markets is lower average revenue per user (ARPU).

Secondly, founders attracted to the talent sector tend to be quite mission-oriented. Balancing those with a well-researched and thought-through monetisation hypothesis gives your company a far higher fighting chance.

Also, understand that SEA is a combination of diverse and fragmented markets, so get clear on which market you want to start with.

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In the fast-evolving landscape of the financial industry, the increasingly competitive landscape and relentless push for innovation have compelled traditional banks to embark on a transformative journey to modernise their legacy systems.

While embracing cutting-edge technology and digital advancements is the clear option and imperative for banks seeking to thrive in the digital era, many traditional banks are uncertain about how to move forward.

In the decision to adopt a modern core banking system and overhaul existing infrastructure, a new strategy has emerged that demands attention and contemplation — the concept of coexistence.

The traditional approach to core modernisation involved complete system replacements, often involving substantial risks, disruption, and significant investments. While the outcomes were intended to be transformative and rewarding, the path to get there was fraught with challenges.

The coexistence approach offers banks the opportunity to strike a delicate balance between past and future, seamlessly blending legacy systems with modern, agile technologies.

More importantly, the costs and complexity of legacy banking are placing constraints on banks’ ability to not only innovate but also in providing the real-time, personalised banking experiences that customers expect.

Moving beyond the Big Bang approach

In the past, typically during the nine-to-five era of banking, the Big Bang migration approach was preferred when moving to a new core platform, a single migration phase in which all product data was extracted, transformed, and loaded in the shortest time possible.

Also Read: Striking the balance: AI, leadership, and the modern workplace

A Big Bang migration was supposed to have minimal downtime so business could resume as soon as possible. Customers usually end up having to tolerate wait times or outages of some form. Depending on the systems being migrated and their business impact, downtime might not be an acceptable option.

What is more, unexpected issues coupled with a lack of agile project management mean that new issues can be discovered after the migration has been completed. Worse still, if the migration fails, a complete rollback (and additional downtime) ends up being needed, not to mention the regulatory scrutiny that usually follows.

The case for coexistence

A more effective route to success for banks, in this case, would be coexistence or running two or more cores together for a period. The ability to bridge cores allows for a phased transition between the old and the new, along with the added benefit of risk-mitigating deployment strategies.

The coexistence model aligns migration with modern software practices, allowing the bank to deploy, migrate, test, and learn from small tranches of its portfolio in a far more controlled approach.

Naturally, each bank will have its own unique and complex data landscapes, so there is no one-size-fits-all model when it comes to coexistence. However, here are some common lessons that banks’ IT and delivery teams can keep in mind on their coexistence journey.

Embrace coexistence and set up the right team for the job

Recognise coexistence and actively plan for it during your transition state or states.

Set up a central team of experts to ensure comprehensive planning and decision-making. This may be distinct and separate from the business and technical teams that define the target state operating model and architecture.

Also Read: Banks must solve their core banking conundrum – or fail

This central team will set the North Star in terms of coexistence early in the program. From there, they will lay the required implementation path, working through each challenge and finding answers for the coexistence situations as they arise.

This team must also be empowered and have the appropriate senior sponsorship to smooth the working process across the many teams involved. Difficult decisions must be made, often at pace, to keep the program and its stakeholders aligned while moving forward with a holistic change-management strategy.

Use technology to support coexistence better

Gone are the days of stitching together a manual process, which would inevitably place additional pressure on operations colleagues. Instead, utilise the program’s target architecture to enable technology-centred coexistence.

Banks can be safe knowing that any interim builds can more easily be changed as you transition from one state to another with a more loosely coupled architecture. For example, a dedicated service could be set up to serve as the ‘control centre’ for managing coexistence indicators across various systems of record.

Investing tactically in legacy can help, but remember to plan for legacy decommissioning

Changes to the source system or data are likely needed to enable a successful transformation. For example, additional flags or tags may be required on legacy accounts to indicate which have been migrated.

Plan these changes early with the teams supporting the legacy core to ensure that things go smoothly. Equally important is that there are concrete steps in place within the migration plan to decommission the legacy estate, to ensure stakeholder buy-in on the journey, and to recognise the full benefits of the core modernisation program.

Final thoughts

Undoubtedly, the migration of core banking systems is a complex undertaking with inherent risks. Yet, with a strategic mindset, a well-planned approach, and the adoption of appropriate tools, banks can position themselves favourably to embrace the concept of coexistence on their path to a new digital core.

Simultaneously, this approach enhances their prospects of successfully navigating the challenges posed by the dynamic landscape of the next normal. The banks that achieve success in this journey of modernisation will emerge as the leaders in the near future.

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The fintech revolution has been sweeping across the globe, transforming traditional financial landscapes and revolutionising the way people access and manage their money.

Asia, with its diverse markets and rapidly expanding digital infrastructure, is poised to become a global fintech powerhouse. However, several challenges stand in the way of its fully-fledged growth, including regional regulatory complexities, barriers in partnerships and cybersecurity concerns.

The value of fintechs, particularly to traditional financial institutions, is undeniable. When the idea of a fintech revolution started, banks initiated their collaboration with minimal engagement in areas such as KYC, identity verification and fraud management, and are now partnering with fintechs to disrupt the market around payments, lending and digital banking.

These partnerships bring innovation and hyper-personalisation for consumers and have given a much-needed impetus to the fintech industry.

Onboarding fintechs can help to reduce a bank’s operational costs, ensure easier deployment of new technologies, such as online portals and banking channels, and achieve efficiency and automation.

According to a survey of 260 major banks conducted by Finastra and East & Partners in January 2023, a total of 87 per cent of banks in Asia Pacific said they are planning to connect with an average of four fintechs in the next 12 months, with just 12 per cent planning to develop their solutions in-house fully.

Regulatory fragmentation

Regional fragmentation in Asia creates significant barriers both for banks engaged in digital transformation and for fintech growth, including navigating multiple legal frameworks, compliance standards, and licensing procedures.

Also Read: Fintech growth in Asia: Why businesses should prioritise expansion in the region

These can be time-consuming and expensive and make it challenging for banks to scale their services across borders. It is particularly noteworthy in Asia compared to other regions and can limit the partner solutions that can be used.

A Cambridge University 2022 report, ‘Fintech regulation in Asia Pacific’, cited the main obstacles in forming regulatory frameworks in Asia Pacific as limited technical expertise, having to coordinate activities with multiple regulators, a lack of clarity on jurisdiction over an activity and limited funding and resources.

COVID-19 also exacerbated existing challenges in regulating fintech and introduced new ones, such as accessing timely data, coordinating with other domestic agencies and performing core functions while working remotely.

Internal matters

Internal factors can also be challenging for banks trying to integrate fintech solutions into their product offerings. Major issues include interoperability, budget constraints, upgrading legacy systems and shortage of expertise within the bank.

The Finastra and East & Partners survey found that almost a third of banks (31 per cent) said one of the biggest barriers for them was internal coordination/cooperation when integrating fintechs with internal product offerings, while 20 per cent said a lack of a strategic direction and plan was holding them back. This finding is underlined by contrasting responses from business leaders and CTOs on which fintechs they prioritise when onboarding.

Data concerns

As fintech adoption grows, so does the threat of cyberattacks. Asia has witnessed a surge in cybercrime, and financial institutions are prime targets. Consumers and businesses can be hesitant to fully embrace fintech solutions due to concerns about data breaches, identity theft and financial fraud.

High-profile data breaches and cyberattacks have raised red flags, leading to apprehension among potential users and regulatory bodies. In Asia, where varying data protection laws exist, the lack of a unified data privacy framework complicates matters further.

Some Asian countries, such as China and Indonesia, have implemented data localisation requirements, mandating that data collected within their borders must be stored and processed locally. However, this can pose challenges for fintech companies that operate across multiple jurisdictions as it may require them to establish costly data centres in each country.

As Europe and North America embrace data sharing and open banking, varying data rules in Asia can be frustrating for banks, who risk falling behind those in other regions.

Traditional mindset

Cultural factors can also play a pivotal role in shaping consumer behaviour and business practices in Asia. Many people in the region, even in highly banked populations such as Singapore, still prefer traditional banking methods due to longstanding relationships they may have with conventional banks, a sense of security when dealing with an established financial institution, reservations about doing digital banking, and a preference for face-to-face banking services and human interaction at physical bank branches.

Also Read: Despite decline, global fintech funding remains fairly stable: McKinsey report

What’s to come?

Asia is poised to be the fastest-growing region for fintechs, led by countries like China, India and Indonesia. The adoption of cloud and technology changes, along with fast-growing customer bases, are contributing to the growth of the industry. We are seeing traditional and digital banks collaborate with fintechs not only to create differentiation in the market but also to service the underbanked.

But the fintech space is fast-moving, and innovation is crucial. AI is perhaps the biggest innovating development and will continue to shift the fintech landscape. We are already seeing fintech products and services steer towards AI and machine learning capabilities to differentiate and disrupt the market.

Looking ahead, amidst funding issues and attempts to gain trust from the industry and consumers, fintechs are likely to evolve their business models and form value-based partnerships.

Considering Asia more broadly, through collaborative efforts involving governments, regulatory bodies and industry players, this region can certainly create an environment conducive to further fintech growth and unlock the industry’s full potential.

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After ChatGPT “caused a storm” in the world, large technology businesses holding a lot of data to develop AI, Vietnam still “calmly” has not launched any new AI chatbot products, only improving the old products, in contrast to giants like Microsoft, Facebook, Google…

According to survey results just announced by the Department of Information and Communications of Ho Chi Minh City, about 48 per cent (out of 1,000 businesses participating in the survey) have applied ChatGPT in their work, about 25 per cent confirmed that ChatGPT is or has replaced workers in certain positions, helping to save hundreds of thousands of dollars.

Creating a ‘hit’ for the AI community, yet ChatGPT still reveals a weakness

According to Mr. Dinh Tran Tuan Linh, Technology Director of Unikon.vn, a content production unit using AI technology and big data, it is not thanks to ChatGPT that people talk so much. About the AI story, four years ago, the AI trend took off, and businesses started researching this technology.

Although it has been developed for decades, AI mainly serves technology people and researchers. But thanks to the “push” from ChatGPT, AI has an interface for end users. For the first time, people who are not familiar with technology can access and know the “shape” of AI and see what it can or cannot do.

ChatGPT has the potential to ignite a global language modelling application war. Before ChatGPT’s introduction to Vietnam, chatbots were frequently used to provide automated responses on fan pages and websites, but they haven’t taken off because the responses frequently adhere to pre-written scripts, which limits the content and doesn’t satisfy user needs.

Also Read: How Southeast Asian brands are reimagining the future of digital experiences

Additionally, the responses’ lack of naturalness and friendliness can occasionally make users feel inhibited. Thus, ChatGPT’s launch will enable organisations and big businesses to consider how they developed and released their chatbots.

“This makes the marketability of AI products higher, and other platforms will look at ChatGPT as a new standard when brought to market,” said the expert.

But ChatGPT has its shortcomings. According to Nguyen Manh Quy, director of the Viettel Cyber Centre (VTCC), ChatGPT is trained on a variety of data sources, including verified and authenticated sources like books, newspapers, and news websites, as well as unverified sources like social media and the Internet.

Updated data is also obtained from user conversations. For the two reasons mentioned above, ChatGPT’s content production process could contain errors, so you should exercise caution while using reply content generated by ChatGPT.

Vietnamese enterprises’ reactions before ChatGPT

Talking about the difference in their chatbot solution, the VTCC representative affirmed that, although it cannot answer customers’ “twisted questions and answers”, the bot has been specialised and answered the questioner’s information in some specific fields such as justice, customer care, finance because it is aimed at business customers, Viettel’s virtual assistant cannot give neutral answers such as ChatGPT but must be able to advise customers with very accurate and clear information.

Around the “phenomenon” of ChatGPT, BKAV CEO Nguyen Tu Quang once raised many discussions, including the discovery that the “father” of the algorithm used to develop ChatGPT is a Vietnamese. Mr. Quang also recommended upgrading the AI chatbot solution with data used for training from Vietnam with knowledge about Vietnamese history and culture, with Vietnamese people owning the technology.

Also Read: Adobe Firefly aims to unlock AI’s potential for effortless design

But up to now, apart from claiming that the business has successfully tested blocking spam messages and emails using a natural language processing AI model using GPT technology, this CEO has not had any further updates about a new product of BKAV shaped like ChatGPT for Vietnamese people.

Mr. Nguyen Vu Anh, CEO of Coc Coc, a company that develops browsers and search engines in Vietnam, affirmed that Coc Coc will not be left out of the AI game. CEO Nguyen Vu Anh once shared that Coc Coc is working to create a ChatGPT tool that is especially “trained” to handle the Vietnamese language and is expected to launch in the second quarter of 2023. However, the shape of this tool is still unknown to users.

Conversely, Vietnamese startups have been creating comparable chatbot platforms quite actively ever since ChatGPT was created. VoiceGPT and LovinBot are typical instances.

It is evident from this that big Vietnamese IT companies, who possess vast amounts of user data, a necessary resource for creating cutting-edge technologies like artificial intelligence, have little incentive to release or market ChatGPT-like chatbots. Rather, the goal of these units is to “smartise” the AI solutions that are now available.

This is in complete contrast to technology giants in the world, such as Microsoft (which has integrated ChatGPT on the Bing search engine) and Google with Google Bard AI. Facebook has also introduced LLaMA to help create chatbots. Super AI in the Future, or even Got It, a Vietnamese startup in Silicon Valley, recently introduced Enterprise Language Model Architecture (ELMAR).

In related discussion threads, many opinions have appeared worried that Vietnamese businesses will continue to lose at home in the AI race, something that has happened with search engines and social networks.

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Recently, Vertex Ventures Southeast Asia & India announced our latest fundraising of US$541 million to invest in more early-stage founders across this region. This is not just the largest venture capital fund raised within our Vertex Ventures network; this is a testimony that Southeast Asia and India will take centre stage in the startup and VC arena in the next ten years.

But I guess, with the grim headlines all around us now, it is not easy to believe this future. The Business Times recently published this “Looming startup failures are giving VCs a reality check”. Well, the hard truth is that in this part of the world, Southeast Asia, the startup ecosystem is still very nascent. Most only got started in the last decade, and as all things go, it takes cycles of booms and busts to build a solid foundation for success.

Sectors that we are bullish about for the next decade

As the region’s large and young population enters their prime earning years and experiences rising incomes, the demand for consumer tech products will naturally rise in tandem, mirroring patterns observed in other developed markets.

Notably, the Generation Z cohort, which comprises digital natives, plays a significant role in driving this demand. Bain & Co reveals that digital natives aged 18-29 in urban areas spend 75 per cent more than the median population and boast one of the highest adoption rates of consumer tech, second only to affluent consumers in Southeast Asia.

Moreover, consumption patterns are expected to shift towards online platforms, providing convenient access to consumer tech products for consumers living in suburban areas outside of Tier one and Tier two cities.

Currently, 43 per cent of the digital population in Southeast Asia resides in suburban areas. Interestingly, despite their significant online presence, there remains a notable disparity in the penetration rate of consumer tech, such as e-commerce and travel tech, compared to their urban counterparts. This indicates a vast untapped market potential in suburban areas, presenting opportunities for growth and expansion.

Also Read: SEA companies making waves with funding, innovation, expansion

While attention has fairly been focused on retail digital banking services for Southeast Asian consumers, there still exists a gap in the infrastructure supporting small to medium enterprises (SMEs). This was what Fairbanc, our portfolio company, recognised — an opportunity to level the playing field for SMEs in Indonesia.

They enable these enterprises to obtain short-term credit for purchasing fast-moving consumer goods from large consumer brands, a process that typically requires extensive documentation — an obstacle that many SMEs face. Fairbanc’s innovative approach addresses this gap, providing fair access to banking services for SMEs and empowering them to thrive in the dynamic business landscape of Southeast Asia.

Beyond Singapore, Southeast Asia harbours immense untapped potential, specifically within the region’s small and medium enterprises (SMEs) that form the backbone of its economy. The market size and potential are huge, with over 70 million SMEs in Southeast Asia accounting for nearly 40 per cent of the region’s GDP and employing almost two-thirds of the working population.

Companies that effectively cater to this market have witnessed remarkable profits. In Indonesia, for example, our portfolio company, Manuva, operates as a tech-based packaging platform that helps SMEs optimise their packaging development and procurement processes. By providing tailored solutions, Manuva enables SMEs to enhance their competitiveness and efficiency in the market.

Also Read: Google, Temasek and Bain & Company: Despite growth, SEA needs to expand the depth of digital participation

Lastly, healthcare presents a significant opportunity for startups to address people’s basic needs through technological advancements. It is noteworthy that, excluding Singapore and Malaysia, Southeast Asia exhibits an average of only 8 doctors per 10,000 residents, as per the World Health Organisation (WHO). This ratio falls significantly below the global average of 15 doctors per 10,000 residents, indicating a lack of access to healthcare services for many individuals in Southeast Asia.

In this context, healthcare companies and startups have the potential to not only thrive in the market but also bridge the gap and connect the underserved population with essential healthcare services through innovations like telemedicine.

What are some roadblocks that Southeast Asia may face?

Southeast Asia is characterised by its vast diversity and fragmentation. Different countries within the region have distinct languages and regulatory policies, posing a challenge for startups seeking to expand across the region. This is especially true for startups with limited manpower and legal resources to navigate and understand each market’s unique background and conditions.

Regional startups encounter a talent crunch despite tech layoffs in larger companies. While tech giants like SEA have been reducing their workforce, emerging startups still face a shortage of talent in tech-related fields.

Skilled employees are often recruited by legacy companies that are undergoing digital transformation initiatives. Consequently, startups must strive to exceed their targets and achieve more with limited manpower.

The full realisation of potential growth in sectors such as logistics and e-commerce depends on the development of key infrastructure. Governments in the region are actively taking steps to address this challenge, with projects like the Trans Java and Trans Sumatra Toll Roads in Indonesia. The establishment of robust infrastructure is essential for startups to leverage and expand their operations effectively.

Southeast Asian customers tend to be price-sensitive, which can impact the adoption of emerging technologies. Affordability becomes a significant factor, and it varies across different regions within Southeast Asia.

According to Trading Economics, Indonesia’s GDP per capita stands at US$11,858, Thailand’s at US$17,077, and Vietnam’s at US$10,628.

In comparison, the global average for GDP per capita (PPP) is US$21,283. These statistics reveal that consumers in Southeast Asia have lower disposable incomes even after accounting for the differences in the prices of goods and services.

The disparity means that consumers with lower disposable incomes in the region may face challenges in affording new technologies that come with higher price points. Thus, startups must learn to juggle the costs associated with developing new products and align them with the price points consumers are willing and able to pay.

Also Read: How these SEA tech companies are using AI to improve their offerings

Several markets in Southeast Asia experience political uncertainty, which can impact business operations and investment climate. Fluctuations in government policies, regulatory changes, and geopolitical factors may introduce uncertainties and challenges for startups operating in the region. Staying informed and adaptable becomes crucial to navigate through such uncertain environments.

A golden age for Southeast Asia startups

We believe the next decade will be a Golden age for Southeast Asia startups and Venture hubs. The future of Southeast Asia’s tech ecosystem is filled with exciting prospects and opportunities. Several key areas are likely to shape its trajectory.

One of these areas is Artificial Intelligence (AI). The integration of AI into existing startup products or new product ideas presents a promising avenue for growth. However, it’s important to acknowledge that the adoption of AI technology may currently be costly and not cost-effective for companies in Southeast Asia.

While the AI sector holds immense potential, startups in the region need to carefully consider the feasibility and financial implications of implementing AI solutions at this stage.

Another area of significance is the growth in Venture Capital (VC) investments. Private investments, particularly in Singapore, have been robust, but emerging markets in Southeast Asia are also experiencing an increase in investment.

As countries like Indonesia and Thailand become more competitive in terms of funding opportunities, we can expect to see a surge in the growth of startups across different parts of the region. This rise in VC investments may pave the way for the emergence of new unicorns and bolster the overall startup ecosystem.

Climate tech will be another area that many investors will be watching closely. Southeast Asia, with a strong commitment from 9 out of 10 ASEAN members to achieve net-zero emissions by 2050, holds significant potential for growth in the ClimateTech sector. Communities in Southeast Asia are expected to be at the forefront of the climate revolution, creating opportunities for innovative startups to develop solutions addressing climate challenges.

Our portfolio company, Fairatmos, based in Indonesia, has already made significant contributions by enabling communities to develop carbon sequestration projects and facilitating financing or offsetting initiatives in the country.

Globally, Natural Climate Solutions (NCS) such as Agriculture, Forestry, and Other Land Use (AFOLU) have the potential to abate seven gigatonnes of CO2e per year. Southeast Asian countries, including Indonesia, can play a vital role in achieving these ambitious targets. Indonesia alone can abate up to a significant 20 per cent.

In fact, Indonesia has the second-largest global potential to provide low-cost, natural climatic solutions for decarbonisation, and it possesses about 66 per cent of the investable forestry carbon stock in SE Asia — the highest in the region.

In closing, the startup landscape in Southeast Asia, while nascent and undergoing a reality check, also holds the promise of a bright future, given its unique advantages and untapped potential.

By leveraging this potential and circumventing the hurdles, the region can indeed transform into a robust startup ecosystem. It may not be an overnight metamorphosis, but with the right mix of innovation, strategic foresight, resilience, and dedication, Southeast Asia can witness a quantum leap in its startup scene.

As we chart our way through the challenges and headwinds, let us not lose sight of the tremendous opportunities that lay ahead, for Southeast Asia may well be the next big frontier for startups.

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