Southeast Asia’s buzzing tech startup ecosystem is going through a period of spectacular growth, emerging as one of the global hotspots for foreign investment., Despite the impact of the pandemic, startups from the region attracted investments totalling US$8.2 billion in 2020. The region’s digital economy is on track to be worth more than USD 200 billion by 2025, backed by an estimated USD 50 billion in expected funding.
The region’s internet economy is fostering a strong startup sector in several of its fastest-growing markets like Vietnam, Indonesia, Thailand, the Philippines, Malaysia, and in the region’s financial hub, Singapore. Startups within the region are attracting FDI from all over the world as they pursue higher growth, while foreign tech unicorns and venture capitalists are looking to benefit from business opportunities presented by a significant market.
The ten Association of Southeast Asian Nations (ASEAN) countries collectively represent a market equivalent to the fifth largest economy in the world. SEA’s overall economy is expected to grow by over 5 per cent every year, and is also home to a large pool of young talent with more than 30 per cent of the population aged between 15 and 34. By 2030, around 500 million people in Southeast Asia will be of working age.
Given the favourable demographics of a large connected young customer base, it is obvious that a host of high growth startups and tech unicorns from the rest of Asia, the US, and Europe are eyeing the ASEAN market.
SEA: a rapidly maturing digital economy
Southeast Asia’s digital maturity makes it a lucrative proposition for global startups looking for their next big growth market. Both the supply of talent and demand for digital products and services are growing at an incredible rate.
The ASEAN market is also maturing at a rapid rate, with homegrown startups expanding throughout the region and some even venturing beyond. COVID-19 has spurred much higher digital adoption among the population, with 70 per cent of Southeast Asia — 400 million people — now online thanks to the pandemic, according to a report by Google, Temasek, and Bain & Company.
The number of digital consumers is surging in Southeast Asia, driven by the combination of rising disposable incomes, access to affordable devices, and a large untapped market. Google estimates around 3.8 million new users across Southeast Asia will continue to come online each month.
For startups looking to expand in Southeast Asia, Malaysia is the perfect entry point
Malaysia is currently ranked as the 11th best-emerging startup destination in the world. Startup hotspots include the capital Kuala Lumpur, Penang, and Selangor. These tech hubs boast an abundant supply of skilled talent, as well as attractive costs of business operations. Strong government support has helped shape an ecosystem of accelerators and incubators that make Malaysia a highly suitable destination for high growth startups wanting to establish a presence in Southeast Asia.
With a population of 33 million, Malaysia has a well-educated and highly diverse workforce who speak multiple languages. Malaysia has experienced a steady improvement in its business climate for domestic small and medium-sized enterprises, moving up three places to a global rank of 12th out of 190 economies in the latest ease of doing business ranking by the World Bank.
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Decades of industrial growth and political stability has seen Malaysia become a major tourist destination and a manufacturing powerhouse. Thanks to reliable digital infrastructure, Malaysia is an attractive base for companies in the financial, IT, and logistic sectors. Geographically, Malaysia is located in the heart of the ASEAN region. Its immediate neighbours are three burgeoning growth markets – Thailand, Indonesia, and Singapore – making Malaysia a great HQ location for companies involved in cross-country operations.
With its balanced mix of languages, people, and industries, Malaysia is a true microcosm of Southeast Asia. Malaysia’s business-friendly regulatory environment can help startups to leverage the Malaysian market as the perfect entry point to quickly establish a presence in Southeast Asia and to better understand the culture, consumer behaviour, and market dynamics. Startups entering Malaysia will find the ideal launch market where they can refine the business model that will work best for them to achieve success in the wider region.
ServisHero: transforming home services in Southeast Asia
ServisHero is a technology-enabled marketplace for blue-collar workers headquartered in Malaysia with operations in Singapore and Thailand. Karl Loo, Founder and CEO of ServisHero, pursued Southeast Asia as a growth market because he felt with the high adoption of mobile technology, the timing for a services marketplace was right. Launched in 2015 as one of the first regional mobile apps to hire home service providers such as Cleaners, AC Technicians, Plumbers, Electricians etc., the app quickly became popular with Malaysians.
The startup operates under two business models — a consumer-focussed app; and under the sub-brand WorkMagic, it provides large enterprises with flexible teams of blue-collar technicians that can perform tasks such as building maintenance or installation services.
Large enterprises like Samsung and Kimberly Clark work with them to eliminate the operational complexity of managing their own service teams. The software developed by ServisHero allows them to effectively manage worker operations and allow clients to receive real-time updates on task fulfilment.
Loo says that people use our blue-collar service solutions because – “consumers can find and book a reliable home service conveniently from their smartphone; enterprises can offer services to their end-users without having to invest in their own labour infrastructure, and blue-collar workers and partners on our platform (we call them “Heroes”) get a consistent stream of high-value work that offers them enhanced earning potential.“
ServisHero is backed by leading Southeast Asian VC funds including Golden Gate Ventures and Cradle Seed Ventures.
In 2017, ServisHero participated in the Malaysian Global Innovation and Creativity Centre’s (MaGIC) programme, Distro Camp, to help them expand to other countries in Southeast Asia, and to form partnerships with many of the region’s leading companies. ”MaGIC has been incredibly supportive with our goals to grow and scale our business. In particular, MaGIC has provided us access to digital marketing training for staff, as well as support to recruit local talent through their career fairs,” shared Karl Loo, Founder and CEO of ServisHero.
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Loo feels that apart from Malaysia’s strategic geographical location, “the key factors that make Malaysia a great place as a launchpad for start businesses, include: a) focused government support for startups; b) talented and young workforce that is keen to work in startup environments; c) relatively low costs to run a business.”
During the pandemic, ServisHero mobilised its network of workers to provide disinfection and sanitisation services to businesses and consumers under the brand Disinfection2U.com – this unit quickly became one of the largest COVID-19 disinfection companies in the region. “ServisHero is committed to creating work opportunities for the underserved, and we work closely with various government agencies to provide earning opportunities for Malaysia’s B40,” adds Loo.
Helping Samsung service customers during COVID-19
In 2020 during the pandemic, Samsung was looking for a better customer experience for people ordering appliances online. Samsung wanted a trusted partner with nationwide installation capability and selected ServisHero as their installation service provider for appliances purchased directly from Samsung’s online channels across Malaysia.
ServisHero leverages its platform to provide a flexible team of installers for Samsung reducing operational complexity for Samsung and increasing online sales conversions.
Loo says having spent several years operating in the region, they understand Southeast Asian users and can deliver extremely relevant services for them. He hopes to offer their “blue-collar workforce in the cloud” to more enterprises, as well as continue to serve their loyal B2C user-base.
MaGIC: empowering entrepreneurs since 2014
Malaysian Global Innovation and Creativity Centre’s (MaGIC) is the agency under the Malaysian Ministry of Science, Technology and Innovation (MOSTI) on a mission to develop a vibrant entrepreneurship ecosystem in Malaysia. They empower technology startups and innovators through a series of mentorship, training, and development programmes, aimed at Early Stage, Mid Stage and Late Stage startups.
For late-stage global startups who want to expand into the region, MaGIC offers a Virtual Global Market-Fit Programme (GMP), a platform for high growth innovative startups to explore cultures, understand ways of business and gain international market access in countries beyond ASEAN. MaGIC also periodically opens applications to MyStartupHub (MSH), a soft-landing program for innovative global startups from all over the world to establish a business hub in Malaysia. Collaborating with Malaysian ministries and agencies, MyStartup Hub provides assistance in company incorporation, local talent acquisition, and Malaysia’s market access.
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Through this programme, MaGIC will assist startups in business set-up, talent recruitment, and vertical-specific market access via their network of partners including government agencies, corporates, and universities. In exchange, startups are required to hire at least 3-5 local talents to help run operations in Malaysia.
MSH seeks to instil the exchange of knowledge between local and international startups to be more forward-thinking and relevant to industrial revolution 4.0. It also aims to provide global startups entry into Malaysia as the testbed and gateway to the larger ASEAN market. Moreover, the programme is designed to leverage Malaysia’s strong positioning in the regional ecosystem for local and international startups.
For more information, visit MaGIC’s official website at https://www.mymagic.my.
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This article is produced by the e27 team, sponsored by MaGIC
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