Jussi Salovaara, co-founder and Managing Partner of Antler Asia
Singapore-headquartered global early-stage VC firm Antler recently announced the final close of Antler SEA Fund II, worth US$72 million. Fund II targets investing US$27 million in 45 early-stage startups over the next six to nine months. The final close comes amidst the significant increase in early-stage investments worldwide.
On the sidelines of the fund’s final close, e27 spoke with Jussi Salovaara, co-founder and Managing Partner of Antler Asia. In this interview, he discusses the new fund, its goals, the regional startup ecosystem, and AI.
Excerpts:
With Antler SEA Fund II closing at US$72 million, what sectors or technologies excite you most about Southeast Asia?
Southeast Asia is incredibly diverse, with each country offering unique opportunities. By 2030, 60 per cent of the region’s population is expected to be classified as middle class, driving significant demand for consumer-focused technology products and a rapidly growing B2B sector.
Our investments are concentrated in Singapore, Indonesia, Vietnam, and Malaysia, where we see the most potential for growth and innovation. For instance, Indonesia’s large and young population creates a massive market for consumer tech. Vietnam is emerging as a hub for high-tech manufacturing and gaming, driven by its highly skilled and educated workforce.
While we are sector-agnostic, we see significant potential in fintech and healthtech across the region, as these sectors address critical needs in rapidly growing economies.
Also Read: Antler closes US$72M SEA Fund II, to invest US$27M in 45 startups in 6-9 months
We are particularly excited about investing in AI, specifically non-generic AI solutions that address real challenges in local markets. These technologies will be crucial in driving the next wave of innovation across Southeast Asia.
The fund plans to invest US$27 million in 45 startups over six to nine months. How do you identify and select startups for investment, particularly in such a fast-paced environment?
Our SEA Fund II is created to back the region’s most promising early-stage startups, particularly in the high-growth AI, fintech, and B2B SaaS sectors. With plans to invest US$27 million in 45 startups over the next six to nine months, we maintain a disciplined approach to identifying and selecting founders who not only possess deep local market knowledge but also a clear vision for scalable and innovative solutions.
To date, we’ve deployed across diverse sectors, from AI-driven solutions to fintech platforms that address hyperlocal needs with global scalability. In such a fast-paced environment, our focus remains on founders committed to long-term growth with solid business fundamentals and a clear path to profitability.
We emphasize building strong relationships with founders by working closely with them for ten weeks during the flagship Antler residency to help them go from 0 to 1 before setting them on a path to build billion-dollar startups. This ensures alignment on vision and strategy before committing to backing them with their first cheque and future rounds on a rolling basis.
In this climate, we prioritize companies with resilient business models, prudent cash management, and the potential for sustainable growth rather than those chasing quick exits. This approach aligns with our belief that downturns can be the best time to invest in ventures with the potential to become market leaders as the economic climate improves. By supporting businesses through longer growth cycles, we aim to foster the next generation of impactful startups in Southeast Asia.
Seed-stage funding dominated the overall funding space in SEA. How will this play out in the coming months? Do you expect this trend to continue in the coming months, if not years, as well?
Seed-stage funding has played a critical role in the overall funding landscape in Southeast Asia, and this trend is likely to continue in the coming months, if not years. The region is experiencing rapid digitalization and economic growth, creating a fertile environment for early-stage startups to emerge and scale.
Moreover, our innovative ARC (Agreement for Rolling Capital) initiative provides continuous funding to early-stage companies. ARC allows founders to secure up to US$600,000 in funding within the first six to nine months of their company’s lifecycle, including initial investment, pro-rata follow-on, and ARC funding.
This approach ensures that early-stage companies have the financial support they need to navigate the critical early stages of growth. Founders can focus more on building their business and less on the often time-consuming fundraising process.
Given the increasing investor appetite for early-stage investments, driven by the region’s strong economic prospects and the rising middle class, we expect seed-stage funding to remain a key focus area.
Antler’s residency programs in Singapore, Indonesia, Vietnam, and Malaysia have produced promising startups. What roles do these programs play in your investment strategy, and how do they contribute to the fund’s success?
These programs are pivotal to our investment strategy, serving as a critical pipeline for sourcing and nurturing high-potential founders and startups in Southeast Asia. These programs provide founders with the resources, mentorship, and networks they need to build and scale their ventures from day one.
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By offering a structured environment that includes co-founder matching, business model validation, and initial customer acquisition, our residency programs lay a strong foundation for success. This approach not only ensures that the startups emerging from these programs are well-prepared to thrive.
Building on this foundation, our residency programs also serve as a unique vantage point from which to observe and understand emerging trends and opportunities across different markets in Southeast Asia. These insights allow Antler to make more informed investment decisions and provide tailored support to each of our portfolio companies.
Moreover, the success of these programs has helped establish Antler as a trusted partner in the region’s startup ecosystem, attracting co-investors like Peak XV, 500 Global, YC, East Ventures, and many more. This reputation enhances our deal flow and creates a virtuous cycle of attracting talent, capital, and opportunities, ultimately contributing to our fund’s overall success and performance.
Given Southeast Asia’s strong economic growth and digitalization, how do you see the startup ecosystem evolving over the next few years? What opportunities are most promising in this region?
The region’s startup ecosystem will grow significantly over the next few years. Its rapid economic expansion, fueled by a young and increasingly tech-savvy population and rising internet penetration, creates vast innovation opportunities across multiple sectors.
As technology evolves, we anticipate a second wave of AI startups in 2024, particularly verticalized AI. This will lead to a stronger focus on building durable businesses, especially in media, customer lifecycle management, and integrating large language models (LLMs).
Industry 4.0, initially driven by the manufacturing sector, is now poised to transform all industry verticals in Southeast Asia. Its core principles of interconnectedness, data-driven decision-making, and automation are increasingly being applied to traditionally non-digital sectors, including construction, transportation, and healthcare.
Additionally, a new wave of startups is emerging in Southeast Asia, focusing on hyperlocal solutions with the potential for global scalability. As the global digital economy is expected to reach US$17.5 trillion by 2025, we see significant opportunities in e-commerce, fintech, productivity, and travel.
These startups are capitalizing on the region’s diverse and rapidly growing market landscape by developing solutions that address specific local pain points while incorporating scalable technologies for a global audience.
How is Antler leveraging advancements in AI and other emerging technologies to identify and support the next wave of successful startups?
At Antler, we recognize the maturing AI landscape as a fertile ground for startups to build enduring businesses by customizing AI solutions for specific industries. This insight has been driving our focus on Verticalized AI investments.
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In a recent US$5.1 million pre-seed investment round in Southeast Asia, 34 per cent of our investments were in verticalized AI startups, targeting sectors such as media, customer lifecycle management, and LLM integration.
We’re also leveraging AI internally through our portfolio company Persona Studios. Its conversational AI platform has transformed the application screening process for our residency programs.
By deploying AI-powered Personas and generating comprehensive screening reports with sortable metrics on founder potential, we can efficiently engage with thousands of applicants. This innovation has dramatically reduced our team’s workload, saving hundreds of hours monthly while enabling us to have initial conversations with nearly every applicant.
While AI has significantly enhanced our data-centric approach and efficiency, it’s crucial to note that we maintain human oversight in decision-making processes. This balanced approach allows us to harness the power of AI while ensuring that critical investment decisions remain in the hands of our experienced Scouting and Investment teams.
What are the biggest challenges you foresee for VC firms in the current global economic climate, and how is Antler preparing to navigate these challenges?
In the current global economic climate, VC firms face significant challenges, including economic uncertainty, fluctuating market valuations, and increased competition for high-quality startups.
Antler is strategically prepared to navigate these challenges by focusing on long-term value creation rather than short-term gains. We are investing in resilient sectors such as AI, fintech, and Industry 4.0, which are expected to drive significant innovation and provide stability in uncertain times.
Additionally, Antler emphasizes strong business fundamentals, prioritizing startups with solid business models, clear paths to profitability, and prudent cash management to mitigate the risks associated with volatile market valuations. To stay competitive in an increasingly crowded investment landscape, Antler leverages its deep connections in local ecosystems through its residency programs across Southeast Asia, allowing us to identify and nurture promising startups early on.
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Image Credit: Antler.
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