Southeast Asian (SEA) climate tech venture builder Wavemaker Impact recently released a white paper titled Portfolio Acceleration: Getting Companies Seed Round Ready. The paper illuminates the challenges early-stage startups face in SEA and the support they need to achieve rapid, sustainable growth.

The white paper highlights Portfolio Acceleration, which is described as the strategic approach through which venture capital (VC) funds assist their portfolio companies in scaling quickly and effectively, optimising both impact and return on investment.

While much literature has focused on scaling up companies in later stages (such as Reid Hoffman’s Blitzscaling and Elad Gil’s High Growth Handbook), Wavemaker Impact’s white paper aims to bridge a knowledge gap for early-stage startups, where failure rates are particularly high.

Studies show that up to 80 per cent of startups at the pre-Series A stage ultimately fail. The paper argues that this high failure rate underscores the need for a systematic framework to accelerate early-stage startups towards a proven market opportunity and reduce risks along the way.

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Key findings on early-stage startups in SEA

The Portfolio Acceleration study identifies three key elements essential for the growth of early-stage startups in the region: Product-Market Fit (PMF), founder-driven focus, and the necessity of strategic guidance.

1. Achieving Product-Market Fit (PMF)

The study found that PMF, defined as a state in which a company’s product meets strong market demand, is fundamental for early-stage startups hoping to grow quickly and sustainably. Startups that attain PMF sooner typically have a competitive advantage, allowing them to focus on scaling efforts. A fast, iterative approach to product development and testing was a common thread among successful companies in Wavemaker Impact’s research.

Rather than being a result of luck or capital, the speed at which startups achieve PMF rests largely on a founder’s ability to understand and fulfil customer needs.

The report defines PMF as “predictably and repeatedly generating positive unit economic revenue from a sufficiently large group of customers.” To achieve this, founders must employ a scientific mindset, using hypotheses, customer feedback, and ongoing testing to refine their product until it reliably meets demand.

2. The role of the founder

The study underscores the central role of founders in early-stage success. While a competent team is beneficial, it is the founder’s commitment to customer understanding and willingness to iterate on product design that often makes the difference in achieving PMF.

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According to the findings, successful founders behave like scientists, designing rigorous experiments to test product hypotheses and refine their offerings based on customer insights. The study notes that no specific team role was found to be as critical in reaching PMF as the founder’s active involvement in shaping and steering the product.

Additionally, Wavemaker Impact found that founders benefit from creating a supportive team environment that enables them to focus intensively on PMF without distraction.

3. Strategic guidance from investors

Another pivotal insight from the study is the importance of strategic guidance from investors. The white paper highlights that the most common request from founders of early-stage startups is for mentorship in prioritising tasks, building a business roadmap, and navigating the unique challenges of starting a business.

With limited established resources for early-stage growth, many founders look to investors for support in clarifying their strategic direction.

The study suggests that effective investors act as “peers” rather than just backers. By engaging in open dialogue, conducting business reviews, and offering strategic advice, investors can help founders identify key objectives and tackle complex challenges with a clearer plan.

This collaborative relationship helps founders navigate the ambiguity of early-stage growth, particularly the period the study dubs the “Valley of Validation,” when companies experiment and try to prove their market potential.

The challenge of navigating ambiguity in early-stage growth

The Portfolio Acceleration study highlights a central challenge in early-stage growth: the need to manage ambiguity, particularly in the quest for PMF.

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As mentioned, the Valley of Validation represents a period when startups must conduct rigorous testing and validation while maintaining momentum and investor confidence. This stage, marked by high uncertainty and few established milestones, is a difficult phase for founders, who often navigate uncharted territory.

With limited resources specific to early-stage growth in Southeast Asia, founders must be adept at strategic prioritisation and work closely with supportive investors to set a viable course.

The white paper also illuminates a broader issue within the SEA startup ecosystem: the lack of readily available resources for early-stage growth.

Compared to later stages, where scaling techniques and growth strategies are well-documented, Pre-Seed and Seed-stage companies have fewer guides and frameworks tailored to their needs. Wavemaker Impact’s Portfolio Acceleration study, therefore, calls for the development of more resources and guidance focused on early-stage companies.

Such resources could provide founders and investors with clearer strategies for navigating early-stage challenges, mitigating the high failure rates associated with pre-Series A companies.

Through a targeted focus on achieving PMF, strategic guidance, and founder-led growth, the study provides a roadmap for companies to reach market viability sooner, with less risk of failure. This pioneering approach has the potential to not only benefit startups in SEA but also to create a more resilient climate tech ecosystem across the region.

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