Executives of three Singapore-based venture capital (VC) enterprises recently shared their experience regarding the island state’s role in helping strengthen Southeast Asia’s startup ecosystems.
Their VCs have invested in several startups in Singapore’s neighbouring countries, including Thailand, for many years due to “tremendous opportunities and a lot of potential” in the region.
Carmen Yuen, the general partner of Vertex Ventures SE Asia & India, said that her 12-year-old VC has about US$1 billion (35 billion baht) under management, with a focus on Southeast Asia.
“We generally invest in Series A and slightly earlier in 3A and sometimes Series B. Our playground is especially in Southeast Asia and India. In Southeast Asia, most of our investments are in Singapore, Indonesia, Malaysia, and Thailand,” she said.
“We have a good mixture of enterprise, the B2B. We’ve got consumer and internet. We also invest in fintech, healthcare, IT, agritech and sustainability.”
In Thailand, Vertex has invested in two companies — SCB Abacus, a spinout from Siam Commercial Bank, and digital insurer Sunday Insurance. Yuen said that does not mean her VC’s focus is on fintech, as it is also looking for candidates in the distribution and logistics sectors.
Paul Santos, the managing partner from Wavemaker Partners, said that his VC has made about 180 investments since 2012. “We invest primarily in the enterprise, deep tech and sustainability around the region,” he said.
James Tan, Chairman of the Action for Community Entrepreneurship (ACE) said that the enterprise is bullish on opportunities in Southeast Asia. Quest Ventures, a Venture Capital Firm where Tan is a General Founder at, has invested in Vietnam and Philippines”
Opportunities and challenges
Tan said that his VC helps foreign startups to “soft land faster” while introducing them to the opportunities and challenges in Singapore as well as in the region.
“We will go through a series of programs, engagement with local ecosystem players, even local funds. We hope that these startups will find their footing quickly, perhaps even get some investments from the funds to our base here and use Singapore as a launching pad for the rest of Asia,” he said.
Tan views Thailand as an attractive market for Singapore startups. “There are opportunities there [in Thailand] that continue to be overlooked,” he said.
For him, Thailand is attractive to the extent that his VC has launched two facilitated programs in the country. One of them is GIA Thailand, or GIA Bangkok, which was launched about three to four years ago.
The other program involves sending Singaporean interns or students to Thailand so that they go through their university and polytechnic lives. “They are mindful that there are opportunities or challenges in the market. They’re so close to Singapore in so many ways — culture, business, and so on,” he said.
In his view, a challenge for Singapore is to attract foreign startups to stay on after they come to the island state. “Our market here is small and they look at Singapore as if it’s just a Singapore market rather than as a launchpad for the rest of Southeast Asia,” he said.
Why Southeast Asia is attractive
Wavemaker’s Santos said that Southeast Asia is attractive to startup investors because of its robust economy and large population.
“Why the region is investable, you know? The $3-trillion economy growing 5-6% per year. The 600-700 million population that’s young and becoming richer and adopting technology,” he said.
Santos pointed to “a tremendous opportunity” in the SME sector (small and medium-sized enterprises), which accounts for 97% of businesses in Southeast Asia.
“SMEs are the number one source of jobs. For these economies to continue to grow, the SME sector will need to continue to grow as well. Part of that will have to be improving productivity with the use of technology. And so that’s why we think there’s a tremendous opportunity,” he said.
“For the region, we’re quite excited about things in the SME sector and different kinds of technology, or combination of technology and services.”
In his view, Southeast Asia’s startup ecosystem is still very young when compared to more advanced markets like the United States, China, or India. He suggested that the region’s startups look outside and see what works in those more established markets. “There’s some opportunity that you can find and localize,” he said.
When asked to comment on Thai startups, Santos said: “I would just focus on my hope that entrepreneurs in Thailand, as well as the rest of the region, really think hard about problems that they really want to solve in a meaningful way. And I know that’s easy to say, but that’s the most exciting part for me.”
Thailand is ‘very unique’
Vertex’s Yuen views Thailand as “very unique” in terms of startups. She noted that the kingdom already has three unicorns — a privately held startup company valued at over US$1 billion (35 billion baht) — in different business areas. They are Flash Express in logistics, BitKup in fintech, and Wongnai in food delivery.
Also, she said that what’s unique about Thailand is that the country has an accelerator fund for multiple areas of startups, including telecoms, property, oil and gas, and fast-moving consumer goods (FMCG).
“[Thailand] has got enough big companies that look into startups in any one of these spaces. So, I think that’s very unique,” she said.
Great time for Southeast Asia
Yuen sees a great opportunity for Southeast Asia’s startups amidst a growing conflict between the United States and China. “This is a great time for Southeast Asia. The US and China are not agreeing so money is able to flow southwards to us,” she said.
But the executive also warned that the region’s startups should be carefully nurtured and guided along on valuation. “None of us will reject a unicorn. But let’s make sure that our unicorns are really worth calling themselves unicorns,” she said.
For Santos, the challenge and opportunity for startups are to figure out how to create a truly valuable business that is not just based on comparable valuation, but rather on problems they are helping solve.
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