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VCs get choosier in funding startups, but Southeast Asia still has big growth potential

Southeast Asia is still a young digital market so there is a tremendous opportunity for further growth, says Thaddeus Koh, co-founder of Singapore-based tech media outlet e27.

He pointed out that much of the region is not yet digitalized while a large portion of its 688-million population is “young digital natives”.

These young digital natives – aged 18 to 35 – are “first mobile”, with smartphones being their first digital device of choice.

“They’re born in the digital age. They are the heaviest adopters of digital services. They consume a lot of digital content. … So, there are so many opportunities out there that are difficult to quantify,” he said.

The Singaporean executive noted that Southeast Asia’s digital gross merchandise value was estimated at US$200 billion in 2022 and is projected to grow continuously to reach $1 trillion in 2030. 

He said that although Southeast Asia has about 416 million Internet users, only a small percentage of them use digital services.

“There’s still so much room to grow in all sectors,” he said, pointing to healthcare, banking, and agriculture, among others.

Startup landscape in Southeast Asia

Regarding the startup landscape in Southeast Asia, Koh pointed out that new investments are slowing down as many venture capitalists (VCs) have been more careful about how they deploy funds.

“The VCs are now a lot more picky,” he said. 

“They will pick companies that are profitable. And if they have really invested in companies that were not profitable, then they are spending time right now to adjust their strategy to ensure that they get to profitability as fast as they can.” 

Koh said that VCs have become more careful after many major tech corporations started laying off their employees and capital became expensive.

For him, that is why early-stage tech founders need to start looking at how to grow their businesses in a very profitable way.

In the earlier years, when capital was much cheaper than today, VCs were far more aggressive while startups were focusing on market share and capturing users. Although many startups were highly unprofitable, they tended to use their VC’s money to power the business, Koh said. 

However, Southeast Asia’s startup landscape has seen a “big change” over the past 18 months as it is no longer that easy to get VC funding.

Koh pointed out that startups need to understand their business, make more margins from their sales, and be more careful about how they spend money and the talents that they hire. 

“You need to make sure that basically every aspect of your business is as optimized and as efficient as it can be,” he said. 

No more easy funding from VCs

In the old days, more than five years ago, many startups obtained funding from VCs – even without launching – simply because they had a good team and their business ideas had good potential.

Later, startups need to launch, have some customers, and have a network for the team to secure their idea before they could get funding. 

“Right now, you need to prove all those things before. And you need to prove that, to a fair extent, you know in two years’ time with your money, your investment will be profitable,” Koh said. 

For him, a big challenge for any early-stage company that has raised less than US$1 billion is to rethink how they position themselves as a high-growth but yet growing towards profitability company – down to the knowledge of the founders, of the product team, the marketing team, the acquisition team, and their managers.

“They need to be very careful on the unique economics. That means whichever customer they acquire, they need to make sure that lifetime value is there. They need to make sure that they have a good retention strategy,” Koh said. 

He reckoned that the entire knowledge for early-stage companies has changed. 

“It’s no longer ‘I just need to grow and grow and grow.’ Right now, it’s ‘I need to grow a little bit. I need to make sure that it stays with me. And I need to make sure that we continue to monetize this audience’.” 

Echelon Asia Summit

Koh’s company e27, founded in January 2007, hosted its flagship tech conference Echelon Asia Summit 2023 at the Singapore Expo on June 14-15. 

It was the company’s first “big event” after the pandemic, according to the executive, highlighting it as a gathering for the Southeast Asia tech community. The last Echelon Asia Summit was held in 2019, and the international tech conference was cancelled between 2020 and last year.

This year’s event attracted a multitude of promising startups from Southeast Asia and other countries in the Asia Pacific region. It was attended by over 5,000 participants, with over 130 booths and exhibitors from different startups, VCs, and enterprises, according to the company.

Its website ( says e27 is “the startup ecosystem’s go-to platform for insights, connections, talent, and funding opportunities. It is our mission to empower you with the tools to build and grow your company.”

Working with governments

Koh said that although e27 is a Singapore company, it aims to work with relevant government agencies across Southeast Asia to help expand the region’s startup community and tech ecosystem.

“We want to continue to engage various government agencies in various countries. For Thailand, we’ve been working very closely with the National Innovation Agency (NIA) to bring forward programs and policies that connect Thai entrepreneurs and the Thai ecosystem with the rest of Southeast Asia,” the executive said.

He added that his company also has a similar collaboration with Enterprise Singapore, the island state’s government agency championing enterprise development, as well as their counterparts in Malaysia, Indonesia, and Brunei.

Koh says that the goal is to present Southeast Asia collectively to prospective investors from other regions through coordination over market access programs. He pointed out that Southeast Asian markets have different strengths and weaknesses, but also different barriers. 

“You need to understand how each of the Southeast Asia markets works because it’s so different – different currency, different culture.”

He said his company was working with relevant government agencies to help Southeast Asian startups succeed.

“In Southeast Asia, governments play an important part in terms of identifying gaps and filling up the gaps before the private sector comes in – be it funding, access to networks, access to corporates, access to information or education. Our job is to work with them, consider advice, and have discussions to understand how we can help in this particular area,” Koh said.



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