To understand the current Southeast Asian startup market, it is essential to understand the scope, growth of the market, and the challenges it is experiencing.

Southeast Asia - where multimillion-dollar businesses are emerging more and more - has attracted the attention of investors from around the world. According to a report by Cento Ventures, in the first half of 2021, the number of investments in Southeast Asian startups increased to a record level. However, the value of these transactions decreased. Clearly, there are challenges that companies in this region must now overcome.

Booming businesses in Southeast Asia

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The Southeast Asian market plays an important role for a number of diversified startups in different service sectors. Some prominent businesses include:

Grab: Grab is hailed as Southeast Asia's largest high-tech startup. This is the most typical name among the companies that have taxi booking and carpooling services in Singapore. Headquartered in Singapore and Indonesia, the company has expanded its services to food delivery, food, mobile payments and more. Currently, Grab is present in 8 countries, 400 cities, with more than 214 million app downloads.

Tokopedia: This startup founded in 2009, allows small businesses and large corporations to sell directly to consumers. As an Indonesian e-commerce giant, Tokopedia has over 100 million active users and 9.7 million sellers on the platform.

Gojek: Gojek's starting point was a motorbike taxi-hailing center, now it has become the largest on-demand multi-service platform in Southeast Asia. Founded in Jakarta, the company has received huge investments from Paypal, Google, Facebook, Mitsubishi and many others.

Momo: Momo is the largest e-wallet service provider in Vietnam today, with millions of customers. Momo application helps users to transfer money nationwide, make purchases, recharge, pay bills, and more. This business has cooperated with 24 domestic and foreign banks including Visa, JCB and Master Card.

PropertyGuru: This is the largest real estate platform in Singapore, serving 37 million people looking to buy properties every month. Recently, the company decided to list shares with an equity value of up to 1.78 billion USD.

As can be seen, the Southeast Asian startup market is still expanding, but the situation is not the same as before. Despite possessing a large market, the lack of innovation and advanced technologies like some Western countries have made the competition landscape in this region more fierce than ever.

Investment quantity increases, investment value decreases

Clearly, Southeast Asia's potential and enthusiasm is the catalyst behind its market success. Big Chinese companies have invested huge sums of money in innovative and energetic companies here. According to a report by Kroll and Mergermarket, since 2015, investment from the US accounted for 25% of investment in Southeast Asia.

This makes the market more competitive, forcing investors to be cautious with their investments. Startups should take advantage of this trust to come up with innovative solutions that benefit society.

So what advantages and disadvantages does Southeast Asia have for investors?

Ideal conditions for a successful start-up

Southeast Asian countries possess characteristics that encourage growth and investment. Here, young people are tech-savvy and 90% of the population has Internet access, many of which know how to build a foundation.

The 2018 Bloomberg Innovation Index places Singapore in third place. Significant investments in R&D and STEM education demonstrate that Southeast Asia is the future cradle of startups. However, these markets need to retain the talent they already possess. Businesses must meet the needs of employees if they want them to devote their energies and devote themselves to their work.

Growth barriers

Investment funds around the world are racing to 'pour money' into Southeast Asian businesses, however, they only focus on developed businesses, not interested in stage startups. young and young. Going forward, if investors really want to shape the next generation of businesses in the region, they will have to focus on early-stage startups.

Besides, regional restrictions are another barrier to the development of Southeast Asia. Large American corporations have not created a strong foothold in this region. Amazon is failing to compete with Southeast Asian e-commerce players like Lazada and Shopee. The area has seen a lot of success with homegrown businesses, because they understand the behavior of local consumers.

Southeast Asia is a region with many diverse cultures. However, some cultures are large enough for businesses to come up with business development strategies, while others are too small and slow to develop. A country in Southeast Asia is composed of many different subcultures, each with its own behaviors and habits - this makes it difficult for businesses to understand the habits and behaviors of the people. consumer behavior.

Apart from Singapore, most countries in the region do not have a complete foreign-friendly business policy system. As a result, Southeast Asia has faced significant barriers to investment. While the number of investments in Southeast Asian startups has increased to a record high, the value of these transactions has decreased, which has delayed the progress of the general startup scene in the region. In addition, the lack of highly qualified human resources also slows down the adoption of advanced technologies. Those are the factors that stifle innovation in Southeast Asia, making the region less innovative than Western nations.

In the coming time, if countries can relax business processes and implement global-friendly regulations, the domestic market will be even more vibrant. Once established locally and have favorable policies to go world, startups can reap valuable foreign investments. The problem here is: how to both have a local mindset to understand consumer behavior and overcome cultural barriers to expand the market to other regions?