By Shane Chesson, Founder and General Partner, Openspace and Freddie Luchterhand, Vice President, Brand Impact,, Openspace
Southeast Asia’s venture ecosystem, though only a decade old, has often been unfairly compared to its more developed counterparts like China or India. However, a more accurate assessment acknowledges the significant progress made in a relatively short span, despite facing challenges such as the recent pandemic and economic downturn.
Empowering Innovation: Digitising Essential Services in Southeast Asia
In 2014, when Openspace began investing, it was among several firms aiming to bring structure to the region’s startup landscape, which had been characterised by scattered efforts. While demographic trends presented opportunities, organised capital was crucial for realising them. As interest grew, both local and geographically diverse investors joined in, some deeply involved while others operated from a distance. Investing from a distance is not a tactic that works in Southeast Asia. What was required were operators who made the region their sole focus. Having teams on the ground, where the action is unfolding, was a foundational principle for Openspace, and it was through the eyes, ears, and intuition of localised teams that the first wave of local tech leaders was discovered.
These emerging businesses primarily aimed to address fundamental societal gaps by digitising essential services. The impact of technologies developed by companies like GoTo, Grab, and SEA Group has been profound, expanding access to vital services, the impact these technologies have already had on society and the ecosystem cannot be overestimated. For instance, in Indonesia, where there are only 0.4 doctors for every thousand residents, access to healthcare is limited. Halodoc, founded in 2016, has now simplified that access through technology, delivers medicines in under 60 minutes and surpassed 20 million monthly active users last year. It also played a vital role in leveraging its platform to bring vaccines and tests to people during the Covid pandemic. In the Philippines, Sarisuki’s technology helps people become their own business owners, earning an income by selling produce to their local communities, with 65% of these Community Leaders now female.
Moreover, the success of these ventures has equipped a new generation of founders with the experience and local knowledge to pursue innovative solutions. This has led to a shift in the startup landscape, with many now offering globally relevant solutions from the outset, leveraging deep tech, AI, and Software as a Service (SaaS), and developing Intellectual Property-driven businesses. This ever-increasing level of sophistication of fit-for-purpose tech is surprising people in a positive way, and encouraging a rethinking of the capacity, capability, and creativity at play in our corner of the world.
Navigating Challenges: The Road to Sustainable Growth
Despite these advancements, challenges persist, notably in the exit environment. Local stock exchanges have yet to significantly contribute to exit volume, compounded by global market downturns disrupting potential merger and acquisition activities. However, there are signs of progress, with companies focusing on exit strategies and prioritising corporate governance and Environmental, Social, and Governance (ESG) principles from inception.
Equally, with the right structural changes and marketing, local exchanges like the Singapore Exchange (SGX) could become an increasingly credible Initial Public Offering (IPO) destination for Southeast Asian tech. Being in a strategic location, Singapore is well positioned to attract the demand-side capital to match the supply-side strengths of a well-developed venture and Private Equity (PE) landscape, possessing an extensive list of companies that provide a solid foundation for growth and innovation.
Southeast Asia: An Investable Region with Promising Prospects
Despite challenges, Southeast Asia emerges as an investable region with promising prospects. The ecosystem’s rapid evolution, driven by experienced founders and favourable political environments, underscores its potential. Embracing free market ideals and prioritising corporate governance are pivotal for sustainable growth.
Ultimately, the region and its startup ecosystem are still taking shape. Every coming-of-age story is punctuated with challenging moments, but that must be seen as the price of growth. As of today, we find ourselves at a promising time, where experienced founders are developing world-beating innovations in a regional political context that largely remains stable, more coalesced and embracing of free market ideals.
At Openspace, we are poised to seize the opportunities of the next decade, recognising the challenges as integral to growth.
The views and recommendations expressed in this article are solely of the author/s and do not necessarily reflect the views and position of the Tech for Good Institute.
About the writers
Shane Chesson is Founder and General Partner at Openspace, a Southeast Asia focused multi-stage venture capital fund finding and backing transformative companies where tech meets life.
Freddie Luchterhand is Vice President, Brand Impact at Openspace, where he works with their 45+ portfolio companies to help them drive value through brand.
