Southeast Asia, home to 655 million inhabitants that make up around 9% of the world’s population, is a tech-friendly region where more than half of its people have Internet access and are among the world’s most engaged mobile Internet users, according to a report released by Google, Temasek and Bain & Co this year. The region’s thriving economy along with its high Internet penetration, social media penetration and mobile connectivity has ushered in a new and vibrant middle class that is consuming digital media and content at a voracious pace. It is projected that Southeast Asia’s Internet economy, which is already booming at US$100 billion in sales this year, is going to triple to US$300 billion by 2025. All of this has led tech startups, entrepreneurs and companies to make a beeline to the region to take advantage of its growth prospects and market opportunities.
Although Southeast Asia does hold a lot of promise and potential for startups, the region is not without challenges of its own. One of the region’s features is its cultural diversity, where an estimated one-sixth of the world’s 6,000 spoken languages can be found here. This means that each market in the region is quite unique with its own cultural nuances, preferences and needs, and startups cannot simply assume that what works for one market in the region would work just as well for another. For example, Malaysia and Indonesia are Muslim-majority countries while Thailand is mainly Buddhist, so a foodtech startup that specializes in pork-related products may do quite well in Thailand but not so great in Malaysia or Indonesia.
While the region is currently experiencing high Internet penetration and mobile connectivity growth, its technological infrastructure overall is still in its developmental stages. The quality of the region’s network infrastructure also varies greatly from country to country; Singapore’s network is well-developed and its citizens are well-connected, but countries like Laos and Cambodia are still lacking in its network coverage and services provided. Also, while most of the major cities of Southeast Asia are well-connected with decent mobile and Internet coverage and services, most rural and far flung places are still lagging behind in terms of technological development. While this may present opportunities for tech startups to offer their products or solutions to fulfill a need such as those in the fintech sector, it also means that startups have to work within the limitations and constraints placed by less than ideal network and infrastructural conditions.
While the number of startups is flourishing throughout Southeast Asia, most of the founders lack international experience and many are setting up their startups for the very first time. As the failure rate for first time businesses is quite high, it would be prudent for these startups to seek guidance and advice from mentors and industry leaders to better their odds of survival. Participation in accelerator and incubator programs will also give a big boost to their progress and propel them forward in achieving their goals.
Southeast Asia is a region with a fast-rising middle class that is both technology-savvy and voracious consumers of digital and online content. Startups that can capably navigate and overcome the region’s challenges stand to gain much and prosper in a thriving economy.