According to a recent report published by Google and Temasek, the region of Southeast Asia is already home to 11 unicorns, with about 70 more aspiring unicorns on the brink of attaining the prestigious status. The same report noted that Southeast Asia’s Internet economy has surpassed all expectations, and is forecasted to grow almost threefold from its current worth of US$100 billion to US$300 billion by the year 2025. The region, which is home to about 8.5% of the world’s total population, boasts more than 350 million Internet users with more than 90% of them using mobile devices as the main means of accessing the Internet. Given the region’s youthful, large mobile and Internet-savvy population, it’s no surprise why so many startup founders and entrepreneurs are setting up base in Southeast Asia; there are many opportunities to explore and leverage in a vast, rapidly growing market.
Other reasons for the rise of Southeast Asia as the preferred destination for tech startups are the uncertainties caused by the trade war between the United States and China, which has caused a considerable slowdown for both country’s economies. Compared to the highly expensive cities and competitive tech markets of the United States, Southeast Asia offers much more opportunities and cheaper prices for new tech startups to flourish and grow in. Many governments in the region are also actively encouraging technological innovations and establishing startup-friendly ecosystems by streamlining regulations and introducing pro-technology initiatives, such as the Monetary Authority of Singapore’s (MAS) FinTech regulatory sandbox.
The fast-rising middle class of Southeast Asia is largely well-educated, Internet-savvy and heavy consumers of social media. In fact, the region has experienced double-digit growth in 2019 for Internet penetration at 65%, mobile penetration at 132% and social media penetration at 63%. This is due in part to the rising deployment of infrastructure and networks throughout the region, which is enabling more and more of Southeast Asia’s population to go online and connect via mobile. There are no signs of slowing down and the growth of its mobile and Internet networks is only going to continue, thus increasing the digital population and offering a plethora of opportunities for tech startups to serve this fast growing space.
The rich diversity of Southeast Asia is another compelling reason why startups are flocking to the region; case in point, Malaysia is home to a sizable population of ethnic Chinese and Indians, besides the majority Malay race. The region is one of the most diverse in the world and its people are very tolerant and welcoming of neighbors and foreigners alike, thus nurturing a business-friendly environment for companies and startups to prosper in. The strategic location of the region also acts as a launching pad for startups to expand into the nearby markets of India, China and the Far East. Therefore, startups that choose to operate in Southeast Asia can expand pretty fast beyond their domestic markets.
Southeast Asia’s huge, relatively young mobile and Internet-friendly population, its strategic location and its high Internet, social media and mobile penetration make it an extremely attractive destination for tech startups. Startups that wish to make the region their base of operations should consider understanding in-depth the culture, customs and laws of the country they are operating in, and leverage government policies and initiatives to grow and innovate.