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4 Reasons Why we are Betting on Southeast Asia (SEA) (2015)

#Insights & Comments#Asia Pacific#Market Insight#South East Asia

When 12 months ago I decided to quit my corporate expat job to focus on startups and venturing in Asia, many called me crazy. The simple reason might be that if you are not based in the region, you probably won’t catch the exciting atmosphere we are experiencing in this part of the globe. Markets in Asia are still developing, and that’s exciting in terms of potential new innovations and business opportunities. Here’s what I believe makes the region hot and my bets for 2016.

A big (growing) market

In Asia the middle class in 2013 stood at 525 million, but by 2030 it will exceed 3.1 billion. By then, two-thirds of the global middle class will be residents of the Asia-Pacific region. A significant proportion of the new Asian middle class are also expected to be at the upper end of the income bracket, with impressive spending power.
While China remains the biggest of the Asian markets, investors and multinationals are increasingly turning their attention to Southeast Asia (which encompasses Brunei, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, East Timor, Singapore, Thailand, and Vietnam), being the region a major global hub of manufacturing and trade, as well as one of the fastest-growing consumer markets in the world.
Nielsen projects that the wealth distribution that is currently observed in South East Asia (SEA) will continue and by 2020 the middle class population will more than double to 400 million. For the sake of comparison, the middle class in USA by 2020 is expected to be 125 Million.

Middle class population by 2020

Despite this being a long term projection, companies certainly don’t need to wait any longer to get interested in the region: as of 2013, if Southeast Asia were a single country, it would already be the seventh-largest economy in the world, with a combined GDP of $2.4 trillion in 2013.

Access to information

The middle class in Asia doesn’t just have increasing amounts of disposable income, but also access to Internet. Such access to information enables companies to reach a broad base of consumers.
Specifically, digital connectivity in Southeast Asia has progressed at a fast pace in 2015, with much of this growth attributable to more widespread access to internet-enabled mobile devices. Mobile subscriptions in the region account for 124% of the population and active internet users sum up to 252.4 Million on a 40% internet penetration.

Digital connectivity in Southeast Asia

A unique ground for innovation

The adoption of digital technologies is expected to deliver massive economic growth in Asia’s emerging markets. By 2025, today’s fast-changing technologies — including the mobile Internet, the Internet of Things (IoT), cloud technology, 3D printing and advanced robotics — are expected to lead to 30% GDP growth in Southeast Asia alone.
Southeast Asia is experiencing digital disruption very differently from more mature markets, such as the USA and Australia. These countries began their digital journey many years earlier, and their progression has been in stages, with socio-economic development and digital innovation progressing at similar speed. On the other hand, in Southeast Asia, digital technologies are expected to have direct impact and lead socio-economic improvements in key areas such as health, education, or financial inclusion.
For such reasons, while organizations in Southeast Asia can look to global trends to gain an insight into what might disrupt their future, regional macro and micro economic factors play a big role in defining the innovation agendas. This makes the region a very unique playground for innovation, where entrepreneurs can address real socio-economic needs with technical solutions.

The capital is coming

Southeast Asia has long been a magnet for foreign direct investment (FDI). FDI inflows into ASEAN are now at historical highs, and Southeast Asia was the only region to experience positive growth in inflows in 2012, demonstrating the attractiveness of Southeast Asia for multinational activities — not only as a location of production for exports but increasingly as a market in itself.
Regarding venture capital (VC), regional funding is increasing steadily and stabilizing as Asian and non-Asian investors are more keen to invest in the region. Total VC funding in South East Asia grew 43% in 2015 from 2014, reaching US$1.61 billion (remarkable, noting that a lot of startups that raised funding didn’t disclose the amounts)

Total VC funding in South East Asia — source: Tech in Asia

Golden Gate Ventures, one of the most active VC firms in the region, analyzed series A investments of China, India and SEA finding positive correlation between the trends, confirming that the exponential trend in the number of deals for Southeast Asia (led by Singapore) follows the similar pattern as that of India and China, but with a lag of 6 years and 11 years respectively. This means that in terms of VC investments, like China and India before it, Southeast Asia is on the brink of a meteoric rise.


Hot areas of activities for 2016

Last October, I joined Fast Forward Advisors (FFA), a European consultancy firm with extensive experience in Innovation Strategy and Venture related services with the role of managing partner for Southeast Asia. Given the trends witnessed and the major needs of the local ecosystems, we decided to place our bets on the following areas of activities:

Corporate innovation

Digital / mobile first is the new norm for Companies in Asia. While 37 per cent of companies are already undergoing digital transformation, almost 60 per cent plan to embark on the transformation journey over the next 12 to 24 months.
Digital transformation requires companies to innovate their products, business models or customer experiences. Such innovation can be sparked in a number of ways, including working with digital startups. Startups can be involved in the process by establishing innovation centers, accelerators & incubator programs, investing in startups, closing partnerships or by organizing events to stimulate new ideas and co-create products.
Corporate accelerators are booming worldwide, a total number of 31 new corporate accelerators have been launched in 2015 alone, where a third is counted in Asia Pacific. Of the total 18 corporate accelerators in Asia, 11 are based in South East Asia.
We expect the number of the overall Corporate venturing programs to grow, especially in Indonesia, Thailand and Vietnam, where corporations are now looking to set up such activities.
Choosing the right program requires an assessment of the strategic needs and a consequent sound structuring of the activity. Bringing our know-how on how to establish such programs will help companies to avoid traditional pitfalls and achieve the set objectives.


Fintech is changing the way consumers expect to be able to receive goods and services. Antony Jenkins, who until July was CEO of Barclays, warned in a speech that as much as half of banking jobs could be replaced by apps and algorithms over the next 10 years.
While this trend is being witnessed on a worldwide scale, Fintech solutions are starting to address very specific needs in emerging markets due to the high rates of “unbanked” population, about two billion adults in 2015 according to the World Bank’s estimates.
Regarding South East Asia, only 27% of the 600 million population has a bank account. In the region’s poorest counties — in Cambodia for example — it is just five per cent.
At FFA, we are currently working on a Fintech Report aiming to catch and analyze the current trends in Southeast Asia and provide insights to companies willing to understand more about this opportunity.

Growth & Internationalization

While startups should prove their model works locally, being able to scale at a regional level is a key to avoid other global or regionals players to take over their markets. Furthermore, most countries in Southeast Asia don’t have a market size large enough on its own to be attractive for investors.
Nevertheless, aiming to expand in neighbor countries bears complexity due to the fact that Southeast Asia is a very fragmented market: different languages, currencies, culture, regulations, level of development and customer needs are a prevalent challenge for scaling in this region.
At FFA, we are now selecting high potential startups in Southeast Asia to work with on their growth and fundraising needs.

Promoting the opportunities of SEA

Lastly, I believe European companies have yet to grasp the full potential of business opportunities in the region. For this reason, at FFA we are now working to connect the two worlds:
– by sharing information of what’s happening here on the Facebook group Ventures in Asia, already counting several regional founders, investors and startup enthusiasts among the members
– by providing (work in progress), a week long program of workshops and networking activities allowing entrepreneurs to discover business opportunities in fast-growing Asia.


Follow/contact me to stay up to date with the next developments, drop me an email at luca[at] to get in touch.