Having invested in more than 300 companies worldwide including big names like Taskrabbit, Wildfire, Twilio, Sendgrid, 9Gag, Cubie Messenger, PicCollage, Viki, Dropmyemail and many more, 500 Startups is definitely a program many startups want to be part of. Well, Mountain View-based 500 Startups is founded by Dave McClure.
Prior to his upcoming keynote at Echelon, one of Asia’s largest technology conference happening on the 4th of June, we hopped on a phone call with Dave to discuss about the investment ecosystem in Southeast Asia.
Opportunities and challenges in Southeast Asia
Dave mentioned that there are large untapped opportunities in Southeast Asia especially in Indonesia, the Philippines, Vietnam and Thailand. Other than the population density, increasing numbers of mobile adoption in the next five years means that innovative businesses can be built to leverage on the mobile growth.
While teams might not have much breakthrough ideas in Southeast Asia where ideas are adapted and localized from the west, there are a lot of opportunities with very basic revenue models which works. Simple models around e-commerce, SAAS, payments, supply chain and logistics can have a lot of returns.
Speaking about teams, one of the major difference between Southeast Asia based startups and Silicon Valley based startups is that there are not many experienced startups here in the SEA region.
“Startups in SEA only have one generation of entrepreneurs to rely on, and the same goes for angel investors. This is not so much of a disadvantage, and its just the same for most part of the world. To improve this, it’s a matter of more mentorships from people who have been there and done that.” – Dave McClure, founding partner of 500 Startups.
Government and telcos might skew the advantage of startups
We have seen how government and major telcos around the Southeast Asia region play an important role in the startup ecosystem. Notably, the Singapore government is known for its technology incubation scheme, which provides up to 85 percent of matched funding to incubators under the scheme. Singapore is also known for giving out grants to support the local startup scene. For telcos, Singtel Innov8 has been playing an active role in the investment and M&A scene not just regionally, but also internationally.
Is this healthy for the ecosystem? Dave thinks that with government and telcos in the picture, it might skew the advantage towards their own agenda. Startups might orientate their behaviour and respond to government policies and milestones rather than focus on customers. The same applies for telcos and carriers which are focusing on their own distribution platforms. Startups have to be wary to respond only to the right signals: your customers.
Finally, we also spoke to Dave about the influx of money in the seed stage and pre-Series A stage. Dave agreed that companies in the post-series A stage might have a tough time raising in Southeast Asia, and often turn to Silicon Valley for investments. That is part of the reason why 500 Startups has been focusing on elevating investment ecosystems around the world. “A lot of our involvement in the international scene is also trying to get more people into the investment scene. We try our best to encourage more (investment) participation from local governments, corporates, and private investors around the world. That’s part of what we do.”
Ending off our conversation, we asked Dave which companies from the region come to mind when the word “disruptive” is mentioned. His picks? Viki, a video streaming service that uses crowdsourced fansubs, followed by Payroll Hero, which addresses the workforce challenges in the Philippines. That said, Dave shared with us that they will definitely be more involved in the Southeast Asian scene, with a few major announcements coming in the next few days.
“We are only scratching the surface of Southeast Asia’s opportunities.”
At our upcoming Echelon, Dave McClure will be delivering a keynote on the shift in investments trends in Silicon Valley and the Series A crunch, as well as a panelist at one of our Series A investment panelist. You can check out the full agenda here and grab your early bird tickets now (ends on Sunday)!