Southeast Asia’s internet economy has reached a turning point. Internet users in the region are among the most engaged globally. The internet economy in the region reached US$72 billion in 2018 and is projected to surpass US$240 billion by 2025, exceeding previous estimates by US$40 billion. According to a Google-Temasek report from December 2018, some of the fastest-growing sectors include Online Travel, e-Commerce, Online Media, and Ride-Hailing.
However, for tech startups to scale effectively, founders and teams must understand the diverse user behaviors, local problems, and regulatory challenges in each market.
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The ecosystem faces a fragmented landscape of digital payment solutions, a lack of online consumer trust in many sectors, and a shortage of deep tech talent.
A different market
Southeast Asia necessitates a nuanced understanding of users from various countries and how they uniquely utilize and value technology.
A one-size-fits-all approach to scaling across the region will encounter numerous challenges and setbacks. Understanding the cultural and economic nuances of each country will be essential moving forward.
Through interviews with key tech leaders in nine Southeast Asian countries, GST has identified four key points to help conceptualize the region as one unified tech market, facilitating successful cross-border expansions, partnerships, and market expansion.
1.Shared problems across the region
The principle of being mobile-first and mobile-only is crucial to understand. Smartphones serve as the primary personal computers for many individuals in Southeast Asia and other emerging markets.
Technological solutions are essential to addressing local issues, but key infrastructure is still underdeveloped in many developing nations. Areas to consider include healthcare, digital payments standardization, last-mile logistics, financial inclusion, B2B solutions, educational technology, and upskilling services.
2.Talent pools and solving the tech talent crunch
Talent remains a critical challenge for the growth of Southeast Asia’s internet economy. Matching a company’s needs with the available talent pool in a specific market could be a potential solution.
Various countries in the region offer different strengths in terms of tech talent. Singapore faces a tech talent shortage, while countries like Cambodia, Vietnam, and the Philippines showcase abundant talent in specific areas.
3. Shared regulatory issues
The fast-growing startup ecosystem in Southeast Asia has outpaced the legal frameworks in many countries, leading to challenges in operating efficiently. Countries like Vietnam, the Philippines, and Cambodia struggle with regulatory issues, prompting many startups to consider incorporating in Singapore for a more conducive environment.
4. The distributed model for building a tech startup
Building a successful tech startup in Southeast Asia requires leveraging resources and partnerships from multiple countries in the region and beyond. Developing a distributed model can help startups gain access to diverse talent, funding, and market opportunities.
By understanding and addressing these key points, tech startups can navigate the unique challenges and opportunities of scaling in Southeast Asia’s diverse and rapidly evolving market.