It’s been a pretty wild ride for Southeast Asia’s tech ecosystem.
Barely a decade ago, the idea of venture capital and startups didn’t even exist in Indonesia, Malaysia or Singapore. Now, it’s an entire industry, fueled by vast amounts of cash and talent from all over the world.
And it hasn’t been easy. In the past five years, VCs and startups have lived through a funding boom, a pandemic, and a wave of “tourist investors” who came and left.
Read more: There’s so little tech $$$ in SE Asia, even VCs are quitting
Today, these startups are in the middle of a funding winter and are barely getting by.
No one rode that wave like Kevin Aluwi, a co-founder of Indonesian ride-hailing giant Gojek.
Gojek was founded in 2010, hit unicorn status in 2016 and leveled up to a “decacorn” with a $10 billion valuation just three years later. It grew beyond ride-hailing into logistics, food delivery and fintech, a feat few thought possible.
Back then, no one thought Indonesia – or even Southeast Asia – could have homegrown tech companies, let alone people spending money online, Aluwi says. “The hardest part was getting people to believe it could happen.”
Looking back, he’s especially proud of Gojek’s impact on drivers and small business partners. At its peak, Gojek had more than 2.5 million driver partners. People criticize the gig economy, but for many, “Gojek offered a way to support their families when formal jobs weren’t there.”
After Gojek merged with Tokopedia to create GoTo in 2021 and went public in 2022, Aluwi stepped down from his role as CEO. He now enjoys advising founders as a venture partner at Lightspeed Southeast Asia, a $25 billion VC firm.
It’s rewarding to be the person he wishes he had access to a decade ago, “sharing insights and ‘war stories’, in a landscape that lacked many tech operators.”
Though the hype’s died down, Aluwi says investors and founders now have a clearer and more grounded view of startups. Below, he shares five tips with MONIIFY for building a startup in Southeast Asia today.
Tip 1: Don’t overestimate your market
A fundamental problem is this tendency among VCs and founders to overestimate the size of the Southeast Asia market, Aluwi says.
“We thought it was much bigger, more valuable, and faster-growing than it actually was,” he says.
While the region still holds promise, it’s essential to understand who your real customers are, how often they’ll use your products, and what value they’ll gain if they’re paying a fair price, he continues.
This also applies to founders building startups aimed at digitizing small businesses. These include services like accounting apps and business-to-business wholesale commerce, which attracted quite a bit of VC in 2019-2020.
And Aluwi’s right. Startups like Tiger Global-backed Lummo, East Ventures-backed Kitabeli and Peak XV-backed Ula struggled to find the right fit and had to pivot or shut down.
Tip 2: You can’t wing this
Even though Southeast Asia is in the middle of a funding winter, there are still plenty of investors around with deep pockets, Aluwi says. So, fundraising isn’t the real hurdle.
That’s the lack of compelling founders, products and business models that make financial sense.
“Simply selling a dream doesn’t work anymore,” he says.
But overly cautious, slow growth also isn’t appealing to most VCs. So, showing a clear route to profitability can make all the difference.
Tip 3: Find your niche
Get granular.
VCs now seek greater specificity, Aluwi says. They seek niches within sectors that can truly resonate with consumers.
For example, companies aiming at upper- or middle-income segments can’t sway their audiences with promotions or discounts. But they do have the potential to become essential parts of their customers’ daily lives by addressing real, tangible needs.
Tip 4: Go big
Aluwi admits that one of his biggest regrets re: Gojek is not pushing harder into international expansion.
“I thought Indonesia was all that mattered. I regret that, because now it’s clear – if you want to be a big player in Southeast Asia, you have to think beyond just one country, even if it’s the largest in the region.”
Gojek ventured into Singapore, Thailand and Vietnam in 2018, but eventually narrowed its presence to Singapore alone. It exited Thailand in 2021 (selling to AirAsia) and Vietnam earlier this year. Despite its small size, Singapore has Southeast Asia’s highest monetizable user base, making it a vital market for consumer tech.
Tip 5: Keep your house in order
Investors today are much more sophisticated, Aluwi says. They demand “better governance, more information rights and a deeper dive into financials like income, balance sheets and cash flow.”
Top investment firms are even adding support teams to act as virtual CFOs, working closely with startups on finance and compliance. So do yourself a favor and keep your financials in order from day one, and you’re more likely to attract those investor dollars.
