Whether you are attempting to access seed funding to start your enterprise, seeking cash flow to keep your business afloat or are in search of finance to move your company to the next level, raising funds during COVID-19 may feel like an insurmountable task. The past decade has spoiled us with an unprecedented amount of Venture Capitalist (VC) investment and peer-to-peer financing leading to phenomenal economic growth and liquidity, particularly in the rapidly developing Southeast Asian region.
Now, we are left scratching our heads, trying to figure out how to overcome the inevitable slump facing us as we look to the post-pandemic future. Fear not, VCs in Southeast Asia are still open for business. However, many are moving sideways into mentorship and consulting modes to aid ailing startups and providing help to those laid off as a result of the pandemic rather than financing.
Some sectors are still receiving financial support, but with money thin on the ground, VCs are taking a more cautious and measured approach to the distribution of their largesse. So how can you get the most out of VCs in Southeast Asia at the moment? And how do you go about raising funds during COVID-19?
We take a look at some strategies that might just help you to thrive like some UK startups, despite the economic downturn.
Cash is king
In the not so distant past, i.e. January and February of this year, there was much optimism and excitement about the upcoming funding rounds and investment potential in the region. The new year started with confidence despite a decrease in the levels of investments in 2019.
Regional VC specialists Cento Ventures reported that funding had dropped from $12 billion USD in 2018 to $7.7 billion USD in the space of a year. Their report also indicated that even though the “number of Southeast Asia internet technology related investment set a new record in 2019” the total amount of capital was less. They discovered that this was “mainly due to less capital raised by Southeast Asia’s unicorns.”
This trend is likely to continue in 2020 with VCs probably making smaller investments and focusing on two main sectors: healthtech and edtech.
With the world uber-conscious about their health and wellbeing, products that assist in the attainment of these ideals are somewhat like a golden goose right now. Technology-based diagnostics and treatments, online doctor consultations, pharmaceutical delivery services, and apps that provide advice and guidance during the pandemic are all very much in demand.
VCs in Southeast Asia have recognised the value in these enterprises and are willing to invest. To avoid coming across as being purely opportunistic, startups must be transparent about their business goals and objectives and show that their product has a real value in the healthtech arena.
Taking a product-first approach to developing your company will help to alleviate concerns, as will excellent communication of your product’s potential impact on the health and wellbeing of the public. If you can demonstrate the necessity of your projects, VCs will be eager to invest both time and money into its development.
The futureproofing of startups for life after coronavirus is also a valid concern for investors, so taking time to ensure that your product will still add value to people’s lives is essential.
Homes all over the globe have become the epicentre of learning during the lockdown. Education has transformed from an outside world endeavour to a much more confined and insular format. The past decade had thankfully paved the way for this transition through an increase in online learning platforms. Still, there is much room for growth.
The sector was already thriving in the region, in part due to increased accessibility to the internet, large youth populations and a desire to enhance education standards, particularly in areas with less funding. Many sought out alternative ways to bolster their education and found innovative avenues with edtech.
Smart investors will be looking to fund potential startups in this sector. However, only time will tell if the world learns its lesson from this crisis and embraces online learning holistically or just goes back to its traditional ways post COVID-19.
Beyond health and education
There is also hope for investment for startups beyond health and education technology. Even though investors will be much more judicious about finances and will focus more on business fundamentals to determine allocation, you can still get a slice of the funding pie.
Make your company more attractive by keeping a tighter rein on finances. Maybe consider tactics such as reducing company overheads, work hours, cut bonuses and compensation, and reassign roles. Become a smarter, more lean business.
If you can find ways how your startup can give to the community in this time of great need, investors will see a responsible company and feel more comfortable in supporting your endeavours. Hopefully, this time next year we will be celebrating the continued success of the startup community in Southeast Asia, despite the global pandemic.