2020 was a year that catapulted millions of businesses around the world. The global pandemic adversely affected companies across a wide range of sectors due to the implementation of social distancing measures, lockdowns and travel restrictions. However, in the world of investments, the long-term perspective reigns supreme. Even though it was a difficult year for numerous businesses, many startups in Southeast Asia have powered through, and some have even grown. With a total of $8.6 billion USD in startup investments, ASEAN is sending a clear message that even though times may seem bleak, the region still remains on top of the latest tech startup trends and is determined to succeed.

According to a 2021 report on VC trends in Southeast Asia, the total capital raised for privately-held companies was $8.6 billion USD. This is an impressive amount, given that it is not far from the amount global giant India raised, which was $11.3 billion USD for 2020. The figure constitutes a 2% decline compared to the investments of 2019 thanks to factors such as corrections in company valuations and fewer large-scale deals occurring during the lockdown. 

Now, why does this happen? Why do investments in startup companies increase, while businesses around the world are closing their doors?

What are VCs looking for?

While a pandemic may come and eventually go, the impact of business decisions made during these pressing periods go a long mile. A National Bureau of Economic Research study of venture capitalist (VC) behaviour during COVID-19 shows that while some were negatively impacted in 2020, a little more than half of 1000 surveyed reported that their portfolio companies were positively affected. Furthermore, they find “little change in the allocation of their time to helping portfolio companies relative to looking for new investments”. 

This indicates that while many businesses might be suffering from the changes the pandemic wrought, the VC scene is looking ahead, investing in companies that will be able to ride out the global health crisis, consequently emerging stronger than ever. Startups are also attractive to investors due to a series of factors discussed below:


2020 brought many changes that altered the natural order of how businesses operate. Some companies have fewer issues accepting the shift from the board room to a Zoom meeting, or from the cubicle to home offices. This is where startups thrive. It is an environment accustomed to pivots and changes quarterly, if not weekly. Already being exposed to such a flexible environment, startups have experience in change management, unlike more standard companies who might have a harder time adjusting to the new normal.  

Agility is not only present in the organisational structure, but also in business operations. The annual Agility Emerging Markets Logistics Index is a list of emerging markets ranked according to their strength and business fundamentals. This year, four ASEAN countries are in the top 15 positions with countries like China, India, and the UAE.

Digital transformation

The attractiveness of startups lies within the possibilities they can bring to the table and the widespread changes they may have on society once consumers embrace them. For instance, Amazon began as a book delivery service, and now it is the world’s biggest online retailer. Google started as a mere search engine, and now it is one of the top 5 companies in the world by market capitalisation.

The case is very similar in Southeast Asia, with Gojek, for instance. The Indonesian Super App started in 2009 as a call centre that connected consumers to ride-hailing services. Now, it has expanded to encompass an extensive range of businesses, from delivering food to processing millions of payments spread across hundreds of thousands of merchants. This type of evolution is what attracts investors and guarantees fundraising. Investors see the value in these economies of scale.

Furthermore, the application of technology in different sectors helps Southeast Asia stay at the forefront of the investment capital scene. For example, in the education sector, $480 million USD have been fundraised in the past five years alone. Some of these edtech companies are Indonesia’s Ruangguru, Singapore’s Emeritus, and Vietnam’s Topica. In the health sector, there were promising signs even before COVID-19. Accounting firm PricewaterhouseCoopers has indicated that digital healthcare applications, particularly diagnostics, remote patient monitoring, diagnostics and digital therapeutics, have grown in the region.  

Even though global economies are going through challenging times right now, venture capitalists and investors are accustomed to witnessing the highs and lows, and startups in Southeast Asia are adapting to this situation. By staying agile in the ways they operate and using technology to improve the provision of goods and services across a wide variety of sectors, they are tapping into the current tech startup trends. These trends will guarantee that business in the region will continue to grow and prosper no matter what happens after the pandemic.