The startup scene in Southeast Asia was experiencing a renaissance, and for good reason. With a rapidly expanding middle class and an increasingly tech-savvy population, the region offers a vast market with enormous growth potential. This has attracted a torrent of venture capital, igniting a surge of new companies across various sectors, from fintech and e-commerce to healthtech and edtech. However, the pandemic, tech hiring winter and recession have taken a toll on investments, exits and growth in the market.
With former startup darlings like Grab struggling to match expectations, what is next for the region? Well, according to one founder and startup industry advocate, Terng Shing Chen, CEO and Founder of SYNC, a leading PR agency in Singapore, this is where Singapore needs to step up as a model for the region.
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Singapore, as the region’s financial and technological epicentre, has always been at the forefront of startup funding and capital for the investor community. Even as countries like Indonesia, Malaysia, Vietnam, and Thailand emerged as formidable players in the startup game, Singapore always had a leadership position overall.
However, Southeast Asia’s startup ecosystem continues to face hurdles like regulatory challenges, cultural nuances, and intense competition are some of the obstacles that startups face. Additionally, the post-pandemic world has brought its own set of changes and opportunities. This is why Terng strongly believes that Singapore has to be the foundation, as well as the hub for innovation, as the startup industry struggles to overcome the current hole that it is in.
What does the current startup landscape in Southeast Asia look like in terms of marketing and growth?
Well, the industry isn’t homogeneous, but for the most part, it is quite stagnant when it comes to growth and marketing spend. I think the previous highs were fuelled by investor speculation and a bullish attitude to the market, but currently, there’s been a noticeable slowdown in the size of the investment, as well as the valuations.
What we are seeing from our work across multiple Southeast Asian markets is a consolidation of many large startups to conserve cash, most likely waiting for a favourable valuation and an influx of investor cash. However, the market doesn’t seem to be recovering at a pace that makes this a viable option.
Industries like healthtech continue to perform well, but there have been noticeable slowdowns in certain fintech categories, as well as martech. Even companies like Flash Coffee are facing challenges despite significant fundraising.
Why Singapore, why do you see it as the most important market to spur a resurgence in the region?
To answer this, we probably need to look back a few years to the glory days of Southeast Asia’s startup ecosystem, where multi-billion dollar valuations were common and minting unicorns was almost becoming a weekly affair. Singapore was the hub for innovation with most startups headquartered there. Today, the country still has the highest concentration of regional companies headquartered here and that isn’t likely to change any time soon.
Singapore still has the infrastructure, talent and incentives in place to develop a scalable business, with many entrepreneurs looking to the country to set the standard for many things, such as security, investment trends and more. Now, the market needs to look at investing in growth as a business, with startups and entrepreneurs looking to re-establish the same growth trajectories as before.
From what we can see, there is still investor money available, but the criteria for investment has tightened. This is a good thing in my opinion, but it can slow down the investment cycle. The investors are still mostly located in Singapore, so we can expect Singapore-headquartered companies to continue to benefit from this the most.
In your opinion, what are some of the steps to move the industry in the right direction?
I think smarter investment in growth is critical at this point. We cannot expect businesses to find money that isn’t there, but slashing marketing budgets without considering the impact of growth and revenue is also not the right answer.
We have seen successful businesses rise during these times with intelligent marketing, utilisation of social and content rather than heavy investment into advertising. This is why I see Singapore as a potential starting point for change, with startups needing to invest in their own growth again. There is still money to be found in the market with consumers and businesses still purchasing. Singapore entrepreneurs and startups could be the model for the new phase of aggressive growth returning to Southeast Asia.
Are there other markets showing strong growth?
Yes, there are. We’ve been keeping a close eye on the region and markets like Indonesia continue to be strong, but we are seeing Vietnam take a leadership position in certain industries. Certain industries are showing strong growth despite the prevailing industry challenges. This includes healthtech, agritech, renewable energy and the resurgence of the e-commerce market.
Smart entrepreneurs will always be in demand from investors and they, for the most part, understand that marketing, PR and growth investment in general, is a critical part of business.
What’s next for SYNC?
Despite the challenges, we continue to remain bullish on the region and we are looking at expanding SYNC’s footprint into markets like Vietnam, as well as taking on select projects in the broader APAC region.
The team continues to grow and with that, we are able to expand our offering to match the evolving market. This includes digital PR products to focus on content-driven growth, digital content campaigns and more. We are fully aware that the marketing industry is in a start of flux, with the introduction of AI solutions and a spate of poor execution of AI solutions, so we are aiming to grow but within reason to ensure that we maintain quality for businesses in Southeast Asia.