Deep technology, known as deeptech, can potentially improve economic and societal standing in Southeast Asia as it continues to churn out data-driven products to benefit the region. This type of technology refers to disruptive technological advancements obtained through extensive scientific research, development, and engineering that enhance an industry rather than focusing on solutions for an end-user. However, this level of achievement requires substantial deeptech investment, which may not always be readily available.
Examples of the technology include artificial intelligence (AI), machine learning (ML), quantum computing, blockchain, robotics, nanotechnology, biotechnology, and more. Some companies impacting Southeast Asia include Malaysia’s BoomGrow, which focuses on improving yields through precision farming, and Singapore’s Seventh Sense, which offers facial recognition and verification services.
Here are some deeptech startups in Southeast Asia that are making waves in the industry
Impact of deep technology
Deeptech grew in response to the COVID-19 pandemic as scientists and other experts leveraged various technologies to try and solve a major problem impacting the Association of Southeast Asian Nations (ASEAN). Now, it is making a significant impact on multiple sectors.
The AI sector has high growth potential as companies innovate and create unique products. For example, generative AI, in ChatGPT and its like, can summarise emails, write articles, reviews, and poems, and compose music and song lyrics. Furthermore, it can write and edit code, help analyse data and save companies money on staffing costs.
The type of investors involved in funding deep technology are people who are patient and do not expect an immediate return on investment.
Factors influencing investment decisions
Investors and venture capital (VC) firms operate in a competitive landscape and must handle the regulatory environment well to guarantee long-term success. Here are some factors they will need to consider before signing up to finance a deeptech startup:
Upfront funding
Working on research and development (R&D) takes a lot of money upfront. Investors must be patient and continue injecting funds and providing support to nurture the business to success.
Skilled tech talent
Next, investors must ensure the company has the right talent with advanced tech skills to handle the projects they are working on. Some staff may have to come from overseas if the locals cannot offer the same level of knowledge and expertise. Also, there is a need to find mentors to guide younger employees on deeptech and its value to society.
Carrying a lot of risk
Investors carry much risk because they cannot be sure whether the companies they support will survive. They may not even know whether all the money they invested will be wasted without positive results to show. In addition, political instability may weaken investor confidence, reducing potential funding from coming in or other backers from being inspired to participate in the fundraising.
The Council on Foreign Relations reports that the state of democracy in ASEAN is worsening. Leaders in the region seem to be eager to change the laws to suit themselves, creating tension and confusion. Nevertheless, investors are still looking for opportunities to invest because deep technology can have a significant impact for years to come.
Regulations
The government and other stakeholders must ensure that a workable legal framework for developing advanced technology is enshrined while protecting the public. As the region continues its digital transformation, it is clear that the current laws do not adequately address novel technologies and their impact on the community.
Bridging the information gap
There should be educational programmes guiding customers and boosting adoption. However, Southeast Asians need to be wary of being conned, as cybercriminals are everywhere, hoping to pounce on unsuspecting victims.
Global economic headwinds
ASEAN has been up against multiple economic headwinds, with investors withholding funding due to uncertain global economic factors. Geopolitical conflicts like the war between Ukraine and Russia affect international trade to the point that some investors are not making any money.
Plus, inflation, high-interest rates, increased energy costs, and other factors force startup funders and VCs to hold on to their capital until the global situation becomes clear.
The future of deeptech
According to CNBC, the digital economy in Southeast Asia looks set to reach USD 1 trillion by 2030, but some roadblocks remain. One of the main issues plaguing the region is the need for more money for deeptech investment. Startup leaders should learn fund negotiation techniques and entice investors by setting up good corporate governance models and adopting environmental, social, and governance (ESG) policies.
Secondly, deeptech startup founders should search for talent with technical expertise to avoid severe errors during R&D, which is crucial in building unique innovations. Furthermore, the leaders should understand their market and promote their services accordingly.
Finally, deep technology has much potential to leave its mark on ASEAN and benefit the local people. However, it will need to be nurtured by everyone, including the government, to establish a robust and resilient ecosystem.