Startups are playing an increasingly vital role in the economies of countries of Southeast Asia. Several startups have reached a size and importance that makes them key industry players. Many companies within the ASEAN umbrella faced significant challenges over the past year. 

Some of these issues include rampant inflation, high interest rates, geopolitical instability, and higher expenses due to climate change. A new paradigm for viewing startup growth has emerged within this context. Many startups in Southeast Asia are now prioritising “sustainable innovation”.

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Let’s explore the concept, the challenges, and the outlook of sustainable innovation in Southeast Asia.  

What is sustainable innovation? 

Sustainability is the ability to meet the needs of the present without sacrificing future needs. The concept’s primary use is for countries to develop while caring for the natural environment. However, it applies to startups as well. 

Sustainable innovation refers to keeping a long-term perspective while making decisions. The current startup culture prioritises short-term growth at any cost. However, an alternative approach is quickly emerging where startup leaders are taking a longer-term view towards decision-making. The goal is not just to grow this year but to still be around in ten years and further into the future. 

Overall, sustainability is about finding the balance between growth and preservation. For example, many startups that receive funding immediately spend the money on fancy office space and MacBooks for the entire staff. If a startup thinks from a sustainability perspective, they are more likely to reduce costs in preparation for a rainy day. 

Sectors with the highest potential 

This type of innovation can be incredibly effective in many sectors that are important to the economy, including:

  • Renewable energy: A large part of the disruption within the renewable energy sector stems from the need to make renewable energy more cost-efficient and accessible. Currently, 74 startups in Southeast Asia focus on renewable energy tech, disrupting this space through innovative business models. 

For example, Sunrun offers residential solar panels with no upfront costs for the user. This model makes them an attractive choice for homeowners looking to simultaneously save energy costs and benefit the environment.  

  • Agriculture and food systems: As the global population increases, an increasing amount of pressure is being placed on rearing livestock to meet food requirements. The vegan movement is gaining force around the world as people grow more conscious of the treatment of animals and environmental issues related to factory farming. Startups have emerged that specialise in solving this issue. 

For example, Beyond Meat offers plant-based meat substitutes that closely mimic the taste and texture of meat. Moreover, these substitutes also have a nutritional profile similar to meat. 

  • Manufacturing and materials: Innovation with a focus on sustainability rewards companies with relatively future-proof business models. Within the manufacturing space, several startups have emerged that are taking this idea to heart. These companies are creating a circular economy by reusing materials from used goods to create new ones. Not only does this reduce wastage, but it also helps lower the input costs for manufacturing. 

Challenges to overcome

Most startups recognise the importance of sustainable growth; however, some challenges remain—they usually operate with a shortage of funding and human resources. With scarce resources, prioritising a longer-term vision can be more challenging. Usually, thinking long-term requires greater expenditure, which is likely to come at the cost of immediate returns.

Further, the pace of changes in the startup world is relatively fast. Technology quickly becomes outdated, the market fluctuates rapidly, consumer behaviour is fluid, and so on. In such an ecosystem, it can be challenging for a startup to think of a few steps ahead, let alone consider years or decades ahead. 

Lastly, there is a lack of insight into how to implement this idea in day-to-day business. Executives at startups are simply unaware of how to balance immediate concerns with future requirements. Further, there can be a lack of incentive for executives to prioritise a company’s long-term vision.  

The way forward 

Several Southeast Asian startups have mastered the art of finding the balance. For example, Green Rebel is a Singapore-based startup that provides sustainable food delivery. Similarly, Rebricks is a Malaysian startup that converts plastic waste into building materials.

Such practices are slowly seeping into the startup ecosystem. Investors increasingly seek startups with a long-term vision who develop business models and are using AI, Blockchain, IoT and other such innovations as they are more likely to survive market volatility. CEOs are also moving away from the “growth at all costs” mindset in favour of sustainable innovation in Southeast Asia. 
Overall, many startups in Southeast Asia are at the cutting edge of thought leadership. These startups are finding new ways to do business and are leading by example. It is clear that sustainable innovation is not just a buzzword but a new way and most likely the only way for startups to navigate choppy waters and prosper.