Experts discuss how India and Southeast Asia’s growth indicates opportunities in VC amid macro headwinds

Kee Lock CHUA | 01 Aug 2022

Despite macro-economic headwinds, investors see long-term growth prospects in India and ASEAN after a strong showing in 2021 and early 2022

Chua Kee LockCEO, Vertex Holdings and Vertex Ventures Southeast Asia shares:

Southeast Asia (SEA) is a burgeoning start-up ecosystem underpinned by youthful demographic tailwinds, a tech-savvy populace and positive macro-outlook. It is also emerging as a home for some of the region’s most innovative companies. Countries such as Singapore, Indonesia, and Thailand are leading the way with more start-ups entering their growth phase and beyond. Mobility and continuous improvement in information technology have made more things accessible to the general population.

The e-commerce, fintech, and digital banking services sectors are expected to interest investors given size and nature of the population in Asia-Pacific. SEA’s digital payment Gross Transaction Value (GTV) was estimated to be $620bn in 2020 and is expected to reach $1.2tn by 2025. Despite recent e-wallet adoption, over 70% of adults in SEA remain either underbanked or unbanked due to various cost and geographical limitations, offering a clear opportunity for innovative fintech start-ups to address these significant unmet needs. We also expect investments in tokenization/blockchain technology and equity crowdfunding to be more widely adopted with the growth in the digital asset market and regulation.

SEA tech economy is deemed fairly nascent when compared to other regional innovation hubs like the US, Israel, or China. This ecosystem is expected to grow strongly in the years ahead with the exits and listings of regional champions. Additionally, the technology sector has been an engine of growth in SEA, India, and China. However, the current technology market reset will likely ripple through the start-up and technology world. This will slow down growth and could increase unemployment in this sector. Being disciplined investors, we focus on backing disruptive and transformational start-ups and work with entrepreneurs to build their business into global champions. We invest our time and resources judiciously – through a variety of value creation activities focused on helping them build enduring businesses regardless of market conditions or changes in government. Companies with sustainable and resilient foundations are expected to perform well even in challenging times, positioning them to thrive when conditions improve.

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