Southeast Asia the New Silicon Valley of the East
There is a silent trend growing in the world of startups and venture capitalists. Silicon Valley is still the envy of anyone dreaming of starting the next big tech startup, and that will not fade in the foreseeable future. But for those who can’t afford to pay the costs to be the boss is finding new ground from which to launch.
The Valley is still the Mecca for startups globally but it has increasingly become super competitive and so full of buzz that new talent and startups find it hard to even get their feet on the ground much less get known. And for this reason, more and more investors are flocking to countries like Indonesia, Malaysia, Vietnam, Singapore, and the Philippines. Forbes has even been promoting Thailand as the next Fintech hub.
Vietnam Gaining Recognition on the Map
The blossoming Vietnamese startup space is entering its teenage phase – and it’s growing up fast. The burgeoning growth and ability to gain international funding are the proof. Startups in Vietnam have scored 67 venture capital funding rounds back in 2015 (over two years ago). This includes undisclosed investments as well. This was an increase of 130 percent over 2014. Data for 2016 is not yet available.
Vietnam is a very attractive place for foreign investors due to the ease of Vietnam visa for US citizens and other European countries. Southeast Asian countries like Vietnam are more than welcoming to investors from outside. Currencies such as the dollar and the Euro go a long way.
Indonesia Is Startup Heaven as Well
Indonesians are not afraid to try their luck in business. There is a reason why Indonesia is such a hotbed for venture capitalist: American companies such as Netflix and Amazon haven’t been fast to take advantage of the world’s fourth-largest market. This means startup look-alikes have filled in the gaps. And even though eBay and Amazon have plans on entering the Indonesian market, it is unlikely they can catch up or keep up with those startups who did what they weren’t savvy enough to do.
As of 2016, Indonesia’s number of internet users rose to 132.7 million out of its 256.2 million population. Smartphone users make up 63.1 million of those internet users. This information comes from the Indonesian Internet Service Providers Association (APJII).
According to Indonesian Tech Startup Report 2017, the hottest sectors for foreign investors for 2017 on into 2018 will be financial technology (fintech), Software-as-a-Service (SaaS), e-Commerce and on-demand or service marketplace.
In the fintech world, the lending startup Modalku has become a leader with a zero percent bad credit loan rating – meaning none of its nearly five million dollars lent out has gone to default. Reynold Wijaya, CEO Modalku, said “The fintech infrastructure has to be strong so it can reach every part of Indonesia. The only way is to do everything digitally, and this is why awareness about digital signatures must be increased. This is a part of KYC.” This KYC stands for “Know Your Customer.”
Foreign Investors More Attracted to Southeast Asia Than to China
Southeast Asia has been drawing more direct foreign direct investment combined than that of their rival China for over a decade now. But it isn’t to say that this investment has been even across the board. It usually depends on political environments and how much it costs to do business in which country in Southeast Asian countries.
American Entrepreneurs Should Get in on the Action
What’s so exciting about Southeast Asia versus countries like India and China is that countries in this region are still pretty much virgin when it comes to foreign investment. Don’t get it wrong, there have been foreign trading going on in Southeast Asia for quite some time, but not in the way seen now.
Countries such as Vietnam, Indonesia, and Malaysia have grown from being producers of commodities to being growing leaders in the tech industry. Nevertheless, they are need of talent from the outside. There are many reasons for this, the biggest having to do with lack of educational recourses. This means there is room for those interested in launching vocational schools or other types of courses, such as English as a Second Language or TOEFL.