Despite the down market, there’s plenty of greenfield for founders to build in Southeast Asia. Hustle Fund’s Managing Partner Shiyan Koh gives us a lay of the land.

Whether it’s large language models targeting previously offline industries, or game-changing fintech raising the bar on financial infrastructure, Southeast Asia has the talent, opportunity, and scope to produce globally competitive start-ups.

Here are four reasons why founders should pay attention:‍

AI opportunities in new spaces

AI is all the hype these days, but using AI technologies in Southeast Asia is still overlooked. There’s huge potential to use large language models (LLM) to build tailored software for local industries.

For example, a forward-thinking company could develop software for farmers with a voice interface on a mobile device. This could enable queries on crops, fertilizers, and crop management in multiple languages. In a region where 8 out of 10 countries are dependent on agriculture, that’s a lot of people. This space could also be exciting for more blue/gray collar jobs that traditionally require someone to type commands in a specific structured way. Even sales people hate entering information into CRMs. Imagine if you could just record the sales calls a rep was doing and automatically enter the information.

Best part? LLMs enable much easier natural language interface—whether by text or speech—which requires less behavior change to adopt.

And yet, for all this potential, it’s not an opportunity that most AI entrepreneurs are chasing, because it’s quite verticalized and regionally specific. Plus, tech entrepreneurs tend to think about replacing software that is already in place, not necessarily about targeting folks who weren't existing software users—so this is one of the big opportunities in a region where so many things continue to be offline.

What’s more, Southeast Asia dominates areas that potentially have a global customer base (see point #4 for why this is significant). From call centers to virtual assistants to medical coding, there’s an opportunity to use AI-driven capabilities to build software for these industries and improve resource utilization.

It would make perfect sense for this software to be built in-region—especially given point #2 below.

A talent influx to drive deep tech in the region

AI and other deep tech opportunities are ripe for exploration also because so many skilled professionals with startup experience are relocating to Southeast Asia, specifically Singapore. Arguably this is happening for 2 reasons: immigrants coming into Singapore due to COVID policies elsewhere, and geopolitical tensions between China and the US.

Southeast Asia’s tech scene is pretty nascent, so this talent influx enables the founding of deep tech companies at a scale that was not possible previously. All the talent is coming from more mature ecosystems, so they've operated at a greater scale (eg China, India), and with more technical teams that we have historically had in the region.

In short, these people can help start the kind of companies that wouldn’t have been founded a few years ago.

Continued opportunities in fintech

As a longtime fintech investor in the region, I continue to see enormous fintech opportunities in Southeast Asia. 70% of Southeast Asia is still unbanked or underbanked, and fintech infrastructure continues to require addressing.

We need quick and large-scale improvements to credit scoring systems and Know Your Customer (KYC) processes for easier financial transactions. The playing field is wide open for startups that can serve these needs in a cost-effective manner.

Companies with global potential from day 1

Valuations in the region largely align with US valuations, but significant exit opportunities are still lacking. To this day, the number of unicorns in the region is limited, so VCs are mostly looking for companies that aim for global expansion and target larger exit outcomes.

But building a globally-oriented company isn’t easy. This needs to happen from day 1, and requires selling to US customers and establishing US teams to take the US market share early on.

The founders of these companies need to have a strong understanding of the US market and ideally have lived there previously.

So founders, if you’re working on interesting AI or fintech applications, please let us know at www.hustlefund.vc

Enjoy the ride!

Shiyan

This article was written by Hustle Fund Managing Partner Shiyan Koh, based in Singapore. In her spare time she plays Padel, continuously thwarts her children’s efforts to get more screen time, and hunts for the best bak chor mee.