Introduction: The State of Startup Ecosystem in Southeast Asia and India

The global economy has faced major headwinds in recent years, and Southeast Asia and India were not spared from these challenges. However, the ecosystem here is showing signs of maturity. Startups are proving to be adaptable and resilient, and continue to contribute to the growth of the region’s digital economy. 
 
Southeast Asia’s digital economy alone delivered $100 billion in revenue in 2023, growing at a 27% CAGR since 2021. In India, the transaction value of digital commerce is projected to reach $211 billion in 2024, with a CAGR of 10.87% until 2028. 

Private funding continues to remain a challenge, hitting an all time low in 2023. While there is a significant amount of VC “dry powder” in the region today, investors are cautiously deploying their funds and advising startups to focus on a clear path to profitability. While startups recognise the need to balance growth and profitability, putting this to practise may be the key determinant in securing capital for future growth. 
 
So, how are startups adapting to this new reality? We surveyed 600 founders and startup leaders across Singapore, India, Indonesia, and Philippines to find out what are their top challenges and opportunities, how they are adapting their playbooks to fit the current market conditions, and what’s their outlook on AI as a driver of future business growth. 

 
Our survey found that startups are leaning on their digital-native nature, and leveraging an established tech infrastructure and high quality data to identify new opportunities and drive innovation. They are doubling down on core markets and building robust customer relationships, which are crucial for long-term sustainability.

The latest innovations in Generative AI are opening up a rare window of opportunities for startups in the region. Data is the currency of AI. Better data enables AI tools to spot patterns that might otherwise go unnoticed, anticipate customer needs before they even realise them, and personalise customer experiences to a tee. But many businesses don’t have the right data or the systems to collect and store the data. 

The startup ecosystem stands out in this regard, displaying a remarkably high adoption of foundational tools such as CRM platforms. A solid tech stack enables startups to collect and analyse data throughout the customer journey. Gen AI powered by all this data can create highly personalised experiences that help startups connect better with their customers or prospects.

custom-module 
Complicated Call-To-Action

Today, AI is viewed as the single largest economic opportunity since the start of the internet and startups are recognising its pivotal role in their business strategy. The sentiment is particularly strong in India and Indonesia, where a higher proportion of companies expressed the importance of embedding AI to accelerate their company's growth. 

The AI boom, however, has introduced fresh hurdles in talent acquisition.
With the talent shortage showing no signs of easing, startups must rethink their talent strategies. Founders that focus on building a strong culture that fosters a sense of ownership, double down on upskilling and reskilling employees by tapping government-led talent initiatives such as Singapore’s SkillsFuture programme, and tap into a broader talent pool by setting up remote friendly work environments will be best positioned to tap on the incredible opportunities in an AI-era.

Moreover, the proactive investment by regional governments in AI initiatives holds the potential to further fuel the growth of the startup ecosystem. A continued commitment to fostering innovation in the right areas can elevate startups to become key drivers of sustainable economic development and prosperity across the region.
 
It’s an exciting time to build businesses in Southeast Asia and India. Startups possess a unique competitive edge and an opportune moment to capitalise on the transformative potential of AI and get a leg up over their incumbents. To help you on this journey, we spoke with some of the region's leading startup founders and investors, who shared their real-world problems and solutions to help you secure your future growth and path to profitability. We hope the insights in this report enhance your startup journey. 

Laurence Butler 

Global Senior Director, HubSpot for Startups

custom-module 
Complicated Call-To-Action