CAN Southeast Asia be the Silicon Valley of the East?
Elean Chin, deputy director and head for financial markets development department of Monetary Authority of Singapore (MAS), posed this question before the startup community during the Cebu leg of the Meet Asean’s Talents and Champions (Match) Philippines roadshow last Tuesday.
According to Chin, the region can be the world’s next hotbed for startups, considering its young and dynamic population who are tech-savvy and the presence of supportive government policies.
“Asean is the new breeding ground for startups,” said Chin.
But she quickly pointed out Asean’s diversity as the one of the region’s major challenges.
Its large fragmented market would require standardized processes to attract capital funding and an integrated ecosystem that unites Southeast Asian entrepreneurs.
Specifically, Chin pointed out needed improvements in the release of funding, which takes an average of three to six months in the region as opposed to the seven days funding period in Silicon Valley.
Chin emphasized that smart access to funding is a key component that would help startups access larger markets and expand internationally. However, such funding at present is limited.
There are an estimated 7,000 startups in Southeast Asia, of which only 1,000 have received funding and only half of the 1,000 have been granted funding beyond the seed funding stage.
Chin said bank lending still remains the most preferred method when accessing funds. Unfortunately, the high risks involved in borrowing from this traditional financial channel have also pushed small and medium enterprises (SMEs) and startups to borrow capital from informal channels.
Moreover, high success in creating an integrated ecosystem also largely depends on the entrepreneurs.
She encouraged startups in the region to work together to create a stronger Asean startup ecosystem.
The Match activity spearheaded by Singapore, chair of the Association of Southeast Asian Nations (Asean) this year, is seen to address this concern to connect Asean startups to potential investors.
Match aims to facilitate deal-making by showcasing Asean startups and growth enterprises across all sectors, and linking them to top global and local investors.
Match connects ideas to capital in two ways— a curated deal-making Match portal that matches Asean enterprises to potential investors, which will enhance their access to quality funding, expertise, and networks, and through the Match conference in the Singapore Fintech Festival on Nov. 13 and 14.
According to Lee Kaishi, assistant director for financial markets development department at MAS, venture capitalist investments remain positive in the region due to its strong macroeconomic fundamentals, as seen in the rise of its middle class, rapid urbanization, and robust domestic consumption.