The remarkable digital and mobile boom of the past decade—which has been even more accelerated by the pandemic—has situated Southeast Asia’s startups on the map for global venture capital. The number of unicorns worth $1 billion or more doubled in 2021 to around 40. Firms such as the Indonesian e-commerce courier J&T, travel website Traveloka, or blockchain gaming factory Sky Mavis have shot up in the valuation rankings.
The perspectives of founders in the region remain bright. A young and tech-savvy population of 650 million and a growing middle class offer a fertile ground for businesses to prosper. Southeast Asia is attracting many of the investments that shy away from China due to growing geopolitical tensions and an increasing need to make supply chains more resilient. The recent economic volatility, nevertheless, shows that it’s not all easy sailing and that startups have to adapt.
Technology can help firms that have to reduce capital expenditure in this environment. With the software-as-a-service (SaaS) model, for example, companies pay on a per-user base every month for functional tools that support accounting, HR, and team collaboration. Founders can run a large part of their businesses without the need for deep pockets and huge cash burn.
Cloud services provide access to top-notch infrastructure at low upfront costs and allow startups to launch products at a faster pace. It also helps the product team to scale their load-handling capacity in case the demand shoots up for their goods or services. We recommend firms get a cloud partner early on to help in this journey.
The pandemic has further shown that remote working has become a very practical option that can also save huge amounts of money spent on real estate or working space. Dedicated remote working tools can increase communication and collaboration and become part of a remote working policy which also includes periodic external meet-ups and networking.
A basic tech stack
The technology stack is the infrastructure that sustains an organization with a digital mindset. What are the must-have components a startup needs in today’s environment? Here are the main 5 elements founders should be focused on:
- Enterprise architecture—Having a strong enterprise architecture and strategy helps organizations to do the necessary due diligence and create an ecosystem of offerings in a phased way. It keeps spending in check and provides a big picture of the end goals in the form of blueprints and roadmaps.
- User experience—Customers today have no tolerance for bad user experience. They are looking for a simple design, for products that can be searched and bought in a few clicks. If startups understand this and spend accordingly they will be able to make a huge difference with regard to how customers perceive the maturity of their products. They are also more likely to come back for a repeat purchase.
- API-first approach—Ensures that a business is enabled for digital partnerships, which can create new revenue channels and cross-sell embedded and related offerings.
- Cloud infrastructure—As mentioned earlier, it reduces costs and accelerates time-to-market for the startup’s products and services.
- Data platform—Ensures data capturing and increases analytics capabilities, as well as the ability to learn and understand customer behavior which will improve the company’s offerings.
The digital transformation happens at the core of a startup. Getting the basics right separates successful businesses from less successful ones. Whether in the basic setup, at the employee, or customer level, a digital framework will ensure scalability, predictability, and responsiveness. Digital processes like e-signatures, e-forms, or e-invoices demonstrate the startup’s technological competence and instill customers’ trust.
Looking ahead
Tech innovations won’t stop here and startups have to be on alert for emerging trends. There are the distributed ledger or blockchain technologies that are making inroads in sectors like healthcare, financial services, real estate, education, and others. Decentralization and peer-to-peer transactions are likely to transform established businesses sooner or later.
The world will see a lot more educated and smart users who will only use products that allow consent-driven data sharing and usage practices. Gone are the days when companies acquired, stored, and monetized user data without being fully transparent about it. New services will create a huge ecosystem of data owners, verifiers, custodians, and consumers.
Changes in user behavior are also disrupting traditional financial institutions, creating new opportunities for agile founders. Consumers are getting their financial services such as banking, payments, investment, and insurance from different channels that include social media. Embedded financial services are projected to have a promising future.
Last but not least, technologies around ESG issues are gaining a lot of momentum thanks to an increased sense of responsibility among investors, governments, and the population at large. Services that enhance financial inclusion, digitalize rural areas, and support the creation of employment will see high demand. So will environmental and climate tech.
Startups might face some rough seas in the immediate future, but they shouldn’t lose sight of the bigger picture.
Nischal Tanna is the Chief Executive Officer of TransformHub.
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