GenAI Fund, through its latest report, has projected the funding for ASEAN generative artificial intelligence (GenAI) sector to increase 50 percent year-over-year in 2025.
The firm said in its “ASEAN GenAI Startup Report 2024” on Wednesday that this growth is expected to be driven by increasing venture capital confidence, the emergence of enterprise Corporate Venture Capital arms, and a rise in mergers and acquisitions.
According to the report, Singapore currently leads the region with 44 percent of ASEAN’s GenAI startups. This was followed by Vietnam (27 percent) and Indonesia (13 percent).
This distribution is expected to shift in the next 18 months, with Vietnam emerging as a popular outsourcing destination due to its technical talent and lower costs.
According to the report, an overwhelming 92 percent of ASEAN GenAI startups focus on business to business (B2B) or business to business to consumer (B2B2C) models, marking a significant shift from the region’s previously business to consumer (B2C)-centric landscape.
Top sectors include productivity and business solutions (26 percent), healthcare and wellness (13 percent), and Financial services (13 percent).
It is noted that startups face numerous hurdles, including slow enterprise onboarding processes, difficulties in executing effective proofs of concept (POCs), achieving product-market fit, and competing with established software as a service (SaaS) and big tech players.
The report highlighted the complex dynamics between GenAI startups and big tech companies.
While cloud providers like AWS, GCP, and Azure are vital for infrastructure, it noted they can also become competitors.
Similarly, it said foundation model providers such as OpenAI and Anthropic offer crucial capabilities but may potentially overshadow startup offerings as they evolve. However, there’s a rising trend of GenAI startups leveraging big tech to GTM with enterprises.
Currently, 50 percent of GenAI startups in ASEAN are bootstrapped or angel-funded, with 41 percent having secured pre-seed or seed funding.
Only 16 percent are currently profitable, indicating the sector’s early stage in the region.
Drawing from an extensive database of 700 GenAI startups, a survey of 250 startup respondents, and in-depth interviews with 25 featured startups, the report provides a holistic
view of the ASEAN GenAI ecosystem.
It also incorporates valuable insights from over 15 prominent venture capitals, accelerators, and incubators, including Lightspeed Ventures, DO Ventures, Wavemaker, and Ascend Vietnam Ventures (AVV).
“This report underscores our commitment to positioning ASEAN as a global leader in AI innovation,
“By sharing these insights and actively supporting the ecosystem, we aim to catalyze growth and drive enterprise adoption of GenAI technologies across the region,” said Laura Nguyen, Partner at GenAI Fund.
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