The Rise of Southeast Asia as the Next Fast-growing VC Market

2 September 2015

Michael Lints, Venture Partner
Golden Gate Ventures

Golden Gate Ventures recently concluded a study about the rise of Southeast Asia as the next fast-growing VC market. China became the region’s first pillar of internet start-up growth in 2005, when regulations were lifted that prevented privately-owned companies from entering a number of economic sectors. This accelerated the growth of a powerful private sector in the Chinese economy. India, the second-fastest growing economy in the world, soon became the second pillar. Now, Southeast Asia is showing all of the signs of being the next blockbuster economy. Based on our analysis, Southeast Asia will at least double the number of Series A investments in 2016 to forty, and reach an aggregate Series A investment of at least US$120 million (compared to an estimated US$83 million the prior year). The reason the number of Series A investments is growing is a previous focus on seed deals in the region. Government grants, incubators, accelerators, university programs and a growing number of angel investors have catalyzed the number of start-ups and seed investments. A percentage of those companies that received early investments are expanding locally and in the region, thus raising more consecutive rounds of funding.

During fundraising for our second fund, we found LP sentiment to be positive to very positive, especially in Southeast Asia, Japan, South Korea and Europe. Strategic and institutional investors were more open to invest in smaller funds that also provided access to deal flow.

What excites me about the Southeast Asian region is the close collaboration between founders and VCs. As founders try to solve local, regional and (in some cases) global problems, VCs provide a network, expertise and (in many cases) a sounding board to support these start-ups in their efforts.

Research