Watch out for these 6 Southeast Asian startups in 2016

2015 looks to have been another stunning year for Southeast Asian startups. According to Tech in Asia’s database, total venture capital funding from Q3 of 2014 to the same period this year stands at US$1.7 billion – more than double that of 12 months before.

While the region is nowhere near stealing India’s thunder – the country brought in a hefty US$6.4 billion in startup investments – there’s plenty of room for optimism.

With the year almost in the rearview mirror, we now look to 2016. Here, we trace six startups that could make a huge impact in Southeast Asia next year, as well as the larger trends they signify.

Honestbee: battle of philosophies

Singapore’s Honestbee burst onto the scene as a service that sends shoppers to buy groceries on your behalf. It’s Asia’s version of Instacart. It quickly secured US$15 million from investors to go on a regional expansion spree.

This buys it time to prove its model can work. Approach-wise, Honestbee and Indonesia’s Happyfresh stand on one side of the ring. Singapore’s Redmart sits on the other.

Honestbee believes it can scale fast by leveraging existing supermarket infrastructure to deliver the goods to consumers. It’s an asset-light model requiring less external capital.

Redmart opposes this philosophy. It thinks Honestbee’s model is more expensive overall and the cost could pass down to consumers. So Redmart has chosen to build its infrastructure almost from scratch. Costs racked up quickly, and it’s scorching through the decent-sized investments it raised.

2016 will be crucial for these companies. For Honestbee, it’ll need to significantly boost order volumes for its business to make sense. And it’ll need to do so without passing costs to consumers – or at least hope it can make enough money off people who don’t mind the extra cost.

For Redmart, it’ll need to raise a ton of money, especially since its upcoming Hong Kong expansion will likely require a huge investment.

The company’s ability to fundraise will be the ultimate test of how confident investors are in an unproven model. Consider this: Asia has so far gravitated towards asset-light ecommerce. Lazada evolved from a firm holding its own inventory towards becoming a marketplace. Alibaba in its early days connected businesses to one another, but didn’t touch logistics.

The story of the tortoise and the hare – at least the beginning part – is apt. Honestbee is off to a running start with rapid expansion in the works – it targets expansion to six cities by next year.

Redmart takes it slow and steady, and as far as we know, it’ll only be in Singapore and Hong Kong next year despite starting out in 2012.

See: Southeast Asia’s online grocery battle (INFOGRAPHIC)

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