The good, the bad, and the hallucinations: What SEA startups think of AI

The honeymoon may be over, but the marriage between startups and generative AI (genAI) isn’t headed for divorce court yet. The road ahead, however, may get rocky.

Across the board, startups in Southeast Asia quickly fell in love with genAI products in 2022. Founders and engineers we spoke to said they use it to manage schedules and emails, generate content, and analyze data.

Despite the outpouring of love for AI possibilities, few founders seem interested in taking the next step: integrating genAI into their core business.

Image credit: Timmy Loen

“I think individuals are embracing AI quite well because if you see something that can quickly make you more productive or outsource your work a little bit – especially if you’re pretty overloaded – hey, why not?” says Daan Van Rossum, the CEO of FlexOS, an AI-focused website based in Vietnam that provides news and offers advice to businesses. “But at a company enterprise level, it’s still very early days for real wide adoption.”

The issue is also evident in the US. The Economist reported last month that despite the hype around genAI across the country, business spending on “information-processing equipment and software” was down 0.4% in 2023. Capital expenditure (capex) in general is also falling at a rate of 4% each year.

In short, companies aren’t increasing their budgets to acquire the new tech. That’s telling, considering the boom years that surrounded the rise in personal computers between 1992 and 1999, when companies on average increased capex by an average of 3%.

A poll conducted by Tech in Asia – which saw the participation of 25 startup founders in Southeast Asia – found that many companies here also hesitate on investing in AI. While some are just being cautious, others are still trying it out.

Most are unsure about increasing their spending on AI without a clearer path to seeing a return on their investment.

Over 52% of startups in the poll spent below US$1,000 on genAI tools last year. About 20% of these founders say they are happy using the free versions of popular apps like ChatGPT.

Further, most of the founders and engineers Tech in Asia spoke to had not successfully integrated AI into their product offerings to customers yet, although not for a lack of trying.

AI is good for a “ton of things”

Those that have added AI to their workflow say they use it to cut costs, hone their business strategies, and use it for general administrative purposes like creating marketing or sales content, summarizing reports, and managing emails.

Alex Svanevik, the CEO of crypto analytics platform Nansen.ai, says his company uses the tech for “a ton of things.”

Struggling to change mindsets

Efficiency vs. hallucinations

Job losses: The part you knew was coming