VCs weigh in on SEA’s next Indonesia

Gavin Teo is a general partner at Altara Ventures.

Last month, Tech in Asia’s flagship conference returned to Jakarta after several years in other locations across Southeast Asia. With some 4,500 participants eager to get back to discussing all things tech in the region, we naturally got to a big question: Who is the next Indonesia?

More specifically, which markets in Southeast Asia are best placed to navigate the macroeconomic headwinds and position themselves for growth in the years to come?

Image credit: Timmy Loen

Hsu Ken Ooi of Iterative moderated a panel that sought to answer that very question. I joined fellow venture capitalists Pinn Lawjindakul of Lightspeed and Eddie Thai of Ascend Vietnam Ventures (AVV) to gaze into our crystal balls on the main stage. Here’s a summary of our main takeaways.

Growth inflection point

Indonesia represents half the regional population with 280 million people and is home to the greatest number of technology unicorns, not including Singapore, which functions primarily as a market for raising capital rather than as a large domestic market.

To map Indonesia’s tech sector to the entrepreneurial journey of many of its startups, the first generation of consumer ecommerce platforms has already reached the top of the proverbial “S-Curve.”

In fact, the post-IPO performance of publicly listed unicorns such as GoTo and Bukalapak suggests that growth may even be beginning to plateau, whereas many of the other markets in Southeast Asia are still looking ahead to a growth inflection point.

Dealer’s choice

There are a few ways to answer who might be the next Indonesia, depending on what factors you see as most important.

Market size

In terms of sheer size, the next largest ASEAN markets after Indonesia are Vietnam and the Philippines, each with a population of 100 million. Indeed, VC investment activity in both markets has picked up considerably in the last few years.

Altara Ventures opened its third office in Ho Chi Minh City, after Singapore and Jakarta, and has made four investments in Vietnam and the Philippines across edtech, digital health, fintech, and agritech. Eddie Thai made the case for why AVV, a Vietnam specialist fund, sees the country as the next Indonesia due to the growth of its urban and tech-savvy population.

Wealth

On a GDP per capita basis, Thailand and Malaysia have double the spending power of the ASEAN regional average, at US$7,000 and US$11,000 respectively. Together, they have a population close to 100 million, presenting a middle-to-high-income market opportunity.

History as the judge