Recession Run: Kickstart Ventures to deploy more funding in 2023

The funding winter is here. News of layoffs and troubles in startups have been cropping up. In this Q&A series, we talk to Southeast Asia’s investors to suss out what opportunities they see, what strategies they’re implementing, and what areas of investment they’re looking at in the next few months.

With the economic slowdown intensifying, we are now seeing global tech giants announce large layoffs. Last week, Facebook’s parent firm Meta shared that it would lay off over 11,000 employees following a drop in its revenue in the third quarter of 2022. Global fintech major Stripe said it would cut 14% of its staff, while Indonesian tech giant GoTo Group is reportedly looking to slash over 1,000 jobs to reduce its burn rate.

It is hard to find the upside in such a scenario. However, Brian Dy, head of research at Kickstart Ventures has tried to do exactly that through a report wherein he plots out which sectors will stay resilient during this period.

Kickstart Ventures head of research Brian Dy / Photo credit: Kickstart Ventures

He shared with Tech in Asia that Kickstart Ventures is upbeat about investing in startups involved with digitalization, decarbonization, and decentralization. He also spoke to us about the sectors that will likely be more impacted by the current economic environment.

However, he’s optimistic about the coming year, though he does expect it’ll take time to get things back on track.

That is why Kickstart Ventures is entering 2023 with “ambitious targets” for funding and intends to make more investments compared to this year. He adds that this will be possible with the VC firm now having a larger investment team and the borders having reopened across Southeast Asia.

Here are more insights from Dy on Kickstart Ventures’ investment plan for 2023 as well as his advice for founders looking to weather the storm.

In Southeast Asia, which sectors are more likely to be impacted by the macroeconomic headwinds?

Dy: We feel that crypto-related startups will continue to have a difficult time raising in this environment. Given the current risk-off environment prevailing, not many investors will be keen on this space as many would prefer startups that solve more practical real-world problems.

Startups that cater to discretionary spending are also going to be impacted. These sectors would include travel and leisure, real estate, construction, and high-end retail.

However, given that Southeast Asia only opened its borders in Q2 2022 – compared to other developed economies that did so earlier – the adverse impact in this region may be more muted, relatively speaking.

The Kickstart Ventures team / Source: Kickstart Ventures