What Southeast Asia can learn from China’s VC-startup network

This article was written in collaboration with Prasanta Bhattacharya, a research scientist at Institute of High Performance Computing – a unit of Singapore’s Agency for Science, Technology and Research – and adjunct assistant professor at the National University of Singapore
Business School’s Department of Analytics & Operations.

A few months ago, we analyzed Asia’s startup ecosystem as a network of connected companies and ranked venture capital firms based on a number of centrality measures in this report.

Several studies have presented a wildly optimistic outlook for Southeast Asia. For example, the e-Conomy SEA 2019 concluded that the region’s internet economy has “crossed a major inflection point in 2018” and estimated that it will likely hit US$300 billion by 2025. In addition, a recent report from Asia Partners declared that Southeast Asia is entering a “golden age,” forecasting that there will be over 20 tech companies with billion-dollar valuations by 2024.

e-Conomy SEA 2019

Asia Partners 2019 Internet Report

See: Southeast Asia’s golden age

With Southeast Asia positioned where China was 10 years ago – on the brink of an economic boom driven by technology companies – Asia Partners’ Nick Nash has predicted the next generation and categories of startups that will go public by using the growth of firms in China as a playbook.

With all eyes on the region’s up-and-coming startups, we decided to dig into our own data and reanalyze the startup ecosystem from a different perspective. This time, we segregated China and Southeast Asia because of their obvious differences in market size, opportunities, and complexities.

Comparing China and Southeast Asia

Previously, we explained how VCs and their investments in various startups can be modeled as an investment network. To focus on the evolution of this network in the region, we constructed five-year snapshots of both region’s startup investment ecosystems in the past decade:

A network visualization of SEA and China from 2010 to 2019 / Image credit: Tech In Asia

How can Southeast Asia close the gap?

Community detection

For startup founders

Limitations