Startups ditch SEA expansion for American Dream, but it’s not that simple

Before 2022, the US market only made up a small part of business for Igloohome, a Singapore-based provider of digital and smart locks ecosystem. However, Covid 19-induced lockdowns in major Southeast Asian markets forced CEO Anthony Chow to swiftly pivot.

“In the US, we started seeing a spike in orders despite not having a physical footprint there. The US market was still growing due to the rise of rental properties. Nobody wants to own assets anymore,” Chow tells Tech in Asia.

Chow flew to the US during the pandemic to establish an office in Austin, Texas in 2022. Today, the US accounts for 60% of the firm’s business, Europe for 20%, with Asia making up the rest, according to the executive.

Image credit: Timmy Loen

In the past two years, founders from Southeast Asia – especially Singapore – have increasingly expanded to the world’s top consumer market, driven by the impact of Covid-19 and the realization that conquering their home region is no longer a prerequisite for success.

In terms of strategy, this stands in stark contrast to some of the largest tech companies in the region, such as Grab and Sea Group.

But is the allure of the US market justified?

Banking on high labor cost

Igloohome sells smart locks for homeowners and businesses. According to Chow, the higher the labor costs in an area, “the more likely people [there] are going to buy our products.”

The firm’s engineering, firmware development, and manufacturing are still based in Asia, Chow says. For him, establishing a local office in the US is essential for building trust with American customers. Igloohome isn’t profitable yet, and it plans to fundraise by the end of the year.

Chee Tung Leong echoes the same sentiment, which explains why the co-founder of HR tech firm EngageRocket relocated his entire family to Silicon Valley in 2022.

EngageRocket provides an analytics platform for companies to track, manage, and retain employees. When the startup raised US$2.1 million in March 2020, it had just opened an office in Jakarta.

However, maintaining growth in Southeast Asia had its limits, whereas the software as a service (SaaS) market value in the US could reach US$150 billion this year.

Chee Tung Leong (first from left) with other leaders of the EngageRocket Team / Photo credit: EngageRocket

Deeper pockets

Beyond market expansion

Think global