Why investors should take a long, hard look at Southeast Asia

With China and India hogging the limelight when it comes to entrepreneurship, it’s easy to forget that something is brewing in Southeast Asia.

Quietly but steadily, geek culture within the region is maturing, creating a suitable environment to nurture the next generation of technology entrepreneurs. A key indicator of this trend is the rise of permanent spaces which provide a comfortable environment for entrepreneurs and geeks to experiment and develop their ideas.

The first of these spaces to emerge is Hackerspace.sg, which was set up as an entirely community funded and supported initiative in 2009.

Photo: Guests interacting with Sheel (center-left) and Abhijeet (center-right) from Bessemer Venture Partners.

It is located within the Arab Street area, which contains an eclectic mix of shisha smoking joints, Indian restaurants, carpet merchants, and hip bars. A Hackerspace sign leads visitors through a door and up a staircase, into a cosy place many geeks call home.

Since then, Hackerspaces have been started all over Southeast Asia, in Indonesia, Malaysia, Vietnam, and Philippines. These venues, and the events and people that center around and emanate from them, is creating a new buzz that has caused investors to sit up and take notice.

On a Tuesday night towards the end of November, about 50 eager entrepreneuers packed Singapore’s Hackerspace, hoping to make an impression on a couple of special guests from Bessemer Venture Partners (BVP), probably the oldest venture capital firm in the world.

The event, called Chillin’ With, is a regular, intimate mixer organized by SGE for entrepreneurs, investors, and the tech community in Singapore. Chillin’ With has played host to Dr Tony Tan, now the president of Singapore.

Mingling with the entrepreneurs were Sheel Tyle, a BVP analyst based in the New York office, and Abhijeet Muzumdar, a senior associate with BVP India. They were on a trip to Singapore as part of their tour around Southeast Asia seeking investment opportunities, having also visited Malaysia and Indonesia.

Bessemer is over a century old, and has invested in major companies like Skype, LinkedIn, Yelp, VeriSign, Staples, Hunch (acquired by eBay) and many others. Embracing failure is a part of their culture, and this can be seen in their “anti-portfolio”, which lists their missed opportunities over the years (does Google sound familiar?).

According to Sheel and Abhijeet, Asia is a goldmine for angel and venture capital investment, especially in the emerging markets. While Western countries have a mature, high-income market, it is also highly competitive. On the other hand, many gaps still exist in Asia in the e-commerce and mobile space.

As such, developing countries have a tremendous upside, despite infrastructural problems and lack of talent which are major hurdles hindering entrepreneurial growth.

“Many parts of Asia are experiencing high growth in Internet penetration, which presents huge opportunities for Internet companies,” noted Abhijeet, speaking in his personal capacity. For example, Indonesians are well-known for being prolific Internet users, which is made possible by the availability of low-cost smartphones. E-commerce and social networking are some of the popular activities they engage in.