Jeremy Tan Talks about Why It's Never a Better Time to Invest in SEA

I've never been more bullish on investing in Southeast Asia. 🐂 
 
But... it’s not for every investor.
 
Here’s why:
 
➡️ 1/ Venture/startup ecosystem is still young
 
It’s still a relatively nascent market vs the US 🇺🇸 or China 🇨🇳 
Great deals to be found, but not as many as what some investors might be used to.
 
As more investors begin to see the promise of this region, I expect greater interest, capital, and upside growth.
 
How do investors win?
Develop a depth of understanding in high-opportunity sectors and invest more selectively.

For us, we chose to hone in on B2B Tech. Why?
Lower failure rates mean we can apply a focused approach to investing with conviction. (E.g. our first fund only has 7 investments, our second will target 10-12)

 
➡️ 2/ The market is different
 
You can’t just take a model from China or USA and copy-paste it here. It is:
- The 3rd largest economic region by population after China & India, fast growing (3-5%)
- Not one homogeneous market - but a mix of cultures, buyer behaviours, and languages
- Highly fragmented, largely undigitised

 
✅ Investors that understand this region and its rules have a unique edge.
🚫 Investors that don’t, will find challenges in picking winners.
 
Expansion, localisation, and adapting to different markets within SEAsia will make or break most startups.
 
Valuations? Not as simple as benchmarking to developed market comparables because of how fragmented it is.

 
➡️ 3/ Exit landscape and liquidity
 
As the name suggests, unicorns are rare.
After finding them, investors need to be thoughtful about exits given the developing IPO and capital markets in SEAsia.

 
There are businesses that offer investors lower risk with decent upside if you know what to look for:
→ High capital efficiency
→ High gross margins
→ Sticky, recurring revenue
→ Lower failure rates
 
Hence, no need for mega-exits. 🦓 
 
I see exits in this fashion:
👉 a. Strategic buyers that rather buy vs build, broker M&A deals
👉 b. Financial buyers that seek out businesses with clear pathways to profitability and recurring cashflow
 
We’ve found B2B offers the best risk-adjusted opportunity for the region. And our first fund has done well based on this thesis.

 
➡️ 4/ Capital alone is not enough
 
Most investors flock to invest capital here due to the promise of growth.
But…the complexity of the region is also intimidating if you’re new to the market.
 
Money alone is not enough for founders to navigate these complexities.

 
Solution? 
→ Build localized go-to-market partnerships
→ Develop and access pools of local talent
→ Collaborate with local investors/accelerators
 
Southeast Asia is an exciting market.
I look forward to witnessing its growth over the coming years.
 
Are you bullish on Southeast Asia too?