Startup ecosystems in APAC
Tales from the Road: Singapore, Indonesia, and Australia Edition
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41 meetings in nine days in three countries spanning four time zones, with 39 hours in the air across five flights (including three red-eyes) that flew approximately 20,000 miles. That's the summary of an exhausting but energizing trip to Singapore, Indonesia, and Australia that my Garuda Ventures Co-founder, Arpan, and I finally made after a four-year hiatus (having kids and a global pandemic will do that!) Meeting founders, investors, and old friends, the trip offered a unique look at the startup ecosystem in the region and left me bullish about what's to come.
Singapore 🇸🇬 : Show me the money
Singapore's city-state is home to just shy of six million people. A small population means startups initially focused on the Singaporean market know they need to expand beyond the country to achieve any scale. That said, Singapore is undoubtedly a great place to get going thanks to a stable government, a strong legal system that follows the English common law, and English as the most commonly used language. Singapore has long been the go-to destination for company formation regardless of market focus, with unicorns including Carro, Trax, and Nium all HQ'd in SG. And for founders looking (eventually) to raise money from US or European-based investors, Singapore is critical.
And speaking of capital, what Lah Lah Land lacks in market size, it more than makes up for in funds. Moreover, the past few years have only further cemented Singapore's status as the financial center in Asia, as political uncertainty and COVID have led to a massive exodus of capital away from other parts of Asia, particularly China and Hong Kong, and into Singapore. Estimates put the number of family offices in Singapore between 400 and 800, up from 200 in 2019. And with global and region-specific firms setting up shop, including Sequoia, East Ventures, Vertex, and Monk's Hill, as well as Temasek and GIC in the Lion City, anyone raising capital in Southeast Asia, whether for a company or a fund, is adding Changi Airport to their itinerary.
Indonesia 🇮🇩 : On the precipice
Going home to Jakarta on the trip's second leg, I was struck by the rapid proliferation of 'startup culture' within the country. Granted, some of this is selection bias — as a venture investor looking to meet folks in the ecosystem, most of my meetings were with people in and around tech. However, even conversations with old friends working in industries like commodities, manufacturing, textiles, and logistics turned to startups and tech in a much more meaningful way than during my last visit in 2018. Whether investing directly, going through digital transformations within legacy industries, or with startup ideas of their own, everyone had an opinion on startups and was keen to learn more about the landscape and investing climate. And it makes sense. The success of homegrown companies like recently public GoTo and Bukalapak, as well as unicorns including Traveloka, Ajaib, and Pluang, has helped redefine entrepreneurship in the country, paving a new, acceptable career path for the country's youth and inspired an entirely new generation of founders in the country. And the capital is certainly there to support them. The premier early-stage funds in the country — East Ventures, Alpha JWC, AC Ventures, and Go-Ventures — have raised over $1.2B in the last year.
Now, much must be done before Indonesia can claim a genuinely sustaining tech scene. There remains a talent gap below the senior leadership level, particularly for companies that have proven some product market fit and are now looking to scale. There aren't enough people who have "seen the movie before" and have the tactical expertise and playbook to scale. There is also a gap on the engineering side, with much of the technical development currently being built or outsourced in other geographies like India and Vietnam. And while there is capital available at the early stages, there is not yet enough supportive growth capital in the market to ensure companies have enough runway to see their way to significant outcomes. The good thing about these challenges is that time will solve each. More founders starting companies leads to more people with relevant experience looking for new opportunities. More experience at the mid-levels leads to an increased likelihood of success for the company, which drives more comfort into investing at the growth stages. Large exits create positive returns for all, and the flywheel starts to spin faster and faster. Still in its early days, the Indonesian startup ecosystem is definitely on the rise.
Australia 🇦🇺 : Spinning flywheels
The ANZ startup ecosystem is the most robust of the three visited on this trip. Home to globally recognized public companies like Atlassian and Xero, decacorns like Canva, unicorns including SafetyCulture, CultureAmp, and Airwallex, and some recent major exits like AfterPay, the founding, talent, and capital flywheel is spinning in the Land Down Under. And in contrast to Indonesia, where the sector focus skews consumer or consumer-adjacent (fintech, healthcare, and AgTech), Australian startups cover a broader cross-section of sectors spanning both B2C and B2B including Fintech, Climate Tech, Consumer, SaaS, Deep Tech, and Healthcare.
The capital environment is also rich. The three most prominent firms in the market, Blackbird Ventures, Airtree, and Square Peg, have raised a whopping $2B over the last year. Add to that several early-stage focused funds, family offices investing directly into startups, and more US-based firms establishing a presence on the continent, and founders certainly have no shortage of potential investors to pitch. In a unique twist, while valuations in Australia have come down at the growth stage along the same lines as in the US, the sheer amount of capital in the market seems to have propped up early-stage company valuations. As one investor friend put it, "Too many dollars are chasing too few quality opportunities…Not enough Aussie founders think big enough."
However, the best Australian founders have an already established playbook they can follow. Start in the local market, branch out to Singapore, the UK, the US, and beyond once product-market fit has been established, and grow teams worldwide. Given the ideas, talent, and capital flywheel is spinning, it won't be long before we see the next Australian multi-billion dollar businesses emerge (which I'm petitioning to call Yowies or Burrunjors instead of boring old decacorns).
There is no question that the US startup ecosystem is still the world's largest and most robust. But, as a Canadian citizen of Indian origin that grew up as an expat in Jakarta, Indonesia, before moving to the US at 17 years old, I am incredibly encouraged to see the startup ecosystems in other parts of the world take on their own unique shapes. America continues to lead the way, but I believe founders and investors ignore Southeast Asia and APAC more broadly to their own detriment. We at Garuda are excited to continue supporting this ecosystem for years to come and look forward to our next trip back!
Special thanks to Aditya Kamath, Eliza Jackson, Karan Wadhera, Maansi Vohra, Punit Chiniwalla, and Ray Pulungan for your help with introductions and organizing great meetups!
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