The Venture Capital Boom in Southeast Asia is Only Beginning – Here’s Why

Anni Cai returned to Singapore in 2021 to join Sequoia India & Southeast Asia. (Photo: Abhishek Bali for Sequoia India)

I’m someone who thrives on diversity and change – both of which have been recurring themes in my venture capital career. Every founder I meet teaches me something new about their industry, and I find it a treat to meet new people, listen to their stories, and learn different perspectives.

After eight incredible years in the US – four at Harvard studying statistics, four in New York City working in finance – I’ve returned home to Singapore to be closer to family and explore the thrumming potential of the startup scene in Southeast Asia.

At Sequoia India & Southeast Asia, I’m fortunate to work with an amazing team supporting Southeast Asia founders at every step of their journey, while applying my learnings from overseas.

An education in variety and diversity

Harvard was a transformative experience – a veritable intellectual buffet. On top of core classes in statistics and mathematics, I took courses in psychology, philosophy, computer science, astronomy, French literature, and more. During summer vacations, I travelled to Taiwan, Spain and France. This breadth of knowledge and variety of exposure developed an intellectual plasticity that’s critical for early stage investing.

What also shaped me during my time in the US was the sheer diversity of people around me. In college I met students of all backgrounds, some who were refugees, others prodigies, still others accomplished athletes or artists. New York was an even greater melting pot which brought together people from all around the globe. While tech and finance were typical careers, I had friends who founded startups or consulted for NGOs and political campaigns outside of their day jobs.

In such a plural environment, it becomes second nature to embrace diversity, to eschew stereotypes, and to see differences as a point of fascination rather than discomfiture. These are attitudes that I carry with me in my work in venture capital, where we must keep open minds to dream of new ideas, uncover new opportunities, and collaborate with individuals of all stripes.

Becoming an investor by accident

I went into investing almost by accident. I had many friends in the Harvard Financial Analysts Club – which manages its own fund and offers courses on investing – so I decided to give it a go. It turned out to be more fun than I had expected, and my time there convinced me to make a career out of investing.

Upon graduation, I moved to New York and joined Blackstone’s special situations investing arm, where in the span of just a few years I covered a wide variety of sectors: shipping, tech, alternative proteins, aircraft leasing, life insurance, and the list goes on.

Although financial modelling and deal structuring were stimulating, I wanted to dive even deeper into business operations – the sausage-making, so to speak – and work more closely with founders. That’s when I made the leap to venture capital.

Venture capital requires you to be an optimist

At General Catalyst, I joined the growth team where we invested in companies at Series B and beyond. While my analysis skills ported over easily, my investment mindset had to undergo a drastic shift.

In private equity, you underwrite your deals to a narrow band of return multiples, and protecting your downside is almost as important as capturing upside. Heaven forbid you lose money on a deal! On the other hand, in venture capital, fund returns follow the power law whereby a few home runs generate almost all the profits, and most deals won’t return anything. So you shoot for the stars and get comfortable with failure. I think you have to be an optimist to be a venture capitalist.

Venture capital is also much more relationship-driven because everything from sourcing deals to researching the market to finding talented operators to join your portfolio companies relies on the breadth of your network. Moreover, when we partner with founders we’re in it for the long haul – sometimes over a decade – so maintaining trust and rapport is everything. 

Dynamic opportunities abound in Southeast Asia

In 2021, Southeast Asia minted 25 unicorns, more than all the previous years combined. But do you know what the best part is? We’re just getting started.

All the macro tailwinds are combining into a gale behind the sails of the startup ecosystem. Population and GDP are both rising strongly, digital adoption is growing at roughly 40 million users each year, propelling the internet economy to an estimated $1 trillion by 2030.

Because the region is evolving so rapidly, speed is the name of the game; founders need to build and execute fast and not let perfect be the enemy of good. But such a heterogeneous region – comprising countries with unique languages, cultures, regulations, and consumer behaviours – also presents a formidable challenge. For founders it necessitates a multi-faceted product and go-to-market strategy; for investors it requires calibrating investing judgement differently for each market. 

Fintech will continue to surge to serve Southeast Asia’s huge underbanked population, democratising access to financial services like cashless payment, lending, insurance, and wealth management. And that’s not including crypto and Web3, which has already gained widespread adoption in Vietnam, Indonesia and the Philippines and led to seismic shifts such as DeFi, NFTs and the metaverse, the play-to-earn movement started by the Axie Infinity boom, and many more. Venture capital firms are creating dedicated crypto funds, and Singapore’s regulatory framework has turned it into a regional hub for digital asset firms.

Not to forget SaaS, which has tremendous growth potential in enabling e-commerce and the SMEs that form the backbone of local economies. And looking further into the future, as the population grows in affluence, demand for healthcare and wellness solutions will rise, as will the need for deep tech solutions to address resource strain and the climate crisis.

For those exploring startup opportunities in Singapore

All this means that there are rich opportunities to get involved in the Southeast Asian startup ecosystem, whether as a founder, investor or operator. Venture capital in Singapore is heating up as local war chests expand and more overseas funds enter the market.

Many global tech giants such as Google, Facebook, Stripe and ByteDance have sizeable operations here, so you might consider an intra-firm transfer as a low-risk way to experience the country. Once you’re acclimated, you can explore working at startups here or elsewhere in Southeast Asia.

For Singaporeans who are certain you’ll return at some point, I’d recommend making a move earlier rather than later. While overseas experience carries some cachet, the longer you stay the smaller the marginal return for your time, and you’re trading off the chance to build local networks and market knowledge. Because demand for tech talent far outstrips supply, there’s a good chance you can leapfrog a couple of years and catapult straight into a managerial role at startups here.

If you do consider moving to Singapore, it’s a good idea to reach out to venture capitalists, who sit at the nexus of information flow and know who’s hiring or looking for a partner. Feel free to connect with me – I’m always excited to support dreamers and doers in one of the fastest-growing, most dynamic regions in the world.

 This article was originally published by the Singapore Global Network. At the Singapore Global Network, our mission is to build a global community with Singapore at its heart. Whether you are Singaporean, someone who has worked or lived in Singapore or simply interested in exploring opportunities here, we warmly invite you to join our 70,000-strong network of global professionals and friends.