The GenAI startups in Southeast Asia are relatively young, dominated by Singapore-based ones, primarily B2B models, and already monetising, according to the “ASEAN GenAI Startup Report” by GenAI Fund, a Vietnam-based AI-focused investment fund, AWS and Databricks.
The firm introduced the report with a two-month roadshow since August across six capitals of Southeast Asian countries. The full report is yet to be released, with plans for publication on September 24.
The report stems from a survey of over 500 startups in this region, with in-depth discussions with more than 20 pre-seed GenAI startups and unicorns, active investors, and community leaders to gain deeper insights.
According to the survey results, 44% of GenAI startups are based in Singapore, followed by Vietnam (27%), Indonesia (13%), Thailand (7%), Malaysia (6%), and the Philippines (3%).
“Vietnam is a surprise but not a surprise. Anyone in a GenAI space today would understand that Vietnam is the epicentre of GenAI. The folks there, they just build GenAI and stuff for fun. They don’t even think about a business plan. They don’t wait for the stars to align, they just build,” said Denning Tan, partner of GenAI Fund, in the ASEAN GenAI Startup Report in Jakarta on Friday.
He commented that for Indonesia, the situation can be described as still dormant, needing time to catch up. However, he notes, “In this GenAI space, if you don’t get on it now, by the time you wake up, it’s almost too late. [..] GenAI has been such a level changing, has levelled the playing field, essentially, for startups building up from here, versus startup building up in Silicon Valley.”
“For the first time, you have access to the same kind of power, the same kind of data as startups anywhere. And if you don’t catch this wave, and if you miss, the ball is on you. So definitely take the opportunity,” he added.
Further interesting findings from this report show that the startups are mainly B2B focused (56%), with a mix of B2B and B2C (36%) and B2C (8%). For B2B-focused startups, the targets are SMEs (73%), large enterprises (67%), individual consumers (43%), government agencies (25%), and educational institutions (22%).
Moreover, the primary sectors they targeted are mostly related to Productivity & Business Solutions (26%), Healthcare & Wellness (13%), Financial Services (13%) and Marketing & Content Creation (11%). Most surveyed startups also choose Global (67%) as their primary Go-To-Market (GTM) strategy, with the remaining 33% targeting SE Asia’s market.
“It used to be the cast that startups would go hyperlocal first, right? And then maybe stay even local on the way. But now they’re looking global from an early stage. There’s a clear logic to it. So favourite ways to acquire customers, partnerships, and alliances is a big one (74%).”
Still early days
The report also highlights the funding status of GenAI startups, with 32,3% still bootstrapped. This is followed by those who have received seed funding (23%), pre-seed (17.7%), angel investors (16.8%), and Series A (9.3%).
“The ones with a Series A and a tiny bit which is like Series B, these are startups which existed before, and then they adopted Gen-AI, rather than Gen-AI from day one,” Tan added.
It reports how the surveyed startups monetise their business, with the majority based on the subscription model (81%), usage-based pricing (47%), professional services and consulting (33%), licensing fees (23%), and advertising revenue (7%).
Further on monetisation, an interesting finding is that 39% are already having recurring revenue. The second place is held by startups having paid pilots and Proof of Concepts (23%), then already profitable (16%), having free users (11%), and Building Viable Product (10%).
“It used to be the case where it was grow at all costs, acquire customers at all costs. You get funded, and then you buy customers. But now, you actually find startups who are profitable from a very early stage.”
Another interesting piece of information from this report is that 75% of startup GenAI have pivoted more than four times, broken down as follows: pivoted 1-2 times (48%), 3-4 times (17%), and more than four times (4%). The remaining 25% have never pivoted.
“One of the several qualities that we emphasise is the ability of startup founders to be adaptable, to move really quickly, and not love your product too much. In this space, you have to pivot when technology changes, and when you really notice things.”
Indonesia’s perspective
The roadshow in Jakarta concluded with a panel discussion with Tyo Guritno (CEO & co-founder of Inspigo), Rama Mamuaya (partner of DS/X Ventures), Patrick Kelly (Sr. director of commercial & mid-market of Databricks), and Brata Rafly (Head of Startup Ecosystem of AWS).
Guritno acknowledged that the number of GenAI startups in this region is relatively low, compared to India and China. His startup, Inspigo, was recently selected to participate in the programme AWS US SaaS Delegation 2024 in Sao Paolo, California. Only four Indonesian startups were invited, with about 10 from SE Asia in total, and 20 from APAC, compared to 60 Indian startups.
Despite this, he remains optimistic, “The good thing is GenAI is new, just two years old. So, everyone had a similar starting point; it’s not just in Indonesia, but it’s in the entire world.”
Inspigo’s inception in 2018 was not as a GenAI first startup; they were an audio podcast startup for skills and knowledge-related topics. Then, pivoted during COVID-19 to an audio platform to improve soft skills with a personalised and AI-powered learning series.
Mamuaya added that they see an increasing number of enterprises needing to adopt AI technology, as this step can help them cut costs, especially in these challenging times.
“This is the perfect time for companies like GenAI and features like GenAI to come into the market simply because it helps the corporation cut costs in a time when everyone is cutting costs. So it’s perfect timing,” he concluded.
DS/X Ventures is an Indonesian-based early-stage VC focused on B2B startups. It has invested in several B2B startups, namely YOBO, GoCement, Ilmu.com, D3 Labs, Finfra, Fazpass, Cards and Baskit since its inception in 2023.
