Startup Expansion into Southeast Asia: 2024 - 2025 Executive Summary

UBE SG
Jun 16
4 min read

Southeast Asia’s “digital decade” is in full swing. The region’s internet-economy gross merchandise value (GMV) is projected to hit US $263 billion in 2024 (+15 % YoY) and stay on course for ~US $330 billion by 2025. Revenues and profits are also growing at double-digit rates, signalling a maturing, more disciplined ecosystem.

Yet the funding landscape has cooled sharply since its 2021 peak: 2024 closed with US $4.56 billion in total deal value, down 42 % YoY and the lowest in six years. Investors remain active, but they now reward clear paths to profitability over hyper-growth at any cost.

Against that backdrop, global startups still view SEA’s 680 million-strong consumer base, mobile-first habits, and nascent B2B digitalisation as an irresistible expansion opportunity provided they navigate each market’s unique realities.

1. Country Snapshots (2024 - 2025)

Market	Digital-Economy Highlights	Investor Climate	Key Watch-outs
Singapore	Global startup-ecosystem rank: 4; deep-tech R&D plan worth S$18.9 B (2021-25)	Attracted ≈60 % of ASEAN deal volume; US $4.8 B raised in 2024	Highest opex in SEA; fierce talent war
Indonesia	Region’s largest GMV (~US $90 B); digital-payment GTV US $404 B in 2024	Funding slump (≈US $0.3 B in H1 2024), but demographic story remains compelling	Complex licensing; archipelago logistics
Vietnam	Fastest GDP growth in SEA (≈6-7 %); 3rd-largest share of SEA seed deals (9.5 % H1 2024)	New Private-Capital Association targeting US $35 B by 2035	Bureaucracy + data-localisation rules
Thailand	Record Series-B deals (e.g., Amity US $60 M); climate-tech inflows US $355 M in 2024	Government BOI incentives, Smart/LTR visas	Foreign-ownership caps in some sectors
Philippines	Funding grew to ≈US $1 B in 2024—a rare regional outlier; booming e-wallet adoption	Startup Act & venture co-investment fund active	Lengthy permitting; infrastructure gaps

2. Sector Hot-Spots to Watch

Fintech: 37 % of all regional VC dollars in 2024. Payments, BNPL, remittances, and “fintech infrastructure” (open-banking APIs) lead demand.
E-commerce & Retail Tech: On track for US $159 B GMV in 2024. Live-commerce already commands ≈20 % of online retail spend.
EdTech: SEA market worth US $10–11 B today, forecast to quadruple by 2033 on the back of digital-skills demand.
HealthTech: Telemedicine is sticky post-pandemic; funding is modest, creating white-space for new entrants.
Climate-Tech & Sustainability: Accelerating thanks to government net-zero goals and new green-fund mandates (e.g., Thailand’s US $355 M private green deals in 2024).

3. Funding Reality Check

Early-stage remains resilient. Seed and Series-A cheques continue to flow, especially in Singapore, Vietnam, and the Philippines, while late-stage mega-rounds dried up.
Geographic concentration. Singapore still hosts two-thirds of deal volume, acting as the fundraising hub for SEA-wide ambitions.
Rise of CVC and intra-Asia capital. Thai, Indonesian, and Malaysian conglomerates plus North-Asian tech giants (SoftBank, Naver) are now key backers.
Exit path diversification. New “tech boards” (Indonesia IDX, Thailand SET) and strategic M&A (Alibaba–Lazada, Grab acquisitions) provide alternatives to NYSE/Nasdaq listings.

4. Proven Market-Entry Playbooks

Mode	When It Works Best	Example & Lesson
Direct Build	Light regulation, clear PMF, strong capital reserves	Uber’s failed SEA push shows local nuance beats brute force
Local Partnership	Need quick distribution / regulatory cover	Netflix’s telco bundles unlocked users without credit cards
M&A	Cash-rich entrant vs. fragmented sector	Alibaba bought Lazada (2016) for instant regional footprint
Joint Venture	Licensing caps or strategic asset sharing	Grab-Singtel JV secured digital-bank licences in SG & MY

5. Common Pitfalls (and How to Avoid Them)

Regulatory Whiplash
Mitigation: Engage policymakers early; join industry associations; secure local legal counsel.
Case: TikTok Shop’s sudden suspension in Indonesia after a 2023 social-commerce ban.
One-Size-Fits-All Product
Mitigation: Local-language UI, COD or e-wallet payments, LINE marketing in Thailand, etc.
Case: Grab accepted cash & motorbike rides; Uber did not.
Talent Crunch
Mitigation: Regional HQ in Singapore for leadership; localized teams for execution; creative ESOPs to retain staff.
Unit-Economics Blindness
Investors now underwrite profitability pathways, not vanity GMV. Focus on CAC/LTV per country and adjust pacing accordingly.

6. Actionable Checklist for Founders

Priority	Key Actions
Pre-Entry Research	Size TAM, map competitors, pressure-test regulations in each target market.
Localization	Translate UI; integrate popular local wallets; tailor pricing to purchasing power.
Partnership Pipeline	Shortlist telcos, banks, logistics providers; structure rev-share or JV options.
Corporate Structure	Consider Singapore HoldCo + local OpCos for compliance and fundraising efficiency.
Funding Strategy	Time raises to highlight local traction; blend equity with venture debt/CVC money.
Government Engagement	Leverage sandbox schemes (e.g., MAS fintech, Thailand BOI) for pilot licences.
Scalable Talent Model	Combine a regional “centre of excellence” with distributed local teams; invest in upskilling.

Conclusion

Bar chart showing GDP growth in SEA for Q1 and Q2 2024. Indonesia, Malaysia, Philippines, and Vietnam show robust growth; Singapore and Thailand less so. — e-Conomy SEA 2024 Report | Google

Startup expansion Southeast Asia still offers one of the world’s most compelling growth stories, if you respect its diversity and new capital discipline. Founders who: