So long, Bali, and thanks for all the love.
I just returned from NextHub, an Indonesian government sponsored investors summit, where I spoke with hundreds of #technology #startups, entrepreneurs, and #VentureCapital investors.
1. Although the mood wasn’t quite as sombre as it was last year, the heady exuberance of 2021 is well and truly behind us. Three years ago, interest rates were close to 0% and #SoutheastAsia's tech sector was flush with cash. Valuations seemed to defy gravity, and the champagne flowed freely, funded (in some cases) by Bitcoin billions.
2. Then came 2022, when interest rates spiked to 16-year highs. Liquidity dried up and startups had to pivot their businesses, or make painful decisions to lay off staff. Many merged, or shuttered their businesses entirely.
3. While many are relieved by the recent interest rate cuts, the consensus is that we were not yet out of the woods.
4. This year’s delegates are much leaner and better focused. I was surprised by the number of founders who told me that they were not fundraising: "We're profitable, and don't need to raise money for working capital. We may raise a small round to finance an opportunistic acquisition, and are currently speaking to a few interesting targets".
5. Although Southeast Asian VCs are sitting on record amounts of dry powder, no-one seems to be in a hurry to invest, and are taking their time to evaluate deals. There is, however, a genuine concern that they will not be able to fully deploy their capital before their funds mature.
6. What hasn’t changed, though, is that Southeast Asia remains the most exciting technology and VC ecosystem in the world. The Southeast Asian digital economy is expected to grow to a trillion dollars by 2030, making it the fastest-growing digital economy in the world, and investors are here to tap that growth.
7. Founders also continue to hustle and build. Have you ever spoken to a startup founder? These guys believe they can change the world. Many of them have. They’re not going to let a little Funding Winter stand in the way of their ambition. Winters are a time for consolidation, reflection, and renewal, and the best founders and businesses will emerge stronger than before.
This, ladies and gentlemen, is a sign of a maturing startup ecosystem.
In fact, we may be starting to witness the thaw of the Funding Winter and I, for one, am encouraged by the green shoots that are starting to emerge.
Back to Singapore for 14 hours, to meet a couple of clients before zipping off to Bangkok early doors tomorrow. Catch me if you can!
All comments welcome.
Photo of silhouettes against a Balinese sunset, copyright of Endeavor Indonesia