Southeast Asia is home to a growing number of vertical AI startups serving a wide range of sectors, from seafood to finance. Singapore-based venture capital firm Antler recently bet on 37 of them, investing a total of $5.1 million in pre-seed deals. This included a strategic partnership with Malaysian sovereign wealth fund Khazanah, which invested in seven startups.
“If you look at other parts of the world, there's a lot of horizontal AI and it's becoming very competitive,” Antler co-founder and managing partner Jussi Salovaara tells TechCrunch. “What founders in this part of the world are increasingly trying to solve are real problems across a variety of industries.”
He believes that even though Southeast Asia doesn't yet have the talent pool to build something like OpenAI, it can take a customer-first approach to AI apps and solve unique problems in different sectors and markets. he added.
Verticalized AI is seeing different trends in different countries. For example, Vietnam has a wealth of technical talent. Founders there working on consumer startups typically focus on the domestic market initially, while B2B startups are more globally oriented from the start, Sarovara said. On the other hand, Indonesian startups tend not to aim for overseas expansion because the domestic market is very large, but Antler expects more startups to expand overseas.
One of Antler's investments, BorderDollar, is building an invoice financing platform for cross-border logistics. BorderDollar built its credit scoring system using proprietary training data, as financing is structured differently in Southeast Asia than in other parts of the world.
“You can't really take something from the West and connect it here and use it,” Sarovara says.
Another member of Antler's portfolio is CapGo. Antler's support was largely due to the founder's background. CTO Chen Yu worked on machine learning at Grab, and CEO Yichen Guo has a Harvard MBA and worked as a product manager at Citi, Almanac, and VIPKid. . CapGo automates data acquisition for market research, a problem Salovaara knows all too well, having previously worked at an investment bank.
“It's very unclear why we would spend endless human time doing market research when AI could do it so much more effectively and efficiently,” he said. Asia, he added, lies in its ability to build tailored data sources. It also plans to expand into the rest of the Asia-Pacific region.
Zolo and Seafoody were both founded to solve food supply chain infrastructure problems in Southeast Asia. Based in Malaysia, Seafoody was founded by Eleen Kee, Samantha Oi and Zach Leong. CEO Kee comes from a family that has worked in the seafood industry for several generations. Seafoody focuses on using AI to eliminate middlemen in the seafood supply chain and sell directly to businesses. Meanwhile, Zolo is simplifying his food supply chain by using her AI to shorten the order management process. The order management process typically requires a lot of interaction between suppliers and restaurants on WhatsApp.
Another startup that Salovaara has his eye on is Malaysia-based Coex. Use AI to digitize project invoices and bills of quantities, so you can approve, communicate, and prepare materials all faster. “Construction is obviously one of the most analog and old-fashioned industries, so this is primarily an effort to optimize capital efficiency and operational efficiency,” Sarovara says.
Building a vertical AI startup comes with unique challenges. For example, you need to build the right team and include not only technical founders with the right expertise, but also people who have a good understanding of your target industry. Training also requires proper data. But if vertical AI startups come together, Sarovara says, they can create a very deep competitive moat.
“If you want to raise quote-unquote ‘hardcore’ horizontal AI funding from Southeast Asia, it will be difficult to compete with companies, especially those based in Silicon Valley,” he added. “Trying to compete in this space, especially in the later stages, with companies that have more talent and better funding infrastructure is still very difficult. So these vertical plays are the way to go. It is.”