Asia's startup ecosystem hasn't been doing so well in recent years, with everything from geopolitics to rising interest rates impacting investor appetite. Many venture firms have retreated from China, once the largest venture market in Asia, and while the number of funding rounds in other regions hasn't dropped significantly, the number of rounds has shrunk significantly. Investors are not putting as much money into them as they used to.
Still, some investors are bullish on the continent's potential and are developing global strategies to seek investments with the potential to pay off.
Venture firm Antler appears to be one such investor. The company launched a $285 million startup growth fund, the Antler Elevate Fund, in June 2023, investing $1 million to $10 million in its Series A round and has since invested around the world. Founded in Singapore in 2018, Antler has since expanded its investments and network globally, expanding its reach across the United States, Europe, Africa, and Asia, including Vietnam, Japan, and Malaysia.
TechCrunch caught up with Antler founder and CEO Magnus Grimlund at an event in Seoul to talk about startup trends in Asia, the opportunities the company sees in the region, and its approach to investing as AI becomes more important.
The Asian market is growing rapidly
Funding may be down, but Grimeland is a firm believer in Asia's innovation potential. “The common thread across Asia is that all of the ecosystems are growing rapidly. Asia has seen a surge in tech innovation like the world has never seen before,” Grimeland says. “I don't think there's any other country that's seeing this kind of growth, and that's Southeast Asia, where we're seeing multiple unicorns coming out of it.”
Antler expects Asia's startup ecosystem to grow significantly over the next few years. “In terms of growth, this is probably the biggest opportunity in the world right now,” Grimland says. “If you look at the foundation we have today and look 10 years from now, you see a 10- to 20-fold increase in potential. In terms of activity levels and value creation in Southeast Asia, we've seen almost 60-fold growth in the last 10 years.”
Grimland said Antler is looking to focus on ecosystems where it can have a big impact and where startups are growing fast. Indonesia has a big market for building successful global companies, he noted, while Vietnam has highly skilled professionals and established international companies, especially in the gaming industry. Grimland also noted that Malaysia is a good hub with a lot of early-stage activity and plenty of capital for the later stages.
Grimland said Japan once had a small tech ecosystem compared to its potential, but is now focusing on building one of the world's largest, with the Japanese government appearing to be actively supporting it. He also said South Korea's strong presence in industries such as shipping, automotive, fashion and beauty speaks to the country's reputation for quality and influence.
He also cited India as another country that is doing great things in building digital infrastructure and digital commerce platforms. “India has really great research and deep technology. We're investing across the entire value chain in India, and I think that's really transformed the opportunity in India over the last few years. India is now big enough to accommodate all of its 1.4 billion people,” Grimland said.
“And for the first time outside of the services industry, we're seeing great technology companies coming out of India, which is really exciting. So through this digital infrastructure, not only can we serve a huge, fast-growing population, but we can also build great companies for the world.”
Antler is also considering backing companies in China, he added.
Grimland said Asia is home to some of the world's top companies in areas such as battery technology and chip manufacturing, and he expects many Asian companies to expand into global markets. “I think we're already seeing this in advanced technologies like consumer electronics and deep tech, but you'll also see this trend in B2B, SaaS and B2C. The next Google, Facebook or Apple could be here in Asia,” he said.
Grimland said Asia's tech startup environment was slowly recovering from the funding winter. [in the U.S.] “It's recovering very quickly and we're starting to see that in other parts of the world. We're seeing a real recovery in Asia right now.”
Grimland said that while things may not go back to the way they were in 2021, the year has been unusual. “As long as you're backing great founders who are building companies that make sense, they'll be able to raise the capital they need,” Grimland said.
Investing amid the AI boom
Grimland believes AI is one of the biggest opportunities for startups right now.
“[The advent of AI] This is the greatest opportunity of our generation. […] “New technological changes create tremendous opportunities. And each opportunity that's created by each technological change is better than the last. This is probably the biggest opportunity the world has ever seen for startups. So this is a big opportunity. So it's important to be thoughtful about how you allocate investments and capital.”
Grimland cited three main areas where AI has potential: infrastructure, applications and enablers. “OpenAI, for example, is common infrastructure. The data center and API layer builds the infrastructure for other people to build on top of it. Going forward, the next trillion-dollar companies will probably be born in that infrastructure bucket and the applications layer that developers build on top of the infrastructure,” Grimland said.