Asia’s startup ecosystem has not been doing well for the past two years, as everything from geopolitics to higher interest rates weighed on investors’ willingness to write checks. Many venture firms have pulled out of China, which was the continent’s biggest business market. While there hasn’t been a huge decline in the number of fundraising rounds, the rounds have shrunk – investors aren’t spending as much as they used to.
However, some investors are bullish on the continent’s potential, forming global strategies as they seek capital-returning investments.
Venture capital firm Antler appears to be one such investor. It was launched a $285 million emerging growth fund;, called the Antler Elevate Fund, in June 2023, and has invested between $1 million and $10 million in Series A rounds and later globally. Founded in 2018 in Singapore, Antler has since grown its investments and networks globally, expanding its reach into the US, Europe and Africa and across Asia, including Vietnam, Japan and Malaysia.
TechCrunch sat down with Antler founder and CEO Magnus Grimeland at an event in Seoul to talk about startup trends in Asia, the opportunities the company sees in the region, and how it’s approaching investment as the artificial intelligence is becoming increasingly important.
Asian markets are growing fast
Funding may have dwindled, but Grimeland is a firm believer in Asia’s potential for innovation. “One thing that was common across Asia is that all ecosystems are developing very quickly. We have seen the fastest growth in technological innovation the world has ever seen in Asia,” said Grimeland. “I don’t think anyone sees this kind of growth. So this is Southeast Asia and a lot of unicorns are built from there.”
Antler expects the Asian startup ecosystem to grow significantly in the coming years. “It’s probably the biggest opportunity in the world right now in terms of growth,” Grimeland said. “If you look at the base right now and where it’s going to be 10 years from now, you know the potential is 10 to 20 times. In terms of the level of activity and value creation in Southeast Asia, you’ve seen almost 60-fold growth over the last decade.”
Antler tries to focus on ecosystems where it believes it can have a big impact and where startups are growing very quickly, Grimeland said. Indonesia, he noted, offers a large market for building successful global companies, while Vietnam has highly skilled professionals and established international companies, particularly in the gaming industry. Grimeland also pointed out that Malaysia is an excellent hub with significant activity in the early stages and ample funding in the later stages.
Japan had a smaller tech ecosystem compared to its capabilities, Grimeland said, but it seems the country is committed to building one of the largest tech ecosystems in the world, and the Japanese government is actively supporting it. And Korea’s significant presence in industries such as shipping, automotive, fashion and beauty shows its reputation for quality and influence, he said.
He also highlighted India as another country that has done an impressive job in building digital infrastructure and digital commerce platforms. “India has really great research and deep technology. We invest across the value chain in India, but that has really, I think, changed the opportunity there over the last few years. It’s gotten so much bigger that now you can actually reach out to the entire population of 1.4 billion people,” Grimeland said.
“Also, for the first time, apart from the services sector, you are seeing big technology companies being created from India, which is very exciting. So not only can you reach a huge and fast-growing population through this digital infrastructure, but you can also build great companies for the rest of the world.”
Antler is also trying to support companies in China, he added.
Grimeland noted that Asia is home to some of the world’s leading companies in areas such as battery technology and chip manufacturing, and he expects many Asian companies to enter the global market. “I think you’ve already seen this trend in consumer electronics and advanced technology like deep tech, and it will also manifest itself in B2B, SaaS and B2C. The next Google, Facebook or Apple can be created here in Asia,” he said.
Grimeland says Asia’s tech startup environment is slowly recovering from the funding winter. “Agreement activity [in the U.S.] is growing very quickly and we are starting to see the same throughout the rest of the world. Now, in Asia, it’s definitely growing.”
He added that things may not return to the way they were in 2021, but he called that year abnormal. “As long as you support great founders who are building companies that make sense, they can raise the capital they need to raise,” Grimeland said.
Investing during the AI frenzy
Grimeland believes that artificial intelligence represents one of the biggest opportunities for startups right now.
“[The advent of AI] it is the greatest opportunity of our generation. […] New technology changes create crazy opportunities, and the opportunities created by each technology change are better than the last. This is probably the biggest opportunity the world has ever seen for startups. So it’s a huge opportunity. So it’s important to be careful about how you invest and deploy capital.”
He sees three main areas with potential for AI: infrastructure, applications and enablers. “For example, OpenAI is general infrastructure: data centers and API layers build the infrastructure for other people to build on top of them. Now, you’re probably going to see the next trillion dollar company in that infrastructure bucket and the application layer, which is what developers build on top of the infrastructure,” Grimeland said.
