US investors showing greater interest in Southeast Asia

This week a few things chimed together to point towards increased interest in Southeast Asia’s startup space from the US. There are no new deals or big news items yet, but promising signs nonetheless.

Largely Singapore-based Smitty (aka ex Yahoo Asia exec Michael Smith) wrote an interesting post, noting that “random, but important people, keep dropping in on Singapore to check out the scene and judge if it makes sense for them to be here in some way.”

He goes on to add that he is seeing “the inflow of people looking into the sing tech scene grow”. That’s echoed by Bernard Leong, who says that he’s having one or two meetings per week with folks outside of the region who are keen to better understand it.

Some overseas VCs have long held an interest but my recent conversation with Darius Cheung – who is launching Billpin, and had his first startup bought by McAfee – suggested the level of attention has increased, as Bernard and Smitty observe.

Cheung, who splits his time between Singapore and Silicon Valley, was at the 500 Startups event last week. There, he, like many, noted the diversity of the latest batch, seeing little difference between the innovation and potential of the US and international startups.

At the show, and others he’s been to, he saw and heard from VCs who are more “open minded” and keen to learn about Southeast Asia. Sure, they know about the potential of BRIC markets but – since everyone asks ‘what’s next’ – Southeast Asia’s cumulative 600 million population and the growth of tech here seem to have caught attention.

There are plenty of reasons that could explain why the interest is more apparent now.

Events like the 500 Demo Day, help showcase international startups, and the progress of some Asian firms in North America – Action.IO and Viki both have a US presence – has doubtless helped. Plus new investors in Singapore with strong US links (Golden Gate Ventures founding partner Paul Bragiel is in Silicon Valley full-time, for example) better connect the two places, sharing information and examples of promising companies.

Cheung also suggests that AngelList has been a revelation in both helping Southeast Asia’s startups get found, and giving them credibility, since each startup’s profile shows details of their investors.

While there hasn’t been much international acquisition activity of late – save deals from Groupon and Living Social in 2011 – Rocket Internet investors have committed a lot of cash to Southeast Asia, pumping over $100 million into Amazon-clone Lazada alone. Germany-based Rocket Internet doesn’t have much of a US presence but, since Lazada’s investors have included JP Morgan, that influx of capital is unlikely to have been missed in North America.

Reasons aside – and there are doubtless more – interest is all well and good, but plenty of other developing markets are also interesting for investors. What Southeast Asia needs is commitments: more experienced figures coming in to help advise, mentor and build the ecosystem, and more checks being written/deals being done.

Certainly, increased interest from Silicon Valley is a good potential first step to helping that. It’ll be interesting to see if the region welcomes new faces or funds from the US soon.


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