Asia’s startup ecosystem hasn’t been doing well in the past couple years, as everything from geopolitics to higher interest rates affected investors’ willingness to write checks. Many venture firms have exited China, which used to be the continent’s biggest venture market, and elsewhere, though there hasn’t been a huge decline in the number of fundraising rounds, the rounds have shrunk a lot — investors are no longer spending as much as they used to.
Still, some investors are bullish on the continent’s potential, setting up global strategies as they seek fund-returning investments.
Venture firm Antler appears to be one such investor. It launched a $285 million emerging growth fund, called Antler Elevate Fund, in June 2023, and has been investing between $1 million and $10 million in Series A rounds and later worldwide. Established in 2018 in Singapore, Antler has since grown its investments and networks globally, extending its reach to the U.S., Europe and Africa, and throughout Asia, including Vietnam, Japan and Malaysia.
TechCrunch caught up with Antler’s founder and CEO, Magnus Grimeland, at an event in Seoul to talk about startup trends in Asia, the opportunities that the firm sees in the region, and how it approaches investments as AI grows ever more prominent.
Asian markets are growing quickly
Funding may have come down, but Grimeland firmly believes in Asia’s potential for innovation. “One thing that has been common across Asia is all the ecosystems have been growing very rapidly. We’ve seen the fastest growth in tech innovation that the world has ever seen in Asia,” Grimeland said. “I don’t think anyone is seeing growth quite like that. So that’s Southeast Asia, and multiple unicorns are being built out of there.”
Antler expects the Asian startup ecosystem to grow significantly over the next few 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 will be ten years from now, you know the potential is 10 to 20 times. In terms of activity level and value creation in Southeast Asia, you saw almost 60x growth in the last decade.”
Antler is trying to focus on ecosystems where it believes it can have a great impact and where startups are growing very fast, 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 initial phases and ample funding in the later stages.
Japan used to have a smaller tech ecosystem compared to its potential, Grimeland said, but it appears that the country is committed to establishing one of the largest technology ecosystems globally and the Japanese government actively supports it. And Korea’s significant presence in industries like shipping, automotive, fashion and beauty showcases its reputation for quality and influence, he said.
He also highlighted India as another country that has done an impressive job of building out its digital infrastructure and digital commerce platforms. “India has really great research and deep tech. We’re investing across the value chain in India, but that has really, I think, changed the opportunity there over the last few years. It’s become so much bigger that you now can actually address the entire population of 1.4 billion people,” Grimeland said.
“Also, for the first time, apart from the service industry, you’re seeing great tech companies being built out of India, which is very exciting. So, not only can you address 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 looking to back companies in China, he added.
Grimeland noted that Asia is home to some of the world’s top companies in areas like battery technology and chip manufacturing, and expects many Asian companies to venture into the global market. “I believe you have already observed this trend in consumer electronics and advanced technology like deep tech, and it will also manifest in B2B, SaaS and B2C. The next Google, Facebook or Apple might be created here in Asia,” he said.
Grimeland says Asia’s tech startup environment has been recovering slowly from the funding winter. “Deal activity [in the U.S.] is picking up very quickly, and we’re starting to see the same across the rest of the world. Now, in Asia, it’s definitely picking up.”
He added that things may not get back to how they were in 2021, but he described that year as an abnormal one. “As long as you back 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 feels AI represents one of the biggest opportunities for startups at the moment.
“[The advent of AI] is the biggest opportunity of our generation. […] New technology shifts create insane opportunities, and the opportunities being created by each technology shift are better than the last one. 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 thoughtful about the way 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 building the infrastructure for other people to build on top of. Now, you’ll probably 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.