Why Indonesia is Dazzling More
Indonesia is the second largest startup market in Southeast Asia, after Singapore.?
Although the funding has slumped since last year, as the region’s most populous country (with nearly 300 million people), Indonesia still offers companies the biggest market for growth.
And it's not just boring big, it’s young and vibrant too. Given its thriving digital economy will touch US$110 billion by 2025, Indonesia remains on investors’ high-potential destination list.
But that’s not the unique thing about Indonesia.?
According to a recent report by PitchBook, Indonesia’s unique charm lies in its large network of conglomerates that have driven economic growth. These large, highly diversified companies invest in local startups to expand new business lines and embrace emerging technologies.
On top of that, the country's sovereign wealth fund Indonesia Investment Authority recently partnered with fund manager Global Infrastructure Partners to back infrastructure investment opportunities in the country, especially in the areas of energy, transportation, digital infrastructure, and utilities. Plus, it is doubling down on private credit business.
Of late, what has made Indonesia more dazzling is US chipmaker giant Nvidia’s rising interest in the country.?
Nvidia is co-investing US$200 million in the country with Indonesian telco Indosat Ooredoo Hutchison to open an AI center in Central Java. This money will fund the center’s infrastructure and develop human resources.?
As such, the American behemoth is bound by a 2022 MoU with the Indonesian government to train lecturers and over 20,000 university students in AI skills over five years.
And that means more innovation in the AI space. A welcome news for the country.
On that note, let’s dive into this week’s recap.?
Buzzing Deals
Singapore is the funding magnet in Southeast Asia, and that’s not going to change anytime soon.
At 522, the startups in the city-state attracted 63.7% of all equity deals in ASEAN 6 (Singapore, Indonesia, Malaysia, The Philippines, Thailand, and Vietnam) in 2023, as per the latest report by DealStreetAsia. In total, they raised US$6.1 billion, 73.3% of all the funding flowing into the bloc.?
What’s new in this? The deal volume and deal value, both went up last year in Singapore. Meaning, the city-state has become even more attractive to investors. Notably, deep tech deals in Singapore rose about 31% to 159 year-on-year in 2023.?
Beyond Singapore, most of Southeast Asia grappled with a funding crunch. And that has continued.?
In the first quarter of 2024, Southeast Asian startups raised US$1.2 billion. That’s 29% lower than the same quarter, last year. And gut-wrenching 83% down compared to 2022, as per the data collected by Tech in Asia.?
If there is a silver lining in this scenario, it’s that the dry powder has piled up. Investors are fishing for the right opportunities while waiting for the right time to cast their nets wider.?
Certain new sectors like biotech have caught investors’ attention, nonetheless. This week, the region saw two biotech companies announcing funding.
Here is a look at noteworthy deals in Southeast Asia this week:
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→ Singaporean startup Peptobiotics has raised US$6.2 million in series A funding in an oversubscribed round, which means more than enough investors lined up to write checks.?Hatch Blue, an aquaculture-focused enterprise, led the round, while others like Singapore’s Seeds Capital and France’s Seventure Partners chipped in. Founded in 2020, the company provides antibiotic alternatives for the farming and aquaculture sector to cut down farmers’ overreliance on antibiotics, which has made bacteria resistant. With the new funds in the kitty, Peptobiotics will take its products to market.
→Another Singaporean biotech startup Auristone has landed a US$4 million seed funding check from Elev8, Seeds Capital, and existing investor Genedant. The startup focuses on epigenomics. Epigenomes are the markers that tell genomes what to do, where to do it, and when to do it. The company’s flagship product is a molecular profiling tech called Epi-Call, which predicts how an individual would respond to different treatment options for cancer. With the new funding, Auristone Pte Ltd will pursue more clinical collaboration to drive Epi-Call’s market adoption.?
→Singapore-based beauty brand Allies of Skin has secured a US$20 million funding round from Meaningful Partners to venture into the US, the largest beauty and personal care market worldwide. The funding comes after the company hit positive EBITA in 2023. ALLIES OF SKIN will list its products that use clinically proven ingredients such as retinoids, vitamin C, acids, and antioxidants on digital and retail platforms in the country. At present, the company's products are available in 36 countries.?
→Singapore-based AI software startup Ailytics has just raised US$2.7 million to grow bigger. The oversubscribed pre-series A funding round was led by Tin Men Capital . Ailytics uses AI-powered video analytics to make workplaces safer and more productive, especially in heavy industries. With the new money, they plan to offer their services in new places like Hong Kong, Japan, Oceania, and the Middle East. Since they began in 2021, they’ve worked on 70 projects and set up 1,000 cameras, helping customers reduce the need for manual inspections by up to 50%.
The Asian Chip Story
Southeast Asia will rise as a chip manufacturing hub in the coming years.?
It sounds unlikely when you consider giants like Japan and South Korea spending billions of dollars to power up their chip manufacturing.?
But the region is on track to achieve that feat, led by Singapore and Malaysia.
One company lies at the heart of this transition. Nvidia, the American chip manufacturing titan.
So far Nvidia has partnered with various companies in the region to power their AI centers. Singapore telco Singtel and Singapore Institute of Technology, for example.?
Now it is reportedly planning to build a pilot manufacturing plant in Malaysia in collaboration with Kinsus Interconnect Technology, a Taiwanese supplier for Nvidia-rival AMD.
In fact, Nvidia’s founder and CEO, Jensen Huang, believes firmly Malaysia could become a hub for AI manufacturing in Southeast Asia on the back of the growing need for AI data centers.?
Interestingly, quite a few players have started spreading their roots in chip manufacturing in the region. Currently, as per Tech in Asia, there are 37 companies in Southeast Asia operating in this space.
Now, chip-making is excessively costly. So the majority of these companies work in verticals that support AI chip production, like assembly, testing, and distribution. Only six of them manufacture chips, like Silicon Box.
Notably, Singapore accounts for about 11% of the global semiconductor market share, while it manufactures one-fifth of global semiconductor equipment.
Japan is also reinventing its long-lost chip manufacturing industry. It has committed US$26 billion to revive it, focusing on the chips for smart cars. A third of that money is earmarked for Taiwan Semiconductor Manufacturing Company (TSMC)—the world’s largest contract chip manufacturer with clients like Nvidia—which opened its first chip plant in Japan in February 2024. Reportedly, it wants to diversify supply chains away from Taiwan to avoid getting into the crossfire between the US and China.
Meanwhile, South Korea is not planning to stay behind. The country recently announced a spend of US$6.94 billion on AI by 2027, specifically to boost local semiconductor production. This includes investing in research and development related to AI chips. As per Reuters, South Korea will focus on specialized chips for machine learning applications and high-bandwidth memory chips.