Southeast Asia is probably the most diverse region in the world – that probably does not need much further elaboration.
So every startup in the region faces this issue almost from the onset – do I want to be regional or just go deep in my country?
Our friend Jonathan Moed has argued very well in his article last year that to scale up regionally, startups need to expand early and wisely, engage regulators and partners, as well as to adapt their product.
However, does everything in Southeast Asia have to be a regional play? We believe startups need to decide whether their business model is a regional or in-country play from the onset.
The region is highly fragmented and the Southeast Asian startup ecosystem is composed of ecosystems of many different countries. Some of them are developed enough or large enough to foster their own ecosystem such as Singapore and Indonesia (for different sectors), while others do not yet have sufficient depth and startups in those places have to be regional to make sense from an investment perspective.
Figure: Regional / Local focus for major unicorns in SEA
A company determined to become regional will need to prepare its product, operations, talent, and funding according to the regional plan. Some of the unicorns in Southeast Asia who have a regional development vision are Grab, Lazada, SEA, GoJek, and Traveloka. Among these, Grab, Lazada, and SEA had regional ambitions from the beginning. We believe this is a key factor for which they are now indeed more regional than Traveloka & GoJek, who only started expanding out of Indonesia much later on.
For a few other unicorns, the local market actually provides opportunities for them to expand horizontally, rather than regionally. Those focusing on in-country developments are Tokopedia (Indonesia), Bukalapak (Indonesia), and VNG (Vietnam).
And there are quite a number of Thai-focused companies that are surviving pretty well, without actively rolling out their businesses in Singapore or Indonesia.
We believe that as infrastructure matures in different parts of the region, the opportunities (and depth) for country-focused startups will grow.
No matter what strategies or vision a startup adopts, players with deep knowledge, clear vision/positioning, and ruthless execution will likely to win in the long run.
And yes, you need to think a few steps ahead of your current, linear growth trajectory – all great strategists need to, right?