Silicon Valley No More: The Rise of the ASEAN Startup

08.10.2020
3 min read

We know that, at the moment, the world is facing multiple crises. From pollution to social unrest there are many that feel that things are getting worse and worse. In particular, food production levels have increased to such a level as to warrant a public health crisis; we consume vast amounts of meat, for example, without thinking about environmental and nutritional consequences.  

But could our luck be about to change? Recently, a number of South Asian startups have been working on several ideas to help us tackle one of the biggest problems that humanity faces – sustainable agriculture. In this short (but sweet) article, we’ll discuss the level of investment in agri-tech companies, particularly in ASEAN (Association of Southeast Asian Nations) countries, and then ask where we go from there. 

A little background

To summarise quickly, when we talk about “agri-tech” we mean the new innovations and technology specifically tied to the improvement of the food production and consumption process.   

And so far, annual financings for ASEAN-based startups in the agri-tech industry has increased exponentially. Where in 2016 companies saw an aggregate of $85 million USD worth of investments, 2019 saw companies receive a total of $423 million USD.   

Over 2019, 99 deals have been conducted with 167 unique investors which shows a 33% year-on-year investment growth since 2018 alone! This is still considering that, unlike markets in North America, Europe, and China, the ASEAN market has still not reached maturity. Whether it was food retailing, meal kits deliveries or even farm management systems, investors are eyeing the opportunity for investment in the ASEAN start-up scene.

In-store retail and restaurant tech

This industry dominated ASEAN-based agri-tech investment in 2019. Trax, a software which helps track the nutritional benefit of goods that consumers and restaurants purchase, raised $100 million USD in Series D funding alone!

Online restaurants and meal kits

Online restaurants and meal kits attracted around $86 million USD across 13 deals in 2019. These investments go to companies such as Fore Coffee which created a “digital first” coffee chain that allows customers to order via a mobile app, either for delivery or in-store consumption  

Alternative meats

As we mentioned in the last article, meat is a huge dilemma in Southeast Asia due to its increased consumption and production despite the environmental side effects and nutritional hazards. But investors have found companies, in Singapore for example, which look to develop meat free dairy, eggs and, beef! In Singapore especially, with companies such as Growthwell, the alt-meat trend is gradually starting to pick up speed in ASEAN countries.   These are just a few of examples that we have given that not only show a curiosity about Southeast Asian business but also a silver lining when it comes to sustainable food production.

A little insight into the future

With this little bit of information, what can we gather about the innovative environment in ASEAN countries?   

It’s just the beginning   Both deal-making and investment levels have skyrocketed in recent years. However, much investment has been directed specifically towards downstream companies, which look at online food shopping, meal kits, e-Grocery and restaurant-related technology. Not much attention has been paid to the upstream companies that look at things like farming, plant biotechnology or even alt-protein development (which is arguably the most necessary).  

As the Agfund report states, this just reflects the underdeveloped tech ecosystem which is still in its nascent stages – the high-value, high-risk capital that is needed for truly disruptive innovation is also still in relatively short supply. But we can also expect this to change in the long run because of the next reason.   

Middle class growth   One of the key indicators of economic growth is the appearance of a larger middle class. In Southeast Asia, in particular, the middle class is showing signs of rapid growth. With a larger percentage of the population having more spending power, it might become more aware of healthy living as well as of environmental sustainability which could lead to a rise in popularity of sustainable technologies in the region.     

The strength in farming    Let us not forget that many ASEAN countries still have farming form a large part of their communities. So, technology which will allow them to farm more efficiently and more sustainably may be a huge bonus in the long term.

Bottom Line

Although we know of the perils of certain food and the havoc that mass production can create, we are also certain that all hope is not lost. Whether it is alt-meat production, restaurant tech, or a software that allows to see nutritional benefits of certain food, there really is no limit to what innovation can bring. And with the right capital, funding, and attention the world could be able to turn its eating habits around for good. All we have to do now is wait and see.