Tech’s B2B Opportunity in SEA
The opportunity for growth in B2B Tech is huge in Southeast Asia, riding the tailwinds of digitalization efforts and young digital natives.
The opportunity for the growth in B2B Tech is huge in Southeast Asia. By 2030, the working age population will amount to 500 million while the current median age is just 30 years old. The young population is digital-native and has grown up online and more and more people are coming online everyday as internet penetration expands. While it is expected that digital will permeate every aspect of social life, a digital native population will become increasingly aware of the gains and improvements that technology can provide in work flows and business. There are already IR4.0 digitalization initiatives in some shape or form in every country in Southeast Asia.
At first review, the most recognizable trends are being driven by consumer purchasing. This has led to the rise of major e-commerce players like Shopee and Lazada being further enabled by a plethora of digital payments companies, in a robust FinTech cohort, enabling consumers the ability to spend and sellers to collect. The inherent logistics challenges in delivering the promise of the rise in e-commerce has seen the rise of third-party logistics (3PL) providers solving first-mile through last-mile, which then led to 4PL (aggregators or lead logistics providers) and more recently 5PL (management of supply chain networks). The move to e-commerce and the enablement of logistics and payments has brought thousands of micro, small and medium enterprises to move towards selling online and reaching new customers.
But underneath the surface layer, there exists a broad range of technology applications that are altering the way we conceive and perform our daily work, the way products are produced, and so much more. Just take the simple example of work during the pandemic. Like most, you probably spent considerable amount of time in video conferences.
Businesses throughout Southeast Asia (and globally) are coming increasingly to the realization that they must act now to capture opportunities as the world digitizes around them.
Digitization of Business
The digital transformation of business in Southeast Asia lags developed markets in the US and Europe but are rapidly implementing digital transformation or expanding their implementation. The impact of the pandemic has forced more businesses to confront the reality of work from home and forced the adoption of new workflows and technologies to enable some level of continuity.
The digital transformers in the region have already reaped benefits from the transformation efforts. The primary benefit is improved operational efficiency, improved sales processes and customer experience, along with employee experience, productivity and other gains. Tech has enabled us to communicate like never before, to focus on our core competencies and outsource a broad range of functions, to measure, track, and report on performance, KPIs and OKRs across and organization.
To that extent, innovation has transitioned from adopting or replicating foreign tech to leapfrogging and creating solutions tailored to the actual local circumstances and addressing the unique pain points. As diverse is the range of industries and the companies that operate across Southeast Asia, the nooks and crannies for technology to be implemented is expansive. We’ve seen an explosion of tech already and more and more are up and coming taking into account the local context of the organizations that require them.
At Indelible Ventures, we see substantially opportunity for the growth in B2B that is riding the tailwinds of the consumer internet economy coupled with the digitalization efforts that are transforming the way work is done. We believe that Malaysian start-ups have the potential to lead the innovation and be market setters in the next technology wave. In follow-up posts, we will dive deeper into some of the areas we view as particularly interesting.
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