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India dominates in tech funding; SEA has better business and innovation environment

  • Published at 05:38 pm September 20th, 2016
India dominates in tech funding; SEA has better business and innovation environment
In the last few years, Asia has improved a lot in respect to tech, startups, and fundraising. The most of it is seen in India and Southeast Asia.  Lots of advances are taking place in these regions. According to Jungle Ventures, a Singapore-based VC; India’s tech investment is way ahead of Southeast Asia’s. Even though Southeast Asia has a stronger and more conductive tech ecosystem, they are relatively behind India. In 2015, India had VC funding that reached US$ 7.7 billion, while Southeast Asia recorded only US$ 1.6 billion. How’s this happening when India is lagging behind Southeast Asia in most area. India’s internet penetration is only 18% while Southeast Asia has a 49% penetration rate. Also, the internet speed is slower in India. In India, the average speed is 3 MBPS, whereas the speed is 5 MBPS in Malaysia and about 14 MBPS in Singapore. This slow speed is resulting in lesser usage of social media in India. South Asia clocked has over 222 million social media users but India has reached only 39 million. Less than 20% of Indians have a mobile 3G/4G connection, while in Singapore and Thailand almost everyone has a mobile speed advantage. If you consider the consumer side, India also has few hindrances compared to Southeast Asia. The GDP is higher in Southeast Asia’s cities than in India. The GDP is more than twice of India proving the consumer base to be more affluent in Southeast Asia. The retail spending is also higher in Southeast Asia. Singapore on average spent US$ 5,585 on retail in 2015, and Malaysia’s spending was over US$ 3,329. Whereas, the retail spending of India was only US$ 787. Credit card and debit card ownership in Southeast Asia is also twice of India’s. The B2B commerce and trade side has a similar story. India’s manufacturing output and exports are the only 17.1% and 23.2% of the GDP which is far less than Indonesia, Malaysia, Philippines, Singapore, Thailand, and Vietnam. The overall ease of doing business is way more in Southeast Asia. Singapore ranks 1st, Malaysia 18th, Thailand 49th, Vietnam 90th, Philippines 103rd, and Indonesia 109th in respect of ease of business. India is far in the ranking at 130th. Overall Southeast Asia’s tech environment looks more attractive than that of India’s. How is India yet getting so much more funding despite all these factors!? The prime motivation is the huge Population size of India. India has a vast internet population of 350 million making it the second biggest largest internet market. It is 100 million more than that of Southeast Asia. There are over 104 startups directed to fashion tech, 87 directed to online travels, 90 for local services and 86 for logistics tech. India also has more mature tech ecosystem, especially in term of tech talent. Most consumer-facing internet business started over 2 years before the same in Southeast Asia. As a result, more companies in India were focused on the large opportunity sub-sectors for some 3-5 years and have been able to build a bigger ecosystem of founders and startup. The startup teams and employees have also managed to gain more experience in building products and promptly scaling business. Southeast Asia has a major drawback for its wide and cultural difference in each market. A company needs to individually tackle 5-6 markets if they want to establish well in the Southeast Asian market. Though India is also not a uniform market, yet things are simpler there and could be solved smartly. Both India and Southeast Asia has lots of prospects and moving forward quite fast. There are so many opportunities in the Southeast Asian market and in no time it would probably take over India as the funding hotspot in Asia. SD Asia
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