The next SEA thing: VCs eye Vietnam, Philippines as the next Indonesia

This week’s On the Rise analyzes VCs’ search for the next Indonesia in Southeast Asia and big tech’s bets in the region as they double down on AI. [Read from your browser]( On the Rise 🚀 Welcome to On the Rise! Delivered every Tuesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in emerging tech. If you’re not a subscriber, get access by [registering here](. --------------------------------------------------------------- IN FOCUS In today's newsletter, we look at: - [Where investors are betting their capital on next in SEA]( - Where Big Tech is building its AI infrastructure in SEA Hello {NAME} , I grew up seeing friends and family in the Philippines search for greener pastures. That usually means leaving home for good to migrate either to the US or Australia to have better opportunities in life. In Southeast Asia, investors are doing something similar. While they aren’t leaving the region, they are moving away from their usual destinations such as Singapore and Indonesia for capital gains. Their next targets? The Philippines and Vietnam. In this week’s Big Story, I explore why homegrown VCs in these countries are excited despite headwinds while some international investors are still hesitant to funnel their capital into these markets. Local VCs argue that founders in the Philippines and Vietnam have proven they can build sustainable business models in spite of the capital crunch. But geopolitical tensions and regulatory issues are among the reasons why some have adopted a wait-and-watch approach instead. In AI Odyssey, I delve into another tale: big tech’s move to Southeast Asia for the backend needs of their AI products. Last week, Microsoft CEO Satya Nadella was touring the region, pledging billions of dollars to build infrastructure in support of the company’s cloud and AI needs. The numbers are historic, but I wonder if that could mean more than just financial benefits for all parties. -- Elyssa  --------------------------------------------------------------- THE BIG STORY [Vietnam, Philippines attract VCs deterred by pricey Indonesian market, but headwinds bring hesitation]( Homegrown VCs believe startups in the Philippines and Vietnam have high potential for profitability despite operating in restrictive environments.  --------------------------------------------------------------- AI ODYSSEY Promising AI projects we’re noticing. Can Microsoft usher in a new era of AI development in SEA? Almost every month this year so far, a big tech company in either China or the US has [reported]( updates to an existing large language model or introduced a new LLM that can compete with OpenAI’s ChatGPT-4. All this work also means that companies are doubling down on spending for data centers that can accommodate the vast amount of data processing these technologies require. Microsoft, Meta, and Alphabet have reportedly forked out more than US$32 billion in the first quarter for data centers alone, as noted by the [New York Times](. And it looks like Southeast Asia is set to benefit. Case in point: By the end of last week, Microsoft CEO Satya Nadella had pledged to invest US$3.9 billion - a historic amount - in [Malaysia]( and [Indonesia]( combined for cloud and AI infrastructure. He also pledged to build a data center in [Thailand]( for an undisclosed amount. These moves come amid big tech’s efforts to move away from its reliance on China. [With more than 400]( data centers, China still had the most number of these facilities in Asia Pacific by the end of 2023, according to Cloudscene, an online marketplace for cloud and data center services. But doing business in Asia’s biggest market has been complicated in the last few years because of the US-China trade war. China has been actively seeking control over what data gets processed, managed, and transferred to and from its borders. The country, however, remains opaque on what it considers as “important data” that has to be reviewed by its regulators. Routine data transfers are now bound to be more complicated, which may turn off major tech players. As such, setting up data centers in Southeast Asia makes good business sense, as it has somehow stayed on neutral ground amid the tensions between the US and China. More importantly, doing business in Southeast Asia - specifically outside of Singapore - is good for big tech’s pockets, as [experts have noted](. But could these AI infrastructure pledges translate to high-level skills sharing between big tech and Southeast Asian countries? Microsoft said it would also train locals in AI skills, but the extent of this effort remains to be seen. This could help Southeast Asians make meaningful contributions to the AI revolution, allowing them to move away from the routine and almost robotic work that they have been doing so far. -- Elyssa  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the emerging tech scene [here](. 1️⃣ [Ex-Binance CEO gets 4-month jail sentence]( After pleading guilty to breaking US anti-money laundering rules, Changpeng “CZ” Zhao, Binance’s founder and ex-CEO, will serve a sentence shorter than the three-year period that prosecutors had proposed in April. 2️⃣ [BYD is going to Indonesia]( One of the world’s largest EV makers, BYD is building a US$1.3-billion plant in West Java to produce 150,000 units a year. 3️⃣ [Anywheel races to first place in SG’s bike-sharing market]( The Singapore-based company got the green light to add 5,000 bikes to its fleet, bringing its total to 35,000 — the highest for any of its kind in the island-state. 4️⃣ [Traveloka repays $300m loan as travel sector recovers]( The Indonesia-based travel tech giant has paid its loan two years ahead of schedule, Bloomberg reported. 5️⃣ [Launchpad for global startups entering Indonesia]( Living Lab Ventures, the corporate venture arm of property developer Sinar Mas Land, has rolled out LLV Launchpad, an initiative aimed at supporting global startups expanding to Indonesia.  --------------------------------------------------------------- FYI 1️⃣ [Can Shopee beat TikTok Shop at its own game?]( Shopee is ready to flex its muscles in the social commerce space as it lures customers and affiliate video content creators with discounts and incentives. 2️⃣ [3 ways to fix climate tech’s bankability problem]( An investor argues that since climate tech firms usually take about seven years to scale, they need to look beyond VC support for funding. 3️⃣ [Can we use AI to curb cryptocurrency’s dark side?]( The Massachusetts Institute of Technology, along with tech titan IBM and blockchain analysis firm Elliptic, have trained an AI model that can reportedly track patterns of suspicious activity in cryptocurrency transactions. ---------------------------------------------------------------  EVENTS HAPPENING You can also check out a curated list of trending tech events [over here]( and Tech in Asia’s signature events [here](. [Saigon Summit 2024 : Charting Vietnam’s Tech Future on May 30]( Vietnam's tech scene is a story of grit, innovation, and potential. From ecommerce to funding and electric mobility, join Sendo CEO Tran Hai Linh, Vertex Ventures advisor Tuyet Vu, and Dat Bike CEO Son Nguyen as they explore the industry’s past, present, and future. Don't miss out – [get your ticket before the sale ends tomorrow!]( [Tech in Asia Conference Kuala Lumpur 2024 : Malaysia on The Rise on July 24-25]( We'll be joined by some amazing speakers, including Khailee Ng, managing partner of 500 Global, who will deliver a keynote speech on opportunities in Malaysia’s tech ecosystem; Kah Meng Wong, co-founder of Funding Societies, who will share his insights on the Islamic fintech industry; and Dione Song, CEO of Love Bonito, who will talk about business expansion beyond Asia. Don't miss out - [purchase your tickets]( today! [Product Development Conference: Jakarta, 25-26 June 2024]( In this edition of Tech in Asia’s flagship conference for product talent, get access to keynote presentations, interactive Q&As, and networking opportunities that help you build, launch, and scale world-class products. Early-bird tickets are gone, but fear not—you can now grab first-release tickets at 50% off! Better yet, bring 2 friends and secure an extra 20% off. [Secure your spot now](. [Tech in Asia’s Founders Meetup in Singapore on April 24]( Amid the slump in the current macroeconomic environment, are VCs now ready to deploy funds? Well, we don’t have the answer, but we know experts that do. Panlists from Square Peg, MSW Ventures, and Antler will shed light into the cautious optimism around funding. They’ll also share their take on the verticals poised for a strong recovery and offer strategic tips to navigate the ongoing tech winter. [Get your ticket now]( [Tech in Asia’s Founders Meetup in Vietnam on May 30]( Founders Meetup is returning to Vietnam as part of the official closing party of Saigon Summit! Unwind and connect with founders, startup leaders, and investors from across the region at this premier networking mixer. Early bird tickets are fully redeemed – [get yours at US$12 now]( ---------------------------------------------------------------  That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you soon! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? 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