Southeast Asia Startup Boom: New Accelerator Enters the Market
Southeast Asian Startup Accelerator Iterative Secures $10 Million
While $10 million may not represent a substantial investment by current standards, Iterative – a YC-style accelerator concentrating solely on Southeast Asia – believes this amount is sufficient to establish a significant presence in the region. The funding comes from prominent Silicon Valley investors, including Andrew Chen of Andreessen Horowitz, Chi-Hua Chien of Goodwater Capital, and Qasar Younis, formerly of Y Combinator and Applied Intuition.
Growing Internet Penetration Fuels Investment
Iterative’s focus on Southeast Asia is well-justified. Co-founder Brian Ma highlights that the majority of the region’s 676 million inhabitants are now active internet users, and are actively making online purchases.
A recent report from Google, Temasek Holdings, and Bain & Company indicates that Southeast Asia has gained 60 million new internet users since the pandemic began, bringing the total to 440 million.
E-commerce and Online Industry Expansion
The online economy in Southeast Asia is projected to experience substantial growth. Driven by e-commerce and food delivery, the gross merchandise volume is anticipated to increase from $174 billion this year to $360 billion by 2025, and ultimately reach $1 trillion by 2030.
Increased Competition and Investment Terms
The emergence of unicorn companies like Grab and GoTo suggests that competition within the region is intensifying. This likely means Iterative will encounter less favorable investment terms in the future.
Currently, Iterative invests $150,000 for a 10% equity stake in each startup it supports.
Iterative's Investment Strategy and Portfolio
Brian Ma, also a co-founder of Divvy Homes, acknowledges the impending increase in investment activity. However, he views this as a positive development.
To date, Iterative has deployed $3.6 million across 26 companies. Several portfolio companies have already secured significant follow-on funding, including:
- Spenmo: Raised $34 million led by Insight Partners.
- Coder School: Secured $2.6 million in pre-Series A funding led by Monk’s Hill Ventures.
- Go Zayaan: Raised $2.6 million in seed funding led by Wavemaker Partners.
This demonstrates Iterative’s ability to identify promising startups early on.
Supporting Regional Founders
Iterative, co-founded with Hsu Ken, the former chief product officer of Workmate, is dedicated to assisting founders in Southeast Asia who may lack experience with investors and experienced operators.
Founders have reported receiving offers of $150,000 for as much as 30% of their company, highlighting a need for guidance on fair valuation and deal terms.
Iterative provides access to its founders, a network of investors, and a fundraising bootcamp to equip founders with the necessary skills.
Ecosystem Development and Future Funding
Iterative’s timing appears strategic, as regional funds like Jungle Ventures and 500 Startups increase their fund sizes, and global investors like Tiger Global and Accel expand their presence.
The seed-stage investment landscape is still developing, with former executives from companies like Grab, Facebook, and Lazada beginning to make smaller investments.
Ma believes this “recycling” of talent is crucial for the growth of the Southeast Asian tech ecosystem.
Plans for a Larger Fund
Iterative is already planning to raise a larger fund in 2022, potentially reaching $50 million. This decision is based on the success of its initial fund and the market’s potential.
Ma states that the opportunity within the region is “only accelerating,” reinforcing the need for increased investment capacity.