Pandemic aside, 2020 has been chock full of geopolitical tensions between tech powerhouses like China, America, and India. Meanwhile, Southeast Asia became an even more popular springboard for investors and tech companies seeking regional expansions.
Altara Ventures, a Singapore-based venture capital firm formed in September, wants to give Southeast Asian companies the means to enter the global market, especially China. “A lot of Southeast Asian startups are looking to tap into the Chinese market and ecosystem,” said Altara’s general partner Dave Ng to KrASIA.
Founded by a group of veteran investors—Koh Boon Hwee, Tan Chow Boon, Seow Kiat Wang, Gavin Teo, and Ng—the firm is currently raising USD 100 million. Altara Ventures is interested in early-stage startups in six sectors: fintech, consumer, enterprise software, logistics, healthcare, and edtech.
Altara writes checks for USD 3–5 million per investment, and its portfolio includes digital bank Tonik, fintech startup Stashfin, and deep tech startup Senseye, Ng said.
With Chinese investors and corporates becoming more interested in doing business in Southeast Asia, Ng believes there will be tighter cross-border collaboration between the two ecosystems. In a recent interview with KrASIA, Ng explained how Southeast Asian startups can enter the highly competitive Chinese market.
The following interview has been edited for brevity and clarity.
KrASIA (Kr): What is Altara Ventures’ investment philosophy? Why is the firm interested in startups with ties to China?
Dave Ng (DN): As a fund, we’re native to Southeast Asia. But at the same time, we want to see the opportunities beyond borders. We are always looking at what we call cross-border opportunities.
Looking at where innovation and business activities are going, we can broadly classify them into three main trends. The first one is with the US, as Southeast Asia has been doing business with the US for a long time.
Then, the other one, especially interesting in recent times, is with China. There’s a lot of strategic thinking from both sides around what can be done between the two regions. Traditionally, China and Southeast Asia trade flows have been there, but in more traditional sectors like property, agriculture, or other consumer products. But now we think technology and innovation will naturally follow the same course.
The last one is with India. It is a large market, but entrepreneurs from China and India, and investment funds, are becoming more involved and placing more interest in Southeast Asia.
Southeast Asian entrepreneurs want to build not only regional companies. When they are large enough, they want to go global as well.
Kr: Do you think Southeast Asian startups with Chinese ties will have bigger chances to enter the Chinese market?
DN: In the technology sector, there is interest from large Chinese companies like ByteDance, Baidu, Tencent, or Alibaba. They are all opening businesses here. More Chinese entrepreneurs are coming here and building businesses based on their experience in the Chinese market.
There are some Southeast Asian companies and businesses that have gone into the Chinese market and established themselves, mostly in traditional sectors like consumer products. I think things in the technology sector will follow that pattern. Over the next decade, there will be instances where you’ll start seeing Southeast Asian startups enter the Chinese market, especially in the consumer sector. The enterprise software market could be the other sector to consider, as you see more Chinese companies buying beyond US software.
Kr: What advice would you give to companies willing to expand their business to China?
DN: I think that beyond technical strengths and a unique product proposition, the other important thing is to offer something from Southeast Asia that is inherently native or potentially niche. That may give you a leg up as the niche market can be rather big in China.
But the question is what would those segments be? I think this is what the companies need to really think and understand better before going in.
Kr: Do you have an example?
DN: A potential example could be in the edtech and education content sectors. Chinese students want to be exposed beyond the Chinese curriculum, they want to access the international curriculum. There will be more demand for that as more Chinese youngsters are going overseas and they want early exposure to such products.
Kr: Chinese companies and VCs are looking for new markets to invest in. Aside from more funding, what are the other benefits for regional startups?
DN: Even amid a trade and tech war, from the business side, countries like China, India, and the US are going to keep talking, however, keeping direct channels open might be tougher given the ongoing dynamics. What’s going to happen is that people are going to look at third-party or neutral platforms. Southeast Asia has always been a region that is neutral, and we’re large. So it will benefit us as more businesses will come here.
We’re seeing large Chinese and US tech companies coming to set up regional offices, and they will create more jobs, talent, and investments. Entrepreneurs will have more platforms and talent to work with.
Kr: What are the trends we are going to see in 2021 and further in the future?
DN: I think people will think more about how to leverage and provide healthtech and edtech products and services. I also think new models of e-commerce or social commerce will emerge. People will continue to reimagine and rethink consumer demands and preferences. That might shift and change over time, especially over five to ten years. New models will emerge.
Then, of course, fintech. It’s not only about access to finance, but what’s beyond. It could be wealth, savings, personal finance management, or insurtech. So I think we’ll see more broadening in the fintech segment.