Building a startup in South East Asia is viable. But it comes with an additional set of challenges that startups in Europe and the US do not face. Bro

The economics of startups in asia

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2021-06-26 20:00:06

Building a startup in South East Asia is viable. But it comes with an additional set of challenges that startups in Europe and the US do not face.

Broadly, these would be social and economic factors. I don’t think I’m the right person to elaborate on the social factors. But I did experience some of the economic ones.

The difference in economies is the reason why an outsider can often supplant home grown startups. Many of the most successful startups in South East Asia are bankrolled by Rocket startups.

The main issue is that startups are funded in the local currency. While a seed round in the US might be a couple of million in USD a seed round in Malaysia is of a similar size but in Malaysian Ringgit. That makes is about four times less.

Really world class talent expects FAANG-level compensation. Even though the cost of living is significantly less the difference in perception between taking home $50k (which would be a great salary well above average in KL) and $120k is insurmountable. People would largely have the same standard of living, perhaps slightly better in KL. However, the perception in the difference of amounts, the ability to spend abroad, and the ability to save are severely impacted.

So, then we set sights on locally great talent. By and large, we’re able to get at least decent talent. However, as they acquire some experience it’s the startups that are funded from abroad that have an edge in offering them much better compensation.

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