Key Takeaways
- • Saemin Ahn, who leads international investments at Rakuten Capital, told Fortune he is "pretty pessimistic" about venture capital prospects in Southeast Asia, arguing the region's scaling model has a "very different velocity curve" from the U.S. that is "not very compatible with venture capital."
- • Per data from the Founders Forum Group and Dealroom cited by Fortune, Southeast Asia drew only $10.7 billion in venture funding in the first nine months of the year, just over 1% of a $679 billion total, with about $4.5 billion going to a single company, Singapore-based DayOne.
- • Ahn said Southeast Asian companies that have gone public or are about to go public are not showing strong results, and that Grab's shares have fallen roughly 75% since its late-2021 SPAC listing on the Nasdaq.
- • Rakuten Capital now focuses on North Asia (excluding China), the U.S., and parts of Europe, and Ahn said he expects it will be "very hard" for Southeast Asia to gain material attention for the next two to four years.
- • Ahn is steering Rakuten Capital's AI thesis toward small compute clusters and heterogeneous computing rather than gigawatt-scale data centers, citing Nvidia's DSX pods and San Francisco-based Gimlet's $300 million raise at a $3 billion valuation in September.
Summary
Saemin Ahn, who helped build Rakuten Capital's Southeast Asia franchise, has turned notably bearish on the region's venture prospects. Speaking to Fortune, Ahn said he is "pretty pessimistic" on venture capital investment in Southeast Asia, arguing that the way firms scale in the region follows a very different growth trajectory than the U.S. and is poorly suited to the venture model. He leads international investments at Rakuten Capital, the corporate venture arm of Japan's Rakuten Group.
The region is emerging from a multi-year funding slump, but the recovery is modest. According to data from the Founders Forum Group and Dealroom, Southeast Asia attracted $10.7 billion in venture funding in the first nine months of the year, just over 1% of a $679 billion global total. About $4.5 billion of that went to DayOne, a Singapore-based data center company. Fortune notes that funding was roughly three times lower the previous year. Ahn argues that the lion's share of global venture capital is concentrated in the U.S. and North Asia, and that companies must post strong results to attract further capital, a standard he believes many regional companies are not meeting.
Ahn pointed to Grab, which listed on the Nasdaq via a SPAC in late 2021 and whose shares have fallen around 75% since. He said entrepreneurs in the region have either moved into the corporate ecosystem or relocated to more developed markets, and noted that rising inflation and higher interest rates have increased the cost of funding. He also suggested that Southeast Asia may struggle to gain attention for the next two to four years, and that venture investors in the region may need to incorporate debt, mezzanine, and tranche financing alongside equity. Fortune cites a Lightspeed Venture Partners report finding that Southeast Asian outcomes generate only half the value per dollar invested compared with China.
Ahn's views contrast with his track record. He co-founded Rakuten Ventures in 2013, which later became Rakuten Capital, with a team that initially focused exclusively on Southeast Asia and backed GoTo, ShopBack, and RedDoorz. Rakuten Capital has since broadened its remit to North Asia (excluding China), the U.S., and parts of Europe. Its seven-person team has invested in more than 90 companies, many in e-commerce and fintech, in line with Rakuten Group's priorities.
On AI, Ahn favors smaller infrastructure bets over the race for massive data centers. He argued that micro-clusters for inference and edge computing are underappreciated, citing Nvidia's modular DSX pods. He also highlighted heterogeneous computing, which combines chips from multiple vendors, and pointed to Gimlet's $300 million round in September at a $3 billion valuation as evidence that the thesis has gained traction. Fortune notes that AI infrastructure investment has drawn scrutiny in recent months, with some data center operators pulling IPOs or seeing shares fall.
The region is emerging from a multi-year funding slump, but the recovery is modest. According to data from the Founders Forum Group and Dealroom, Southeast Asia attracted $10.7 billion in venture funding in the first nine months of the year, just over 1% of a $679 billion global total. About $4.5 billion of that went to DayOne, a Singapore-based data center company. Fortune notes that funding was roughly three times lower the previous year. Ahn argues that the lion's share of global venture capital is concentrated in the U.S. and North Asia, and that companies must post strong results to attract further capital, a standard he believes many regional companies are not meeting.
Ahn pointed to Grab, which listed on the Nasdaq via a SPAC in late 2021 and whose shares have fallen around 75% since. He said entrepreneurs in the region have either moved into the corporate ecosystem or relocated to more developed markets, and noted that rising inflation and higher interest rates have increased the cost of funding. He also suggested that Southeast Asia may struggle to gain attention for the next two to four years, and that venture investors in the region may need to incorporate debt, mezzanine, and tranche financing alongside equity. Fortune cites a Lightspeed Venture Partners report finding that Southeast Asian outcomes generate only half the value per dollar invested compared with China.
Ahn's views contrast with his track record. He co-founded Rakuten Ventures in 2013, which later became Rakuten Capital, with a team that initially focused exclusively on Southeast Asia and backed GoTo, ShopBack, and RedDoorz. Rakuten Capital has since broadened its remit to North Asia (excluding China), the U.S., and parts of Europe. Its seven-person team has invested in more than 90 companies, many in e-commerce and fintech, in line with Rakuten Group's priorities.
On AI, Ahn favors smaller infrastructure bets over the race for massive data centers. He argued that micro-clusters for inference and edge computing are underappreciated, citing Nvidia's modular DSX pods. He also highlighted heterogeneous computing, which combines chips from multiple vendors, and pointed to Gimlet's $300 million round in September at a $3 billion valuation as evidence that the thesis has gained traction. Fortune notes that AI infrastructure investment has drawn scrutiny in recent months, with some data center operators pulling IPOs or seeing shares fall.
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