Key Takeaways
- • Rakuten Capital's international investments lead Saemin Ahn says he is "pretty pessimistic" about venture capital prospects in Southeast Asia, telling Fortune the region's firm-scaling velocity is "very different" from the U.S. and "isn't very compatible with venture capital."
- • Southeast Asia drew only $10.7 billion of venture funding in the first nine months of the year, just over 1% of a $679 billion global total, according to Founders Forum Group and Dealroom data; about $4.5 billion of that went to DayOne alone.
- • Grab's shares have fallen roughly 75% since its late-2021 SPAC listing on the Nasdaq, which Ahn cites as evidence that regional companies are not delivering the results needed to attract VC capital.
- • Rakuten Capital has shifted its focus to North Asia (excluding China), the U.S., and parts of Europe, and Ahn says the region will struggle to gain material attention for the next two to four years.
- • Ahn advocates small compute clusters and heterogeneous computing over gigawatt-scale data centers, citing Gimlet's $300 million raise at a $3 billion valuation in September.
Summary
Saemin Ahn, who leads international investments at Rakuten Capital, the corporate venture arm of Japan's Rakuten Group, has become markedly pessimistic about venture capital in Southeast Asia. Speaking to Fortune, Ahn said the region's firms "scale and succeed" at a "very different velocity curve" than their U.S. counterparts, which he said is not well suited to the venture model. The comments come as the region begins to emerge from a multi-year venture funding slump, though the rebound remains small in absolute terms.
According to data from the Founders Forum Group and Dealroom cited by Fortune, $10.7 billion flowed into Southeast Asian startups in the first nine months of the year, just over 1% of a $679 billion global total. Roughly $4.5 billion of that went to DayOne, a Singapore-based data center company. Funding was still three times lower than the prior year, so the figure represents a recovery from a low base. Ahn argues that the bulk of global venture capital is concentrated in the U.S. and North Asia, and that only "a fraction of the fraction of the fraction" of money entering a market reaches startups.
Ahn is particularly critical of the region's listed companies. He said many Southeast Asian companies that have gone public or are preparing to do so are not showing strong results, and that quality companies in the region "get a lot less oxygen" than comparable businesses in the U.S. Grab, once considered a flagship of the region's tech sector, has seen its shares fall around 75% since its SPAC listing on the Nasdaq in late 2021. Ahn also pointed to rising inflation and higher interest rates as factors that have increased the cost of funding. A Lightspeed Venture Partners report cited in the article found that Southeast Asian outcomes are significantly less capital-efficient, generating about half the value per dollar invested compared with markets such as China. Ahn said VC firms in the region will need to incorporate mezzanine, tranche, debt and credit financing alongside equity.
Rakuten Capital, which Ahn helped establish as Rakuten Ventures in 2013, initially focused exclusively on Southeast Asia and backed companies including GoTo, ShopBack and RedDoorz. The firm has since broadened its geographic scope 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 said he favors small compute clusters and edge nodes over the large hyperscale campuses that dominate investment in Malaysia, which has attracted more than $34 billion from cloud providers. He cited Nvidia's newly released DSX pods as an example of modular infrastructure and noted that heterogeneous computing, which combines chips from different vendors, has gained traction; San Francisco-based Gimlet raised $300 million in September at a $3 billion valuation for software that divides AI workloads across chip types. Ahn also said Rakuten Capital hopes to take on incubation activity for the parent group.
According to data from the Founders Forum Group and Dealroom cited by Fortune, $10.7 billion flowed into Southeast Asian startups in the first nine months of the year, just over 1% of a $679 billion global total. Roughly $4.5 billion of that went to DayOne, a Singapore-based data center company. Funding was still three times lower than the prior year, so the figure represents a recovery from a low base. Ahn argues that the bulk of global venture capital is concentrated in the U.S. and North Asia, and that only "a fraction of the fraction of the fraction" of money entering a market reaches startups.
Ahn is particularly critical of the region's listed companies. He said many Southeast Asian companies that have gone public or are preparing to do so are not showing strong results, and that quality companies in the region "get a lot less oxygen" than comparable businesses in the U.S. Grab, once considered a flagship of the region's tech sector, has seen its shares fall around 75% since its SPAC listing on the Nasdaq in late 2021. Ahn also pointed to rising inflation and higher interest rates as factors that have increased the cost of funding. A Lightspeed Venture Partners report cited in the article found that Southeast Asian outcomes are significantly less capital-efficient, generating about half the value per dollar invested compared with markets such as China. Ahn said VC firms in the region will need to incorporate mezzanine, tranche, debt and credit financing alongside equity.
Rakuten Capital, which Ahn helped establish as Rakuten Ventures in 2013, initially focused exclusively on Southeast Asia and backed companies including GoTo, ShopBack and RedDoorz. The firm has since broadened its geographic scope 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 said he favors small compute clusters and edge nodes over the large hyperscale campuses that dominate investment in Malaysia, which has attracted more than $34 billion from cloud providers. He cited Nvidia's newly released DSX pods as an example of modular infrastructure and noted that heterogeneous computing, which combines chips from different vendors, has gained traction; San Francisco-based Gimlet raised $300 million in September at a $3 billion valuation for software that divides AI workloads across chip types. Ahn also said Rakuten Capital hopes to take on incubation activity for the parent group.
Go deeper than the headline
Research every firm in this story, track the ones that matter and get the daily briefing — free for 7 days.