A growing roster of vertical AI startups is emerging in Southeast Asia to serve sectors starting from seafood to finance. Singapore-based enterprise capital firm Antler recently made a bet on 37 of them, investing $5.1 million in total for pre-seed deals. This included a strategic partnership with Khazanah, Malaysia’s sovereign wealth fund, which invested into seven startups.
“When you have a look at the remaining of the world, there’s numerous horizontal AI and it’s becoming insanely competitive,” Antler co-founder and managing partner Jussi Salovaara tells TechCrunch. “What founders are increasingly trying to solve on this a part of the world are practical problems in several industries.”
He adds that though Southeast Asia doesn’t have the talent pool to construct something like OpenAI yet, they’ll take a customer-first approach to AI apps, solving pain points unique to different sectors and markets.
Inside verticalized AI, different trends are emerging in each country. For instance, Vietnam has a big pool of technical talent. Founders there who’re working on a consumer startup often focus more on the domestic market at first, but B2B startups are more globally-oriented from the start, Salovaara says. Then again, Indonesian startups tend not to focus on international expansion because their domestic market is so large, but Antler hopes to see more of them expand internationally.
One in all Antler’s investments is BorderDollar, which is constructing an invoice financing platform for cross border logistics. Since funding structures are different in Southeast Asia than the remaining of the world, BorderDollar used their very own training data to construct a credit scoring system.
“You possibly can’t really take something from the West after which just plug it in here and use that,” says Salovaara.
One other member of Antler’s portfolio is CapGo, which Antler backed largely due to the founders’ backgrounds: CTO Chen Yu worked on machine learning at Grab and CEO Yichen Guo earned a Harvard MBA and worked at Citi, Almanac and VIPKid as a product manager. CapGo automates data acquisition for market research, a pain point Salovaara is conversant in because he used to work at an investment bank.
“It’s super unclear why you’d throw countless amounts of human hours into researching a market when AI can accomplish that far more effectively and efficiently,” he says, adding that CapGo’s competitive moat is its ability to construct data sources which might be tailored first for Southeast Asia. It plans to expand into the remaining of the Asia Pacific region.
Each Zolo and Seafoody were created to unravel problems in Southeast Asia’s food supply chain infrastructure. Based in Malaysai, Seafoody was founded by Eleen Kee, Samantha Ooi and Zach Leong. Kee, its CEO, comes from a family that has worked within the seafood industry for several generations. Seafoody is concentrated on using AI to eliminate middlemen within the seafood supply chain and sell on to businesses. Zolo, meanwhile, can also be simplifying the food supply chain by utilizing AI to shorten the order management process, which often entails quite a lot of back-and-forth between suppliers and restaurants on WhatsApp.
One other startup Salovaara highlights is Malaysia-based Coex. It uses AI to digitize project claims and bills of quantity, so approvals, communication and preparing materials can all be performed more quickly. “Construction is clearly one of the crucial analog and old fashioned industries, so this is essentially a play to optimize capital efficiency and operational efficiency,” says Salovaara.
Constructing a vertical AI startup comes with its own challenges. For instance, the appropriate team needs to be put together and include not only a technical founder with the appropriate expertise, but in addition someone who understands the industry they’re targeting thoroughly. In addition they need the appropriate data for training. But once a vertical AI startup comes together, Salovaara says they’ll construct a really deep competitive moat.
“If you must raise funding for a quote unquote ‘hardcore’ horizontal AI out of Southeast Asia, it will be difficult, especially to enter right into a race with an organization based in Silicon Valley,” he adds. “Attempting to compete with a spot that has more talent or a greater funding infrastructure on this space, especially on the later stage, remains to be quite difficult. So these vertical plays are the technique to go.”
