SINGAPORE — HubSpot, the customer platform for scaling businesses, has announced the findings of a study conducted by Milieu Insight that explores the trends and innovations shaping the startup landscape in Southeast Asia and India.
Despite current global economic headwinds and private funding in the region declining to its lowest levels in six years, the startup ecosystem in Southeast Asia and India remains resilient, demonstrating significant signs of maturity. HubSpot’s new report reveals that, on average, about half (53%) of startups across the region found it easier to grow their businesses in the past year compared to previous years. Notably, startups recognize the need to balance growth and profitability, with most regional startups agreeing that a clear path to profitability (98%) has become more important in the last year compared to the years prior.
This resilience is characterized by an interesting dichotomy: while geographical expansion presents challenges, with 23% of startups finding it harder to enter new markets, customer acquisition and retention have become more manageable. Although 18% mentioned that acquiring customers has become more challenging, more than half (55%) of startups report customer acquisition and retention improvements. Increased competition (31%), stricter customer demands (31%), and access to capital (29%) were cited as the key challenges to customer acquisition among those who mentioned acquiring customers has gotten harder.
Laurence Butler, Global Senior Director at HubSpot for Startups, commented, “These signs of growing resilience are a testament to the region’s entrepreneurial spirit and adaptability. While digital transformation has been a focus among the region’s SMBs in recent years, the digital-first nature of modern startups empowers them to swiftly adapt to volatile market conditions by leveraging data analytics and foundational technologies such as CRM platforms. Most startups now recognize the critical importance of having a clear path to profitability, marking a shift towards focusing on core markets and building robust customer relationships, which are crucial for long-term sustainability.”
Potential for technology-augmented growth
The survey findings also revealed that startups in the region have built a robust technology foundation and are leveraging their tech stack to collect, structure, and analyze customer data to drive business growth.
Almost all (99%) startups say they are using at least one CRM tool, and eight in 10 (81%) startups are satisfied with their tech stack. CRM platforms consolidate customer data from multiple sources, creating a single source of truth that enables brands to accurately track and measure the impact or effectiveness of their customer engagement efforts.
Consequently, 71% of startups surveyed perceive that they have an adequate amount of data to identify new business growth opportunities. The collective use of data and technology is not only helping drive innovation and build better customer relationships but may have also contributed to the enhanced resilience and adaptability of startups in the backdrop of a persisting global funding winter.
The report also uncovered a disparity between the countries surveyed. More than a third of startups (38%) in the Philippines reported insufficient data on their business prospects and the customer journey. Only 58% of startups in the Philippines indicated satisfaction with their tech stack, the lowest among all countries surveyed. This could have contributed to local startups’ inability to collect the right data for better decision-making and growth prospects. Nearly half (48%) expressed that growing their companies is more difficult than before, almost double the regional average of 25%.
Amid ongoing economic uncertainties, the findings collectively suggest that the most successful startups will adopt the relevant technologies to collect and leverage customer data, boosting their growth or expansion prospects.
AI is on the rise, but talent is still in short supply
The emergence of artificial intelligence (AI) is fundamentally transforming the startup landscape in Southeast Asia and India. AI is increasingly seen as a pivotal element in companies’ future strategies, automating repetitive tasks and creating new roles that demand advanced skill sets. However, this technological advancement comes with its own set of challenges, particularly in the area of talent acquisition.
Startups are struggling to fill key positions, with marketing (46%), customer success (40%), and sales and business development (38%) roles being the most difficult to hire for among go-to-market positions. For non-go-to-market positions, AI and machine learning engineers top the list of hardest-to-hire roles (35%), followed closely by experts in data analytics (33%), product management (33%), and industry-specific specialists (33%). Software engineers also remain in high demand (32%).
Cost and experience are identified as the primary shortcomings in the current talent pool across the region. Other challenges include a lack of soft skills among candidates and a mismatch of expectations regarding remote and hybrid working arrangements.
The talent landscape varies across different countries:
- In Singapore, the lack of diversity in the talent pool (41%) and the shortage of specialized technical skills (37%) are significant challenges, alongside cost (37%).
- In India, limited experience in startup environments (49%), expectations misalignment regarding remote/hybrid work (49%), a general shortage of talent (48%), lack of soft skills (47%), and high turnover rates (41%) are prevalent issues, with cost being a major factor (50%).
- Indonesia mirrors many of India’s trends, although the challenges related to soft skills, remote/hybrid working expectations, and turnover rates are less pronounced.
With the talent shortage showing no signs of easing, startups must rethink their talent strategies to overcome these hurdles. Solutions could include investing in upskilling and reskilling employees by tapping government-led talent initiatives such as Singapore’s SkillsFuture program, leveraging remote work to access a broader talent pool, and fostering a culture that values diversity and continuous learning.
Future outlook: The role of AI in driving growth
The majority of startups across the region (98%) agree that AI is important in their future strategy, particularly among those in India and Indonesia. 73% of respondents in India and 63% in Indonesia strongly agreed with this statement, the highest sentiments registered among all countries surveyed.
Leveraging AI offers several key opportunities for startups:
- Accelerating Time to Market: 32% of startups see AI as a way to bring products to market faster.
- Enhancing Product Delivery: 30% believe AI can help in delivering products more quickly.
- Competing with Larger Competitors: 30% view AI as a tool to level the playing field against bigger competitors and incumbents.
“Today, AI is viewed as the single largest economic opportunity since the start of the internet, and data is the currency of AI,” explained Laurence. “Residing in some of the world’s fastest growing digital economies, digital-native startups in the region are well-positioned to tap on their established tech infrastructure and quality data that form the basis for effective AI solutions. By leveraging AI, startups can quickly identify gaps in their business models, better anticipate customer needs, and improve their overall ability to deliver highly personalized customer experiences.”
These findings were based on responses from 600 startup founders and decision-makers across Singapore, Indonesia, the Philippines, and India to understand their biggest challenges and opportunities for growth conducted from February to March 2024.
Learn more about the startup pulse report at the official website here. For more insights like this and helpful tips for founders, we invite you to join HubSpot for Startups.
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