Southeast Asia is fielding deep tech startups worthy of competing on a global stage, showing Silicon Valley isn’t the only place investors should look for innovative ideas, Paul Santos, managing partner at Wavemaker Partners, said at the Asia PE-VC Summit 2020 organised by DealStreetAsia on Wednesday.
“We believe that B2B and deep tech represent a tremendous, yet undervalued, opportunity in Southeast Asia,” Santos said in a keynote presentation titled ‘The Evolving Deep-tech Investment Landscape in Southeast Asia’ at the summit.
“Nobody has a monopoly on innovation globally. It comes from everywhere.”
Wavemaker, based in the US and Singapore, is an early-stage venture capital company, mainly investing in business-to-business (B2B) and deep tech startups. It has made 136 investments since 2012, with 12 exits valued at around $600 million, Santos said. Across its three funds, Wavemaker has invested around $180 million.
Santos defined deep techs as companies offering a technology beyond just business model innovation, and creating a difficult to replicate solution to a meaningful problem. He said it doesn’t really matter if it’s deep tech or “medium tech,” as long as it has a path to commercialisation.
He added that there is more interest in investing in Southeast Asia’s deep techs now than there was eight years ago, but said the segment still faces resistance from potential investors.
“One of the criticisms is, ‘I haven’t seen really big companies come out of Southeast Asia yet,’ especially in the B2B and deep tech space. But why can’t it happen? That, for me, is kind of like driving with a rear-view mirror,” Santos said.
“The perceived value that you can build interesting B2B and deep tech companies out of this part of the world is still low. Where we have hope is that maybe the actual value of these companies could be really high,” he said. “I’m not coming out here saying we’re better than everybody else. But I also want us to open our eyes and say we actually have a chance.”
He said one of the concerns he hears often is that the region lacks talent.
“Talent can move. And things change with politics,” he said, noting his portfolio has founders from 32 different countries, including three from Iran.
Indeed, as the Trump administration made it more difficult for US tech companies to import overseas talent to Silicon Valley over the past few years, Singapore was touted as an alternative location for tech hubs, in part for its easier immigration policies.
As an example of the talent in Singapore, Santos cited his portfolio company Borneo, a data-privacy and cybersecurity player founded by Prithvi Rai, an alum of Facebook, Uber and Yahoo.
Rai “could have built his company in Silicon Valley. But he chose to stay here [in Singapore]. And he’s competing against guys in Silicon Valley,” Santos said.
Rai raised around $2.5 million and has already built the product, which has customers globally, including in the US, with large contract sizes, Santos said, adding the company likely couldn’t have been built on that budget in Silicon Valley.
Another of Wavemaker’s portfolio companies, Transcelestial Technologies, uses laser technology to provide internet access. It was founded by Mohammad Danesh, from Iran, who studied at National University of Singapore (NUS), and Rohit Jha, from India, who attended Singapore’s Nanyang Technological University (NTU).
Santos said that since showing the technology can keep the signal up even during a typhoon in South Korea, Transcelestial Technologies has raised $10 million, with “a couple million more” dollars expected to be raised soon.