SEA of Startups

Decoding the Pulse of Founders, Capital & Conviction in Southeast Asia.
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Real, raw, relatable takes on Southeast Asian startups. One investor, the week's news, no script. seaofstartups.substack.com

  1. Aug 13

    A salary is not ownership

    In 2022, at the Vietnam Venture Summit, forty one funds stood up and pledged one and a half billion dollars for Vietnamese startups. The pledge covered the three years from 2023 to 2025. Through May of this year, Vietnamese founders raised twenty eight point eight million dollars. Ten rounds. And next month, on the twenty first of September, FTSE Russell reclassifies Vietnam from a frontier market to a secondary emerging market. FTSE’s own estimate is that about six billion dollars of passive index money follows it in. Six billion dollars, arriving on a scheduled date, into the stock exchange. Twenty eight point eight million, across five months, into companies. So I do not want to hear that Vietnam has a funding problem. Vietnam is about to be soaked in money. It is just the wrong money. I will defend this next line anywhere. Vietnam has the best engineering talent base in Southeast Asia. It also spent recent years being told it was the next China, then the next India, then the next Indonesia, then whatever the next thing was that year. Every one of those labels pulled in capital. Not one of them pulled in the kind of capital that funds a company and then hangs around for eight or ten years to find out whether it worked. This is not about how much money there is. It is about what kind. The amount was never the problem. * * * One. Four taps, and the one that is off There are four ways money flows into Vietnam right now. Three of them are running hard. One has been turned off. Almost every story you read about the country confuses them. Tap one is venture capital, and that is the one that is off. Through May, Vietnamese startups raised twenty eight point eight million dollars across ten equity rounds. In the same period last year it was two hundred and twenty seven million across fifteen rounds. Deal count barely moved. Deal value fell about eighty seven percent. Those are Tracxn numbers and they run through May, not through the full year, and I am going to keep saying that, because a five month figure is not a year. Let me be fair about the baseline, because this is where people overcook the story. Vietnam was never a billion dollar a year venture market. Full year 2024 was four hundred and ninety four million dollars across sixty eight deals. So this is not a collapse from a great height. It is something more boring and more serious. Sixty eight deals a year became ten deals in five months. That is roughly one venture round every two weeks, in a country of a hundred million people, with the deepest engineering talent pool in the region. And Vietnam is not alone in it. Across Southeast Asia the first half was thin. The regional dollar totals held up because people keep stuffing them with data centre deals that should never have been in a startup funding report in the first place. Strip those out and it is down across the board. Vietnam is the sharpest version of a regional problem, not a Vietnamese peculiarity. Tap two is index money, and it is running hard. In April, FTSE Russell confirmed the upgrade, effective the twenty first of September and phased into the global index series through next year. FTSE estimates about six billion dollars of inflows from passive trackers. The World Bank puts near term flows at about five billion and says the long term potential could reach twenty five billion by 2030. Those are their numbers, not mine, and both institutions have an interest in the story being good, so hold them loosely. Even at half those figures it is the largest single capital event in Vietnam’s modern financial history. Here is the part nobody says out loud. Ask what passive money actually does. It buys the index by a pre-designed weighting. It does not read a deck. It does not take a meeting. It does not care who the founder is or what the product does. It buys the listed companies in proportion to their weight, which in Vietnam means banks, property and retail. And when it leaves, it leaves the same way, by weight, on a rebalance date, regardless of how good your quarter was. Not one dollar of that six billion is available to a founder with a working product and eighteen months of runway. Not one. It is not that kind of money. Tap three is borrowed retail money, and it is running very hard. Margin lending at Vietnamese brokerages hit about four hundred and forty five trillion dong at the end of the second quarter, roughly sixteen point nine billion dollars. At the start of 2023 it was one hundred and twenty five trillion. Three and a half times more borrowed money in three years. This is the bit that should make you sit up. That borrowed money is now the main thing absorbing foreign selling. When overseas funds sell Vietnamese stocks, it is domestic retail investors, on credit, taking the other side. The counterargument is a real one. The prevailing view among Vietnamese analysts is that this is not yet a problem: brokerages have strengthened their buffers, July’s margin calls were localised, forced selling did not spread. That is the majority position, held by people who know that market far better than I do. My read is simpler. When the buyer holding your market up is borrowing to do it, your market is not deep. It is propped. Contained and safe are different words, and the gap between them is where people lose money. Borrowed positions unwind faster than anyone models them. Tap four is public listings, and it is reopening hard. Four Vietnamese IPOs raised more than eight hundred and thirty million dollars in the first half of this year, at a combined market value just under seven billion. I am going to hold that one, because tap four tells you the most and it deserves its own section. Put the four side by side. Vietnam has built a functioning machine for turning domestic savings into listed equity. It has built almost nothing for turning savings into new companies. Both get called a capital market. Only one of them compounds into industries that did not exist before. Think about what that does to a talented twenty seven year old in Hanoi who wants to build something. The shortest path to capital is not a seed round, because there are ten of those a year. It is a salaried job at a multinational, a role inside a listed group, or a family business with a balance sheet. Every one of those choices is rational. Individually they are all the right call. Collectively they are how you end up with a country that has world class engineers and no company anyone outside the country can name. * * * Two. The world found Vietnam’s engineers and decided to rent them Vietnam has more than eighteen thousand four hundred specialised AI engineers, the largest pool in Southeast Asia. Demand for them is running at about two and a half times where it was in 2023. On technical and system design assessments, the top tier score within about eight percent of their American peers, at sixty to eighty percent lower cost. Disclosure on those figures, because it matters. Most of them come from recruitment firms and offshore advisory shops, which are businesses that exist to sell you a Vietnamese engineering team. Take the direction as real and the decimal places as marketing. Even discounted heavily the picture holds. This is a deep, cheap, genuinely excellent engineering base, and the world knows it. Vietnam is an exporter of talent. Look at what the world is doing with it. Nvidia has been expanding its hiring in Vietnam across manufacturing and operations roles tied to high end GPUs, with Foxconn reported as a possible partner, and it keeps AI model development roles in Hanoi and Ho Chi Minh City. Be careful here, because this is exactly the kind of story that gets inflated in a group chat by Friday. Nvidia has not announced a factory in Vietnam. What is reported is hiring, in roles consistent with more advanced work. That is a signal, not an announcement. But take the signal seriously, because it tells you the whole story in one move. The world found Vietnam’s engineers, and it decided to rent them. Nobody in this story is the villain. Nvidia hiring hundreds of engineers in Hanoi is good for Hanoi and good for those engineers. Hard currency, frontier work, none of the risk. A twenty nine year old with a mortgage and a kid who takes that job over a startup salary is making the correct choice, given the options in front of them. The failure is that nobody local ever put a competing offer on the table. And I want to be even handed about whose fault that is, because it is not only the money’s fault. Investors in this region got risk averse and clustered around whatever was already working, which is how you get ten rounds in five months. Founders own a piece of it too. Plenty of Vietnamese founders spent the last few years priced for a market that stopped existing in 2022, holding out for a valuation that was available once and is not available now. A round that closes is worth more than a valuation you are still defending. That is not investor propaganda. That is arithmetic about runway. The reporting around Vietnam’s funding reset names constraints that are unglamorous and real: reluctance to hire foreign expertise, language barriers, and legal and foreign exchange rules that make a Vietnamese entity harder to fund than a Singapore one. Some of that is business culture and takes a generation. Some of it is paperwork and could be fixed inside a year. In fairness, the government has made real moves on the rules, and the direction of travel is good. But underneath all of it sits one sentence, and it is the sentence I would put on the wall of every ministry in the region, and every university. A salary is not ownership. When an engineer in Hanoi builds something excellent on an offshore contract, the value of what they built shows up on somebody else’s cap table, in somebody else’s currency, in a company listed on somebody else’s exchange. They get a good wage, which is not nothing, especially if you remember wha

  2. Aug 5

    Malaysia does not have a money problem

    On the twenty seventh of July, in a bank tower in Petaling Jaya, the Malaysian government announced more than five billion ringgit of financing for Malaysian startups. It has been a week. I still cannot tell you who is giving it. Not because it is a secret. Because nobody published the list. The minister said fifteen organisations. The fullest account any newspaper ran named twelve, and it introduced them with the word “among”. So somewhere out there are three institutions holding a share of five billion ringgit for Malaysian founders, and not one outlet in the country can tell you their names. Now, I am not going to spend this piece telling you Malaysia has no money. That is the lazy version and it is not true. Malaysia has enormous amounts of money. Thirty billion ringgit sits in committed venture and private equity funds, according to the Securities Commission. A hundred and sixty billion ringgit of data centres is going up in Johor. And two weeks before that press conference, Malaysian retail investors queued up with one point four billion ringgit in cash to buy shares in one small AI company on the ACE Market. One point four billion. For a company raising about twenty million. So the money is here. The appetite for risk is here. Malaysians will absolutely gamble. What almost nobody in this country will do is write a two million ringgit cheque into a company with no revenue and then wait eight years to find out if they were wrong. That is not a funding gap. That is a temperament gap. And you cannot fix a temperament gap with a press release. One. Fifteen organisations, twelve names Start with what was actually announced, because the detail is better than the headline. The event was called TechnoMART Malaysia: High Tech Financing 2026. It was run by MOSTI, the Ministry of Science, Technology and Innovation, and launched by the minister, Datuk Chang Lih Kang, on the twenty seventh of July at Menara MBSB Bank in Petaling Jaya. His words, and I want to be fair and quote him properly: “We have connected fifteen organisations, including funding agencies and financial institutions. Together, they provide funding worth about five billion ringgit to support our startups and innovators.” Four things about that sentence. First, the verb. He said connected. Not allocated. Not committed. Not budgeted. Connected. And he was straight about it when a reporter pushed him, because a reporter did ask whether the five billion was for this year alone. His answer was that it is an aggregated funding pool from the participating organisations, covering about a year and a half. Aggregated is doing a lot of work there. It means nobody created a fund. Fifteen institutions added up the financing capacity they already had on their books, over eighteen months, and someone put the total on a banner. Not one ringgit changed hands on the twenty seventh of July. Second, and to his credit, the minister said the quiet part himself. He said the financing is not distributed automatically, and that it is subject to each institution’s own eligibility requirements. That is an honest caveat and he did not have to offer it. Credit where it is due. But sit with what it means. There is no single door. There are fifteen doors, and behind each one is a different credit committee with a different form, a different collateral test, and a different definition of the word startup. Third, TechnoMART is not new. It has been running since 2018 and has delivered more than thirty programmes. It is a matchmaking platform. It puts technology companies in a room with financiers. That is a genuinely useful thing to do, and I want to say so plainly, because the commercialisation gap in Malaysia is real. The minister called it the valley of death, and he is right that it exists. It is just not a new pot of money. It got reported like one. Fourth, the list. This is where it stops being funny. New Straits Times named three participants: MRANTI, MBSB Bank and EXIM Bank. Business Today added MIDF. Malaysia Tribune ran the longest list and named twelve: Cradle, SME Bank, Malaysia Debt Ventures, Permodalan Negeri Selangor, MRANTI, Bioeconomy Corporation, ADFIM, EXIM Bank, MTDC, Venture Tech, Kumpulan Modal Perdana and PMB Tijari. Put every outlet together and you get fourteen distinct names, and not one of those reports claims to be the complete list. Look at what is on it. SME Bank. EXIM Bank. Malaysia Debt Ventures. MBSB. MIDF. Those are lenders. Development banks. Institutions whose entire discipline is getting the principal back. There is real equity in there too, and I am not going to pretend otherwise. Cradle, MTDC, Venture Tech and Kumpulan Modal Perdana are equity vehicles. The minister himself listed the instruments: grants, equity, debt, guarantees, blended finance and working capital. Equity is in the mix. What nobody has published is how much of the five billion is equity. There is no split. Not by instrument, not by institution, not by stage. You are told the total and asked to be impressed. And one of the fifteen is ADFIM, the Association of Development Finance Institutions of Malaysia. It is a trade body. It represents lenders. It does not lend. So we are already at fourteen funders and a members’ club. Two. The bank in the lobby Here is the part that actually changed how I read this story. Five days later, the same New Straits Times reporter filed a second piece on a different subject. MBSB Bank, the bank that hosted the event in its own tower, announced it is committing four billion ringgit to what it calls high growth, high value industries. One billion each for rail, aerospace, automotive and renewable energy. And the chairman gave that quote, in the paper’s own words, “on the sidelines of the TechnoMART Malaysia: High Tech Financing 2026 event”. Same room. Same day. I want to be careful here, because this matters and I am not going to overstate it. Neither article says MBSB’s four billion is part of MOSTI’s five billion. No source links them. I chased this and could not close it, because MOSTI never published a breakdown. So there are two possibilities, and you can pick either one. Possibility one. The four billion is inside the five billion. In which case eighty percent of Malaysia’s headline startup financing pool is one bank’s sector lending strategy, and the startups in question are rail suppliers and solar farms. Possibility two. It is separate. In which case MOSTI’s five billion is spread even thinner across the other fourteen institutions than it already looked. There is no third possibility where this number means what the headline said it meant. And one more detail, because it is the most telling sentence in the whole story. MBSB described this push as diversifying beyond its traditional strength in property financing. A property lender is moving into industrial lending. That is a perfectly sensible corporate strategy and I have no quarrel with it. It is just not startup capital, and it got filed under startup capital. Three. Thirty billion committed, 2.8 billion out the door So much for the announcement. Now ask what happened last year, with the money that already exists. The Securities Commission published its capital market masterplan in March. In it is a number that should be the headline of every Malaysian startup story for the next twelve months, and I have seen almost nobody use it. At the end of 2025, Malaysian venture capital and private equity together held thirty point one billion ringgit in committed funds. In that same year, venture and private equity together deployed two point eight billion ringgit, across a hundred and seventeen deals. Thirty billion committed. Two point eight billion out the door. That is under ten percent. And be careful with that two point eight, because I am going to be careful with it. That is venture and private equity combined. The venture slice on its own is smaller. Of the thirty billion committed, only about six billion is venture at all. The other twenty four is private equity, which buys profitable companies. Different animal, different risk, different sport. So when a minister stands up and says Malaysia needs more financing for startups, the honest response is: does it? There is thirty billion ringgit sitting in committed funds in this country and it moved two point eight billion in a year. Adding a fifteen door lending pool to that does not solve the problem. It is the wrong end of the pipe. If you want the sharpest version of this, look at Jelawang Capital. Jelawang is Khazanah’s national fund of funds. It was set up specifically to fix this. One billion ringgit, mandated to back Malaysian venture managers so they can back Malaysian founders. Exactly the right instrument. Genuinely the right idea. I have no criticism of the design. In February, Khazanah reported the results for the year to the end of December. Its first five fund managers had backed more than ten startups, and crowded in about thirty million ringgit. Thirty million. Ten companies. From a one billion ringgit national fund of funds. Fund of funds are slow by design. First five managers, early days, capital calls take years. That is all true and I will defend it. But hold that thirty million next to a five billion ringgit banner and tell me which number describes Malaysia today. Four. Fifty billion of debt, under a billion of equity You can see the same shape in the budget. Budget 2026 raised the combined equity allocation across KWAP’s Dana Perintis and Khazanah’s Jelawang to seven hundred and fifty million ringgit. Cradle got fifty five million for equity programmes. The co-investment fund got two hundred million. In that same budget: over fifty billion ringgit in loans and guarantees for entrepreneurs. Fifty billion of debt. Under a billion of equity. That is the Malaysian capital stack in two numbers. And I understand why. Debt is politically easy. A guarantee costs nothing until it is calle

  3. Jul 29

    When the bust ends in a courtroom

    For a decade, Indonesia was not a story about Southeast Asia. It was the story. Two hundred and eighty million people, most of them young, most of them coming online for the first time with a phone in their hand. Gojek, Tokopedia, a parade of unicorns. Every global fund with a Southeast Asia slide put Jakarta in the middle of it, and everybody wanted in. In 2021, at the peak, Indonesian startups raised about $6.9 billion. Not the region. Indonesia by itself. Last year, the whole country raised $355.7 million across 91 deals. That is roughly five cents on the dollar. Indonesia, the giant, the centre of the entire regional pitch, now raises less venture money in a year than Vietnam does, and less in a year than Singapore raises in a month. The music stopped and the bubble burst. That part is not the interesting part. Bubbles burst everywhere. What is interesting is what comes next, and in Indonesia three things arrived at once. The courts came for the founders. The regulator came for the funds. And the smart money quietly started packing its bags. That is the reckoning. Let us walk through it. One. How the balloon got that big Before we bury this thing, we have to be honest about how it got so big in the first place, because a bubble this size is never one person’s fault. It is a whole system agreeing not to look too closely. I am going to be honest about my own side of the table, because that is the only way this ends up being fair. You back a startup. Six months later, twelve months later, eighteen months later, another fund puts money in, hopefully at a higher price. And just like that, on your books, your stake is worth more. You have made money on paper. You did not sell anything. You did not return a cent to anyone. But the number on your page went up. That paper number is the single most valuable thing you own, because it is what you carry into the room when you go and raise your next fund. A bigger fund. And a bigger fund pays you a bigger management fee, in cash, this year, whether or not a single rupiah ever comes back to an investor. So let me say the quiet part plainly. These funds spent years marking their own books up to prices that only ever lived on paper, because that paper is what raises a bigger fund and pays a bigger fee. Every asset class on earth plays some version of this game. Private equity plays it. Hedge funds play it. Real estate plays it. Indonesian venture’s bad luck was that here the bubble actually burst, so everyone found out at once. And when everyone marks everything up, nobody wants to be the person who checks. When eFishery was carried on everyone’s books at unicorn prices, every investor holding it got to wave that markup around and raise more. The number made everyone richer on paper. So who exactly was going to drive out to the fish farms and count the feeders? Nobody did. That is how a balloon gets this big. Real founders, real ambition, a genuinely enormous market: all of that was true. But wrapped around it was a thick layer of paper valuation that everyone had a reason to believe and nobody had a reason to test. Then the cheap money went away. Global rates went up, the free-flowing capital dried up, and the next round at a higher price simply stopped coming. The moment the markup stopped going up, the whole thing had to be repriced down to whatever was actually there. Sometimes that is a smaller, real business. Sometimes it turns out there was nothing there at all. As Buffett put it, when the tide goes out you find out who has been swimming naked. In Indonesia, when the tide went out, the state did not shrug. It reached for a hammer. Two. The hammer lands on the frauds, and it should Start with the clearest case. eFishery, the internet-connected fish feeder company that sold itself as the future of aquaculture, turned out to be one of the largest frauds this region has ever produced. Two sets of books. The company claimed roughly $752 million in revenue when the real number was nowhere close, and claimed a profit while it was losing tens of millions. The founder was sentenced to nine years, reduced to six on appeal. Two of his executives are going to prison alongside him. The investors who got fooled were not amateurs. Then there is Investree, a fintech lender and at the time one of the respected pioneers, run by a genuine star of Indonesian finance. The regulator says Adrian Gunadi collected around Rp2.7 trillion, about $164 million, from the public without the licence to do it, and routed money through shell companies. When the investigation closed in, he left for Qatar. Interpol red notice, extradition, and he landed back at Soekarno-Hatta in handcuffs in September last year. He faces up to ten years. So far this is a clean story. Frauds exposed, frauds punished. Good. If that were the whole thing I would be telling you the cleanup is working. But the hammer did not stop at the frauds. Three. Four venture capitalists went to prison for a startup that failed There was a startup called TaniHub, an agritech connecting farmers to buyers. It failed the way startups fail. Two investors had put about $25 million in between 2019 and 2023: MDI Ventures and BRI Ventures. Here is the detail that changes everything. MDI is owned by Telkom Indonesia. BRI Ventures is owned by Bank BRI. Both parents are state-owned. So in the eyes of the law, the money that went up in smoke was state money. And in Indonesia, a loss of state money can be prosecuted as corruption. The man who ran TaniHub, Ivan Arie Sustiawan, did divert funds for himself. That was a fraud. He got nine years, plus a fine and restitution, and according to the court record that is a thief getting what a thief gets. No argument from me. Then the court turned to the investors and convicted them too. Donald Wihardja, former chief executive of MDI Ventures: five years. Nicko Widjaja, former chief executive of BRI Ventures: three years. Two more investment executives, Aldi Adrian Hartanto and William Gozali: two years each. Four venture capitalists in prison for backing a startup that failed. I want to be precise here, because this is the part that made every investor I know, inside the region and outside it, sit up. The court record noted there was no personal gain. These men did not steal. What they were convicted of was approving an investment that lost money. Their own defence was the most basic rule in the whole business: a decision made in good faith that happens to lose money is not a crime, it is the risk you were hired to take. The court did not accept it. I told you the funds were not saints and I meant it. The markup game, the fee game, all of it. I have called parts of my own industry a grift and I stand by that. We earned plenty of the anger coming our way. But there is an enormous gap between you pumped your paper numbers to raise a bigger fund and you belong in a prison cell because a startup failed. The hammer stopped drawing that distinction. It came down on the thieves and on the losers with roughly the same force. Four. And it reached the very top Then there is Nadiem Makarim, co-founder of Gojek and former Minister of Education. At the time he built it, Gojek was the most successful startup this country had ever produced. I am going to be exact, because it matters. He was not convicted of enriching himself, and the court specifically found that he did not. The conviction, on 30 June, was for abuse of authority in how his ministry procured school laptops, and for favouring Google, which had been an early Gojek investor. The court put state losses at Rp1.57 trillion, roughly $88 million, on the basis that the Chromebooks could not be used in regions without internet access. He got ten years, a fine, and an order to pay restitution. He says the deal saved money. He is appealing. I am not going to opine on guilt. That is what the appeal is for, and I have no interest in convicting anyone from behind a microphone. The only thing I can talk about is the picture this makes from the outside. The founder who built the country’s proudest tech company is in a cell. Two founders who faked the numbers and one who fled the country are in cells. And four investors who simply lost money are in cells too. Whatever you think of any single case, the message that lands on every founder and every fund in the country is identical. When the boom turns to a bust here, the bust does not end in a spreadsheet and some red ink. It can end in a courtroom. Every founder and every fund manager in Jakarta is now doing that mental maths. Five. Then the regulator arrived, as it always does Once the courtroom is in play, the regulator is never far behind, because the other thing a burst bubble always triggers, everywhere, is new rules. The people who missed the fraud on the way up tend to be the most desperate to look tough on the way down. The financial regulator, OJK, brought in a new regime for venture firms. You now need Rp50 billion, about $3 million, in paid-up capital just to operate a fund. Use your licence within six months or lose it. Full disclosure of who really owns and controls you. Some of that is a reasonable reaction. After Investree ran money through shell companies, wanting to know who actually controls a fund is fair enough, and I understand the intent. But be honest about the $3 million floor. It does not stop the next fraud. Fraud does not care what your paid-up capital is. What it does do is price out emerging fund managers, the exact people a recovering market needs most, the ones willing to back a founder before anyone else will. You do not catch the crook. You just clear the room of the honest small players. And it is not only the private market. Up at the level of the public exchange, MSCI, the firm whose indices steer trillions of dollars of passive money around the world, has put Indonesia under review. It flagged the market for opacity, for murky shareholding structures, for suspected coordinated

    When the bust ends in a courtroom

  4. Jul 22

    Just passing through: how Malaysia keeps funding the people who leave

    Over the past few weeks, three Malaysia stories hit the news that, on the surface, have nothing to do with each other. A government pension fund answered in Parliament for nearly RM200 million lost in a fish farming startup that turned out to be a fraud. A celebrity founder and her husband sat in a courtroom over money that came from two of the biggest state funds. And a quasi-crypto commune in Forest City had its license pulled by the local council and announced it was leaving. A fraud, a trial, and a controversy. Three different casts, three different genres. And underneath all three sits one uncomfortable pattern about how Malaysia spends its public money and who actually ends up on the receiving end of it. Here it is in one line, and the rest of this post is me proving it: when the Malaysian state goes looking for the future, it keeps handing its money and its land to people who are just passing through. And the ones who stayed, who put down roots and built something here, are the ones it keeps overlooking. One. Four audit firms, and nobody counted the feeders Start with the pension fund, because this is the one that should make you angriest, and not for the reason you think. The fund is KWAP. It manages the retirement savings of Malaysian civil servants: teachers, nurses, clerks, the people who keep the country running. About RM195 billion under management, more than RM8 billion in investment income last year. A serious, professional institution. In July 2023, KWAP put nearly RM200 million, call it US$47 million, into eFishery, the Indonesian startup that made internet-connected fish feeders and sold itself as the future of aquaculture in Southeast Asia. You already know how this ends. eFishery was one of the biggest startup frauds this region has ever produced. The company kept two sets of books. It claimed roughly 400,000 smart feeders deployed in the field. The real number was about 24,000. The fleet was inflated more than fifteen times over, and revenue was inflated to match. The founder was sentenced to nine years in an Indonesian prison, since trimmed to six on appeal. The story is back in the news because the Prime Minister stood in the Dewan Negara this week to answer for it, and the anti-corruption commission has opened a probe. The easy story, the one a lot of people wanted, is that somebody was lazy or asleep at the wheel. I do not think that is what happened, and the truth is far more useful. KWAP did not skip the diligence. It was part of a consortium that included SoftBank and Temasek, serious money with serious teams. Between them, the investors hired four separate audit and diligence firms: PwC, Grant Thornton, EY, and KPMG. They hired six more firms to survey the market and validate eFishery’s position in it. They hired Kroll, the corporate investigations outfit, to run background checks on the founders. That is millions of dollars of the most reputable professional diligence money can buy. Every single one of them missed it. Because all of that diligence was done on paper. Financial statements verified, documents cross-checked, management interviewed, the numbers in one data room matched against the numbers in another. As far as I can tell, nobody got in a car and drove out to the fish farms to count the feeders. If a single one of those firms had spent one week doing what any private equity analyst is taught on day one, go to the site, walk the floor, talk to the actual customers, they would have found 24,000 machines where the company promised 400,000. The fraud was not hiding in the accounts. It was sitting in plain sight in the fields, where nobody bothered to look. Every founder and fund manager reading this should burn that in: diligence on documents only tells you the documents are consistent. It does not tell you the documents are true. The cheapest, most boring check in the entire toolkit, physically going and looking at the thing, is the one nobody did. Two fairness notes. RM200 million against a RM195 billion fund is a rounding error, one tenth of one percent. Nobody’s pension is at risk, and when you hear the political noise, keep it in proportion. This is embarrassing, not an emergency. But it is exactly because the money was small that the failure matters. This was not a bet that went wrong. It was a bet that was never really examined, waved through on the strength of who else was in the round. SoftBank is in, Temasek is in, the auditors signed off, so we are in. That may pass in public markets. In private investing it is not investing, it is following. And when a Malaysian pension fund follows a crowd of foreign funds into a foreign fraud, you have to ask the question this whole post is about: what did any of it have to do with building Malaysia? Two. They bought the face, not the business I am going to be careful here, because this is a live trial. The founders have pleaded not guilty, and I am not here to convict anyone from a microphone. Everything about the alleged conduct is exactly that, alleged, and the courts will decide in due process. But the investment itself, the money going in and the money coming out, is a matter of public record, and that part is fair game. The company is FashionValet, the Malaysian fashion e-commerce startup founded by Vivy Yusof and her husband. Vivy was, and is, one of the most recognizable entrepreneurs in the country, a genuine influencer before that word got cheap, with a modest wear brand, dUCk, that people genuinely loved. She became the face of a certain kind of Malaysian success story. In 2018, two of the largest state funds invested: Khazanah put in RM27 million and PNB put in RM20 million. Call it RM47 million of public money into a homegrown fashion brand. Here is the number that should stop you. When the two funds eventually sold their stakes, they got back a combined RM3.1 million. A loss of roughly RM44 million, confirmed by the Ministry of Finance. Startups lose money, understood. But the losses were visible before anyone wrote a check. FashionValet lost money every single year it operated, and the losses grew from a few hundred thousand ringgit to more than RM10 million a year. Six straight years of red ink, and the funds looked at that and invested anyway. So the obvious question is why. I was not in the room, and I arrived in Malaysia around that time without the context to judge it then. But I do not think the honest answer has much to do with the business. I think the honest answer is worse, because it is a pattern rather than a one-off. They did not buy a business. They bought a face. A narrative, a following, the magazine covers, the idea that if you back the most famous young founder in the country, some of that shine rubs off, and the national funds get to say they are backing national icons. It feels modern. It ticks the marketing boxes. It photographs well. But an icon is not a business model, and a following is not a balance sheet. When the thing you actually bought is a personality, you bought a fragile asset, because the moment public sentiment turns, and in the influencer game it always eventually can, your investment turns with it. And here is the detail that tells you this is a real lesson and not just hindsight dressed up as insight: Khazanah itself, after the whole thing blew up, publicly warned about the risk of what it called icon-driven businesses. The fund said the quiet part out loud. Betting on personality is a structural mistake. Now put the two stories side by side, because they rhyme. In eFishery, the funds bought a foreign founder’s story and never checked the fields. In FashionValet, they bought a local founder’s story and never respected the profit and loss statement. One was a fraud, one was just a bad business, and those are very different things. But the investor mistake underneath both is the same: fund the narrative, skip the boring verification that would have told you the narrative was hollow. In both cases, public money went in on the strength of a name, not a capability. Three. Three names, one machine Two bad deals is just two bad deals. The reason this is a post and not a shrug is that these are not isolated checks. This is the machine working the way it has always worked. For more than twenty years, the government has tried to build a venture capital scene by pouring public money into funds and programs. Walk the track record. MAVCAP, the state venture arm going back to the early 2000s: over half a billion ringgit committed over the years, and by last reporting somewhere around RM200 million and change had come back. Roughly 38 sen home for every ringgit out. Allow for liquidity and unrealized positions, it is still a very slow, very official way of setting money on fire, and the local venture scene did not become self-sustaining on the back of it. Then came 2020 and Penjana Kapital, a fund of funds worth hundreds of millions, launched to kickstart the sector after the pandemic. Big launch, big numbers. Years later, remarkably little of the money had actually been deployed. The government, the local investors, and the foreign partners all wanted different things, and the apparatus seized up. And after two stalls, it did not stop. It rebranded. The prior attempts were consolidated under the sovereign fund and relaunched in late 2024 under a new name, with a new commitment of capital, as part of an even bigger government mobilization effort. Fresh name, fresh logo, fresh press release, fresh faces. MAVCAP, then Penjana, then the new entity. Three names, one machine, more than two decades. Fairness again, because it matters: real managers got their first checks from these vehicles, some very good local companies were backed, and many of the people involved are smart and sincere. The new iteration is too early to judge, and I genuinely hope it does better. But the machine, as a machine, has not built the thing it was built to build. There is still no self-sustaining venture

    Just passing through: how Malaysia keeps funding the people who leave

  5. Jul 15

    The $7.4 Billion Lie

    You have seen the number this week, probably five or six times, from five or six people who all copied it from the same report. Southeast Asian tech funding hit 7.4 billion dollars in the first half of 2026. More than double last year. Recovery is here, the drought is over, break out the good coffee. It is true. It is also one of the most misleading true things I have read all year. Because 4.5 billion of that 7.4 billion went to a single company. One. A data-centre operator. Take that one company out, and on the exact same set of numbers, the region did not double. It went sideways, and depending on how you count, slightly down. And while we are here: when did we start counting data centres as startup funding at all? That is a genuine question, and it is going to matter more than it sounds. One landlord, not a region Here is the full picture, because the detail is where the headline falls apart. First half of 2026, 7.4 billion raised across Southeast Asia, against 3.2 billion in the same six months last year on the same source. On paper, up 130 percent. Now pull the thread. Of that 7.4 billion, 4.5 went to DayOne, a Singapore-registered data-centre operator, across two Series C rounds to fund a build-out. That is more than 60 percent of everything that flowed into the entire region, in one company, for concrete and cooling and racks. This is not a knock on DayOne. They did nothing wrong. Raising four and a half billion dollars is not a crime, it is a very good year. The problem is not the company. The problem is that we take their balance sheet and hand it to founders across five countries as if it were their momentum. Strip DayOne out and the region raised roughly 2.9 billion in six months, which is less than the 3.2 billion it raised the year before. The honest headline is not “funding doubled.” It is “one landlord had a great six months, and everything else went slightly backwards.” It gets worse when you look at where the money sat. Singapore captured 6.9 of the 7.4, over 90 percent, and still climbing. So this is not a Southeast Asian story. It is a Singapore data-centre story. And even that is a little bit of a fiction, because much of the physical build is not in Singapore at all. It is in Johor, across the causeway in Malaysia. The concrete goes up in Johor, the capital gets booked in Singapore, and the statistics tell you Singapore is booming. The map and the money have stopped agreeing with each other. One caveat to hold onto, because it trips people up. Around the same time, KKR and Singtel bought ST Telemedia’s data-centre business for about 5.2 billion. Huge, and real, but that is mergers and acquisitions. One company buying another. It is not venture funding and it is not in the 7.4 billion. If someone stacks the two and tells you data centres pulled in ten billion, they are double-counting. The money went into concrete. Whether a founder in KL, Jakarta or Ho Chi Minh City ever sees a cent of it is a separate question, and so far the answer is no. And here is the part that should sting. Fintech. Payments. The thing this region was supposed to be about, the super-apps and the wallets and the great Southeast Asian consumer story we told for a decade. Fintech raised 685 million dollars in the first half. Not a slow year. A sector that is basically over as the headline act, and nobody held the funeral. So the founders leave, into a narrower door Now widen the lens, because the timing matters. The same six months that Southeast Asia congratulated itself on 7.4 billion, global venture funding hit a record 510 billion, a record half driven almost entirely by the AI hype. Of that 510 billion, two companies, OpenAI and Anthropic, raised 217 billion between them. Two American AI labs pulled in 43 percent of all the startup funding on Earth in six months. Put the numbers side by side. All of Southeast Asia raised 7.4 billion, and ex-landlord, call it 2.9. Two AI labs in San Francisco out-raised our entire region by something like 75 to one. We are a young market, I get that. But 75 to one, two companies against a region, is not a gap you shrug off. So what does a smart, ambitious founder do with that information? Some of them are already answering it. They are leaving. Founders who launched in Singapore in 2025 packed up in April and May and moved to the Bay Area. This has always happened, but it is becoming a steady trickle, which is worse, because a trickle does not make the news. It just quietly drains the pool. Here is where I want to be careful, because there is a lazy version of this story. The lazy version is: the money is in San Francisco, so move there and get funded. That is not true anymore. The money in the US has concentrated too, and not just by geography. It has concentrated by story. Look inside that record US number and 86 percent of it went to AI. The same brutal filter is running there, just on a different axis. In Southeast Asia the filter is one landlord. In the US it is one narrative, and if you are not telling it, the cheque book stays shut. Think about what that does to the bar. There used to be a respectable way to raise. You grew triple, triple, double, double, double. You built a business that compounded, showed durable revenue, and that was a clean Series A. That founder today walks into a room in San Francisco and gets a polite no, because the person across the table is not looking for durable. They want a thousand-x. They want the AI story that eats a category in eighteen months, and a healthy business that doubles every year sounds boring next to it. You did not escape the filter. You swapped a filter you understood for one that is even harder to clear. And I want to be fair, because it would be easy to turn this into a loyalty test, and that is not honest. The founders who leave are not traitors. They are moving toward the center of gravity, and San Francisco genuinely is the center of gravity for building right now, especially in AI. But nobody should sell you the fairy tale that the flight to SFO ends with a term sheet. The center of gravity is also the most crowded, most selective room on the planet, and this year it is writing cheques for exactly one kind of story. Whether the founder stays or goes, the answer is the same shape. Here, the money went to a building, not a founder. There, the money goes to one narrative, not a founder. Either way, the ordinary, good, growing company, the backbone of any real startup scene, is the thing nobody is funding. We built a region that funds the warehouse and exports the talent, and the place we export it to only wants that talent if it can promise a miracle. Fewer deals, but not better ones There is a comeback I always get here, and it is a fair one. Deal count is down, sure, but that is discipline. The market matured. Fewer, bigger, better deals. Quality over quantity. This is healthy. I would love to believe that. In the first half of 2026 there were 127 funding rounds across the region, down from 153 a year earlier. Fewer deals, yes. But look at where the money inside them went. Six billion of the 7.4 went into just twelve rounds of a hundred million dollars or more. Twelve rounds took six billion. The other 115 rounds, every seed cheque, every Series A, every founder not raising nine figures, split roughly 1.4 billion between them. That is not discipline. Discipline is looking at a hundred good companies and carefully backing the best thirty. This is a hundred companies looking up at twelve giants eating almost everything, and scrapping over the crumbs. When the top twelve deals take 80 percent of the capital, that is not a mature market. It is a bare cupboard with one very full shelf. And before anyone tells me last year was some golden baseline we have fallen from, no. Last year was the same shape. In the first half of 2025, fintech was carried by three deals that made up more than half of all fintech funding, and Singapore took over 90 percent of the pie even then. The concentration is not new. It is not a one-off. It is the structure. Southeast Asian venture has run on “one or two deals carry the whole region” for at least two years straight. The only thing that changed in 2026 is that the one deal got bigger, so the number got louder, and the lie got easier to tell. Read the middle of the list Let me be clear about what this is and is not. This is not doom. I am not telling you the region is dead, or that nobody should build here, or that we should all give up and move to California. Plenty of good companies are being built here right now, quietly, with real revenue, and they deserve better than to be background noise behind a data-centre headline. Which, again, I still do not understand why we file under startup funding at all. What I am asking for is honesty about the number. Stop reading 7.4 billion as a sign of health. It is not. It is the balance sheet of one landlord plus a rounding error for everyone else. If you want to know how Southeast Asia is actually doing, do not look at the top deal. Look at deal number three, and deal number fifty, and deal number 127. Look at whether a seed-stage founder in Kuala Lumpur can raise a real round without moving to Singapore first. Look at whether the best people are staying or leaving. Right now, on the honest read, the top of the market is a landlord, the middle is thin, and the sharpest founders are heading to the airport. Until the number without the landlord starts going up, we are not narrating a recovery. We are narrating a story we would like to be true. Real. Raw. Relatable. If this one annoyed you, good. That means you were paying attention. Tell me where I am wrong. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

    The $7.4 Billion Lie

  6. Jul 8

    Who Owns the Scarce Thing?

    This week the two biggest stories in Southeast Asian tech were not a funding round or somebody’s ninth super app pivot. They were a government chip program in Penang and 3,600 kilometres of fibre being dropped on the seabed between India and Singapore. Two boring stories. Laid side by side, they are the most honest picture of this region you will get right now. Both are asking the same question, the one I ask in every partner meeting at Indelible, the one that decides who gets rich over the next ten years and who just gets used: Who owns the thing that is actually scarce? Malaysia tries to climb a rung On 1 July, MTDC, the Malaysian Technology Development Corporation, launched the first cohort of Semicon Start Malaysia. Ten companies picked from 39 applicants. A pot of RM10 million for the first phase, up to RM1 million per company, call it US$250k apiece, with Khazanah money in the mix. If you have been in this region as long as I have, your first reaction to “government launches program to build high-tech industry” is a small, tired sigh. We have seen this film. Malaysia has a graveyard of these: grand corridors, MOU signings, innovation valleys, state venture funds that wrote checks into slide decks and got slide decks back. Big announcement, ribbon, photo, handshake. Two years later you go looking for the companies and nobody is home. I had that sigh ready. Then I stopped, because this one has the potential to be different, and the reason why is the whole point of this piece. This time there is a real industry underneath the program. Penang is not a hopeful press release. Penang has been doing semiconductor assembly and testing for decades. A serious slice of the world’s chips passes through Malaysian hands on the way to being packaged and tested. That is not a pitch. That is payroll. Factories that have run for thirty years, and a workforce that already knows the difference between a good die and a bad one. So the bet is not “let’s conjure a chip industry out of nothing.” The bet is much narrower, and potentially much smarter: we already own one rung of this ladder. Can we climb one step up into design, where the money actually sits? The climb has already started without the program. SkyeChip, a homegrown Penang design house doing genuinely hard work (high bandwidth memory, chiplets), listed on Bursa’s Main Market. Before recording this week’s episode I saw a report suggesting Cerebras, the US chip company that also just went public, may be tapping SkyeChip for design work. I have not verified that, so hold it loosely. But the proof point stands either way: a local company has already climbed the exact rung the government now wants ten more companies to climb. Add the National Semiconductor Strategy from a couple of years back, Penang’s own chip design academy, and Selangor standing up a state fund, and you have something rarer than a press release. You have momentum with an industry underneath it. The timing is as good as it has ever been, too. The world wants to diversify where its chips come from. Nobody wants every advanced part made in one strait that could close on a bad Tuesday. Malaysia is neutral, capable, and already in the supply chain. If there was ever a decade to attempt this climb, it is this one. Now the hard part, out loud, because that is what this show is for. Money was never the thing missing here. What has been missing, every single time, is patience and expertise arriving in the same envelope as the cash. A million ringgit and a short program do not build a chip design house. Chip design is a long-term sport played by people who have failed at it a few times first. If Semicon Start is a check and a demo day, it joins the graveyard. If it comes with real design mentors, real customer introductions, and follow-on money that does not vanish when the photo op ends, it has a shot. So the thing to watch is not the RM10 million. It is whether anyone attached to the program has real operating expertise. Money is easy. Knowing what to do with it is the scarce part. Hold that thought. The cable, and what it actually is Now to the seabed. This week it was reported that Microsoft, together with Singapore’s Lightstorm, is leading a consortium building a new subsea cable called I2C: roughly 3,600 kilometres of fibre linking India to Malaysia to Singapore, targeted to go live around 2029, built for AI and data centre demand. Standard disclaimer, because I read these announcements the way I read a pitch deck: this is a 2029 project, consortium details on these things move around, and I have not seen final paperwork, just a news story. Treat the specifics as direction, not gospel. But the direction is what matters. Every few weeks now there is a story like this. A new cable, a new hyperscaler campus, somewhere with cheap power and a friendly minister. And every one of them gets written up as billions pouring into Southeast Asian digital investment. Celebrations all round. Here is what I actually see, and maybe I am a bit cynical: the region being wired up as a very good place to host other people’s compute. The fibre lands here. The data centres sit here. They use our power and our seabed. That is real economic activity and I am not pretending it is nothing. But ask the only question that matters. Who owns the compute? Who owns the demand sitting on top of that cable? Generally, not us. The demand is offshore, the models are somebody else’s, and the margin, the part where value actually compounds, is in Seattle and San Francisco, not Johor. We are the landlord renting out the ground floor, being told to feel grateful for the rent. I am a capitalist. Rent is not a dirty word. It is a perfectly good business, and Singapore has run that playbook for fifty years. But do not confuse being the landlord with owning the building. A region cannot tell itself it is climbing the value chain when what it is actually doing is leasing the basement to the people who own the value chain. This is where the cable and the chips rhyme. Same story, pointed in opposite directions. Malaysia’s chip program is a country trying to own more of the building. The cable is the region agreeing to stay one rung down. One is a strategy. The other is a lease dressed up as a strategy. What is actually scarce Value flows to whoever controls the scarce thing. It always has, AI or no AI. Find what is scarce, own it, and the money flows to you. Own something abundant and you compete it down to nothing. So: in Southeast Asia right now, what is actually scarce? I will tell you what is not. The technology is not scarce. The model is not scarce. Models are commoditizing in front of us, between the big labs’ price war and open source, and they will get cheaper and better every quarter whether you do anything or not. Building your moat on the model is building your house on the tide. Here is what is scarce. The customer who already trusts you. The physical network that took years and real pain to build. The license from a regulator who does not hand them out twice. Distribution into the towns and small shops that no hyperscaler in the world will ever bother to map. The workflow nuance that took ten years of unglamorous work and cannot be copied in a weekend of clever prompting. That is the scarce layer. That is the thing worth owning. Where the winners come from Look back at the two stories through that lens and they light up. Malaysia is trying to move from an abundant thing (cheap, capable labour, which everyone has) to a scarce thing (design capability, which very few have). Right instinct. Own the scarce rung. The founder version of the same move: the winner is not the one who owns the AI and goes hunting for a customer. The winner is the one who already owns the customer and quietly adds AI on top. The lending business that already has the borrowers and now underwrites them better. The logistics operator that already owns the trucks and the routes and now runs them tighter. The distributor who already reaches 10,000 shops and now forecasts demand for them. Those companies will never put AI in the headline. They do not need to. They already own the scarce thing. The AI is just a sharper tool in a hand that already knows the work. I know that is not a fashionable thing to say in 2026. Every second founder I meet opens with the model they are building on, the AI-native this, the agentic that. The funding tallies love it: somebody counts up the AI startups that raised this quarter, puts out a chart, and everyone nods. But that chart measures ambition, not durable revenue. Those are very different things, and the gap between them is where founders and their investors go to die. And here is the uncomfortable part I want founders to sit with. Every wave of cheap capital, every shiny new tool, every drop in the price of intelligence does not close the gap between those two kinds of companies. It widens it. When the tool gets cheap and everyone has it, the tool stops being the difference. The only difference left is the position underneath: the distribution, the trust, the scarce layer. Cheap AI makes owning real distribution worth more, not less. Be honest about what you own This is where Indelible puts its money, and I will say it plainly so you can hold me to it. We back people who own the scarce layer, or are credibly climbing one rung towards owning it. Not people standing on top of somebody else’s scarce layer with a nicer logo. (None of this is investment advice. It is simply where my money already is.) So the homework this week, if you are a founder: be honest about what you actually own. Not what is in your headline. What is in your foundations. If the answer is a really good wrapper around somebody else’s model, it is better to know that now. Using a commodity as an input is perfectly fine. Every company will. The question is what you own on top of it. A chip program in Penang. A cable on the seabed.

    Who Owns the Scarce Thing?

  7. Jul 1

    One Winner, Six Shipwrecks

    Since 2017, Southeast Asia has produced exactly one tech IPO that made public investors real money. One. And this week, the Philippines is getting ready to bet its entire year on the next one. So this week I want to talk about who is buying, who is selling, and which side of that trade you actually want to be standing on. Four stories, and they braid into one. We open with the good news, because there usually is some. Then we follow the money all the way to the part nobody puts on the deck. The smart money showed up twice in one week Start with the hopeful, because it is real and it is specific. This week two of the most serious institutions on the planet made their first proper bet on Southeast Asia. Not a press tour. Not a memorandum of understanding. Actual money into actual companies. The first: MIT, the university, joined the cap table of a Singapore company called PVX Partners. Not a flashy name, I had not heard of them before this. They do cohort-based financing for user acquisition. In plain terms, they fund the marketing spend for mobile games and consumer apps, and they get paid back out of the revenue those users generate. It came on the back of a ten-plus-million-dollar round with names like General Catalyst, and I think a DraftKings vehicle in there too. As far as I could find, this is MIT’s first major disclosed startup bet in the region. The second, and this one landed the day before I recorded: Pfizer Ventures, the drug giant’s venture arm, made its first Southeast Asian startup investment into a Singapore biotech called Engine Biosciences. Engine does AI-driven precision oncology, hunting cancer drugs with machine learning. They just opened a Silicon Valley office to go with the Singapore base. Here is why this is not just a funding roundup. When an elite American endowment and Big Pharma’s investment arm both pick Singapore companies for their opening move, in the same week, that is not a coincidence. That is a signal about where sophisticated capital now thinks the edge is. These are not tourists chasing a hot round. PVX is unglamorous infrastructure. Engine is deep science. Both are the kind of bet you make after you have done the work. Hold that thought, because the rest of this is about what happens to the money that was already here when it tries to leave. The Philippines is betting its whole year on one listing On the 27th, Mint, the company behind GCash, filed its registration with the Philippine SEC and its listing application with the stock exchange. The number: up to 92.3 billion pesos, roughly 1.5 billion US dollars at up to ten pesos a share, targeting a fourth-quarter debut. If it prices at the top, it is the largest IPO in Philippine history. Sit with the context. The Philippines’ IPO count for 2026 before this filing was zero. Nothing. So the country’s first listing of the year is also the biggest it has ever had. And it is a fintech, which if you have listened before you know is my home-turf bias made concrete. GCash put financial services into something like 90 million pockets. It is the rare regional company that is genuinely profitable. The pitch writes itself: the people who made GCash a habit can now own a piece of it. I want this to work. Let me say that plainly. Now the part that worries me, out loud, because that is the point of these episodes. The float is about 12%. Twelve percent of the shares go to the public market. The public is being sold a fairly thin slice while insiders keep the rest. And to fit GCash into its main index, the exchange is now considering cutting its own minimum public float rule from 20% down to as low as 12%. Take that in. The benchmark is bending its own rules to accommodate one company. When a market reshapes itself around a single listing, and that listing is carrying the whole nation’s IPO year on its back, that is not a recovery. That is concentration risk wearing a party hat. The real question: does GCash trade well enough to reopen the pipeline for everyone waiting behind it, or does one wobble set the Philippine market back another two years? To answer that honestly, you cannot just look at GCash. You have to look at what happened to the last batch of regional champions that rang the bell. Indonesia got a stay of execution, not a clean bill of health While Manila is opening a door, Jakarta is trying to keep one from closing. On the 24th and 25th of June, MSCI, the index provider whose decisions quietly move billions in passive money, deferred its decision on whether to downgrade Indonesia from emerging-market status to frontier. They kicked it to November. Indonesia keeps the badge, for now. Why was it even on the table? MSCI said, in effect, that it cannot trust the market. Lack of transparency in who actually owns the shares. Suspected coordinated trading that makes it hard to know what a fair price even is, or how much stock is genuinely free to trade. And the market rallied on the news. Here is where I get off the celebratory bus. That rally is celebrating a delay, not a fix. When the index provider tells you it cannot work out who owns the shares or what they are really worth, that is not a paperwork problem. That is a governance warning about the entire market. And look at the response. Indonesia is leaning on Danantara, the sovereign fund, plus insurance and pension money, to add buying support and prop up the exchange. Think about what that means. To pass a test about transparency and genuine free float, the answer is to bring in state and pension money to hold the market up. That is close to the opposite of the thing they are being asked to prove. A frontier downgrade is not abstract. It would force passive funds to sell Indonesian equities mechanically, which raises the cost of capital for every late-stage founder in the country dreaming about an IPO on that market, especially now without the hype cycle. November is closer than it sounds. Manila might be opening up, maybe. Jakarta is one review away from being pushed out. Hope on one side, risk on the other. So let me put some numbers on which way this bet usually goes. The receipts I promised you a number at the top. Here it is with the receipts. Since 2017, this is how Southeast Asia’s big tech IPOs have actually treated the public investors who bought in. SPAC valuations are listing marks, not day-one closes. Dollar figures are dragged by weak pesos and rupiah. Current values approximate. One winner. Sea Limited went out at a $4.9 billion valuation and trades somewhere in the $56 billion range today. Everything else is a shipwreck. Grab is down around 60% from its listing cap. GoTo lost roughly nine-tenths of its value. Bukalapak is trading below the cash it raised. Converge, the one Philippine name I could pull, is the cautionary tale sitting right next door to GCash. Now the caveats, out loud, because the show runs on honest data. The SPAC valuations were listing marks, not day-one closes, and several fell on the open. Currency matters too: weak pesos and rupiah drag the dollar figures down. On a per-share basis the returns are often worse than the market-cap numbers suggest, because of share issuances along the way. But the base rate for this region is brutal. If you bought the Southeast Asia tech IPO story over the last eight years, with one exception, you lost money. What actually breaks the curse Here is the thing that matters. Almost every one of those shipwrecks went public unprofitable, floated at the very top of the cheap-money window on a growth-at-all-costs story. GCash is not that. GCash actually makes money. That is the one real thing that could break the curse. The curse was never the business. The risk is the entry price. GCash is reportedly chasing a valuation around eight to nine billion dollars, against roughly five billion in the private market just a couple of years ago. That is the exact same “premium to the last round” framing that came right before every name on the shipwreck list. History says it is not company quality that determines whether public investors win. It is the price on the day they are let in. Buy low, sell high. If Mint prices for perfection at the top of the range, the regional base rate says the valuation compresses toward fundamentals first and compounds later, if you are patient. Converge, down 40%, is what impatience looks like. Who holds the pen Here is the thread that ties the week together. This was the week Southeast Asia’s public markets stopped pretending to be a pure growth story and started behaving like state-managed plumbing. A fintech bends an exchange’s rules to get listed. A country leans on its sovereign fund to keep its emerging-market badge. And underneath all of it, the smartest new money in the world, MIT and Pfizer, is quietly buying into private companies at the early stage, where the value actually gets made, long before any of this public-market theater begins. Notice where the sophisticated capital is putting its chips. Not into the IPO. Into the cap table, years earlier. So my filter for all of it, and yours, should be the same question: who actually holds the pen here? Who decides what gets built, what gets listed, what gets propped up? More and more in this region, the answer is governments and sovereign funds, not founders and not public investors. If you are a founder who is not a conglomerate heir or a sovereign-fund favourite, that should tell you exactly where to aim, and exactly who to raise from. That is the week. If it was useful, the most useful thing you can do is send it to one founder who is about to get excited about an IPO. This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit seaofstartups.substack.com

  8. Jun 24

    The Mirage and the Fork in the Road

    Start with two numbers and a question. In May, startups in this region raised $472 million. More than double what they raised in April. Read only that line and you would think the drought had broken. Now the second number. That doubling was built almost entirely on two checks. Take those two out and May was thin, still down on the year before. So here is the question I want to sit inside. When you are a founder in Kuala Lumpur, or Bangkok, or Manila, which numbers are actually telling you the truth? Because two of the loudest numbers in this market, the funding headline when you raise and the IPO pipeline when you want out, are both unreliable. And they are unreliable in different ways. The money coming in is inflated. The money going out is uneven. In between sits a real company, your company, trying to make decisions on top of figures that flatter and figures that lie. The mirage: headlines that flatter The funding rebound is a perfect little lie. Not a dishonest one. A statistically true one, which is worse, because it is harder to argue with. May 2026: $472 million across 31 deals, per DealStreetAsia. Up 104% on April. The kind of line that gets screenshotted into a pitch deck by Tuesday. Look underneath it. The jump came from the return of mega deals, transactions worth $100 million or more. A data center. An AI hardware platform. April had none. May had two. Two checks did the heavy lifting for an entire region. And even with them, May still came in 18% below the same month a year earlier. Strip the two big ones out and what you have left is quiet. This is not new, and that is the point. We saw the same shape in the first quarter: about $2.8 billion across 98 deals, the lowest deal count in at least eight years, with a single data center raise accounting for more than 70% of all that capital. Once you see the pattern you cannot unsee it. The total goes up. The number of companies actually getting funded does not. The aggregate is being inflated by hardware and data centers, while the count of real operating companies catching a check stays flat. Here is why that matters to you, and it is not academic. If you are raising right now and you benchmark yourself against the headline, you will conclude that capital is flowing and you are simply being passed over. That is the wrong lesson, and it will make you do desperate things. The right lesson is that the deal count, not the dollar total, is the honest gauge. And the deal count says fewer companies, higher bar, slower checks. The honest number is in the margin So if the aggregate is a mirage, what is the real one? What is the number on a Southeast Asian cap table that does not lie? It is the margin. Which brings me to one of the genuinely good stories in the region this month. Respond.io, a Malaysia-based company, raised a $62.5 million Series B led by Camber Partners, with Endeavor Catalyst and existing backers coming back in, off the back of going through the Endeavor selection network. Big round. But the round is not the story. The story is what was true before the round. $35 million in annual recurring revenue. Growing over 100% a year. At a decent profit margin. Read that again, because they were already profitable. They raised growth money from a position where they did not strictly need it. That is the exact opposite of the burn-first, find-the-model-later playbook the last cycle rewarded and then punished. They run an AI-agent-powered customer messaging platform, the layer that lets a business actually hold a conversation and close a sale across the channels where commerce in this region happens. Billions of messages a quarter, more than 10,000 businesses, over 180 countries. The new money is going west, into North America and Europe, with the possibility of some acquisitions. A profitable company, quietly compounding, raising on its own terms and going on offense into the biggest markets in the world. Take one thing from this. Stop reading the league tables. Read the profit and loss. In 2026, the only honest number on a Southeast Asian cap table is the margin, because it is the one figure nobody can dress up with a single big check. The asterisk Malaysia should be honest about Let me complicate my own happy story, because I am not here to wave the flag. This one is close to home, and KL should be proud of it. The founder is not Malaysian. The company did not start here. It was brought here. That should be a feature, not a footnote. A founder who could base anywhere chose to base in KL, and that decision creates things you can touch: engineering jobs, payroll that gets taxed, corporate tax, office leases, local lawyers and accountants, the cafe downstairs, and a signal to the next founder weighing where to land that says people build serious companies here. Malaysia should bank that credit fully and without an asterisk. But the timing is almost too on the nose, because there is an asterisk. At the same moment, the rules on foreign talent are leaning the other way. The salary floor on the employment pass has jumped. Pass lifespans are changing. To me, though, the salary number is not the headline. The harder one is the requirement that you have a replacement plan in place for foreign talent, and some of those plans are short. Detail has been scant, but one person closer to the interpretation told me the employment is treated as tied to the company, not to the title or the role. So if you bring in a foreign hire to fill, say, a junior developer seat, and that person does well and gets promoted, it does not matter that their title has grown. What matters is that they are still there, and the requirement is that you replace them so that they no longer are. Sit with that from the talent’s side. What highly capable person takes a role knowing there is a clock on it? If they have a family, will they uproot to a market that is effectively saying we want you temporarily but not forever? I understand the intent. We do need to build local capability, and you should not let companies park expats in seats indefinitely. Fair enough. But here is the tension I cannot get past as an investor. You cannot run a “come build your global company here” pitch and a “here is your countdown timer, please train your replacement” policy at the same time. The open-door version of this works. There are countries we can point to that prove it. This is a competitive sport. The founder who chooses KL had other options, because Singapore wanted him, Hong Kong wanted him, Tokyo, Bangkok and Manila all wanted him. The risk is that Malaysia celebrates this win in the very quarter it makes the next one harder to land. If attracting mobile founders is how a small market punches above its weight, and it is, then the policy and the pitch have to point in the same direction. For this month at least, they did not. The fork in the road Now the way out. Every founder eventually asks the quiet question. If this works, how do I get out, and where? Every investor asks it less quietly. In Southeast Asia the answer used to be a shrug. This month, three companies gave three different answers, and together they tell you more about this region than any funding total. Thailand sends its champion abroad. LINE MAN Wongnai, the app more than 10 million Thais use for food, rides and payments, is weighing an IPO, and the venues it is looking at are Hong Kong and New York, not Bangkok. The reporting cites weak domestic conditions and political volatility, with a decision expected as soon as the end of this month. Sit with that. The most-used app in the country looked at its home exchange and decided it could not get a fair hearing there, so it is shopping for a listing 8,000 kilometers away. A market that cannot list its own champions does not have a sentiment problem. It has a plumbing problem. The pipes that turn a great company into a liquid, locally owned public outcome simply have not been built. The Philippines builds a house worth staying in. In the same window, the opposite answer. Mint, the parent of GCash, the finance super app tens of millions of Filipinos live inside, has authorized the filing to go public: a registration with the regulator, a listing application with the Philippine Stock Exchange, an offer of around 12% of the company, targeting the second half of this year and possibly the fourth quarter. It is shaping up to be the largest IPO in the history of that exchange. And it is listing at home. Not Hong Kong. Not New York. The biggest fintech outcome the country has produced is choosing to be a Philippine public company. It is not alone. Maya, the digital bank, is weighing its own listing on a dual track, the local exchange plus NASDAQ, after its first profitable year. One foot at home, one foot abroad, a hedge. Look at the fork honestly. Thailand’s champion is leaving the list. The Philippines has one champion committing to the home exchange outright and another hedging across both. That is not the region as a single sound story. That is the region splitting in real time over the same question: is it worth building a venue people want to stay for? Right now, this quarter, the Philippines is making the bigger bet that the answer is yes. The caveat, because I promised it. Do not let anyone sell you Mint and Maya as a scrappy-startup miracle. Mint sits behind Globe and the Ayala group, with AMP alongside. Maya sits behind PLDT. These are conglomerate and telco children going public, which rhymes with what I said recently about Vietnam, where the giants raise and the startups starve. Hold both thoughts. The optimism is earned: a deep local public market is the single thing this region has always lacked, and the Philippines is genuinely building toward it. But the homegrown-founder fairy tale is not the right frame. Incumbents are listing. That is still good. It is just not the legend. And here is the constructive next move, the one I would want a Filipino policymaker or oper

    The Mirage and the Fork in the Road
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Real, raw, relatable takes on Southeast Asian startups. One investor, the week's news, no script. seaofstartups.substack.com

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  • Creator
    Decoding the Pulse of Founders, Capital & Conviction in Southeast Asia.
  • Years Active
    2022 - 2026
  • Episodes
    85
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    Clean
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