Accelerating Asia held a demo day for its seventh cohort in Singapore. This occasion was a momentous one for the founders of the ten startups - Cocotel, Hishabee, Klink, Kooky, SafeTruck, Shoplinks, Easy Rice, HealthPro, BizB, and Ulisse - who were able to pitch their innovation to an invite-only audience of investors, entrepreneurs, and other ecosystem stakeholders.
While each startup was notable in its own right, equally notable were the trends that cut across all ten of them. As these startups were among the best chosen from a pool of several hundred (this flagship accelerator program has a selection rate of 1.5%), the cohort is representative of not only Accelerating Asia, but the broader ecosystem in Asia Pacific.
The cohort thus reveals the shifting tides across several dimensions of the startup landscape, including geography, technology, economy, and more. These trends were contextualized by Craig Dixon, Accelerating Asia’s Co-founder and General Partner, in his opening remarks and conversation with Osman Ahmed, host of The Clueless Capitalists and an investor and limited partner at Accelerating Asia.
Here are three key takeaways from their discussion.
Investors are less willing to open their checkbooks. In a report from Crunchbase, venture capital invested into startups has fallen 35% to US$445 billion in 2022, down from the US$681 billion in the previous year.
Investors are naturally concerned about the broader economic downturn that startups are operating in. In his remarks, Craig offered counter-intuitive advice to investors: Now is a great time to invest.
He pointed to previous bubbles, such as the dot-com bust of 2001. While the era marked an implosion for some companies, it also paved the way for the next generation of startups, who could innovate their way through the crisis. “People pick up the pieces, they move on, they learn their lessons, and things become more efficient,” said Craig.
Craig noted that he has witnessed this first-hand. Portfolio companies from Accelerating Asia are posting revenue growth and fundraising ticket sizes similar to levels prior to the downturn. Part of this consistency is owed to the ingenuity of founders, who are finding ways to cut costs, pivot, and extend their runway.
In tech publications, fundraising news always factors into headlines. Many tech companies, such as those in on-demand services or hot industries like web3, are raising ever larger funding rounds.
Many of these are driven by the principle of land-grabbing. They will just grab as much market share in their space as they can and figure out how to monetize later on once they are the dominant player. Osman believes this kind of artificial growth will soon be over, where startups are locked into this mentality: “I’m going to fundraise for growth, and wait for six months and fundraise again,” he said.
Craig shared these sentiments. “There were a lot of companies and business models that thought they could do that and then maybe IPO and kick the hot potato to the retail investor, and therefore everyone that gets involved before the IPO wins. These days, they need to figure out that monetization path much sooner,” he said, adding that this pressure is especially strong for companies in Asia Pacific as there is less capital, later stage capital, and IPO opportunities.
In contrast to startups built on never-ending fundraising, Craig and Osman believe that startups with their fundamentals in check will be the next winners. These are led by founders who know how to get to the break-even point, how to get to profitability, and how to scale their business.
To successfully navigate this course, these founders have a clear understanding of key metrics, such as their unit economics and burn rate. This focus on profitability is aided by the fact that many founders in Asia Pacific do not have the luxury of their peers in markets with far more generous investment landscapes. “From day one they have to be thinking, ‘If I can’t raise a series A or series B, how am I going to scale anyway and make this a profitable business?’” Craig asked.
Osman praised the fact that all of the startups in Accelerating Asia’s portfolio meet this criteria: They are real, revenue-generating businesses with a clear path toward profitability that the founding team can guide the company across.
“That’s the key point that’s always been part of the Accelerating Asia portfolio: sustainable growth and being aligned to the sustainable development goals… If there is an SDG goal in place, there is usually a problem, and there’s a problem that they’re solving, and therefore there’s a real demand for that in the market,” said Ahmed.
You can watch the full video of Dixon and Ahmed’s discussion above. Interested investors can also co-invest alongside Accelerating Asia or invest into one of our individual startups.
Accelerating Asia invests in startups with scalable technology solutions and revenue generating business models that combine purpose with profit.
In making an investment decision, investors must rely on their own examination of startups and the terms of the investment including the merits and risks involved. Prospective investors should not construe this content as legal, tax, investment, financial or accounting advice.
