The Southeast Asia region is witnessing the emergence of a growing number of vertical AI startups catering to various industries, from seafood to finance. Singapore-based venture capital firm Antler recently invested $5.1 million in 37 of these startups through pre-seed deals, forming a strategic partnership with Malaysia’s sovereign wealth fund, Khazanah, which invested in seven of the startups.
According to Antler co-founder and managing partner Jussi Salovaara, the focus on practical problem-solving in different industries in Southeast Asia sets it apart from the rest of the world, where the competition in horizontal AI is intense. While the region may not have the talent pool of OpenAI yet, the customer-first approach to AI apps allows for the unique addressing of pain points in specific sectors and markets.
Each country in Southeast Asia is showing different trends in the verticalized AI space. Vietnam has a large pool of technical talent, with consumer startups focusing more on the domestic market initially, while B2B startups have a global orientation from the start. Indonesian startups, on the other hand, tend to focus on the domestic market due to its large size, but there is potential for more international expansion.
One of Antler’s investments, BorderDollar, is developing an invoice financing platform for cross border logistics, utilizing its own training data to create a credit scoring system tailored to the unique funding structures of Southeast Asia. Salovaara emphasizes the need to build solutions that are specifically designed for the region, rather than transplanting Western models.
Another portfolio company of Antler, CapGo, utilizes AI to automate data acquisition for market research, with plans to expand into the rest of the Asia Pacific region. The venture’s competitive edge lies in its tailored data sources designed for Southeast Asia.
Startups like Zolo and Seafoody are focused on solving issues in the food supply chain in Southeast Asia. Seafoody, founded in Malaysia, aims to use AI to eliminate intermediaries in the seafood supply chain, while Zolo simplifies the food supply chain management process using AI to streamline order management.
Malaysia-based Coex leverages AI to digitize project claims and bills of quantity, aiming to optimize operational efficiency in the construction industry, which has traditionally been analog and old-fashioned.
While building a vertical AI startup presents its challenges, including assembling the right team with the necessary technical and industry expertise, as well as acquiring the right training data, Salovaara believes that a successful vertical AI startup can create a strong competitive advantage. This approach is seen as the way forward in Southeast Asia, given the challenges of competing with more established players in the horizontal AI space.
