Follow the Money: 3 Trends That Shaped Asian Tech Landscape In 2024
- Moulishree Srivastava
- Nov 18, 2024
- 7 min read
2024 has been slow and steady, mostly, for the Asian tech and startup ecosystem.
While venture capitalists continued to be cautious, they held higher hopes for India, Singapore, and Japan. Even China, despite all the doom and gloom, saw growth in venture funding. We talked about it in detail in our last edition.
Between January and July 2024, overall deals including VC, PE, and M&A, fell nearly 10% to 7,966 deals in Asia Pacific, as per GlobalData Plc.
However, not all markets were depressed. The fall in deals in a handful of APAC markets was offset to some extent by India, Japan, and Thailand. The IPO market brought relief as well as it performed better, increasing investors’ appetite to pour money back into the market.
In the first eight months of 2024, the APAC market saw a healthy surge in IPO activity, with 575 listings raising a total of USD 23.7 billion. This represents a 15.6% year-on-year growth in IPO proceeds.
India led the IPO activity in the region, recording 227 listings with a deal value of USD 12.2 billion during the first eight months of 2024. Proceeds were up nearly 200%, indicating a strong capital market.
South Korea and Japan also registered impressive growth—the K-Pop land saw a 185.7% increase in proceeds with 60 IPOs raising a total of USD 1.2 billion, while the land of the Rising Sun witnessed a 48.5% rise, with 49 IPOs generating USD 1.6 billion. China and Southeast Asia did drag down the APAC IPO market a bit, but the overall gain was a net positive.
Going beyond the resilient funding and exit markets, we looked at this year’s prominent trends in the startup ecosystem and their impact.
Big Tech Investments in Southeast Asia
The year 2024 will be remembered as the year when big tech giants—read Google, Microsoft, and Amazon—opened their treasury and invested billions of dollars to expand their data centres across Asia to capture the rapidly growing demand for cloud computing and AI capabilities.
The cloud service providers announced investments of almost USD 33.5 billion to capture the growing cloud demand and boost artificial intelligence adoption in Southeast Asia.
Recent investment announcements in cloud computing:
➤ Google said it would invest USD 1 billion in Thailand and USD 2 billion in Malaysia for cloud and data centre projects.
➤ Microsoft plans to invest USD 1.7 billion in Indonesia and USD 2.2 billion in Malaysia over the next four years to build new cloud and AI infrastructure. It has proposed to set up its first regional data centre in Thailand, though it hasn’t disclosed the investment in the country.
➤ Oracle plans to invest over USD 6.5 billion to establish its first public cloud region in Malaysia.
➤ NVIDIA, the famed chipmaker, committed approximately USD 200 million to establish an AI centre in Indonesia in partnership with local telco giant Indosat Ooredoo Hutchison. It is also exploring opportunities in Malaysia and Thailand as a part of its broader strategy to expand AI infrastructure across Southeast Asia.
➤ Apple revealed a USD 250 million investment this year to expand its campus in Ang Mo Kio, Singapore. The company also said it would increase spending on suppliers in Vietnam, though the exact amount of this investment was not disclosed.
So what do these investments mean for Asia?
Asia's tech scene is getting more vibrant with major tech companies pouring money into Southeast Asia and other Asian markets. They're betting on Asia being the next big hub for tech innovation, and they want to be part of that story from the ground up.
As a direct result of these investments, Southeast Asia will see enhancement in its digital infrastructure and will most likely stimulate local economies by creating jobs in construction, engineering, and IT management associated with data centre development.
With Asia on its way to becoming a global data centre hot spot, there would be a spike in demand for a skilled workforce that’s adept in AI technologies, cybersecurity, and data management.
GenAI Gobbles Big Money
In the first three quarters of 2024, one-fourth of the total global funding went to AI startups, thanks to the ongoing GenAI wave that started in late 2022 with the launch of ChatGPT. Of the USD 216.2 billion global startup funding, AI startups gobbled a bit over USD 55 billion.
Asian AI startups saw USD 7.7 billion in investment between January and September 2024, up 83.3% over the same period last year. If we talk about specifically GenAI, 41% of the ASEAN GenAI startups have raised pre-seed or seed funding, while 50% are either angel-funded or bootstrapped, per the latest report by GenAI Fund, a USD 10 million Southeast Asia fund.
Funds are slowly realising that investing in Asian AI startups is much more lucrative than backing US-based companies which command much higher valuations.
While it sounds all hunky dory for the Asian AI startup ecosystem, these startups have a list of challenges that they are grappling with—slow enterprise onboarding, product-market-fit, and competition with established players like OpenAI, among others.
Beyond the hype, generative AI is finding real-world applications in customer service, content creation, and software development. Not just that, it’s addressing challenges across sectors such as healthcare, finance, fraud detection, network optimization, and retail—driving improvements in efficiency and decision-making.
As it makes space for itself in almost all sectors, investors have lined up to back these Gen AI startups. The Asia-Pacific region is projected to see USD 110 billion pour into Gen AI companies by 2028, showing a growth of CAGR of 24%.
The rising adoption of GenAI in Asia has several implications:
➤ Economic Transformation: The substantial investment in GenAI is expected to drive economic growth by enhancing productivity across sectors such as finance, telecommunications, and customer service.
➤ Innovation Acceleration: Organisations leveraging GenAI are likely to experience accelerated innovation cycles, enabling them to bring new products and services to market more efficiently.
➤ Ethical AI Development: The focus on responsible AI practices will shape how organisations implement these technologies, ensuring they align with societal values and regulatory requirements.
Sustainability Goes Mainstream
Green technologies and sustainability are no more niche concepts. With growing customer interest in this space, they have emerged as the central priorities for companies across industries.
As climate change and resource depletion become more urgent, businesses, governments, and consumers are embracing eco-friendly solutions that promise a balance between progress and preservation.
From renewable energy systems and sustainable manufacturing practices to green building materials and electric vehicles, these innovations are no longer optional. This shift towards sustainable technology not only addresses environmental concerns but also offers significant economic opportunities, creating a new mainstream where technology and sustainability intersect for a resilient, low-carbon future.
Notably, countries like India and China are leading this trend, with numerous startups focusing on renewable energy, waste management, and sustainable agriculture.
Here is why we think Asia will see sustained growth in sustainability and climate tech solutions:
➤ Sustainability as a Key Driver for Innovation: Companies are integrating sustainability into their core business strategies, leading to the development of innovative products and services. For example, Asian Paints came up with the first architectural paint in India to earn Green Seal certification. It has set ambitious sustainability goals for 2025 and 2030, including reducing Scope 3 emissions and increasing renewable products.
➤ Government Support: Governments across Asia are implementing policies to support clean technology initiatives. Indonesia, which has a fund focused on improving climate change, is supported by global organisations. Asian governments are also increasingly utilising green bonds to fund sustainability projects.
Thailand raised nearly USD 6 billion from sustainability bond issuances, while Indonesia's green bond market was valued at USD 7.7 billion as of 2021. These financial instruments are crucial for mobilising capital towards climate-resilient infrastructure. The Asian Development Bank (ADB) and The Asian Infrastructure Investment Bank (AIIB) have committed to financing projects that align with sustainable development goals, focusing on renewable energy and infrastructure resilience.
The World Bank Group delivered a record USD 31.7 billion in FY2022 to support climate-related projects across Asia, marking a 19% increase from the previous year.
➤ Rise of Green Tech and Sustainability-Oriented Funds: Taking note of the changes and interest in climate tech—which range from decarbonization solutions and green energy to waste reduction and sustainable agriculture—many venture capital funds have not only increased their appetite to back such startups but have also raised more money for dedicated climate tech funds.
While there have been well-known funds such as Wavemaker Partners, Omnivore Capital, ACV Capital, and Avaana Capital Capital that back startups working on climate tech and sustainability solutions in Asia, here is a list of a few more such funds:
In a nutshell, Asia’s tech and startup ecosystem is maturing at a breakneck speed. And the focus on AI will only accelerate things further.
As Asian governments continue to support initiatives involving green tech and charm global tech giants to invest, the region is all set to rise as a global hub in AI and climate tech solutions.
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