Top 5 Learnings from Our Southeast Asia & India Startup Pulse Report

Introduction

Is the Southeast Asian and Indian region weathering the current funding drought?

Private funding in Southeast Asia has declined to its lowest levels in six years. At the same time, many governments in the region are still offering incentives and tax breaks to encourage startups. So, how has this affected the tech industry? 

HubSpot wanted to find out the state of the startup ecosystem in India and Southeast Asia, so we undertook a survey in India, Singapore, Indonesia, and the Philippines in March 2024. The 600 professionals who responded were founders and other decision-makers in C-suite positions and directorships of both early- and late-stage startups. They told us about their biggest challenges to growth including their tech and data challenges, and how they’re investing in AI to ensure future success. They also revealed how they are balancing growth and profitability while continuing to search for the top talent they need to succeed.

Altogether, this survey paints a picture of a tech industry in India and Southeast Asia with the resourcefulness and resilience needed to compete globally. In this article, we’ll highlight the key findings from this report, which you can also download for free here.

Key Startup Survey Findings

1. Growth has gotten easier

Even though funding is currently at low levels, Indian and Southeast Asian startups are finding it easier to grow in the last one year as compared to previous years. While this wasn’t even across the board, 53% of startups in the region said it was easier to grow in the first one year. Indonesian firms had the most significant improvement, with 65% of startups finding growth improved, while only 39% of companies in the Philippines had the same answer.

What forms is this growth taking? Over half of the companies we talked to said it was easier or significantly easier (55%) to acquire new customers in the past year and retain existing customers (55%). The challenges of acquiring new customers include increased competition, stricter customer demands, and operational issues like limited funding and slow decision-making. Successful firms focused on innovative strategies to acquire and retain customers at all stages of the customer journey, and that focus paid off this year. 

In the last year compared to previous years, over 50% of companies found it easier to enter new markets, develop new products, build brand awareness, form beneficial partnerships, streamline processes, and diversify into new business verticals. About 25% of firms felt no change in the difficulty of these activities from last year, and only around 20% of companies found these activities harder than before.

Tech industry leaders also expect new opportunities for growth to arise in the future. Most firms focused on leveraging the various abilities of AI to increase their market positions. Others pointed toward increased opportunities for strategic partnerships (25%), using data analytics to identify new opportunities (24%), growing demand for their products and services (22%), increased remote and hybrid work to open up the global talent pool (22%), and increased government investment (20%). Additionally, 22% of respondents expected an increasingly favorable economic outlook globally to help improve business.

These findings suggest that the tech landscape is robust, has a positive outlook, and is meeting the growing needs of customers in this region.

2. Path to profitability is crucial

Investors will often emphasize that they aren't necessarily looking for profitable startups, but they do want to see a clear path to profitability. 98% of  the founders and startup leaders surveyed agreed that a clear path to profitability has become more important to them in the past year, as compared to years prior. In India and Indonesia, 44% and 48% strongly agreed with this sentiment, suggesting that profitability is an increasing priority in the tech landscape. At the same time, 93% of respondents agreed that growth at all costs remained as important as ever.

These seemingly contradictory priorities may represent the fact that most startups struggle to find the right balance between growth and profitability. By optimizing expenses, cutting costs, being conservative in hiring, and optimizing people, startups can increase profitability. Once they do so, they can start growing from a solid position.

3. CRMs have become the industry standard

One of the most surprising findings from our survey is that over 99% of startups across the region are using customer relationship management (CRM) platforms. These software packages put sales, marketing, operations, and content management data and activities into one place, making them indispensable parts of almost all startups’ tech stacks.

Just under 1% of respondents across the region said they don’t currently use CRMs. Among those who do use CRMs, selecting a platform depends on several factors. 37% found the security of software to be an influential factor in deciding which software to use, with 16% ranking this as the most influential factor, indicating a high level of concern for data protection. Other factors sought after include software scalability, excellent customer support, and a wide array of features to meet their various needs.

At the same time, managing tech is still challenging for many businesses. While 81% are somewhat or very satisfied with their tech stacks, respondents still offered some clear challenges in managing their current tech stacks. Over a third (36%) need help to keep their programs updated to follow regulations and avoid security vulnerabilities. Other concerns include measuring a clear ROI on investment in tech (32%) and employees not using the tech stack as much as they should (29.2%).

Data collection is one more challenge for startups in multiple directions. Just over 71% of startups across the region feel they have adequate data and are leveraging it to identify new opportunities and grow their business.

What limits the insights startups can gain from their data? 

Survey respondents highlighted limited time and expertise in analysis, low-quality and inconsistent data, insufficient analysis tools, data silos, and organizational cultures resistant to data-driven decision-making.

4. Startups are embracing AI to fuel growth

How influential is AI technology on startups in India and Southeast Asia? In our survey, 98% of founders and leaders agreed that AI was an important part of their companies' future strategies. Of these, 53% said AI was very important to their future direction. With the waves this hugely disruptive technology is making in all arenas, the only thing that is a surprise here is that this number isn’t 100%.

We also asked founders what are the opportunities they see rising in the future that may help in their company's growth?. About a third of them (32%) said they planned to use AI to get to market faster and more efficiently. Likewise, they indicated using AI to deliver products and services more quickly (30%), to help them compete with incumbents (30%), and to deliver more personalized customer experiences (28%). From this diverse range of answers, it’s clear that AI is featured highly in the strategic plans of almost all startups in India and Southeast Asian countries.

5. Talent is still in short supply in SEA and India

While startups are quickly embracing AI, they face one big hurdle in leveraging this technology—the right talent is hard to find. We asked startups what non-go-to-market positions they had trouble filling in the past year. Artificial intelligence/machine learning engineers were their number one answer, with 35% of respondents expressing difficulty. It’s clear that while all companies want to be able to leverage the power of AI to fuel growth, there aren’t enough experts to let them accomplish this goal. 

Data analytics/science positions, product managers, and industry-specific roles were also similarly difficult to fill (all 33%). Just behind these categories, 32% and 30% of startups, respectively, said they struggled to fill software development and project management roles. 

Startups also need help putting people into go-to-market roles. Marketing  roles (including digital marketing) were the most sought-after, with 46% of respondents saying they had struggled to find these professionals in the past year. Closely behind were customer success (40%), sales and business development (38%), and customer support (34%) professionals. 

Hiring for startups is always a challenge. Oswald Yeo, CEO of Glints, a career development and discovery platform, advises for founders to clearly communicate their company’s mission and how candidates can contribute and find purpose in it. He further advises founders to highlight the potential for personal and professional growth within their company and promote their company’s culture and values to engage candidates.

Finding and recruiting skilled people is only half the battle. Many companies (41%) indicated that it was too costly to hire talent (e.g. demand high pay, inflexible in negotiating pay, etc.), there was limited experience in startup environments (41%), and a mismatch in expectations between employees and employers when it comes to hybrid/remote working (39%). So, a general shortage of talent in the market combined with the unique requirements of startups is set to challenge these businesses in the foreseeable future. 

The pulse of the SEA and India region

Even though investment is down around the globe, the tech industry in Southeast Asia and India has proven to be robust and mature. While startups struggle to balance growth and profitability and find the talent they need, they’re also embracing the technologies that will help them compete globally.

Get the report

This article has given an overview of the key findings from HubSpot’s Startup Pulse report. However, there’s a whole lot more inside the report including many more informative statistics, insights from business leaders and founders, and words of advice from venture capitalists operating in the region. We've made this report available for free for people interested in setting up businesses in this area, understanding the competition, or seeking investment opportunities.

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