There is a comfortable story about Southeast Asian startups: that the money is out there, and the job of a founder is to find it. We do not think that is the market founders will be building in over the next few years. Early-stage capital here is scarce, and we expect it to stay that way. That changes which B2B companies win, and it is the market our thesis is built for.
Why we expect capital to stay thin
Start with the earliest money. In more mature markets, a founder can piece together a first round from angels, a grant, an accelerator and a friendly seed fund. In Southeast Asia, most of those sources are weaker than they look from the outside.
Angel networks are still small and not very organised. Many wealthy individuals in the region invest, but few do it as a regular practice with a portfolio, a process and follow-on money behind it. Grants exist, but they are fewer and more onerous than the announcements suggest, and the paperwork often costs a small team more than the cheque is worth. And there are very few real accelerators: programmes that put capital, a network and hard feedback behind a company at the same time.
Above the earliest stage, much of the capital that came into the region in recent years was raised for larger rounds. Larger funds need larger cheques to matter, and they move up the stages to find them. That leaves the first check, the one that turns a working product into a company, as the thinnest part of the stack. We do not see a reason for that to change quickly.
What scarce capital does to a company
Scarcity sounds like a problem for founders. For the right kind of company, it is closer to a filter.
When the next round is uncertain, the founders who do well are the ones who stop treating it as the plan. They charge from the first customer. They price for the value they deliver rather than for adoption. They hire after revenue, not before it. Over time, a growing share of their growth is paid for by their own customers, and the next round becomes something they choose rather than something they need to survive.
The opposite pattern is just as clear. A company that raises too much too early tends to spend into the gap: more people, more markets, more products, all before the core business can carry them. Startups rarely starve to death. More often they die from indigestion. A thin capital market makes that mistake harder to make, which is one of the quieter advantages of building here.
Where we think the market is heading
Put scarce capital together with the way business buyers in this region already behave, and a few things follow.
B2B will keep pulling ahead of consumer. Business customers pay, and they pay early. A company selling to manufacturers, distributors, clinics or professional firms can reach meaningful revenue on far less capital than one that has to buy its users first.
Going regional will happen earlier, not later. Home markets in Southeast Asia are too small for most B2B companies to reach real scale alone, and the companies that wait to win at home before moving tend to stall. Going regional is part of the build. In a thin capital market, the founders who plan market two in year one get more out of every dollar they raise.
Discipline will show up in the numbers. Gross margin, payback on each customer and the share of growth funded from revenue will matter more to the next investor than headline growth. Founders who track those from the start will raise on better terms, when they choose to raise.
What it means for how a fund's results look
This has a consequence for LPs that is worth stating plainly. If the companies we back grow on their own revenue rather than on fast follow-on rounds, their valuations will move more slowly. Marks in venture move when a company raises again, and a company that does not need to raise does not generate a new mark.
We are comfortable with that. A quiet mark on a company that is growing on its own cash is a better position than a fast markup on one that is not. Fast markups can be a sign of hype when the operating performance underneath does not support them, and in a thin market, hype is expensive to unwind.
How our thesis is positioned for it
We write first checks of $100K to $250K into B2B and enterprise-tech founders across Southeast Asia. In a market like this, a first check has to carry a company further than it would elsewhere, so how a fund supports that check matters more than how large it is.
That is why we hold back a meaningful share of the fund for follow-on investment, so we can back companies that are working without waiting for a lead to appear. It is why cross-border expansion support is at the centre of what we do, because going regional early is how these companies reach scale. And it is why we push for financial discipline from the first month, because revenue a company can fund itself is the runway nobody can take away.
The challenge
If you are a founder, plan your next 18 months as if the next round will not arrive on time, and see how much of the plan your own customers can pay for. If you are an investor, ask how a company would survive without its next raise. In this market, the companies with good answers to that question are the ones worth backing.