Singapore – More than half of startups across the region found it easier to grow their businesses in the past year compared to the previous year, indicating signs of maturity in the startup ecosystem within Southeast Asia and India. This is according to the latest report by software development firm HubSpot.
In this report, startups recognise the need to balance growth and profitability, with around 98% of regional startups agreeing that a clear path to profitability has become more important in the last year as compared to the years prior.
This resilience is characterised by differences; with geographical expansion presenting challenges and leading 23% of startups to find it harder to enter new markets, customer acquisition and retention have become more manageable.
Although 18% noted that acquiring customers has become more challenging, approximately 55% of them have also reported improvements in customer acquisition and retention.
Along with these challenges, it was also observed that increased competition (31%), stricter customer demands (31%), and access to capital (29%) were cited among the core challenges to customer acquisition.
Furthermore, data from the survey findings also revealed that startups in the region have built a robust foundation of technology and are leveraging their tech stack to collect, structure, and analyse customer data to drive business growth.
In fact, around 99% of them said they are using at least one CRM tool, and 81% are satisfied with their tech stack. This builds upon CRM platforms integrating customer data from multiple sources, which creates a single source of truth that enables brands to accurately track and measure the impact or effectiveness of their customer engagement efforts.
About 71% of startups surveyed also perceived that they have an adequate amount of data at their disposal to identify new opportunities for business growth.
Additionally, more than a third of startups (38%) in the Philippines reported a lack of sufficient data on their business prospects and the customer journey.
Only 58% of startups indicated satisfaction with their tech stack, the lowest among all countries surveyed. This could have contributed to the inability of local startups to collect the right data for better decision-making and their growth prospects.
Nearly half (48%) further expressed that it is more difficult than before to grow their companies, almost double the regional average of 25%.
Interestingly, the emergence of artificial intelligence (AI) is significantly transforming the startup landscape in Southeast Asia and India, automating repetitive tasks and creating new roles that demand advanced skill sets.
However, the said advancement poses challenges in the area of talent acquisition. More specifically, startups are struggling to fill key positions, with marketing (46%), customer success (40%), as well as sales and business development (38%), being the most difficult to hire for among go-to-market positions.
For non-go-to-market positions, AI and machine learning engineers lead the list of hardest-to-hire roles (35%), followed closely by experts in data analytics (33%), product management (33%), and industry-specific specialists (33%). Software engineers also remain in high demand (32%).
Cost and experience are also identified as the primary shortcomings in the current talent pool across the region. Other challenges include a lack of soft skills among candidates and a mismatch of expectations regarding remote and hybrid working arrangements.
Lastly, a significant majority of startups across the region (98%) further agree with the crucial role of AI in their future strategy, especially among those in India and Indonesia.
In India, 73% of respondents strongly agreed with this statement, while in Indonesia, 63% did so, marking the highest sentiments among all countries surveyed.
Leveraging artificial intelligence presents several key opportunities for startups, including accelerating time to market, enhancing product delivery, and competing more effectively with larger competitors.
Laurence Butler, global senior director at HubSpot for Startups, commented, “These signs of growing resilience are a testament to the region’s entrepreneurial spirit and adaptability. While digital transformation has been a focus among the region’s SMBs in recent years, the digital-first nature of modern startups empowers them to swiftly adapt to volatile market conditions by leveraging data analytics and foundational technologies such as CRM platforms.”
“Most startups now recognise the critical importance of having a clear path to profitability, marking a shift towards focusing on core markets and building robust customer relationships, which are crucial for long-term sustainability,” continued Laurence.
He further adds, “Today, AI is viewed as the single largest economic opportunity since the start of the internet, and data is the currency of AI. Residing in some of the world’s fastest-growing digital economies, digital-native startups in the region are well-positioned to tap on their established tech infrastructure and quality data that form the basis for effective AI solutions.”
“By leveraging AI, startups can quickly identify gaps in their business models, better anticipate customer needs, and improve their overall ability to deliver highly personalised customer experiences,” concluded Butler.
