Vertical AI startups: Transforming industries in Southeast Asia

Notably, there's a surge in vertical AI startups in Indonesia, supported by the emergence of genAI technologies like ChatGPT

Southeast Asia's AI startup scene is in a major transformation. Instead of creating one-size-fits-all solutions, these companies are now prioritizing practical applications of AI that address specific challenges faced by different industries.

Customer-Centric Approach is Key:

According to Antler's co-founder, Jussi Salovaara, as quoted in a recent TechCrunch interview, a crucial ingredient for success in Southeast Asian AI is a customer-first approach. While the region might not yet boast Silicon Valley's vast talent pool, local startups are leveraging their deep understanding of regional needs to develop tailor-made solutions that address the unique challenges of the Southeast Asian market.

Verticalization Drives Growth:

Each Southeast Asian nation exhibits distinct trends within the realm of verticalized AI. Vietnam, with its strong technical talent base, sees startups targeting both domestic and international markets, particularly in the business-to-business (B2B) sector. This is evidenced by Antler's recent hefty investment of $5.1 million in pre-seed funding across 37 vertical AI startups, highlighting the rising interest and potential in addressing industry-specific challenges.

"The rest of the world is saturated with horizontal AI, making it fiercely competitive," Salovaara told TechCrunch. "Here in Southeast Asia, founders are increasingly focused on solving practical problems within specific industries."

On the other hand, Indonesian startups, supported by their large domestic market, are actively exploring opportunity for international expansion.

Indonesia's AI Landscape: A Closer Look, in a recent analysis summarizing insights from interviews with three industry experts, highlighted the promising prospects for AI startups in Indonesia. Partner at Antler Indonesia, Agung Bezharie, pointed out that almost half of Indonesian AI startups are less than a year old, with most securing funding from venture capitalists (VCs).

"Vertical AI focuses on developing targeted solutions for specific industries, activities, and issues prevalent in Southeast Asia," Bezharie explained. "AI excels in automating repetitive and recurring tasks, which are abundant in everyday life across Southeast Asia, particularly in Indonesia."

From Seed to Growth: Fostering Indonesian AI

The number of AI startups applying to Antler Indonesia has increased significantly. In batches I and II of 2022 to early 2023, only 1-2 AI startups applied. However, the number has now increased by 30% overall. This suggests that there is a growing interest in AI startups in Indonesia.

Initiatives like SEA-LION play a crucial role in propelling Indonesia's AI ecosystem forward by nurturing local talent and fostering solutions that address regional challenges. However, sustained support for research and development (R&D) remains essential for nurturing homegrown AI solutions and ensuring their competitiveness on the global stage.

CB Insights anticipates the genAI boom to maintain or even gain momentum in 2024. However, it's important to understand the distinction between horizontal and vertical AI startups before diving deeper into this flourishing field.

Ready to launch your startup journey with us? Find out more about Antler in Indonesia here.

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