Antler's Founder Discusses Vertical AI Investment Strategies in Southeast Asia

A wave of vertical AI startups is emerging across Southeast Asia, catering to industries ranging from seafood to finance. Recently, Singapore-based venture capital firm Antler invested a total of $5.1 million in 37 startups during pre-seed rounds. Antler also announced a collaboration with Khazanah, Malaysia’s sovereign wealth fund.

“As we explore the global landscape, horizontal AI is becoming highly competitive,” says Jussi Salovaara, co-founder and managing partner at Antler. “Founders in Southeast Asia are increasingly focused on addressing practical challenges within various sectors.”

Salovaara notes that while Southeast Asia may not yet possess the talent pool to create innovations like OpenAI, there is an opportunity to adopt a customer-first approach in developing AI applications tailored to the specific pain points of local markets.

Distinct trends in vertical AI are emerging across different countries. For instance, Vietnam boasts a robust technical talent base. Founders of consumer startups in Vietnam typically concentrate on the domestic market at the outset. However, B2B startups often have a global focus from the beginning, as per Salovaara’s observations. In contrast, Indonesian companies tend to prioritize the vast domestic market over international expansion, although Antler encourages more startups to consider global outreach.

One notable investment by Antler is BorderDollar, which is developing an invoice financing platform for cross-border logistics. Due to differing funding structures in Southeast Asia, BorderDollar leveraged its own training data to create a customized credit scoring system. “You can’t simply transfer solutions from the West; they require local adaptation,” asserts Salovaara.

Another promising venture in Antler’s portfolio is CapGo. Antler recognized the strong backgrounds of its founders, including CTO Chen Yu, who has machine learning experience from Grab, and CEO Yichen Guo, who holds an MBA from Harvard and has worked in product management for firms like Citi and VIPKid. CapGo streamlines data acquisition for market research—a pressing issue Salovaara understands from his previous experience in investment banking. “Why invest countless human hours on market research when AI can handle it more efficiently?” he questions, emphasizing CapGo’s strength in developing data sources specifically for Southeast Asia, with plans to expand throughout the Asia-Pacific.

Startups like Zolo and Seafoody aim to tackle challenges within Southeast Asia's food supply chain. Based in Malaysia, Seafoody was founded by Eleen Kee, Samantha Ooi, and Zach Leong, with Kee bringing generational experience from the seafood industry. The platform utilizes AI to eliminate intermediaries in the seafood supply chain, facilitating direct sales to businesses. Similarly, Zolo is enhancing the food supply process using AI to streamline order management, reducing the extensive back-and-forth communication between restaurants and suppliers via WhatsApp.

Salovaara also highlights Coex, a Malaysia-based startup that employs AI to digitize project claims and bills of quantity, expediting approvals and communication. “The construction sector is quite traditional, so this innovation aims to optimize both capital and operational efficiency,” he states.

However, launching a vertical AI startup presents its own challenges. It requires assembling the right team, which must include not only technical experts but also industry veterans who deeply understand their target market. Additionally, acquiring accurate data for training is crucial. Once established, though, Salovaara believes these vertical AI startups can develop a formidable competitive edge. “Securing funding for a so-called ‘hardcore’ horizontal AI venture from Southeast Asia can be tough, especially against companies in Silicon Valley with better talent and funding options,” he explains. “Focusing on vertical solutions is the strategic path forward.”