SEA tech ecosystem presses reset on funding, startup strategies

This week’s On the Rise looks at a funding playbook reset for SEA startups, the hurdles in Malaysian startup funding, and India’s hasty AI decisions. [Read from your browser]( On the Rise 🚀 Welcome to On the Rise! Delivered every Tuesday via email and through the Tech in Asia website, this free newsletter breaks down the biggest stories and trends in emerging tech. If you’re not a subscriber, get access by [registering here](. --------------------------------------------------------------- IN FOCUS In today's newsletter, we look at: - Whether SEA’s tech bubble is [about to burst]( - How Malaysian tech funding is being [stalled by government-owned funds]( - Why the Indian government’s haste in AI regulation could make waste Hello {NAME} , Last weekend, I was on a road trip with my friends to Jaisalmer, the desert city of India often known as the gateway of the [Thar Desert](. It was spontaneous, and to us, the destination seemed less important than the journey itself. That's what the early tech boom in Southeast Asia felt like - exciting and a little chaotic, but full of potential. But now, the route's getting a little bumpier for the region. Companies are being forced to map things more carefully and focus on efficiency. In this week’s first Big Story, my colleague Huong explores if the lower funding in the region is an indication of a tech bubble that’s about to burst. That said, this downturn has sparked a new wave of strategies and innovation for Southeast Asian startups as they look toward a broader expansion strategy to draw the eyes of investors. In this week’s second Big Story, my colleague Emmanuel dives deep into the state of startup funding from Malaysian government-linked investment companies. The long process has led to hurdles for firms looking to raise funds, despite Prime Minister Anwar Ibrahim’s push for more investment in the country’s tech ecosystem. Finally, in AI Odyssey, I discuss how the Indian government’s rushed approach to regulating AI companies might do more harm than good for the development of this nascent sector in the country. -- Lokesh  --------------------------------------------------------------- THE BIG STORIES 1️⃣ [Southeast Asian tech undergoes a funding and playbook reset]( Tech funding plummeted by 30% in 2023, driving the region's ecosystem to adapt to a new reality. 2️⃣ [Speed bumps ahead as Malaysian state investors grapple with startup funding]( Approach with caution as approvals are lengthy, a Kuala Lumpur-based lawyer tells founders.  --------------------------------------------------------------- AI ODYSSEY Promising AI projects we’re noticing Will India's AI bureaucracy kill the next big tech breakthrough? Last week, the Indian government issued an advisory requiring tech companies to [seek its approval]( before launching any of their genAI tools to the country’s users. This announcement came following a complaint about Google’s Gemini producing biased responses as it said that [Prime Minister Narendra Modi was fascist](. The incident elicited a response from IT minister Rajeev Chandrasekhar, saying that it was “an irresponsible, unplanned, and hasty launch” of the generative AI platform and that it was in [violation of the country’s IT rules](. In response, Google issued an [apology to the Indian government](. Prior to this, the country’s regulators had been lenient on genAI, with almost zero plans to regulate large language models (LLMs). The incident brings about the question on whether this type of decision taken in haste will ultimately hinder the growth of India's AI sector. Those supporting the government's stance argue that it's a necessary step to protect Indian citizens from potential harms caused by unregulated AI. Chandrasekhar underscored the importance of accountability and ethics when dealing with tech that affects people’s daily lives. However, the advisory has drawn criticism from AI startups and developers who fear this new regulation will impede innovation in the sector. “While presumably well-intentioned, this approach is misguided at best and destructive at worst,” [Brad Kasell]( principal technology strategist for Asia Pacific at US-based data analytics firm [Domo]( tells Tech in Asia. Kasell is of the opinion that the AI genie is well and truly out of the bottle and even if “permissions” were the right approach, it is an impractical obligation. He says that organizations at the forefront of AI development are moving at breakneck speed and cannot afford the lengthy delays bureaucracy would impose. “It is incredibly presumptuous to assume that (lagging) government regulators are in any position to evaluate emergent LLMs, let alone approve them,” he adds. Kasell also believes that this is an exercise in being seen to do something in a space that is both vague and fast-moving, rather than effectively guiding or developing the industry. Requiring permission before launch slows down the development process and adds a layer of bureaucracy that could disadvantage smaller players. Furthermore, the advisory lacks clarity in several crucial areas. After Chandrasekhar received backlash for the announcement, he clarified that only [“significant platforms”]( would need the government’s permission, with no explanation as to which firms would fall under this definition. For instance, would Ola’s KrutrimAI fall under this definition, or does it only apply to LLMs from international firms like Google or OpenAI? Would other Indian LLMs like farmer-focused Kissan GPT be required to seek government permission for their product launches? Pratik Desai, founder of KissanAI, took to X to voice his disappointment regarding the regulation. In addition, the requirement for AI models to be labeled as "under testing" could become permanent, given that even the most advanced systems are known to produce inaccuracies occasionally. Instead of stifling pre-launch permissions, a regulatory framework emphasizing transparency and clear labeling of AI models could be a more effective way forward. This would better inform users about potential biases and limitations, allowing for informed consent while still encouraging the growth of India's AI sector. -- Lokesh  --------------------------------------------------------------- FYI 1️⃣ [Founder-focused VC offers hope to startups facing end of the runway]( Singapore-based Febe Ventures has launched its second fund and plans to invest in startups in the B2B software, marketplace, health, and sustainability sectors. 2️⃣ [The female founders and leaders behind SEA’s top-funded startups]( To celebrate International Women’s Day, Tech in Asia highlights the women leading SEA’s most well-funded tech companies. 3️⃣ [Surviving the funding game: how timing can make or break your startup]( The Tech in Asia Bot maps out how industry realities, economic conditions, and market volatility can affect the time gap between funding rounds.  --------------------------------------------------------------- NEWS YOU SHOULD KNOW Also check out Tech in Asia’s coverage of the emerging tech scene [here.](  1️⃣ [Temasek’s Open interest]( The Singapore state-owned investment firm is in preliminary talks to fund OpenAI. If finalized, it would mark the ChatGPT developer's first investment from a state-backed company. 2️⃣ [Ai Palette paints funds]( Singapore-based Ai Palette, which specializes in the F&B industry, has secured US$4 million in funding to support its global expansion. 3️⃣ [Indonesia to regulate AI]( The country plans to introduce more comprehensive AI regulations by the end of 2024, focusing on sanctions for misuse and aligning with global ethical standards. 4️⃣ [Green growth]( Singapore-based carbon project developer Thryve has raised US$2.6 million in a seed round led by Openspace Ventures. The startup uses a tech stack to design and implement carbon projects, with a focus on transparency and quality. 5️⃣ [Tech heals]( NTU spinoff Synphne has secured US$5 million in funding to bolster the development and reach of its wearable rehabilitation device for patients with stroke, brain injuries, and other neurological conditions. The company offers its services in Singapore, India, and the US, among other markets. --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you soon! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. You can also break our hearts and remove yourself from all Tech in Asia emails over [here](  Copyright © 2024 Tech in Asia, All rights reserved. 63 Robinson Road, Singapore 068894