COVID-19 continues to have significant humanitarian and economic consequences regionally. As the world mobilises itself for recovery, one silver lining is the accelerated digitalisation taking place between societies and businesses. This in itself has not only inspired founders and budding entrepreneurs, but is also catalysing efforts by industries to create new business models and categories via technology-led disruption.

As the world is embracing the digitally influenced new normal, South-east Asia is now under the microscope for startup investments, as evidenced by startup funding in the region doubling in 2021. This upwards trajectory is projected to only continue; for investors identifying ripe areas of growth, it is key for them to understand the trends happening in South-east Asia and how they tie into creating new offerings, to cater to the region's booming consumer market.

Brimming growth potential

South-east Asia's startup scene is primed for growth because there is now a clearer, more discernible path for exits to take place - backed by Grab's US listing and Bukalapak creating Indonesia's largest initial public offering to date. These previous Davids of the ecosystem are turning into Goliaths, but previously, only a few saw their monetary potential. The landscape has changed, especially as the 2 companies mentioned are now part of a growing list of regional unicorns (that also include Gojek, Tokopedia and Traveloka) and in turn, are drawing more attention from investors outside the region.

Concurrent with the maturing of the ecosystem, there is also a new breed of entrepreneurs who are more equipped, resourced, and experienced to start taking risks. This is as they now have "forerunners" whom they can learn from; those they can seek to emulate, and see how they can achieve success along the same lines. These entrepreneurs now also have a better time sourcing talent, as startups are attracting people from other industries. This is largely due to a cultural shift in employment perceptions; fewer people now think that they must be in corporate environments to be deemed "successful", so there is now a greater influx of people from more conventional industries into the startup scene.

But what is truly impacting South-east Asia's startup ecosystem growth is the market itself. The region possesses the unique features of a maturing market - it has a large, young, tech-savvy population, a trend that is being coupled with millions of people still coming online for the first time. With more people engaging products and services offered by startups, there will be additional "ripe" room for growth and development in the broader ecosystem, which can simultaneously and positively impact the region's development in terms of improved quality of life across societies.

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What can we expect from South-east Asia's startup ecosystem?

Investors must understand the uncanny qualities of the region's ecosystem and how it differs from others. For instance, while Grab managed to be listed via a special purpose acquisition company, it is unlikely (at least in the short term) for other South-east Asian startups to follow suit, which runs counter to how startups in the US have been using the same vehicle to go public.

This is mostly down to the South-east Asian market not being as mature in terms of assets. Instead, what we can expect to see is more exits and acquisitions taking place, as investors and companies flock to find growth outside of more established Asian ecosystems (that is, China).

It is also worth noting that the type of startups that will expand in South-east Asia is linked to its unique "hierarchy of needs". To better identify the region's idiosyncratic trends, we must look at how people choose to spend their money on the components of life that matter to them which, for a fast-growing region, includes food, travel and education (hence the growth of the aforementioned startups). This also extends to the mediums in which people in South-east Asia are spending and managing their money, which is why we will see the fintech space being innovated.

While fintech evolution has been taking place for years (albeit at different levels in each South-east Asian country), digitalisation and disruptive events like the pandemic have pushed governments to bolster fintech infrastructures and support the growth of related service providers. Hence, the region will see areas such as e-wallets and QR codes grow and, in time, even open banking, to plug in gaps faced by financially underserved segments.

Another area to consider is the small and medium-sized enterprise (SME) sector, as digitalisation is taking place across various industries. However, this development has not been even; they are just growing in areas like Vietnam and the Philippines, making the latter 2 nations emerging markets to watch. Although relatively small in terms of population, their growth in grocery businesses, consumer banking, and e-commerce are spaces to watch, and their governments are making their growth conducive by providing regulatory and/or infrastructural support.

Beyond South-east Asia's more immediate socio-economic demands, investors should also track how the region responds to emerging sectors - namely, the crypto and blockchain worlds. It should be noted that while activities in these sectors have been bubbling under for years, the regulatory landscape is still a grey area. However, the region will eventually find its own way to participate - but the winning companies here will be those that can hold their own against more established global players via regulatory moats, operational excellence or more locally relevant applications.

Getting in on the ground floor

Overall, investor interest in South-east Asian startups will only continue to rise - a statement of intent that was already reflected in the US$25.7 billion in total funding recorded in 2021. If investors seek to benefit from the ecosystem's growth, they must understand the unique potential South-east Asia holds. By doing so, they would be better placed to take advantage of market trends - getting in on the action early and sowing the seeds - to also impact the region's overall development positively.

• The writer is a vice-president at Lightspeed Venture Partners.