The Asian start-up story has attracted increasing global attention in the last two decades, and the region is now home to the world’s second largest start-up ecosystem, when measured by venture capital investment. In addition to a vibrant start-up scene, most governments in the region are implementing targeted policies to foster start-up development. This chapter presents a comprehensive overview of the start-up landscape in Asia focusing on four economies at different levels of development: India, Indonesia, Thailand and Viet Nam. It discusses in a comparative way the start-up ecosystems in these countries and the policies which are being implemented. Despite the differences it clarifies the similarities across these countries: in all of them start-up ecosystems are maturing, showing growing sophistication in terms of technologies explored and moving to align start-up development with inclusivity and sustainability goals.
Start‑up Asia
Abstract
Start-ups in Asia have been attracting increasing attention in the last two decades by policymakers and investors alike. A variety of public, private, civil society and academic initiatives have emerged in the past decade to encourage start-ups to take root in these markets, while new business models have become more widespread as digital technologies have penetrated the region. Governments have been implementing specific strategies and tools to support start-uppers, attempting to replicate the successful conditions that spurred start-ups in Silicon Valley forty and more years ago. Some countries, including the ones discussed in this report as India, Indonesia, Viet Nam and Thailand have shifted to policy approaches that look to start-ups as precious allies in transforming their national economies towards more innovative, greener and more inclusive sustainable development pathways.
This chapter presents an overview of the Asian start-up scene based on the experiences of India, Indonesia, Thailand and Viet Nam (each country has a dedicated chapter in this report). This chapter presents a comparative overview of start-up ecosystems in these countries, focusing primarily on the evolution and distribution of founded start-ups and associated venture capital investments. It also discusses their main achievements as well as the main challenges ahead.
Start-ups have become a global phenomenon, going beyond their traditional heartland, the Silicon Valley (Figure 1.1). Global venture capital (VC) investments have grown 5 times as a share of GDP in 10 years, accounting for 0.5% of world GDP during 2021-23. The United States remains the world’s largest start-up hub, with about 45% of global VC investments in 2021-23 and 33% of the world’s start-ups. However, start-ups have been mushrooming in developing and emerging economies at an increasing rate during the past decade (Startup Genome, 2023[1]; OECD, 2016[2]; OECD, 2013[3]). Latin America and the Caribbean accounts for 2% of VC and 4% of start-ups, and Africa for 1% of VC and 2% of start-ups respectively, and while these numbers are small compared to global innovators, they represent a doubling of their shares compared to a decade ago.
Asia absorbed 23% of all venture capital (VC) investments during 2021-23, the second largest after North America. It is also home to 19% of the world’s start-ups, the third largest after North America and Europe. Start-ups are mushrooming in Asia and shifting its perception globally, from a region that is mainly a producer and exporter of low-tech manufactures, to an innovator. Asia’s start-up trajectory has taken place during a worldwide boom in venture investments, but its story is unique in terms of scale and speed. Just 10 years ago, its share of global VC was one third what it is now, at 8%. The rise of these new start-up growth poles in Asia has been supported by a growing web of private sector and university initiatives, including cross-border investments, as well as dedicated government policies that have attempted to kick-start domestic venture capital and stimulate innovation to emulate the success of Silicon Valley and other leading hubs.
Note: For start-ups, all start-ups created between 2014 and 2023 have been taken into account. Asia includes the regions of Central Asia, East Asia, South Asia and South-East Asia and excludes Western Asia.
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
Measuring start-up development is not without difficulties. Despite increased interest in start-ups by policymakers, experts and the media, there is no single definition of what a start-up is. Official internationally comparable databases, notably the OECD SDBS database, exist for enterprise births and young enterprises (e.g. less than 2 years old), but not for start-ups. Investors’ platforms, such as Crunchbase, Pitchfork and Dealroom combine self-reporting with smart algorithms that collect public information from the web. These databases, even if coverage is not uniform across countries, provide realistic estimates of start-ups dynamics.
This report uses data from Crunchbase, a commercial database on technology-related companies and financing that is widely used by investors, entrepreneurs and researchers. It uses the term “start-up” to refer to innovation-intensive or high-impact new enterprises for which support mechanisms are being implemented in the countries included in this work, based on each country’s own definitions.
Start-ups operate in dense, creative ecosystems with science and technology skills, investors, and physical and digital infrastructure. Several stakeholders act concurrently to create a suitable system for start-ups to emerge and expand.
The start-up ecosystem includes public and private institutions that focus on supporting innovative start-ups, such as incubators, technology parks, angel-investor networks, incubators and accelerators, and more recently, development banks and start-up programmes set up by large companies. In addition to receiving support from large companies, start-ups also receive it from communities and networks through experience-sharing platforms and not-for-profit linkages, as well as from the people who participate in crowdfunding and support the creation of innovative start-ups based on their growth potential, their innovation intensity and their capacity to solve problems that are specific to certain places or that respond to certain challenges.
Source: OECD (2016[2]), Start-up Latin America 2016: Building an Innovative Future, Development Centre Studies, OECD Publishing, Paris, http://dx.doi.org/10.1787/9789264265660-en
Traditional supporters of start-ups – i.e. national governments, universities, research centres, and more recently, regional and local government – also operate in this context under different schemes, often with different objectives and incentives. Governments, for instance, seek to maximise the impact on intergenerational welfare. Communities, meanwhile, often seek solutions to specific short- and medium-term problems. Finally, private-sector investors often look for potential returns in the medium term. The fact that the various parties involved each have different priorities makes co-ordination and dialogue among them all the more important.
This report uses the UN regional classification for Asia but excludes Western Asia, unless otherwise specified.
Source: Authors’ elaboration based on OECD (2016[2]), Start-up Latin America 2016: Building an Innovative Future, Development Centre Studies, OECD Publishing, Paris. http://dx.doi.org/10.1787/9789264265660-en.
Asia is far from a homogeneous region, and the same holds true of its diverse start-up hubs. Growth in start-ups first took hold in the People’s Republic of China (hereafter “China”), India and Singapore, which saw their first large investments pouring in during 1999-2000. During that time, confidence in the first large successful internet ventures in the United States sparked interest in replicating similar business models in other markets. However, as the dot.com bubble burst in 2001, investment interest globally in start-ups cooled. It would take roughly another decade until start-ups started reaching significant scale in Asia, building on the rapid adoption of the smartphone and fast advances in digital connectivity. Investments increased rapidly in these new Asian markets. More specifically:
China and India have emerged as the two largest ecosystems in Asia (Figure 1.3). China quickly became the region’s top destination for VC in the 2010s, driven by confidence in emerging opportunities in the country as it became the world’s top manufacturer and exporter, and worked towards increasing innovation across the economy. The attractiveness of targeted government policies to lower costs for start-up operations, and the creation of various start-up funds at multiple government levels, also incentivised rapid start-up creation. At its peak in 2018, China accounted for 35% of global investments, but since the start of trade frictions, VC investments in China have started to cool down. The country remains the largest hub in Asia by investments, absorbing 55% of the Asian total during 2021-23, followed by India (19%) and Korea (9%). India, by contrast, is the largest ecosystem in Asia in terms of total number of start-ups, accounting for 49% of total, followed by China (16%) and Japan (9%). India has seen rapid growth in recent years, building on its rich software tradition, and with recent policies to promote digitalisation and start-ups.
Singapore has grown into a connecting hub for financing start-ups in the region. Singapore accounts for about 7% of VC and start-ups in Asia. Singapore-based investors are often among the most active in Asian hubs, particularly in Southeast Asia. They were the top investors in Indonesia and Viet Nam where they participated in 31% and 38% of deals respectively during 2020-22 and the second largest in India after the United States, where they participated in 5% of deals.
Asia also has several newcomers that developed their ecosystems in a record amount of time. It took Indonesia, Viet Nam and Thailand between 2 and 4 years to go from the first large investments emerging (of over USD 100 million) to venture capital reaching over 0.1% of GDP, a trajectory that took 15 and 13 years in China and India. These ecosystems grew in the last decade in tandem with investor appetite to diversify investments, and tap into a relatively stable, growing and very connected regional market.
Despite their rapid growth, start-up ecosystems in Asia remain below their potential when it comes to their density. Except for Singapore, hubs in Asia have relatively few start-ups compared to their population. For example, in India there are 4.4 start-ups per 100 000 inhabitants, 2 in Viet Nam, 1.5 in Thailand and 1.3 in Indonesia, compared to almost 40 on average in the OECD (Figure 1.3). However, the gap is much smaller when it comes to the role of venture capital in the economy, with the Asian average at 0.22% of GDP, compared to 0.32% in the OECD. This implies that Asian hubs see high investments, but these are more skewed, with a handful of unicorns in each country accounting for the majority of these.
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
The dynamism of the region’s start-up scene owes to four key assets:
A large, connected and dynamic market. Start-up development in Asia has taken place in the context of a rapidly growing region. During 2010-2022, average annual growth of GDP per capita in Asia, including Western Asia (USD 2015 constant) was 3.5%, 5 times the rate in Africa and 6 times the one in Latin America and the Caribbean [authors’ elaboration based on (UN Stats, 2023[5])]. This represents a growing disposable income at the hands of a population that is the world’s largest, including 4 out of 5 of the world’s most populous countries (China, India, Indonesia and Pakistan). Connectivity has advanced fast in Asia – between 2010 and 2022 an estimated 1.2 billion more people started using the internet in the region, with connectivity tripling from 22% of total to 62% [authors’ elaboration based on (ITU, 2024[6])]. The region’s growth presented an unprecedented opportunity to tap into new consumers, particularly in e-commerce and fintech that remain the region’s traditional poles for start-up investments. In addition, the Association of Southeast Asian Nations (ASEAN) and the Regional Comprehensive Economic Partnership, have contributed to a very deeply integrated trade and investment market, incentivising investments in start-ups that can capture cross-border consumer potential.
Accumulated manufacturing capacities that allow for start-up experimentation. Asia has become the world’s manufacturing centre, generating about 52% of the world’s manufacturing value added (MVA), with China the world’s top manufacturer (31% of world MVA), and Japan (7%), Korea and India (3% each), among the top ten hubs [authors’ elaboration based on (UNCTAD, 2024[7])]. Start-ups in the region have started to emerge that are able to build on this manufacturing expertise, both to experiment with solutions for the manufacturing process (e.g. Industry 4.0) and use local and regional production networks to quickly prototype and launch new products. One example of this trend is the high density in AI and robotics start-ups in some hubs, that are attracting investments. Out of the top 25 cities for AI and robotics investments, 10 are in Asia, including Beijing (6%), Shanghai (2%), and Shenzhen (2%) in China, Singapore, Seoul, Tokyo and emerging hubs in India such as Delhi and Bengaluru (around 0.7%) (Figure 1.4). In Shenzhen, for example, start-ups have been developing solutions for local manufacturing firms that utilise AI and robotics in the production process multiplying linkages with the local economy.
Share of global VC in AI and robotics, %, top 25 destinations, 2021-23
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
Governments that are committed to supporting start-up development. Start-ups do not flourish in a vacuum: they need dense ecosystems where various stakeholders interact and come together, share information and resources and collaborate. Start-uppers, universities and academic institutions, civil society organisations, and government agencies at the national and local level, are all crucial to kick-start start-up ecosystems and foster them. Several countries in Asia have stepped up efforts to support start-ups in the past decade, by complementing private sector efforts and designing specific strategies for start-ups. Such programmes have their roots in the 1980s and 1990s when initiatives emerged to support technology-based SMEs and university spin-offs. However, during the last 15 years there has been a growing awareness of start-ups as a separate category of business that while they have some common elements with other firms, such as SMEs, they are also characterised by different dynamics, and therefore need different and targeted policy tools [see also (ERIA/OECD, 2024[8])]. In addition, the creation of start-up “scenes” in countries, also helped consolidate communities of stakeholders that put forward their own demands to be supported through specialised support and regulatory frameworks.
Start-up programmes have taken different forms in the region. For example, in Malaysia and Thailand large start-up events in 2011 sparked the creation of stakeholder platforms, named Start-up Malaysia and Start-up Thailand respectively. These platforms included the contribution of different stakeholders, from the private sector (such as associations), as well as different government agencies with an interest in supporting start-up development, with the aim of understanding the emergence of start-ups and streamlining their support in public policy. In both cases these platforms grew into a collection of different government programmes to support start-uppers. Start-up India, in contrast, was launched in 2016 as a comprehensive programme to support start-ups, from financing to mentorship and regulatory reform. In the Philippines, the Innovation Act was enacted in 2018 to define start-ups to facilitate their access to funding and government policies, in line with global trends that have seen start-up Acts multiply in recent years, from Italy in 2012 to Tunisia in 2018, Senegal and Ethiopia in 2020 and others. In Korea, the Ministry of SMEs and Start-ups was established in 2017 and launched a comprehensive Start-up Korea strategy in 2023.
A corporate sector that is investing in innovation and start-ups. Large corporates in Asia are active in financing start-ups, using open innovation practices to harness complementarities: investors get access to new technologies, solutions and business models and get to diversify their portfolios, and start-ups get access to markets and finance. Thailand has the most active corporate venture capital (CVC) scene in Asia, with local and foreign CVC participating in about 46% of all VC deals in Thailand with an investor listed during 2020-22, compared to for instance 30% in Indonesia and 20% in China (Figure 1.5).
The role of CVC in Asian start-up ecosystems reflects an overall large footprint for big businesses in innovation, production and trade. For example, the R&D investments financed by business in Korea was 78.5%, in China 78% and 69% in Thailand, compared to the OECD average of 64.9% (Figure 1.5). Some of these firms are competing at global scale. For example, about 17% of the R&D investments performed by the world’s top 2 500 corporate R&D investors were undertaken by Chinese firms, a level similar to the EU-27 and less than half of those of the United States (42%) (Joint Research Centre, 2023[9]). Countries in Southeast Asia also count with investors among the top 2 500 for R&D, such as VinGroup of Viet Nam and GoTo of Indonesia.
However, the firms that engage in CVC go beyond those that traditionally invest in innovation in-house. The first to become active are the large ICT firms (both state-owned and private), such as Telkom Indonesia, and Dtac in Thailand, but these have been followed by other types of firms as start-ups started to become ubiquitous, including banking, petrochemical and agro-food groups. Notable is also the role of unicorns, some turned over time into large conglomerates, such as Alibaba and Tencent in China, and Flipkart in India. Overall, CVC are relatively more risk-averse than traditional investors. For example, out of the deals where corporates participated, only 37% were at the seed stage during 2020-22 in Thailand, compared to 66% for all investors.
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com and additional research; authors’ analysis based on OECD (2025[10]), “Science, Technology and R&D Statistics (database)”, https://doi.org/10.1787/data-00182-en, RICYT (2024[11]), "Main indicators", https://www.ricyt.org/en/category/indicators; and national statistics.
Start-ups are highly concentrated in capital cities
The majority of Asian hubs show a large concentration of start-ups in their capital cities. Capital cities often concentrate economic, educational and financial resources, and as a result their footprint in start-up ecosystems tends to be high. For example, in Thailand 85% of start-ups set up their businesses in Bangkok, while the city accounts for only 16.4% of Thailand’s population and 48% of GDP [authors’ elaboration based on National Statistics Office (2022[12])]. Similarly, about 71% of start-ups in Indonesia concentrate in Jakarta and 78% of Malaysia’s one in Kuala Lumpur (Figure 1.6). In contrast, in China, India, Pakistan and Viet Nam more than one hub have emerged. India for example has developed several large start-up centres. Delhi, Bengaluru, and Mumbai stand out as the country’s largest and most mature hubs, accounting for 50% of Indian start-ups. As India’s larger hubs become increasingly crowded and cost pressures mount, and as emerging technologies grow ever more diffuse, new hubs are emerging in India, such Pune, Hyderabad (6% of India’s start-ups each), Chennai and Ahmedabad (4% respectively).
Start-up support organisations, such as incubators and accelerators, also tend to concentrate in capital cities, constraining opportunities for growth in regions. A look at data from Crunchbase and GSMA, which tend to capture larger institutions, show that in Indonesia Jakarta continues to account for about 53% of incubators and accelerators in the country, followed by Bandung (13%), Surabaya (6%), Bali (5%) and Yogyakarta (3%) (Figure 1.7). However, Jakarta still concentrates more advanced services: around 30 out of 35 organisations that offered acceleration activities were based there. Bangkok concentrates 82% of accelerators and incubators in Thailand, while in Viet Nam these are split between two cities, Ho Chi Minh (50%) and Ha Noi (36%). Digital connectivity gaps are also prevalent. For example, only 49% of the rural population was connected in Indonesia, compared to 71% for urban areas, a large gap compared to Thailand (82% vs 90%) and Viet Nam (65% vs 82%), for instance [based on (ITU, 2024[6])].
Note: Only active start-ups that were founded between 2014 and 2023 are included. DEL: Delhi, BLR: Bengaluru, MUM: Mumbai, BJS: Beijing, SGH: Shanghai, SZH: Shenzhen, TYO: Tokyo, SEL: Seoul, JKT: Jakarta, LHE: Lahore, KCH: Karachi, ISD: Islamabad, KUL: Kuala Lumpur, HCM: Ho Chi Minh, HAN: Ha Noi, DHK: Dhaka, MNL: Manila, BKK: Bangkok, CMB: Colombo, KAT: Kathmandu, PNH: Phnom Penh.
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
Note: Coverage excludes small university incubators.
Source: Authors’ elaboration based on Crunchbase (Crunchbase, 2024[4]), database, https://www.crunchbase.com/, XYZ Lab (2023[13]), “Start-up accelerators & incubators”, https://www.xyzlab.com/startup-accelerators-incubators, GSMA (2021[14]), Indo-Pacific Tech Hubs (database), https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2021/11/GSMA-Ecosystem-Accelerator-Indo-Pacific-Tech-Hubs-List.xlsx and additional research.
Women start-uppers in Asia are fewer than men
Women start-uppers in Asia are fewer than men, in line with global trends (OECD, 2021[15]; OECD, 2024[16]; Startup Genome, 2023[1]). Globally, only about 19.1% of start-ups had at least one female founder in 2023. There are important regional differences. Asia, for instance, has the lowest share of female-led start-ups among geographic regions (15.4%), with the EU-27, Africa and LAC at around 17% (the United States stands at 23%). Still with Asia being far from a homogeneous region there are important differences across hubs, for instance, from the Philippines with 26% to Japan with 10%. (Figure 1.8). In Viet Nam, Indonesia and Thailand the share was similar at around 17%-19% of all start-ups. Scaling up is also not easy for female-owned start-ups. Female-owned start-ups tend to be even less represented among firms that receive late-stage financing, including unicorns, compared to their overall share in the start-up population. As a result, they tend to receive even less financing. Globally, the share stood at around 13%, with the lowest in the EU-27 (7%) and the highest in LAC (31%), with the United States, and Asia around the global average. Viet Nam has one of the lowest shares of VC going to women-owned firms in Asia at 4.4% of total, three times lower than in India (13%) and China (12%) and, much less than Singapore (15%), and Indonesia, the highest among Asia’s larger hubs (31%).
Start-ups with at least one female-founder as a share of start-ups (2023) and venture rounds (2021-23), top 20 hubs by total number of start-ups globally and selected Asian ones
Note: Only active start-ups that were founded between 2014 and 2023. Asian hubs are shaded in green, all other hubs in orange. India, China, Korea, Japan and Indonesia are among top 20 hubs by number of start-ups globally. Malaysia, Philippines, Viet Nam, Bangladesh and Pakistan are selected additional Asian hubs featured in the figure. A venture round is an event when a start-up receives a venture capital investment (including angel funds in this report) from an investor.
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
This report provides a deep-dive on four start-up ecosystems in Asia: India, Indonesia, Viet Nam and Thailand. The development of start-ups in these four hubs are indicative of broader trends in the region, as countries are shifting from exports of labour-intensive and primary goods to more knowledge-intensive and sustainable goods and services. The early 1990s in Asia were marked by the spread of regional and global value chains, particularly in goods such as textiles, electronics and automotive, supported by the reduction of tariff and non-tariff trade and investment barriers. National plans and strategies also accelerated this process, such as the doi moi of Viet Nam in 1986 that also led to growing marketisation in the country, liberalisation reforms in Indonesia since the mid-1980s, and the package of reforms introduced in India in 1991, and were complemented by regional and multilateral actions such as the ASEAN Free Trade Area (AFTA), signed in 1992 and the expansion of WTO, among others. All four countries have seen steep rises in per capita incomes in the past decades, with Viet Nam GDP per capita (2015 USD) increasing by 7 times between 1990 and 2023, that of India 4 times, and that of Indonesia and Thailand almost 3 times, just below the Asian average (3) (Figure 1.9.). Among the four countries, Thailand has the highest GDP per capita at USD 6 641 (2015 USD), close to three times the level in India, and 50% higher than Indonesia and 70% higher than Viet Nam. Structural transformation trajectories in the four countries have differed:
India experienced a slow structural adjustment of its manufacturing sector, with its share in GDP reduced from 19.3% to 14.7% between 1990 and 2022 (Figure 1.9.). This shift represented a move away from heavy industries towards services, with IT a prime example. The country became a global software hub, accounting for some 10% of global exports in telecommunications, computer and information services [authors’ elaboration based on UNCTAD (2024[7])]. This industry owes a lot to the development of Bengaluru’s IT cluster, already in the 1980s. However, India’s economy goes beyond IT; it is a diversified one, with several manufacturing clusters, such as in Pune and Chennai, including in complex industries such as automotive, as well as bio-tech and pharmaceuticals.
Viet Nam pursued foreign direct investments (FDI) in export-oriented manufacturing, more than tripling the share of exports in GDP (from 26% to 94%) and doubling the share of manufacturing (from 11% to 27%) (Figure 1.9.). Most of the industries that settled in Viet Nam were in light goods, particularly electronics. About 11.3% of the world’s mobile phones were exported from Viet Nam in 2021, the second largest after China (49%) [authors’ elaboration based on ITC, (2023[17])]. At the same time, Viet Nam saw the gradual emergence of a domestic private sector, as it moved away from central planning towards a socialist market-oriented one.
Thailand continued a strategy of export-oriented FDI, already in place since the 1970s when the country became embedded in regional production networks, particularly in automotive, electronics. FDI as a share of GDP (stock) in Thailand is the second highest in Southeast Asia is (stock), standing at 36% of GDP, behind Singapore (365%) [authors’ elaboration based on UNCTAD (2024[7])]. Within three decades, Thailand’s exports in GDP have doubled within three decades (33% to 66%) although the manufacturing share remained stable (around 27%) (Figure 1.9.). Large private local firms have also emerged that leverage the domestic market in heavy industries and services or engaged in exports together with foreign investors.
Indonesia’s connection to global markets has been anchored in the exploitation of natural resources. Primary goods accounted for 57% of exports in 2020-22, with oil and gas, and palm oil among the main exports [authors’ elaboration based on (UNCTAD, 2024[7])]. The country’s fast growth over the three decades has been associated with a remarkable poverty reduction: the poverty gap at USD 2.15 a day reduced from 20.5% in 1990 to 0.3% in 2022 (World Bank, 2023[18]).
Source: Authors’ elaboration based on UNCTAD (2024[7]), UNCTADstat database, https://unctadstat.unctad.org/.
The ecosystems in India, Indonesia, Thailand and Viet Nam are at different development stages and have followed distinct development trajectories. The first start-up hubs emerged in the 1980s and accelerated in the 1990s, when all four opened up to global markets. In India, early start-ups were linked to the IT outsourcing activities, which led to the emergence of local IT firms, such as Tata Consultancy Services and Infosys. In other countries, tech SMEs similarly developed linked to the provision of business services, as well as emerging digital communication tools. Over time, ecosystems in India, Indonesia, Thailand and Viet Nam became denser, particularly as the uptake of smartphones and e-commerce in advanced hubs demonstrated the potential for novel business models and services in the region. In tandem, policymakers started becoming more attuned to the potential of start-ups to add to the arsenal of innovation and to contribute to overall a culture of experimentation and risk-taking.
Despite their heterogeneity in terms of size, maturity and geography, the start-up scenes in India, Indonesia, Thailand and Viet Nam are characterised by three common elements, notably:
The bulk of investments flow to areas with strong consumer potential, such as e-commerce, fintech and transport, in line with regional trends.
Fintech was the top sector for VC in Viet Nam (absorbing 55% of total VC in during 2021-23), in Indonesia (40%) and in India (22%), and the top second in Thailand (27%, after transport with 38%), compared to 20% on average in the OECD (Figure 1.10). The interest in fintech is explained by the large potential of financial inclusion in the region. The Asian average of people with a bank account, for example, was 57% in 2021, compared to 93% in the OECD [authors’ calculations based on (World Bank, 2024[19])]. This has left a space for experimentation for new payments firms, lending platforms and financial services comparison sites. The creation of public digital platforms, such as Aadhar and e-KYC in India and PromptPay in Thailand, has been key for boosting growth in this segment, complemented by dedicated regulatory sandboxes.
E-commerce was the second most popular sector for investments in India (12%), Indonesia (16%) and Viet Nam (18%) and the third most popular in Thailand (22%), between 2 and 3 times higher than the OECD average (6%). This segment has risen as local platforms emerge that adapt global models to local conditions, with several first unicorns emerging in this space, such as Tokopedia in Indonesia. E-commerce and fintech are also linked through the rise of integrated apps, making it hard to distinguish between the two. For instance, two of Viet Nam’s oldest unicorns (VnPay and Momo) are e-wallets. VnPay has partnered with Tiki, a popular e-commerce start-up in Viet Nam, while Momo has recently added functionalities for e-commerce through the integration of mini-apps into its platform. The pattern of start-up specialisation tends to be more diversified than that of investments.
Overall, there is still potential to increase investments in new and higher technologies. For example, despite the pockets of capabilities for AI in the region, investments in AI and data analytics were negligible in Thailand, Indonesia and Viet Nam and only 3% in India, compared to the OECD average of 8%, and other large Asian hubs such as China (7%) and Singapore (10%). In contrast, in terms of start-ups, all four hubs had between 3% and 6% of their start-ups engaged in these activities, in line with the regional and OECD average (5% and 6% respectively). This suggests that start-ups in the industry may find it comparatively more difficult to secure investments in these hubs, due to more risk-averse attitudes across investors.
Share of venture capital by sector, % of total, selected Asian countries and Asia and OECD averages, 2021-23
Note: Regional averages for venture capital include countries with over 10 venture capital deals annually during 2021-23.
Source Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
Financing is growing hand-in-hand with services. In all four hubs, there are financing and targeted services on offer to support start-ups. In Viet Nam, Thailand and Indonesia, the role of foreign venture capital funds, particularly those based in Singapore and the US, has been sizeable, with VC deals made just with foreign funds accounting for 55% of total in Viet Nam, 50% in Thailand and 45% in Indonesia during 2020-22. However, local investors are emerging fast, especially since the mid-2010s, and adding more options to the available pool, particularly for seeds and early-stage firms. In contrast, India’s share of foreign-only deals was 23% during 2020-22, highlighting the relative maturity of the Indian financing scene.
Another key feature has been the important role of corporate venture capital (CVC) in these ecosystems, particularly Thailand and Indonesia, where they accounted for 36% and 40% of all deals, compared to 17% in Viet Nam and 7% in India. This is taking place through specialised CVC funds, such as Indigo and MDI Ventures in Indonesia, through direct investments or through setting up accelerators, such as Sprint Accelerator in Thailand.
Finally, there is a growing provision of services to firms through the creation of incubators and accelerators, both by private actors and also publicly owned. For example, the number of supporting organisations in Viet Nam reportedly roughly doubled to 50 between 2017 and 2018 and had reached 197 by 2022 (including 84 incubators and 35 accelerators), of which almost 57% were led by the private sector (NATEC, 2022[20]; Pham and Hampel-Milagrosa, 2022[21]). About 39% of seed investments in Thailand were made with the participation of an incubator or accelerator, with the share in Viet Nam reaching 38%, in India 27% and Indonesia 22%. Among these, the highest sums were disbursed in India where such deals yielded 20% of all VC investments in seeds, higher than in all four other hubs (around 10% in Thailand and Indonesia and 17% in Viet Nam).
Social inclusion and environmental impact are emerging as priorities for start-ups, for example:
Transforming food systems with food-tech for net zero and zero hunger: both Indonesia and Thailand are among the Asian hubs that are relatively more specialised in food-tech. In Indonesia about 9.6% of all start-ups were engaged in food-tech, the highest in Asia after Myanmar (10%) and followed by Thailand (9%), much higher than the OECD average (7%) (Figure 1.11). Food-tech start-ups are emerging in a variety of activities, from AI solutions for agriculture and food production, to developing biotech and nanotech solutions to platforms for food delivery and food commerce. Food-tech also has the potential to link with the cultural and creative industries in the region, and to promote the development of start-up ecosystems beyond capital cities. In Thailand, Chiang Mai, for example, has become a large food-tech hub, centred on Chiang Mai University, and leveraging linkages with nearby rural ecosystems.
Share of food-tech start-ups in total, Asian countries and OECD average, 2023
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
Boosting renewable energies. Investments in renewable energy start-ups are gaining ground again globally, following global commitments to enable the green transition, and geopolitical tensions around energy supply chains. They now account for around 6% on average of global VC during 2019-2023. India is relatively more specialised in renewables than other Asian countries, featuring the highest share of renewable energy (RE) start-ups (1.6%), on par with China, and above the regional average of 0.9% (Figure 1.12). It also accounts for about 5% of VC investments in RE, behind the United States (40%), China (26%) and Sweden (4%). The country has been leveraging high consumer demand for new transport and energy-saving solutions, as well targeted policies to become one of the world’s largest hubs in RE, accounting for 4.6% of global VC and 9.6% of start-ups in the industry. Among the handful of start-ups that have raised more than USD 50 million in financing, are Ola Electric, the country’s unicorn that specialises in electric scooters, Euler motors, an EV manufacturer and Juniper Green Energy, an operator of solar, wind and other renewable projects, now part of the AT Group. While a much smaller hub, RE is also taking root in Viet Nam, where it accounted for 5% of VC, higher than the Asian average. This is due to large investments attracted by SkyX Solar, a rooftop solar panel provider that was created in 2019 with funds from French-based company EDF, and seed investments into Selex Motors, an electric vehicle start-up.
Share of renewable energy start-ups in total country start-ups (2023) and VC funding (2021-23), Asian countries and top 3 OECD
Note: The top three OECD countries included are those with the highest share of renewables start-ups in total. Only countries with over 10 renewables start-ups on Crunchbase are included. Renewable energy start-ups include those that have chosen among their industry categories the following ones: biofuel, biomass energy, clean energy, electric vehicle, hydroelectric, fuel cell, renewable energy, solar and wind energy.
Source: Authors’ elaboration based on Crunchbase (2024[4]), database, https://www.crunchbase.com.
Tapping into social entrepreneurship: There is a relatively higher awareness of social (or impact as it is also known) investing among Indonesian firms. Indonesia has nearly 6 of every 1 000 start-ups self-identified as a social start-up, the third highest in Asia after Singapore and Malaysia (7 and 6.6 respectively) and higher than the OECD average (4). Social start-ups have been supported in Indonesia, not least through the formalisation and legal recognition of the sector in the country as early as 2015. While venture capital to social start-ups still remains at low levels, a growing ecosystem is fostering social start-ups, including the Asian Venture Philanthropy Network (AVPN), and specialised private sector impact funds.
All four countries have targeted policies and institutions to support start-ups. 2016 was a landmark year in this respect, with all four hubs launching their respective strategies: Start-up India, the 1 000 Digital Start-ups Programme in Indonesia and the Project 844 - Initiative for the startup ecosystem in Viet Nam until 2025.
As part of this effort, and in line with broader regional and global trends, countries have moved to formally define start-ups to better target the stakeholders that have access to financial and non-financial support (Table 1.1). For example, India set criteria for obtaining a start-up certification, while Viet Nam set a legal definition that could serve as a basis for more specific identification of stakeholders by implementation agencies. In other countries, such as Thailand and Indonesia, definitions are provided in the context of specific programmes. Countries adopt different definitions, with some focusing on performance, particularly the possibility of firms to scale up quickly, others focus on the specific nature of the start-up as an innovative business, and others yet adopt mixed definitions (OECD, 2016[2]).
The policy mix for supporting start-ups in the four ecosystems has become increasingly articulated, with tools designed to address the different areas needed for start-ups, namely providing financing, facilitating connections and providing business services, creating markets, regulatory frameworks and transforming mindsets (Table 1.2). Each country has adopted its own approach, according to its institutional set-up, development goals and industrial and innovation dynamics:
India has introduced one of the most integrated programmes in the region, through Startup India, a one-stop-shop initiative co-ordinated by the Department for Promotion of Industry and Internal Trade (DPIIT), an agency under the Ministry of Commerce and Trade. This initiative is multi-ministerial in nature, encompassing different initiatives, policies and actions across the government. One of the key features of India’s approach is unique start-up certificate through which firms can access financial and non-financial support, including at the union territory (UT) level. India has introduced a comprehensive policy support framework, ranging from tax incentives to start-up grants, credit guarantees and a dedicated procurement programme for start-ups.
Indonesia has a relatively decentralised strategy for promoting start-ups. Following the inclusion of start-ups in Indonesia’s national development policies (the National Medium Term Development Plans for 2015-19 and 2020-24), Indonesia’s ministries developed specific start-up portfolios, including the Ministry of Creative Economy/Creative Economy Agency, the Ministry of Communication and Digital and with the Ministry of SMEs taking a co-ordination role. Indonesia’s efforts are mostly focusing on improving the regulatory framework by making business licensing easier, and creating frameworks for new issues, such as e-commerce. Indonesia puts emphasis on raising awareness events and incubation, too, trying to promote a culture of innovative entrepreneurship. Finally, one of the distinctive features of Indonesia’s approach is the combination of start-up programmes with poverty alleviation and rural development objectives, such as the Pahlawan Ekonomi Nusantara (PENA) programme by the Ministry of Social Affairs.
Thailand set up a Start-up Committee bringing together different government agencies to boost awareness for start-ups, infrastructure and incubation services and improve policy and regulatory environments. The National Innovation Agency (NIA) is one of the main agencies for start-up promotion, introducing various schemes such as grants, loans, and networking services. Other agencies are also active, notably the Digital Economy Promotion Agency (DEPA), and the Department of Industrial Promotion. Thailand has introduced a comprehensive policy mix for start-ups with the main thrusts being the issuance of “smart visas” for start-uppers, seed grants with an emphasis on innovative projects, and mentoring services. More recently the country has introduced new tools such as convertible grants, interest subsidies, and a programme to facilitate procurement for start-ups.
Viet Nam’s start-up policy efforts have focused on reforming legal frameworks for start-us, in line with Viet Nam’s overall move towards a more market-oriented innovation system since the Doi Moi reforms of 1986, and on creating support institutions that can enable start-ups to access mentorship and networks, thus raising overall visibility for the start-up system. The National Agency for Technology Entrepreneurship and Commercialization Development (NATEC) has been particularly active in the latter area, working on technology transfer, mapping and evaluating policies and supporting the creation of incubators and other support institutions. In terms of legal reforms, among the most important stand out efforts to introduce legal definitions for start-ups and guidelines for investing in them (Law on Support for SMEs No.04/2017/QH14), for commercialisation of research (Law on Technology Transfer No.07/2017/QG14) and for investment (Investment Law No.61/2020/QH14).
Note: The details of each country’s public policy mix can be found in the specific country chapters. *Denotes a recently implemented instrument.
Source: Authors’ elaboration.
Despite differences between countries in their start-up policies, two common features include:
New tools for demand-side support. For example, Thailand’s DEPA has been experimenting since 2020 with convertible grants for start-ups, which are meant to mature into equity at a later stage. This tool has been recently introduced in other countries, such as for instance by NESTA in the UK, mainly for impact investments (NESTA, 2018[28]). There is also a movement from seed-only grants and loans to setting up larger funds that can also perform equity investments and support scale-ups, such as the Merah Putih Fund (MPF) in Indonesia. In terms of demand-side tools, notably both India and Thailand have launched procurement programmes. Thailand did so in 2019 whereby NIA provides funding to start-ups for testing solutions that respond to problems identified by government agencies. If their technology proves successful, then start-ups can win a contract with the relevant agency. India adapted in 2017 its rules for procurement to include start-ups in its Government e Marketplace. This is in line with some global trends. For instance, the European Union that amended in 2014 its public procurement rules to encourage procedures to include smaller innovative firms.
Public investment in awareness raising. A central part of initiatives in Asia is organising large awareness and networking events and competitions with the aim of not only facilitating the connections between domestic and international investors and start-uppers, but also to shift local mindsets towards more risk-embracing, entrepreneurial attitudes. Examples include the annual TechFest in Viet Nam, Start-up Thailand league competitions, and Indonesia’s 1 000 Digital Startups. These initiatives have been key for nurturing a business- and investment-oriented culture and planted the seeds for the creation of start-up communities. \
Going forward, start-ups in India, Indonesia, Thailand and Viet Nam are facing an increasingly challenging landscape, characterised by a so-called “capital winter”, geopolitical tensions and technological uncertainty. Moreover, the quick gains of transplanting business models in e-commerce, e-payments, ride-sharing and other mass consumer-facing models are dissipating, increasing competition for new solutions and ideas. To consolidate start-up development, address structural challenges in start-up ecosystems and step up their contribution to sustainable and inclusive development, it will be important for governments to:
Update and diversify the policy mix. The smart use of conditionalities for instance, could help focus resources and support on addressing territorial disparities, supporting entrepreneurs that are traditionally underrepresented, such as women or from marginalised communities, and supporting the development of more advanced technologies that is often overlooked in less mature ecosystems in favour of more market-ready products and services. There is also potential in better linking start-up measures to production development policies, so as to encourage better synergies between the two areas, and spark innovation.
In addition, it is important for policy mixes to encompass diverse tools as innovation is a complex endeavour and often no unique tool can address the risks that prevent start-uppers from engaging in building their capabilities, learning and bringing their idea to market. Institutional inertia or regulatory voids can lead to a tool “mono-culture” where only one type of support is on offer. For example, Thailand has recently introduced new schemes, such as convertible loans and interest rate subsidies to complement traditional tools such as seed grants and loans, and mentoring support. India is complementing supply-side tools with demand-side instruments, such as enabling start-ups to bid for public procurement projects through the Government e-Marketplace (GeM) Startup Runway portal. Scaling up existing tools that encourage collaboration among stakeholders will also be essential, by introducing targeted conditionalities, for example, or by setting up joint spaces (e.g. incubators and accelerators) that connect the public and private sector.
It will be important to regularly monitor, assess and evaluate existing programmes to understand the impact of policies and adjust when needed, to ensure resources are used efficiently and effectively (OECD, 2020[29]; ERIA/OECD, 2024[8]). This is particularly important when it comes to the introduction of newly designed programmes and tools.
Mobilise financing that is in line with innovation ambitions. It is important to ensure that the resources put forward are in line with the impact envisaged. Start-up policies can go a long way in kick-starting start-up scenes with few resources, as even relatively low-cost instruments such as revising regulatory frameworks and setting up mentoring and networking mechanisms. For example, Indonesia and Viet Nam provide relatively little funding, and have instead put emphasis on networking and incubation initiatives, which have been crucial in inspiring young entrepreneurs, connecting investors with potential start-ups, and raising visibility of local opportunities to domestic and international investors. However, as ambitions change over time, from incentivising start-ups to take root, to supporting more technologically sophisticated ecosystems, financial resources need to be revised in line. When thinking of financing tools, such as seed, equity and loans, there is a risk that in an effort to have some support available to close financing gaps at the early stage, the resources provided are too small or dissipated among many recipients. The size of the support provided needs to be sufficient to catalyse change, which means that for stimulating more innovative technologies or supporting start-ups at a later stage, resources might need to be higher, particularly in areas where the private sector might not be ready to step in. Singapore, for instance, has created a tiered support strategy, ranging from approx. USD 37 000 in grants for new start-ups to between USD 185 000-370 000 for proof of concept and proof of value projects in innovation-intensive start-up projects respectively. Increasing resources gradually would be important, along with ensuring that these are used effectively, utilising for instance competitive processes and implementing monitoring and evaluation best practices.
Leverage partnerships to foster learning and pool resources. Regional co-operation for instance can support countries in Asia to learn from each other, share best practices, and transfer lessons learned to their own specific context (ERIA/OECD, 2024[8]; GEN, 2024[30]). Stepping up such partnerships can also help create new markets and facilitate start-ups to take a more cross-border approach to their business models, as well as to diversify funding sources. International partnerships can also be crucial for increasing financing available together with technical support. For example, the Global Green Growth Institute (GGGI) is an inter-governmental organisation established in 2012 in Seoul, Korea, that aims to support low-carbon resilient growth in developing and emerging economies, including by supporting start-uppers. Beyond country- and region-specific co-operation programmes, the European Union is also supporting innovation and start-ups for countries in Asia by enabling the access of applicants from several low-to-middle income countries in the region and beyond to access funding for Horizon Europe, the EU's main fund for research and innovation.
Public policies to foster start-up development are valuable allies in unleashing economic transformation. This means integrating start-up development into broader sustainable development agendas, by considering that:
Start-ups can push the global innovation frontier and address local development challenges. The world is complex and becoming more uncertain, fragmented and fast-changing. In this scenario, unleashing innovations that can work towards meeting big challenges is paramount, and this effort on top of corporates and established research hubs, needs to include start-ups too. Already, the experience of countries in Asia shows that start-ups can be valuable allies in this respect: for example, in India start-ups are already working on renewable energies, including those that are not yet mature, such as hydrogen. In Indonesia, start-ups are choosing social entrepreneurship models that can help bring into the entrepreneurial ecosystem those that are marginalised. These efforts can be leveraged and become part of start-up strategies, enabling start-ups to meet multiple objectives.
Learning from others. All four ecosystems have looked to peers in Asia and also OECD countries as sources of learning to strengthen their own policymaking when it comes to start-ups. Given that this is a policy area where changes are fast, and the target group is a dynamic one, intimately linked to the development of new technologies, learning from contemporary experiences can help transfer good practices, and identify areas for improvement and experimentation. In the case of Viet Nam, for instance, this learning has been vital in sparking new regulatory changes to increase the scale and typology of start-up instruments. The exchange of ideas and insights has not only taken place bilaterally, but also with the creation of dedicated fora, including the Southeast Asia Startup Assembly (SEASA) organised by Thailand’s NIA, the ASEAN Startup Initiative and the Startup20 launched during India’s G20 Presidency.
Start-ups can fast-track the transformation of local production ecosystems. Start-ups have the potential to revitalise existing economic activities with new technologies and business models, while local production ecosystems can serve as markets and co-creators of knowledge. For example, start-ups can help develop novel manufacturing technologies that utilise digital technologies, that can in turn help modernise local industrial capabilities. One example is the food-tech sector in Thailand, where public private initiatives through dedicated incubators and accelerators, among others, are incentivizing the development of new solutions that could transform agro-food in the country. There is scope to scale up such initiatives in the region, and beyond.
Beyond the narrow scope of start-up policies, it will also be important for Asian countries to continue investing in wider innovation, industrial, entrepreneurial and educational policies that have a large impact on start-up ecosystems. Despite progress, investments for example in innovation overall remain low in several Asian countries. Yet, building science and technology capabilities is crucial for catalysing quality start-ups.
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