Photo Credit: WorldIslandInfo.com / Creative Commons

We are still looking for our Jack Ma in Southeast Asia. And while we were still searching in 2014, we are getting close. Here’s a list of key developments in Southeast Asia’s startup ecosystem in the past year and what it may mean for 2015.

People love Jack Ma, the founder of Alibaba and China’s richest man. Like other successful entrepreneurs, people hang onto his every word (even if they are of dubious origin), and they’re endlessly fascinated by him. How do we know? Articles featuring Jack Ma tend to do well on Tech in Asia and elsewhere.

And that’s why I chose to lead this article with him. But bear with me – I highlighted Ma for another reason: he is single-handedly propping up China’s startup ecosystem. Aspiring tech moguls can now point their parents to the ex-teacher as proof that their startup isn’t a waste of time. Flooded with money, Ma has reinvested back into startups, creating the fabled virtuous cycle so critical to the ecosystem’s survival.

We are still looking for our Jack Ma in Southeast Asia. And while we were still searching in 2014, we are getting close. Here’s a list of key developments in Southeast Asia’s startup ecosystem in the past year and what it may mean for 2015.

1. Rise of the founder-investor

The rhetoric towards venture capitalists lacking startup experience has been unkind. Portrayed as ignorant and fickle-minded vultures with no clue about how the tech industry works, entrepreneurs are clamoring for the day when founder-VCs will save the industry from itself. But facts paint a different picture.

A glance at the top ten investors on Forbes’ Midas List shows only four with startup experience. Another writer looked at the top 50 and found only 34 percent with an entrepreneurial background. The rest were either bankers, management consultants, or tech executives. It’s true that good entrepreneurs do not necessarily make good investors, but it can’t hurt to have more of them in the ecosystem, especially in Southeast Asia where investors and limited partners typically consist of real estate, traditional business, or rent-seeking folks who don’t possess the right mindset to invest in startups.

In 2014, we saw a continuation of a trend from the year before where more entrepreneurs got into the investing game, from the seed stage all the way up to series A. The most prominent example is the founding of Monk’s Hill Ventures in Singapore, spearheaded by Match.com founder Peng Tsin Ong. Garena Venture (yes, that’s how it’s spelled) may be considered another example, though it’s unclear how involved the founders are in the investing. Even entrepreneurs from young companies have time and capital to do a little angel investing on the side – RedMart founders backed Edit Suits, while Thailand’s Ookbee invested in edutech company Taamkru.

We’re just seeing the start of this trend. As a new crop of startups in the region list on the public markets or surpass the US$100 million valuation stage, you can expect to witness an accelerated circulation of talent, expertise, and capital through consolidations, pooling of resources, investments, and commercial deals.

2. Government involvement still strong but shifting

Photo Credit: TteckK / Creative Commons

Complementing the increase in entrepreneur involvement in seed and early stage investments is the sustained (or even increasing) participation from institutional investors and corporations. It’s mostly status quo for telcos like SingTel (SNGNF) and Globe (GTMEY), who are continuing to invest in companies through Innov8 and Kickstart respectively. What’s new is a US $60 million fund by Malaysian telco Axiata, though its Bumiputra focus will pose difficulties when deal sourcing. Singapore Press Holdings is one to watch in 2015, and we should expect to see its investment activities kick to high gear after a slow start.

On the government side of things, Malaysia and Singapore have remained especially active. Malaysia of course has MaGIC, a government agency in charge of promoting entrepreneurship. It recently held a week-long bootcamp for startup founders, though it seemed like the euphoria was dampened a bit with a slashed budget for the new year and a shift in focus back towards being a program for all entrepreneurs rather than tech startups. Meanwhile, Malaysian government fund Cradle has inked four co-investment deals with venture capital firms, while the government budget itself contained some goodies for entrepreneurs.

In Singapore, the government pumped more money into the startup ecosystem, though it’s shifting towards startups with stronger intellectual property. It kickstarted the ESVF co-funding scheme, which is like TIS except that it targets series A as opposed to early stage startups. Also, fund managers under ESVF are given more autonomy in decision-making, whereas TIS incubators that want to use government money must get approval from the government. While there’s no official change to the TIS, the approval process has been tightened up with an eye towards proprietary technology.

That’s just the tip of the iceberg. If the acronyms confuse you, this handy guide will give you a full handle on what the Singapore government is doing for startups.

Besides coming up with grants and schemes, the state is getting its hands dirty and doing some late-stage investments as well. Sovereign wealth fund Temasek has dipped its hands into pots like ecommerce, the sharing economy, and internet payments with investments in Lazada, Didi Dache, and Adyen respectively. And that’s only a portion of Temasek’s portfolio of internet companies (check out Tech in Asia’s complete coverage of its activities).

While observers advocate that governments should have a hands-off approach towards nurturing startups, this isn’t an option in Malaysia and especially Singapore’s minds. I wrote in an earlier piece how Singapore’s startup scene is overrated:

What Singapore is, or is trying to be, is an aircraft carrier. It’s projecting influence beyond its tiny shores. It’s trying to achieve what Israel now has, but the reverse way. Instead of collecting a global diaspora, it’s letting people go out hoping they’ll maintain ties here, and bringing people in hoping they’ll develop roots in the country.

So until Southeast Asia can boast startup and venture capital activities on the level of China, India, or even Israel, expect heavy government involvement to continue for the next few years. I’d put Indonesia on the watchlist as well given progessive candidate Joko Widodo’s (Jokowi) ascension as the country’s new president. 2015 may be the year where Indonesia finally puts in place startup-friendly policies and programs, though whether businesses want to deal with the bureaucracy is another matter. This will likely be an effort that will span Jokowi’s entire stint as president.

3. E-commerce continues to attract big money

Continuing my observation from 2013, ecommerce has sustained in receiving the lion’s share of investments into internet companies. Rocket Internet’s Lazada brought in another US $250 million, while online marketplace Tokopedia became the toast of Indonesia’s startup scene by attracting a US $100 million round. Meanwhile, Singapore’s RedMart and Luxola raised US $23 million and US $13 million in 2014 respectively.

The eye-popping investments are not just restricted to marketplace or online retail sites. Ecommerce infrastructure and services are getting a lift too. Alibaba (BABA) put in a massive US$250 million into Singapore’s national postage and logistics provider SingPost (no doubt to fuel Alibaba’s overseas expansion), while Thailand’s aCommerce received US $10.7 million. Add to that a slew of smaller investments into e-payment companies as well as Malaysian MOL’s listing on NASDAQ, and you have what amounts to a surge in confidence in ecommerce prospects in Asia.

So what will 2015 bring? It’s likely that big players will be the ones to reap most from this ecommerce bonanza due to economies of scale. With this logic, massive marketplaces (both business-to-consumer and consumer-to-consumer) and massive online retailers like Tokopedia, Lazada, and Zalora should thrive. RedMart is in a unique position given that it has not quite reached the scale needed to succeed and it’ll probably need a large infusion of cash to do so. The same goes for other players like Luxola, Bellabox, and the tons of venture-backed ecommerce stores. For them, the pressure to earn a return for investors will either lead to bigger fundraising rounds, a quick shutting down next year, or consolidation between competitors to compete with the giants.

4. The Uber effect

Photo Credit: Uber

While I’ve delved into this in detail, the effect of Uber’s massive valuation on startups like GrabTaxi is worth mentioning again. Despite Uber’s troubles, it’s reaping massive dividends by betting on logistics-on-demand as the next hot area. Investors are clearly following suit by backing networked transportation companies around the globe. Uber’s story also has the effect of inspiring a wave of startups that want to tackle every aspect of the sharing economy — from boats to parking lots to even hair salons. More Uber-for-X startups will come out in 2015.

5. Untapped potential in Philippines, Vietnam, and frontier markets

Predictably, most splashy startup news this year has centered around the big four: Indonesia, Singapore, Malaysia, and Thailand. Preliminary data on Techlist, our platform for connecting investors with startups, shows that Singapore still leads the region by volume of investments, followed by Indonesia, Thailand, and Malaysia. Though Singapore might have to play second fiddle this year if positions are adjusted by sum of investments. Vietnam is definitely a market to watch with successes like Appota and Flappy Bird, though political and legal challenges are now making international investments a challenge. The scene may continue to thrive, just don’t expect to hear as much from it.

The Philippines is trending upwards as well, with a slew of seed investments and even an IPO capturing headlines. Like many developing countries, payments and counterfeit goods will pose challenges to ecommerce firms, but there’s also a lot of potential in the country for healthtech and remittance-related startups. Given its large population and rising middle class, the country is far from its full potential, and hopefully it’ll reach closer to the mark in 2015.

Lastly, we have Myanmar. With the country opening up to the world, we are hearing more stories of entrepreneurs dipping into the frontier market. Going into 2015, we expect the scene to continue staying small due to a host of issues like high rental costs, small talent pool, and an uneducated market.

But give it a few years and a few more intrepid entrepreneurs, and Myanmar might just surprise you.