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Business

Raising in 2024: Why Australian startups are turning to Singapore for VC

- October 28, 2024 4 MIN READ
Haymarket HQ's Isabelle Lee talks with Peak XV's Abheek Anand, Clayton Chu from Prosus Ventures and Investible's Ben Lindsay.
More and more Australian startups are chasing capital from VCs in Singapore—and for good reason.

Unlike Australian VCs, who risk losing tax concessions if they invest too heavily outside Australia, Singapore-based investors face no such restrictions and are actively deploying capital across global markets.

That’s why we decided to ask some of APAC’s most influential investors the questions every Aussie startup founder needs answered: Why Australia? Why Southeast Asia? And should you raise funding at all?

Here’s what Abheek Anand (managing director, Peak XV), Ben Lindsay (principal, Investible), and Clayton Chu (principal SEA & APAC, Prosus Ventures) had to say.

Why Australian startups are built differently

Australian startups tend to take a different approach compared to their global peers.

As Abheek Anand put it, founders here often focus on profitability and sustainable growth right from the start:

“The last company we partnered with in Australia built their business over six years—bootstrapped, hit profitability early, and only then started considering external capital,” he said.

“These kinds of stories are common in Australia but much rarer in markets with easier access to funding.”

Australia’s scarcity of capital, compared to places like Silicon Valley, leads to what Abheek called “sensible company building.”

The downside? Some Australian founders may become overly cautious.

Clayton Chu noted: “Australian founders are conservative by nature, which has its strengths. But we sometimes push them to aim higher because that’s what global investors are looking for. Meanwhile, in Southeast Asia, it’s the opposite—forecasts can be overly optimistic, and we work on reining them in.”

Opportunities (and pitfalls) in Southeast Asia

Some Australian startups look to Southeast Asia as their next growth frontier. It’s a fast-growing region with a rising middle class, making it attractive for consumer brands and tech companies alike.

However, Clayton cautioned that Southeast Asia is not a one-size-fits-all market.

“Southeast Asia isn’t homogenous. Singapore is very different from Indonesia or Vietnam—not just economically, but culturally. For instance, Singapore has an average income of around US$5,000 per month, while the regional average is closer to US$450. This affects how businesses should approach each market,” he said.

“The stark difference in labour costs also shapes how firms make purchasing decisions. In low-cost countries, hiring additional staff is often cheaper and more efficient than investing in automation.

“In some Southeast Asian markets, businesses prefer hiring more staff over adopting software. Recently, I was surprised to see a fairly large company in SEA managing their HR processes with Excel. Upon querying why they didn’t use a platform like Workday, the response was: ‘Why pay for software when we can hire 100 people to do it?’.”

Funding: to raise or not?

For many founders, the biggest question is whether they need venture capital at all.

At Haymarket HQ, we often challenge founders on their need to raise capital. Some of the most successful businesses that we have worked with purposefully avoided raising external capital.

A good example is Sydney-based HolonIQ, based at Haymarket HQ, who built a global data intelligence platform, did not raise any external funding and was just successfully acquired.

Ben Lindsay advised founders to think carefully about the expectations that come with VC funding.

“VC funding comes with pressure—you have to grow fast and deliver specific outcomes. If your business doesn’t fit that model, you might be happier without it,” he said.

Similarly, Abheek emphasised that not all successful companies need venture capital.

“The impact of VC is often overrated. Some of the world’s biggest companies didn’t rely heavily on venture capital,” he said.

“If your business has a path to profitability, you don’t need to chase VC funding just because it’s popular.”

Both investors stressed that founders should align their funding strategy with their long-term goals.

As Ben put it: “Ask yourself—do you really need VC funding, or are you better off growing organically? Not every business fits the VC mould and that’s perfectly okay.”

During the panel, one founder shared his frustration with the audience—despite running a successful business generating millions in revenue, he couldn’t secure funding from VCs.

“It’s profitable and scalable,” he explained, “but VCs aren’t interested because it’s not a tech play.”

Abheek noted that VC isn’t always the right fit for every business.

“VCs swing for the fences. They’re looking for companies with 100x potential, knowing several might fail,” he said.

“Small, profitable businesses might not align with a VC’s incentive structure. VC funding isn’t a badge of success. Sometimes the best founders are the ones who build without it.”

The right way to approach Asian expansion

Haymarket HQ has worked with hundreds of companies on their international expansion in the Asia-Pacific and have seen some great successes, but also our fair share of failures.

The reality of growing into a new market is that unless you’re a well-established brand, it’s often like starting a new business from scratch. Developing markets often bring an additional layer of complexity to the table.

Ben offered a practical piece of advice for Australian founders entering markets like Indonesia.

“If you want to enter Indonesia, you need two things: a state-owned enterprise (SOE) or a family with a name that carries weight,” he said.

Otherwise, you’re going to get stuck in endless meetings without progress. It’s a tough market and local partnerships are essential.”

This mirrors how international companies feel when entering Australia.

“Just as Australia is protective of its own industries, Southeast Asian countries are too,” Ben continued.

“You need to show that you’re committed to the market and build trust with the right partners.”

We’ve also seen this firsthand at Haymarket HQ.

Many foreign companies we’ve worked with have learnt the hard way that success in Australia isn’t just about having the best product—it’s about building relationships. Spending time on the ground and earning trust matters more than anything.

What APAC VCs look for

One of the recurring themes from the panel was the importance of picking a narrow problem to solve—and solving it really well.

Abheek referred to this as focusing on a “narrow wedge with a big toolkit”.

“The most exciting startups focus on solving narrow problems, like legal software or a specific healthcare workflow,” he said.

“Once they solve that, they expand into adjacent areas. That’s how you build something meaningful.”

Ben added that passion is just as critical as focus: “If you’re not passionate about the problem you’re solving, you won’t last. Founders need to convince investors that they’ll still be working on this five-to-10 years from now.”

Final thoughts

For founders considering whether to expand into Asia or raise venture capital, the message from our panel was clear:

  • Don’t chase funding unless it aligns with your long-term goals.
  • Build relationships before entering new markets.
  • And most importantly—solve meaningful problems with passion.

 

  • Duco van Breemen is CEO of Haymarket HQ, which has helped 1,000+ companies raise over $100m and expand across APAC.