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Why Southeast Asia Demands a Different Approach
When Grab first launched in Malaysia in 2012, they faced a unique challenge in sizing their market. The traditional taxi market size wouldn't tell the whole story – they needed to account for the massive informal transportation sector, the growing middle class, and the region's rapid smartphone adoption. Today, as a super-app valued at over US$20 billion, Grab's journey illustrates why conventional market sizing frameworks need adaptation for Southeast Asia.
Let's explore how founders can approach market sizing in this diverse region, learning from both successes and failures along the way.
Total Addressable Market (TAM): The Art of Sizing
Southeast Asia's fragmented nature makes TAM calculations particularly challenging. Take the case of Carousell, which started in Singapore's second-hand goods market. Their initial TAM could have been limited to Singapore's population of 5.6 million, but they understood that the real opportunity lay in the region's growing middle class and increasing digital adoption.
When calculating your TAM in Southeast Asia, consider these regional dynamics:
The Digital Economy Factor: Southeast Asia's digital economy reached US$200 billion in gross merchandise value in 2022, with projections showing growth to US$300 billion by 2025. However, these numbers alone don't tell the whole story.
Market Maturity Variations: Singapore's digital payment adoption rate exceeds 90%, while in Myanmar, it's below 10%. Your TAM calculations must account for these disparities rather than treating Southeast Asia as a monolithic market.
For founders, this means developing a nuanced approach to TAM calculation. Consider how PropertyGuru approached this challenge. Instead of simply counting all property transactions in Southeast Asia, they focused on the digitally-enabled real estate transaction value, which gave them a more realistic view of their true market potential. "In PropertyGuru's early days, we had to completely rethink how we calculated our market size," shares Winnie Khoo, early employee at PropertyGuru and now Partner at Antler Singapore. "What made PropertyGuru successful was understanding that our true market wasn't just about property transactions, but about digitizing the entire property search and transaction experience in Southeast Asia."
Serviceable Addressable Market (SAM): Finding Your Sweet Spot
The jump from TAM to SAM in Southeast Asia requires particular attention to infrastructure and regulatory realities. Sea Group's Shopee provides an instructive example: Despite e-commerce being their TAM, they initially focused their SAM on markets with strong logistics infrastructure and digital payment adoption – namely Singapore, Malaysia, and Thailand – before expanding to other Southeast Asian countries.
Key considerations for SAM calculation in Southeast Asia include:
Infrastructure Readiness: Digital payment infrastructure varies significantly across the region. Singapore and Malaysia have advanced systems, while Cambodia and Laos are still developing their digital payment ecosystems.
Regulatory Environment: Financial services startups often find their SAM limited by varying regulatory frameworks. Consider how GXS Bank had to obtain separate digital banking licenses in Singapore and Malaysia, effectively creating distinct SAMs for each market.
Cultural and Language Considerations: Southeast Asia's cultural and linguistic diversity means that your serviceable market might be limited by your ability to localize. Successful companies like Lazada have shown that investment in local language support and cultural adaptation is crucial for expanding SAM.
Serviceable Obtainable Market (SOM): Reality Check
The path from SAM to SOM in Southeast Asia is where many startups face their biggest reality check. This critical metric represents what you can realistically capture in your first 18-24 months of operations, considering your resources, capabilities, and competitive landscape.
In Southeast Asia, effective SOM calculation requires understanding three key dimensions:
Market Entry Dynamics: Each Southeast Asian market has unique entry barriers and requirements. Take the example of Carro, which successfully navigated the used car market by carefully calculating their obtainable market share across different countries. They started with Singapore's structured market before expanding to Indonesia and Thailand, adapting their approach for each country's specific vehicle ownership patterns and regulatory requirements.
Resource Allocation Strategy: Your initial SOM is heavily influenced by your available resources and how you deploy them. Consider these practical factors:
- Customer acquisition costs vary significantly between markets (often 3-5x higher in Singapore compared to Indonesia)
- Sales cycle lengths differ by country and industry (B2B sales cycles in Vietnam can be 2-3x longer than in Singapore)
- Market education costs in emerging markets like Cambodia and Myanmar can consume 30-40% of early marketing budgets
Competitive Response: Southeast Asian markets often see swift competitive reactions to new entrants. Your SOM calculations should account for:
- Incumbent response strategies (pricing adjustments, increased marketing)
- Market share defense by established players
- New entrant dynamics in your target segment
Understanding Vertical Opportunities
Southeast Asia's diverse markets often present unique vertical opportunities that might not be immediately apparent in initial market sizing. Erik Jonsson, Partner at Antler Vietnam and former co-founder at Zalora, witnessed this firsthand in the fashion e-commerce space. "What made Zalora successful was understanding that our market size wasn't just about fashion retail, but about building a complete lifestyle platform for Southeast Asian consumers," Jonsson explains.
This vertical-specific thinking has proved successful in other sectors too. Frank Kang, Partner at Antler Malaysia, saw this during his time building Althea, Korea's premier beauty e-commerce platform that expanded successfully into Southeast Asia. By deeply understanding the region's beauty and skincare market dynamics, Althea was able to tap into the growing demand for Korean beauty products across Southeast Asian markets.
Practical Guide for Founders
When approaching market sizing in Southeast Asia, consider these approaches:
Start with Urban Centers: Begin your TAM calculation with tier-1 cities where digital adoption is highest. This approach helped Grab build a strong foundation before expanding to tier-2 and tier-3 cities.
Account for Market Evolution: Southeast Asia's markets are developing rapidly. Your TAM today might be significantly different in 12 months. Build this evolution into your calculations, as Tokopedia did by factoring in Indonesia's growing internet penetration rate.
Consider Cross-Border Opportunities: While starting in one market is often wise, understanding cross-border opportunities is crucial. Sea Limited's success came partly from their ability to leverage cross-border synergies while respecting local market differences.
Competition Dynamics: Local incumbents often have strong relationships and distribution networks that can limit your obtainable market. Ninja Van succeeded by focusing initially on e-commerce logistics in Singapore, where they could build a strong operational foundation before expanding.
Operational Capabilities: Your SOM might be limited by your ability to serve different markets effectively. Consider how GoTo Group operates Gojek and Tokopedia separately in different markets due to varying operational requirements and market conditions.
Common Pitfalls to Avoid
Many founders in Southeast Asia fall into these market sizing traps:
Overestimating Market Readiness: Just because Singapore has adopted a technology doesn't mean other Southeast Asian markets are ready. Buy Now Pay Later (BNPL) startups learned this lesson when expanding from Singapore to other markets with different credit cultures.
Underestimating Localization Needs: Your market size might be limited by your ability to localize. Consider how Traveloka succeeded by deeply understanding local travel preferences and payment methods in each market.
Ignoring Informal Markets: In many Southeast Asian countries, informal markets represent a significant portion of the economy. Take Indonesia's warung ecosystem, for example. Companies like Warung Pintar, founded by Agung Bezharie Hadinegoro (now Partner at Antler Indonesia), demonstrated how understanding these traditional retail networks could unlock massive market opportunities. Similarly, GudangAda and Bukalapak's Mitra program succeeded by digitizing these traditional small family-owned shops, which make up over 65% of Indonesia's retail market.
Investor Perspectives of Southeast Asia
"In Southeast Asia, market sizing isn't just about numbers – it's about understanding the unique growth trajectories of each market within this region. The most successful founders we've backed demonstrate not just the ability to calculate market size, but to truly grasp how these markets evolve at different speeds and in different ways."
- Jussi Salovaara, Co-founder and Managing Partner, Antler
Understanding how investors evaluate market size claims in Southeast Asia can significantly impact your fundraising success. Regional investors have developed sophisticated frameworks for assessing market potential, shaped by both successes and failures in the ecosystem. Some key investor perspectives to consider:
Market Evolution Patterns: Investors in Southeast Asia look for founders who understand market maturity curves. While Singapore might be ready for advanced fintech solutions, Indonesia might be 2-3 years behind in adoption, and Myanmar 4-5 years behind. Your market sizing should reflect this staggered evolution.
Geographic Expansion Potential: Regional investors particularly value businesses that can demonstrate clear paths to geographic expansion. This means showing:
- Market entry sequencing logic
- Adaptation strategies for different markets
- Resource requirements for each expansion phase
- Clear unit economics that improve with scale
Risk-Adjusted Market Sizing: Sophisticated investors in Southeast Asia expect founders to present risk-adjusted market sizes that account for:
- Regulatory risks in each market
- Competition from both regional and global players
- Infrastructure development timelines
- Consumer behavior change requirements
Common Investor Red Flags:
- Overemphasis on Total Population: Simply multiplying solutions that work in Singapore by Southeast Asia's total population rarely convinces experienced investors
- Ignoring Market Development Costs: Many founders underestimate the resources required to develop nascent markets
- Unrealistic Market Share Assumptions: Claiming more than 20-30% market share in competitive segments raises skepticism
- Over-aggregation of Different Markets: Treating Southeast Asia as one homogeneous market rather than acknowledging distinct characteristics of each country
Looking Ahead: Market Sizing in an Evolving Region
Southeast Asia's digital economy continues to evolve at an unprecedented pace and the next wave of innovation is already challenging traditional market sizing approaches.
The region's unique development patterns, where markets often leapfrog entire generations of technology, add another layer of complexity to market sizing. We're witnessing this in digital payments, where markets like Indonesia are moving directly from cash to digital wallets, bypassing traditional credit card infrastructure entirely. Meanwhile, regional integration initiatives are gradually reducing barriers to cross-border trade and digital services, potentially expanding addressable markets for startups.
The success stories of Grab, GoTo, and Sea Limited demonstrate that initial market sizes rarely capture the true potential of innovative business models in Southeast Asia. What ultimately convinces investors isn't just the size of the market, but rather founders' deep understanding of how to capture it – combining ambitious vision with pragmatic execution strategies tailored to each market's unique characteristics.
Building the Next Southeast Asian Success Story
Southeast Asia's startup ecosystem is entering an exciting new phase of growth and innovation. At Antler, we're committed to supporting the next generation of founders building for Southeast Asia, with plans to deploy $20M in funding over the next six months in 2025 across 33 startups, with rolling-capital investments commitment of up to $600,000 per company.
We're particularly excited to work with:
Ambitious Individuals:
- Experienced founders looking for their next venture
- First-time founders with deep operational experience (seasoned startup operators, early employees, builders, technical & domain experts)
- Seeking a co-founder and launchpad to build the most defining companies of tomorrow
- Looking for support to validate their ideas and launch a startup in 10 weeks
- Raising pre-seed funding at day zero (pre-launch)
Early-Stage Startups:
- Teams at pre-product or pre-revenue stages
- Founders working on stealth projects
- Builders looking to raise seed funding, accelerate their growth trajectory, and access investor introductions to a global network of VCs including Southeast Asia and more
For founders ready to tackle the most pressing challenges in this region, the opportunity to create significant impact has never been greater. Whether you're at the ideation stage or already building, understanding your true market size – and having the support to capture it – can make the difference between good and great outcomes.
The key to success lies in understanding that market sizing in Southeast Asia is not a one-time exercise but an ongoing process of discovery and adaptation. With the right approach to understanding and segmenting markets, coupled with the right support and resources, the next generation of Southeast Asian tech giants is waiting to be built.
If you're ambitious about building in Southeast Asia, we'd love to hear from you. Reach out to us antler.co/apply to initiate a conversation with us.
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