Southeast Asian start-ups are trying to survive, every which way they can.

The economic repercussions from the coronavirus or taking a severe toll on Southeast Asian start-ups. With revenues petering out, fresh funding in doubt and dwindling reserves of cash, these businesses are suddenly confronted with a new and basic reality – making ends meet. (Nikkei Asian Review)

For FOMO Pay, fortunes turned on a time

The coronavirus, out of the blue, made a sea change to the fortunes of Singapore-based digital payments start-up FOMO Pay.

Pre-pandemic, the start-up was looking forward to a year of growth ahead as consumers in the Southeast Asian region showed rising tendencies to use digital payments. The virus turned that on its head. Digital payment transactions slumped by more than 50% in February amidst rising cases of coronavirus.

As cash burn suddenly assumed alarming proportions, FOMO Pay had to put expansion plans on hold and let go of a bunch of its part-time employees.

More such cases abound across Southeast Asia

Malaysian flower delivery start-up BloomThis had to cut marketing expenses and seek help from their landlord and banks after revenues crashed 90%. Thailand’s online eyewear retailer Glazziq is also pushing back expansion plans and has already deferred salary increments and bonus packages.

Indonesian travel booking unicorn Traveloka had to lay off 10% of its workforce.

Singapore-based multicurrency digital wallet YouTrip slashed salaries of senior management and cut marketing expenses by 50% even though the start-up had just raised $30 million.

Venture capital investors have gone into a shell

Frankly, after a series of debacles in 2019, such as WeWork and Uber’s IPO flop, venture capitalists had already turned circumspect. The massive uncertainty in the financial markets due to the possibly recessionary impact of the coronavirus made things so much worse.

Fundraising for Southeast Asian start-ups is now up in the air. Because face-to-face meetings are all but impossible, most venture capitalists are not considering new deals.

“I am not actively looking at new deals because face-to-face meetings are very tough,” says Hyuk-Tae Kwon, CEO of Singapore-based Pine Venture Partners. “Venture capital is a very high-touch industry where you cannot just look at the spreadsheet and paper.”

GV Ravishankar, managing director at Sequoia Capital India, has advised founders to “assume very little funding will be available,” and cut spending “quickly and deeply.”

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