Southeast Asia’s Top 16 Web3 Startups, According to Top VCs

• Southeast Asia has emerged as a hotbed for Web3 startup innovation.
• The region’s young, tech-savvy, unbanked populations are attracted to crypto’s utility, say VCs.
• Insider spoke to top VCs who identified the most promising Web3 startups in Southeast Asia to watch.

Southeast Asia has emerged as a hotspot for Web3 startups, who have grown thanks to a combination of a largely unbanked population, looser regulations around crypto, and relatively cheap technical talent.

Globally, the recent crypto crash has seemingly done little to cool investor enthusiasm for the nascent Web3 space: A16z, a prominent VC firm investing in crypto, last month announced a $4.5 billion fund aimed at crypto startups, while Binance, the world’s largest crypto exchange, announced a $500 million Web3 investment fund of its own.

In Southeast Asia, total VC funding for Web3, crypto and blockchain startups reached $1.45 billion in 2021, according to a report from White Star Capital. Almost $1bn in investment had been raised for startups in this space by June of this year, according to the report.

“The rapid growth of the Web3 sector in Asia and throughout the world serves as a testament that innovation lives everywhere,” said Christine Tsai, founding partner of 500 Global, a VC firm operating in the region. 

The 2021 Crypto Adoption Index report from blockchain analytics firm Chainalysis ranks Vietnam, Thailand, and Philippines among the top 20 countries in the world when it comes to cryptocurrency adoption. In fact, 17 of the top 20 countries in the ranking are in the developing world, with the US ranking number eight on the list.

Being able to set up crypto wallets and store savings in cryptocurrencies can be appealing to the largely unbanked population in Southeast Asia, which consultancy Bain & Co. estimated at over 70% of the total population in a 2019 report.

“We’re seeing some emerging economies gravitate towards Web3 technologies in part because of social, economic and political forces,” said Tsai. “Devastating rates of inflation have, for example, heightened interest in cryptocurrencies, which can enable holders to retain value.”

Government sentiment towards cryptocurrency and blockchain in countries like Singapore, Thailand, the Philippines, and Indonesia has been fairly permissive so far, in contrast with Europe’s recent raft of legislations aimed at taming the crypto “wild west”. 

And the cost of talent, which sees software developers earn more than $300,000 a year in Silicon Valley, is significantly lower: Glassdoor data shows software engineers in Ho Chi Minh City, Vietnam, for example, get paid around $650 per month, or $7,800 per year. 

It was one of the reasons behind Sky Mavis’s success, COO Aleksander Larsen told Insider in March. The company released the popular crypto Axie Infinity game last year, which allowed players to own and trade digital creatures. It went on to earn $215 million in a single week in August last year, with Sky Mavis reaching a $3 billion valuation.

Insider spoke to VCs at firms like Lightspeed Venture Partners and DeFiance Capital, all of whom have made significant bets in the space. Here are their picks for the 16 most promising startups building Web3 applications out of Southeast Asia.