HubSpot, a leading customer platform, has revealed new insights into the startup ecosystem in Southeast Asia and India through a study conducted by Milieu Insight. Despite global economic pressures and a decline in private funding to the lowest levels in six years, startups in these regions are showing significant resilience and maturity.

According to the report, 53% of startups found it easier to grow their businesses in the past year compared to previous years. This growth is accompanied by a heightened focus on profitability, with 98% of startups emphasizing the importance of a clear path to profitability.

Geographical expansion poses challenges, with 23% of startups finding it harder to enter new markets. However, customer acquisition and retention have become more manageable. While 18% noted difficulties in acquiring customers, 55% reported improvements in both acquisition and retention. Key challenges include increased competition (31%), stricter customer demands (31%), and access to capital (29%).

Laurence Butler, Global Senior Director at HubSpot for Startups, highlighted the region’s entrepreneurial spirit and adaptability. “Digital transformation has empowered modern startups to adapt swiftly to market conditions using data analytics and foundational technologies such as CRM platforms,” Butler stated. “Most startups now recognize the critical importance of profitability, focusing on core markets and robust customer relationships for long-term sustainability.”

The study also indicates that technology plays a crucial role in startup resilience. Almost all startups (99%) use at least one CRM tool, and 81% are satisfied with their tech stack. This technology aids in collecting, structuring, and analyzing customer data, driving business growth. Consequently, 71% of startups believe they have enough data to identify new growth opportunities.

However, disparities exist between countries. In the Philippines, 38% of startups lack sufficient data on business prospects and customer journeys, with only 58% satisfied with their tech stack. This lack of data has hindered growth, with 48% finding it more difficult to expand, nearly double the regional average of 25%.

AI is emerging as a transformative force, with 98% of startups considering it crucial for future strategy. In India and Indonesia, 73% and 63% of respondents, respectively, strongly agreed on AI’s importance. AI offers opportunities to accelerate time to market (32%), enhance product delivery (30%), and compete with larger companies (30%).

Despite the potential of AI, talent acquisition remains a significant challenge. Startups struggle to fill key positions in marketing (46%), customer success (40%), and sales (38%). AI and machine learning engineers, data analysts, product managers, and software engineers are in high demand. Cost and experience are primary barriers, alongside a lack of soft skills and misaligned expectations regarding remote work.

The talent landscape varies across countries, with Singapore facing challenges in diversity and specialized skills, and India grappling with high turnover rates and cost concerns. To overcome these hurdles, startups may need to invest in upskilling and reskilling employees, leverage remote work, and foster a culture of continuous learning.