Pivot, partner, or get acquired – navigating SEA’s funding crunch

In a tight funding environment, founders across Southeast Asia are staring down tough choices. Is it time to pivot? Should they explore partnerships to scale? Or should they consider an acquisition?

I went through both a pivot and an acquisition as co-founder of GajiGesa. These weren’t easy decisions, but they were necessary and showed me how to think through these types of crossroads. 

Image credit: Timmy Loen

In 2024, startups in the region raised just US$8.7 billion, down sharply from US$36.4 billion in 2021, according to Tech in Asia data. Investors now expect profitability sooner and business models that prove themselves quickly.

That pressure means founders can’t wait months hoping for product-market fit to appear. The cost of sticking with the wrong model is higher than ever.

So how can founders navigate these choices with clarity?

Is this a pivot point?

Startups typically need to pivot when their product is consistently misaligned with its intended market. If months of iteration have failed to produce product-market fit, or if key metrics such as retention, revenue, or unit economics are not improving, then it’s time to reassess.

Other indicators of misalignment may include market saturation, limited total addressable market (TAM), or shifts in demand dynamics that weaken the original value proposition. These factors often signal that continued investment in the current direction may not yield proportional returns.

A good example is the surge of focus on Indonesia’s MSME segment in 2021, driven by a TAM of over 60 million businesses. While the TAM looked enticing on paper, converting that into meaningful revenue proved difficult for most startups.

This was true for us at GajiGesa. Despite initial enthusiasm and massive TAM projections, sustainably generating revenue from the MSME segment proved more complex and slower than anticipated.

In 2021, we realized that while driving gross merchandise value was relatively easy, convincing MSMEs to pay for software was a challenge. We told these companies that the monthly price of the product was comparable to a cigarette packet, but we still faced strong resistance.

See also: Kredivo takes over GajiGesa in $12m deal: source

That unwillingness to pay made it clear that the product would not gain traction. By the middle of that year, we chose to shut down our MSME-focused offerings and focus our resources on the enterprise segment, where buyer intent, problem-solution fit, and scalable revenue potential were more aligned.

To pivot smartly, a company must first take stock of its core strengths, including its team, tech assets, and current user base. These form the foundation for finding adjacent problems where value can be delivered faster with fewer resources.

When partnerships are the play

The case for acquisitions

Strategy is the real superpower