Why Building SaaS in Low-GDP Countries Is Extremely Difficult
In recent months, many young founders have tried pitching startups to investors. Some have even built AI Agents or other tools packaged as SaaS (Software as a Service).
The reality, however, is harsh: a SaaS business focused on low-GDP countries is often valued at $0 by global investors. Why?
1. GDP and Purchasing Power
SaaS only makes sense when services are expensive.
- In countries with low GDP, labor costs are cheaper than software subscriptions.
- Example: if an employee’s monthly salary is only $250–300, companies would rather hire an extra admin than pay $100/month for SaaS.
- Investor research shows that SaaS thrives when GDP per capita exceeds $8,000 — that’s when companies start realizing it’s cheaper to pay for software than for additional staff.
Indonesia’s GDP per capita is currently around $4,960, which is far below that threshold.
2. SaaS-Friendly Countries in Southeast Asia
Based on economic data, only a few countries in the region have enough purchasing power to support SaaS growth:
- Singapore
- Brunei
- Malaysia
Other countries — Indonesia, Vietnam, the Philippines, Thailand — struggle unless the SaaS is ultra-cheap or solves a critical pain point that cannot be addressed manually.
3. Implications for Founders
If you’re building SaaS in a country with lower GDP, here are some practical strategies:
- Build locally, sell globally
Keep your development team in a lower-cost country, but sell to high-GDP markets (US, Europe, Japan). - Freemium + Ads / Upsell
Because willingness to pay is low, focus on large user bases, then monetize through ads or premium features. - Hybrid: SaaS + Service
Many local SaaS businesses succeed when combined with a service layer (e.g., an agency that builds its own SaaS and sells it bundled with consulting). - Vertical SaaS for high-margin sectors
Target industries or consumer groups with high margins (oil & gas, finance, healthcare, premium B2B).
4. Why Investors See “Zero Value” in Local SaaS
Investors do not invest in a name, a brand, or even AI hype. They focus on:
- Market size — how many paying customers exist in this country?
- Revenue potential — how much can you realistically charge?
- Scalability — can this product expand beyond a low-GDP region?
If the answer is “we’re targeting only the local market,” investors often conclude: value = 0.
5. Conclusion
This doesn’t mean SaaS cannot exist in low-GDP countries. But it does mean that pure-play B2B SaaS targeting the local market has almost no chance of becoming a unicorn.
Models that stand a better chance include:
- Consumer apps with massive volume (freemium + ads)
- Service companies with SaaS as a backend (agency + software)
- Global SaaS built locally, but sold internationally
👉 The core issue is not technology or ideas. It’s purchasing power. As long as GDP per capita remains low, it will always be cheaper to hire humans than to pay for SaaS — and investors know this well.
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