6/25/2020 Venture Capitalists invest big in Southeast Asia’s startup market - Tech Collective

TECH COLLECTIVE
The de nitive guide to technology in Southeast Asia

VOICES

Venture Capitalists invest big in Southeast Asia’s

startup market

Date: August 14, 2019 Author: Tech Collective 0

Fintech based Unicorns made a major push in the 2018/2019 market to upgrade
the economic state of Southeast Asia through mobile app-based business, and
now Venture Capitalists (VC) have set their sights to swarm the market with
fundraising investment. DealStreetAsia data shows that VC fundraising is stated to
raise $4.2 billion USD in 2019, with a major push from Chinese VC groups at $3.4
billion USD towards overall growth. With more than 35 VC companies set to strike,
the state of Southeast Asia economy is worthy of world attention as the next up-
and-coming global economy.

Contenders from 2018

An impressive influx of VC investment of $48 billion USD hit the market in 2018.
Some of the most notable, 500 Durian ($50,000 – $300,000 USD), Golden Gate

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Ventures ($100 million USD), Gree Ventures ($500,000 – $3 million USD), Jungle
Ventures ($150 million USD), Vertex Ventures HC ($201 million USD), Openspace
Ventures ($135 million USD), Qualgro Venture ($100 million USD), will see a major
rise in commitments in 2019. According to data from Refinitiv, Chinese firms
poured an additional $148 million USD into investments through companies such
as Sequoia Capital and Monk’s Hill Ventures.

Why the in ux? 

Mark
Suckling,
Cento
Ventures

According to Mark Suckling from Cento Ventures “The sheer scale of Venture
Capital activity is the most notable shift–from less than $500 million USD in 2013
to over $11 billion USD in 2018. The last five years have been a period during which
the Southeast Asia tech sector has emerged as an attractive destination for global
venture capital.”

e-Conomy SEA 2018 report by Google and Temeasek:

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While the internet economy is growing in all six Southeast Asian countries covered
in our research, the stage of development relative to the size of each country’s
economy differs. It is most developed in Vietnam, where the gross merchandise
volume (GMV) of the internet economy is 4% of the country’s gross domestic product
(GDP), and it has the most room to grow in the Philippines, where it reaches 1.6% of
GDP. Singapore, where the internet economy is 3.2% of its GDP, ranks second in
Southeast Asia, although it still lags behind markets like the U.S. or China. The
Indonesian “digital archipelago” is firing on all cylinders. Supported by the largest
internet user base in the region (150 million users in 2018), Indonesia has the largest
($27 billion in 2018) and fastest growing (49% CAGR 2015-2018) internet economy in
the region. With huge headroom across all sectors, it is poised to grow to $100 billion
by 2025, accounting for $4 of every $10 spent in the region.

“China’s mobile internet growth is slowing down–it has reached maturity,” said Ms
Helen Wong, a partner at Qiming Ventures. “A lot of Chinese firms that we are close
to, such as the Alibabas and Tencents of the world, are also looking at the region
[Southeast Asia] as the next market.”

The rst half of 2019 

Local Southeast Asia investors include: B Capital Group’s with $406.1 million USD
in commitments; Vickers Venture Partners, which is chasing a target of $500
million USD; Vertex Ventures who has raised $230 million USD; Jungle Ventures,
having secured commitments of $175 million USD; STRIVE, formerly known as GREE
Ventures, is raising a $130 million USD; and Alpha JWC who has invested $100
million USD in funds.

China has wasted no time in stepping up with Qiming Ventures and GGV Capital,
which has managed to raise a combined total of $10.2 billion USD this year. GGV’s
China-based managing partners, Jenny Lee and Jixun Foo, plan to allocate a portion
of their $1.8 billion USD profit margin towards Southeast Asia investment by the
end of the year. Warburg Pincus has announced a potential $4.25 billion USD
investment as well.

2025 projection 
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According to the e-Conomy SEA 2018 report, “Southeast Asia’s internet economy
reached $72 billion USD in 2018 and is on track to exceed $240 billion USD by 2025,
$40 billion USD higher than previously expected.” Projections now estimate that
the e-Commerce sector will exceed $100 billion USD by 2025, with the addition of
online media to reach almost $32 billion USD, online advertising to reach $20
billion USD, mobile gaming to reach $10 billion USD, and subscription music and
video on demand to rise up to $1.5 billion USD by 2025.

Interestingly, it appears that “$16 billion USD–or two-thirds–of that capital

[investment] has gone to just nine companies: Bukalapak, Go-Jek, Grab, Lazada,
Razer, Sea, Traveloka, Tokopedia, and VNG.” It’s an important observation to make
as there is plenty of evidence that select Southeast Asian unicorns are driving
exits of regional startups in an attempt for a sort of Oligopoly. Looking into the
future, the e-Conomy SEA 2018 report estimates the Southeast Asia Internet economy
to reach $240 billion USD by 2025, showing an 8% increase from the 2.5% growth in
2018.
With so many big players jumping into Southeast Asia’s market, especially in the
tech sector, it’s obvious why the pundits are projecting such large increases in
ASEAN’s e-conomy for the near future. From the outside, it seems like a veritable
playground, rich with opportunities, so don’t be surprised to see the region
continue to flourish with continued investment opportunities. The only question is:
Are you ready to play?

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