Southeast Asia Startup Venture Capital

Southeast Asian Startups Gain Global Venture Capital Spotlight

28 August 2019

Low-profile Southeast Asia has gained the attention of venture capitalists from other parts of the globe where trade fracases are slowing commerce. In the first seven months of this year, VCs collected $2.62 billion in commitments for the region’s unicorns and other promising startups.

The trend is part of an overall deal-making boom in the region. Southeast Asian companies bagged investments and inked mergers and acquisitions worth a grand total of $15.18 billion between January and July this year, DealStreetAsia data shows.

The investments include capital infusion in the region’s privately held companies by private equity, venture capital and corporate players.

Singapore led the charts, accounting for 30.7% of total deal value during this period. Thailand came in second at nearly 25% on the back of Thai lender Siam Commercial Bank’s $3 billion sale of its life assurance business to Hong Kong’s FWD.

Indonesia rounded off the top three at 19.6%, helped by a frenzy of startup deals in the first seven months of the year.

Investments in Southeast Asian startups in the first seven months of the year came to $8.58 billion. This compares to $9.88 billion for the same period last year. For all of 2018, Southeast Asian startups raised $14.7 billion.

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With the region’s unicorns continuing to raise large funding rounds, the 2019 tally is likely to match last year’s total. Singapore-headquartered ride-hailer Grab is set to raise another $2 billion to finish a $6.5 billion Series H fundraising spree that started last year.

This year, the decacorn has disclosed raising over $1.76 billion — $1.46 billion from SoftBank Group and $300 million from investment manager Invesco — as part of the Series H round. It has also raised $200 million separately from Thai retailer Central Group.

Anthony Tan, Grab co-founder and CEO, has also confirmed that the company is weighing the spinning off of its payment and financial services arms. This would allow strategic backers — Ant Financial and PayPal have previously been rumored to be interested — to invest in these units directly.

Grab rival Go-Jek is raising over $3 billion as part of a Series F round, of which it is thought to have so far gathered over $1.6 billion. DealStreetAsia has earlier reported that the startup intends to keep its funding doors open for the near term and could end up raising as much as $4 billion.

SoftBank chairman and CEO Masayoshi Son has expressed interest in topping up his group’s investments in Indonesia’s e-commerce unicorn Tokopedia. Travel startup Traveloka, meanwhile, has been reportedly seeking $500 million in fresh funding.

So far in 2019, Southeast Asia’s startup success stories are not merely unicorn-driven.

In its H1 2019 report, venture capital firm Cento Ventures noted that about 50% of total tech investments in Southeast Asia in the first half of the year were accounted for by mega-deals that typically involve the large unicorns, down from 70% in 2018.

Singapore’s financial district and Merlion Park:¬†The city-state bagged 30.7% of all¬†investments and inked mergers and acquisitions in Southeast Asia between January and July 2019. (Photo by Shinya Sawai)

The region has its share of near-unicorns, or privately held startups with a valuation just shy of the vaunted $1 billion mark. This list includes Vietnamese payments startup VNPAY, which recently secured an undisclosed investment — DealStreetAsia has reported a $300-million total — from SoftBank and Singapore sovereign wealth fund GIC Pte.

Within this cohort, a majority are headquartered in Singapore and Indonesia, and e-commerce and fintech stand out as dominant themes. However, other sectors such as hospitality and enterprise software are also drawing increased investor interest.

Searching for the next unicorn and the promise of generous returns, VC firms continue to raise larger funds in this part of the world.

In the first seven months of the year, VCs with an interest in Southeast Asia amassed as much as $2.62 billion in capital commitments to top last year’s total of $2.12 billion.

There are also funds with a complete or partial focus on Southeast Asia that are in the market to raise over $3.7 billion. While most of these funds are targeting investments in multiple markets, the fundraising spree indicates high investor confidence in Southeast Asia’s startup ecosystem.