Jungle Ventures on Southeast Asian Tech Startups

GrabFood drivers line up to pick up orders at a Pisang Goreng Bu Nanik store in Jakarta, Indonesia.

Dimas Ardian | Bloomberg | fake images

SINGAPORE – Southeast Asian tech startups had a combined valuation of $ 340 billion last year and that number could more than triple by 2025, according to Jungle Ventures.

Over the next four years, Jungle expects the region’s tech startups to be collectively valued at $ 1 trillion.

In its calculations, the Southeast Asian venture capital firm examined publicly available information on 31 startups with a minimum valuation of $ 250 million. It also made provisions to account for things like many venture capital transactions that are not publicly disclosed.

“I was a bit surprised, but it didn’t surprise me either,” said Amit Anand, founding partner of Jungle Ventures. He told CNBC that the actual number could be much higher than $ 340 billion.

“We have done a calculation so far behind the envelope that it is not difficult to imagine that there is much more data that we are not seeing, in terms of rounds that are not announced or companies that are still under the radar,” he said. .

“If you look at the growth rate of the last 3 to 5 years in Southeast Asia, if it continues, which of course it will happen, it will go to a trillion dollars even before 2025,” added Anand.

The potential of Southeast Asia

Southeast Asia is home to some 400 million internet users and 10% of them went online for the first time in 2020.

The internet economy in Singapore, Malaysia, Indonesia, the Philippines, Vietnam and Thailand, the region’s largest economies, is projected to exceed $ 300 billion by 2025, according to a commonly cited industry report from Google, Temasek Holdings. and Bain & Company.

There is no shortage of financing options available to startups in the region, as investors, including private equity, write big checks. Southeast Asian startups reportedly raised a record $ 6 billion in the first three months of the year.

I think there is a lot of appetite in the IPO market.

Amit anand

Jungle ventures

Anand explained that investors are looking for “accelerated growth” in their investments compared to what they received from other traditional industries.

The region’s start-up environment has what he described as a “last-minute advantage”: Companies have the benefit of learning from the successes and failures of their peers in the United States, China and India.

Exit strategies

Several of the region’s top startups are in the process of going public, and some of them have already announced highly successful initial public offering plans.

Private transportation giant Grab announced in April that it would go public through a $ 39.6 billion SPAC merger, one of the largest blank check deals in history. The recently merged Indonesian tech giant GoTo Group also plans to go public soon.

Singapore-based real estate firm PropertyGuru will also reportedly go public through a SPAC merger, while Indonesian e-commerce company Bukalapak debuted on Friday.

Going public through blank checking companies would open up startups to greater scrutiny by investors, especially those in the US, according to Michael Lints, a partner at Golden Gate Ventures.

“I think they have been a little disappointed in where the SPAC market has taken them, so they are going to be more critical of the target companies that are going to be listed now,” he told CNBC.

Founders typically sell their startup to a larger company or go public through an initial public offering, a process known as “going out.” Mega SPAC deals, like the one announced by Grab, remain comparatively rare.

Lints explained that the exit values ​​of most startups in the region are still below $ 1 billion, and most of them are done through mergers and acquisitions.

Appetite for IPOs

Jungle’s Anand, who is a fervent supporter of startups going public early, said he is encouraging more companies in the firm’s portfolio in the region to go public.

“I think there is a lot of appetite in the IPO market,” he said, adding that investors are looking for new companies, industries and technologies that can generate additional returns from the market.

Anand explained that local stock markets do not yet have the capacity to handle mega IPOs, most of which are expected to be listed in the US being to have double-listed IPOs.

“Governments have a lot of work to do before we get there, but that will unlock another level of global liquidity,” he said.

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