Jungle Ventures on Southeast Asian Tech Startups

SINGAPORE – Southeast Asian tech start-ups had a combined valuation of $ 340 billion last year and that figure could triple by 2025, according to Jungle Ventures.

Over the next four years, Jungle expects the region’s tech start-ups to collectively be valued at $ 1,000 billion.

In its calculations, the Southeast Asian venture capital firm looked at publicly available information on 31 start-ups with a minimum valuation of $ 250 million. He has also made arrangements to accommodate issues such as numerous venture capital transactions that are not publicly disclosed.

“I was a little surprised, but not either,” said Amit Anand, founding partner of Jungle Ventures. He told CNBC that the actual number could potentially be well over $ 340 billion.

“We’ve done such a backward calculation of the envelope that it’s not hard to imagine there’s a lot more data that we’re not looking at, in terms of laps that aren’t announced or d ‘businesses that are always under the radar,’ he said. .

“If you look at the growth rate of the last 3-5 years in Southeast Asia, if it continues, which it sure will be, you’re going to be heading for a trillion dollars even before 2025,” Anand added. .

Southeast Asia has some 400 million internet users and 10% of them logged in for the first time in 2020.

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

Start-ups in the region have no shortage of financing options as investors, including private equity, write big checks. Southeast Asian start-ups are said to have raised a record $ 6 billion in the first three months of the year.

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

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

A number of leading start-ups in the region are on the verge of going public, and some of them have already announced successful IPO plans.

Rideshare giant Grab announced in April that it would go public through a $ 39.6 billion PSPC merger, one of the biggest blank checks ever. Newly merged Indonesian tech giant GoTo Group also plans to go public soon.

Singapore-based real estate company PropertyGuru is also set to go public through a SPAC merger while Indonesian e-commerce company Bukalapak debuted on Friday.

Going public through blank check companies would open up startups to further scrutiny from investors – especially those in the United States, according to Michael Lints, a partner of Golden Gate Ventures.

“I think they’ve been a bit disappointed with where the PSPC market has taken them, so they’re just going to be more critical of the target companies that are going to be listed now,” he said. at CNBC.

Founders typically sell their startups to a larger company or make them public through an IPO, a process known as “exit”. Mega SPAC deals, like the one announced by Grab, are still relatively rare.

Lints explained that the exit values ​​of most of the region’s start-ups are still below $ 1 billion, and most of them come through mergers and acquisitions.

Anand de Jungle, who is a strong advocate for start-ups that go public early, said he is encouraging more of the company’s portfolio companies in the region to do IPOs.

“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 in 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 United States. be to have dual-listed IPOs.

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