Fewer mega-deals impacts numbers . . .
New investment in tech startups in Southeast Asia experienced a slump last year, down to C$10 billion in 2019 from C$16 billion in 2018. The drop was due in large part to less capital being raised in mega, late-stage deals involving companies with valuations above C$70 million, deals that totalled C$7 billion last year compared to C$14 billion in 2018. There was, however, a sizable increase in both the number and the capital invested in smaller, early-stage deals below the C$70 million value mark, totalling C$3 billion in 2019, up from C$2 billion in 2018. While multi-vertical startups (i.e. diverse, online businesses offered by regional unicorns such as Grab and Gojek) and online retail remained the most funded, the health care and education sectors saw significant growth in capital injection, reflecting the growing interest in healthtech and edtech startups in the region.
Thailand and Vietnam speeding up . . .
Although Indonesia continued to capture the majority of capital invested, its share of total investment significantly declined from 76 per cent in 2018 to 59 per cent in 2019. Indonesia’s decline contrasted with the sharp rise of Vietnam, with its share of total investment increasing to 18 per cent from four per cent in the previous year. Funding in Vietnamese-based startups also exceeded that in Singapore-based startups for the first time in 2019. Similar to Vietnam, Thailand had an increase in both the number of deals and capital invested in its tech startups. Thailand has also emerged as Singapore’s top rival in attracting R&D and tech talent, followed by Malaysia, Indonesia, and Vietnam.
Regional market on the rise . . .
Despite the slump in 2019’s investment, Southeast Asia remains a hotbed for innovation and an attractive destination for tech funding due to its large, rapidly digitalizing population with changing consumer behaviours, and the adoption of new technologies transforming many sectors’ business operations. Southeast Asian tech startups have increasingly looked to regional unicorns such as Grab and Gojek, and to China, rather than Silicon Valley, as the top sources of inspiration for successful business models. As China’s investors have established a stronger presence in Southeast Asia, Canadian investors are missing opportunities and should take this regional market more seriously.
- Cento Ventures: Southeast Asia tech investment - 2019
- SG Innovate: Future jobs for Industry 4.0 and the digital economy
- Nikkei Asian Review: Southeast Asia and India look to China for tech success models