2021
Southeast Asia Startup Ecosystem 2.0 the past decade and the decade ahead
Table of Contents Summary ……………………………………………………………………………………………………………... 3 Southeast Asia Startup Financing ……………………………………………………………………. 4
Government Programs Contributing to Success ……………………………………. 31
The SEA Startup Scene’s Meteoric Rise ……………………………………………………………………... 5
Singapore ……………………………………………………………………………………………………………………. 32-35
Number of Investments …………………………………………………………………………………….................. 6
Indonesia …………………………………………………………………………………………………………………….. 36-38
Number of Active VC funds ……………………………………………………………………………………………. 7
Vietnam ……………………………………………………………………………………………………………………….. 39
Startup Ecosystem Trends From the Past Decade ……………………………………….. 8
Appendix ……………………………………………………………………………………………………….. 40
More Capital Inflow from the U.S. …………………………………………………………………………….… 10
About ………………………………………………………………………………………………………………………………… 41
Top of the Game PE and Later-stage Venture Funds ……………………………………….…11-12
Contributors …………………………………………………………………………………………………………………… 42
Most Well-Funded Verticals …………………………………………………………………………………………. 13 The Path to Success Has Been Indonesia or Regional ……………………………………... 14- 15
Sources …………………………………………………………………………………………………………………………….. 43-44 Legal Disclaimer …………………………………………………………………………………………………………… 45
Emergence of 1.5 & 2nd Generation Entrepreneurs ……………………………………..……. 16 It’s a Marathon, Not a Sprint ……………………………………………………………………………………….... 17 Doubling Down on Corporate Venture Capital (CVC) ……………………………………..… 18 10x10: Predictions for the Next Decade …………………………………………………….….. 19-20 VC Assets Under Management (AUM) will more than double …………………….. 21 Vietnam: SEA’s Rising Star ……………………………………………………………………………………..…… 22 Social Commerce to Dominate ………………………………………………………………………………... 23 Bumper Years for Medtech to Come ……………………………………………………………………... 24 Boom for IPOs in Search for Exits ………………………………………………………………………..….. 25 Exponential Uptick in B2B SaaS Startups ………………………………………………………….... 26 Media and Entertainment Tech: Funding Size to Grow Substantially ….…. 27 SEA Emerges as a Global Islamic Tech Hub ……………………………………………………….. 28 Fintech-only Unicorn(s) to Emerge in Southeast Asia ………………………………..…...29 More Mega-Merger Rollups to Come ………………………………………………………………...…..30
2
Summary SEA Startup Ecosystem 2.0 Over the last decade, the SEA startup scene grew phenomenally in terms of capital inflow with total capital invested per annum increasing 50 times from US$130M in 2010 to US$6.5B in 2020 - with the close of the decade culminating in 15 mega-deals of over US$100M each that accounted for over half of the total capital invested. Food, fintech and logistics were amongst the verticals that drew the most investment dollars. The first half of this report identifies seven trends that took hold over the past decade, and the second half outlines 10 predictions that will take hold over the next 10 years in Southeast Asia. We have observed the emergence of ‘1.5 and 2nd generation entrepreneurs’ who will shape a decade dominated by a rise in social commerce, medtech, fintech-only unicorns and an uptick in B2B SaaS startups. In addition to Singapore and Indonesia, Vietnam will emerge in 2022 as a major startup ecosystem in Southeast Asia. Over the next decade, social commerce GMV will cross US$5B in 2025, and US$25B by 2030 due to a persistent growth in e-commerce adoption and growing GDP per capita. Similar to the U.S., B2B/B2B2C startups are expected to capture a greater share of total capital deployed, an average of 40% by 2030, with US$30B invested into B2B over the next decade. And finally, as large tech companies vie for top spot in their vertical, we are betting on mega-mergers in Southeast Asia, much like the consolidation of the finance and fast-moving consumer goods (FMCG) space in North America. 3
Southeast Asia Startup Financing
Hanoi, Vietnam
4
Southeast Asia: Startup Ecosystem 2.0
The SEA Startup Scene’s Meteoric Rise Total Dollars invested by VC funds in the Past Decade Projections
14,383 11,951 9,821
9,656 7,701 5,987
5,627
3,330 1,218 128
111
1,115
1,566
381
*Company logos denote large rounds that contribute significantly to megarounds (Series C and beyond)..
Source: GGV Internal Database, Crunchbase
Mega deals (>US$100M) and later stage (C and above) rounds have been driving up total capital deployed ● Total capital invested per annum increased 50X, from $130M in 2010 to $7.7B in 2020. In that year, 15 mega-deals (>=$100M) accounted for over half of the total capital invested, whereas in 2010, none of the investment rounds were of such significant size. ● Later stage capital (Post-Series C) experienced the steepest jump (100x in value) given the absence of such rounds a decade ago. Comparatively, early stage and seed rounds have multiplied 30x.
5
Southeast Asia: Startup Ecosystem 2.0
Number of Investments Projections
Source: GGV Internal Database, Crunchbase
Explosive growth in transactions - By 2018, the number of seed investments was nearly 20x that of 2010. Meanwhile, the number of investments in Series A and B multiplied by roughly 10-15x - A distinct jump in Seed and Series A capital is observed in 2015 and 2019. Funding for Series B and onwards only caught up in 2018.
6
Southeast Asia: Startup Ecosystem 2.0
Number of Active VC funds Projections 480
Within the last decade, - The number of active ASEAN based venture capital firms with a mandate to invest in the region increased 3.4x, from 115 in 2010 to 393 in 2020 - The number of funds that are within active deployment period doubled from 60 to 123
Source: Preqin Assumptions: First 4 years of fund registration will be the active deployment period
7
Startup Ecosystem Trends From the Past Decade
Bangkok, Thailand
8
Southeast Asia: Startup Ecosystem 2.0
Trends over the Past 10 Years Trends
#1 More Capital Inflow from the U.S. There’s been a meteoric rise of US VCs/PE firms investing into Southeast Asia over the past few years, including: Kleiner Perkins, Accel, KKR, Tiger Global, and Warburg Pincus.
#2 Top of the Game PE and later-stage Venture Funds Experienced funds from the U.S., China, and Japan are leading the pact in the strongest funded companies. Leading the pack: Sequoia, Softbank, Tencent, and Alibaba.
#4 The Path to Success Has Been Indonesia or Regional Indonesia has been the market requirement for ~75% of the unicorns in Southeast Asia. Less than half of the unicorns target just 1 market.
#5 Emergence of 1.5 & 2nd Generation Entrepreneurs We’re just starting to see the emergence of 2nd generation entrepreneurs, building their second startup on the heels of a previous success.
#6 It’s a Marathon, not a Sprint In Southeast Asia, similar to Silicon Valley, it takes on average, 8.3 years from start to exit (which often is not an actual exit for the founder who stays on)
#3 Most Well-Funded Verticals Verticals that saw the most funding over the past 10 years: E-Commerce, Fintech, and Entertainment. Fastest growing verticals? Food, Fintech, and Logistics.
#7 Corporate Venture Capital (CVC) Investing is more than just financial, and corporate venture offers distribution access, strategic advice, and a potential exit. CVC has grown by 729%
9
Southeast Asia: Startup Ecosystem 2.0
#1 More Capital Inflow from the U.S.
9.8
7X
Trends Source: GGV Internal Database, Crunchbase
10
Southeast Asia: Startup Ecosystem 2.0
#2(A) Top of the Game PE and later-stage Venture Funds Trends
Average YoY Round Size Growth
A
Seed
1.22X
1.35X
B
1.23X
Steady and consistent growth across funding rounds The expansion of round sizes is evident across the various stages as the startup ecosystem matured and as more regional and global investors grew their appetite for ASEAN opportunities. Series A rounds have been growing the fastest. Source: GGV Internal Database, Crunchbase
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Southeast Asia: Startup Ecosystem 2.0
#2(B) Top of the Game PE and later-stage Venture Funds Trends
No.
Lead Investors
Number of Deals with >US$50M Single Financing
Who is leading the largest rounds - Investors are identified as ventures or investment arms
1
Sequoia Capital
13
2
SoftBank
8
under the same incorporation (e.x. investments by
3
Tencent
4
Sequoia Capital, Sequoia Capital India and Sequoia
4
Alibaba Group
3
Capital China are all counted as investments by
5
Goldman Sachs
3
Sequoia Capital).
6
Tiger Global Management
3
7
KKR & Co. (Kohlberg Kravis Roberts & Co.)
2
8
Astra International
2
investor led subsequent investments (>50M USD) in
9
B Capital Group
2
the same deal, we count all rounds only as ‘one’
10
Central Group
2
investment.
11
DST Global
2
12
Fidelity International
2
13
Hopu Investments
2
than 2 investments (>50M USD in single financing
14
International Finance Corporation (IFC)
2
round) in E&M, e-Commerce, Edtech, Fintech, Food &
15
Khazanah Nasional Berhad
2
Transport, Healthcare, Logistics, Online Travel and
16
Mitsui & Co
2
other industries in SEA from 2011 to 2021.
17
Northstar Group
2
Source: GGV Internal Database, Crunchbase
- Number of deals are counted in a way that if an
- The chart presents the investors who have led more
12
Southeast Asia: Startup Ecosystem 2.0
#3 Most Well-Funded Verticals
Num. Startups w/ >$50M in funding
Trends Source: Crunchbase
Industries with Large Investments with >50M USD in Single Financing - Top 3 verticals with highest number of startups >$50M in financing in the past 10 years are E-Commerce, Fintech, and Entertainment & Media. - Top 3 verticals with fastest growth in startup funding in the past 5 years: Food & Transportation, Fintech and Logistics. - The chart illustrates the variation of the number of large investments (>50M USD in single financing round) from different industries including Entertainment & Media, e-Commerce, Edtech, Fintech, Food & Transport, Healthcare, Logistics, Online Travel and others (include SaaS, Data Analytics, IT and etc) in SEA.
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Southeast Asia: Startup Ecosystem 2.0
#4(A) The Path to Success Has Been Indonesia or Regional Trends Source: Crunchbase
Market Coverage by 15 Unicorns in SEA - Unicorns’ home country is identified by its headquarter and they include the ones that recently underwent public listings or M&A. - Number of operating markets for an e-commerce company is identified through various sources, including: ‘offices’ from company’s website, ‘regions’ from its e-comm platform, ‘company information’ from annual report for a listed player and market news. - Unicorns in SEA as of 2021 include: Bigo Live, Bukalapak, Carro, Gojek, Grab, Lazada, OVO, Patsnap, Razer, SEA Group, Tokopedia, Traveloka, Trax, VNG and VNPay.
14
Southeast Asia: Startup Ecosystem 2.0
#4(B) The Path to Success Has Been Indonesia or Regional Trends
Number of rounds per country
Numbers inside chart indicate total no. of funding rounds in the year
Source: GGV Internal Database, Crunchbase
Country Breakout - Singapore captured the lion’s share of the VC capital in 2010 (90%) but their piece of the pie shrunk to 40% in 2020 - Indonesia has eclipsed Singapore to being the country with the highest concentration of well capitalised startups, with lesser startups funded but the average closing a comparatively larger funding round 15
Southeast Asia: Startup Ecosystem 2.0
#5 Emergence of 1.5 & 2nd Generation Entrepreneurs Trends
10%
6%
26%
Founder Backgrounds for the top 50 highest raising startups (2010 - 2020)
38% 12% 16% Source: GGV Internal Database, LinkedIn
● First generation entrepreneurs typically came from corporates, as there was no existing startup pool. ● Post-2015, mega rounds raised by Grab, Gojek, and Rocket internet companies uplifted funding across the stages - encouraging diversity (culture, background, expertise) in a new generation of entrepreneurs. ● We’ve seen an emergence of Generation 1.5 - former senior employees of high-growth tech companies. As it takes an avg 8.3 years from start to
Some Prominent Names Generation 1.5 Prev. senior role in Unicorn/Late Stage Startup
Prev. an Investor
Jakob Rost AYOCONNECT
Dzung Dang VUI
Achmad Alkatiri HYPEFAST
Wisnu Nugrahadi SAMPINGAN
Andrea Baronchelli ASPIRE
Liat Beng Neo ARROW
Sebastian Roervig ARROW Tiger Fang KARGO Shanru Lai SHOPBACK Agung Bezharie WARUNG PINTAR Rohi Mulani GOTRADE
Generation 2.0
JJ Chai RAINFOREST Tessa Widjaya XENDIT Sagar Khatri MULTIPLIER
Aaron Tan CARRO Andy FUSE NANO
Ex-Entrepreneurs Gillian Tee HOMAGE Changwen Lai NINJAVAN
Ankiti Bose ZILINGO
Akshay Garg KREDIVO
Phil Opamuratawongse SHIPPER
Giacomo Ficari LIFEPAL
Grey Krasnov TONIK
Krishnan Menon BUKUKAS
James Vuong INFINA
Chinmay Chauhan BUKUWARUNG Casper Peh SVESTED Alex Feng CHILIBELI
exit, we are on the precipice of seeing Generation 2.0 take off.
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Southeast Asia: Startup Ecosystem 2.0
#6 It’s a Marathon, not a Sprint Trends
BIGO Technology, Singapore: Type: Acquisition by JOYY Exit Valuation: $2.1 billion TIme to Exit: 5.2 years Last Funding Round: Series D iflix, Malaysia: Type: Acquisition by Tencent Exit Valuation: N/A TIme to Exit: 6.5 years Last Funding Round: Corporate
8.3
Avg. # of years until exit
Sea Group, Singapore: Type: IPO Exit Valuation: $3.75 billion TIme to Exit: 8.8 years Last Funding Round: Series E
*Filter criteria included: founding date after 2000, total funding of >$50m over the past 5 years
Source: Crunchbase
The average number of years it took for a startup to reach an exit was 8.3 years. Majority of exits within the past 5 years came in the form of acquisitions from major foreign and domestic technology players. 75% of these startups were Singapore-based, with a large focus on e-commerce, marketplaces and media & entertainment.
17
Southeast Asia: Startup Ecosystem 2.0
#7 Doubling Down on Corporate Venture Capital (CVC) Trends
Most Active SEA-based CVCs include:
Number of CVCs
+729%
Source: Crunchbase
Corporate Venture Capital (CVCs) - There were only a handful of CVCs in 2010, which were typically venture arms set up within family-run businesses, telcos or super apps. Today, there are over 50. - In 2020, CVCs were involved in ~8.7% of all VC deals and are increasingly leading funding rounds, especially in Seed & Series A. This is excluding non-ASEAN tech giants such as Tencent, Bytedance and others, which opportunistically invest in ASEAN startups as well. 18
10x10: Predictions for the Next Decade
Kuala Lumpur, Malaysia
19
10x10
Southeast Asia: Startup Ecosystem 2.0
10 Predictions for 10 years ahead Predictions
#1 #2
VC Assets Under Management (AUM) will more than double AUM has been rising on a steady trajectory for the past decade and we predict it will cross US$300B by 2030.
Vietnam: SEA’s Rising Star Vietnam will emerge in 2022 as a major startup ecosystem in Southeast Asia. It has already solidified its growing prominence, and we expect to see stronger signs of SEA-focused VC funds putting more effort into early stage investments in Vietnam.
#6 #7
Exponential Uptick in B2B SaaS Startups We estimate that similar to the U.S., B2B/B2B2C startups will capture a greater share of total capital deployed, an average of 40% by 2030, with US$30B invested into B2B over the next decade. Media and Entertainment Tech: Funding Size to Grow Substantially Media and entertainment startups will gain stronger following and funding as the industry is shifting its focus into a digital-first solution - including TV/film, live-streaming, and esports. Funding in this space will cross $700M by 2030.
SEA Emerges as a Global Islamic Tech Hub
#3 #4 #5
Social Commerce to Dominate Social Commerce GMV will cross US$5B in 2025 and US$25B by 2030 due to a continued rise in e-commerce adoption, mixed with a growing GDP per capita over the next decade.
Bumper Years for Medtech to Come We will see the rising trends of Medtech as a means to provide healthcare access for a large demographic and improve infrastructure challenges in Southeast Asia - especially in a post-pandemic world.
Boom for IPOs in Search for Exits The number of IPOs in Southeast Asia is expected to cross 300 by 2030, as more local startups seek an exit in domestic public markets.
#8 #9 #10
Indonesia’s and Malaysia’s market size will grow 8x its current size by 2030, including Muslim lifestyle/Halal economy in industries as varied as fashion, food, and finance.
Fintech-only Unicorn(s) to Emerge in Southeast Asia A massive unbanked population in SEA creates a big opportunity fueling fintech players, providing opportunity for a fintech-only unicorn to emerge. Areas open for disruption include eWallets, Neobanks, BNPL, and other forms of financing.
More Mega-Merger Rollups to Come As companies continue to vie for the top spot in their vertical, we will see more mega-mergers in Southeast Asia, much like what we have seen in the finance and fast-moving consumer goods (FMCG) space in North America.
20
Southeast Asia: Startup Ecosystem 2.0
#1 VC Assets Under Management (AUM) will more than double
10x10
Projections
Predictions
AUM of SEA funds - VC AUM in Southeast Asia has increased 3.3X between 2010 and 2020 - Forecasting shows that this fast, steady growth is expected, with AUM to more than double by 2030, crossing US$300bn
Source: Preqin
Method: Preqin data (Strategy VC, Growth, and Co-Investments, Southeast Asia), forecasted forward on a polynomial regression R2 = 0.969
21
10x10
Southeast Asia: Startup Ecosystem 2.0
#2 Vietnam: SEA’s Rising Star
Movers and Shakers Projections
Predictions
Vietnam will emerge in 2022 as the 3rd largest startup ecosystem in Southeast Asia. It has already solidified its growing prominence in the region. In 2022, the number of SEA-focused VC funds will put more effort into early stage investments in Vietnam, and it will continue to grow in the next 10 years. -
Used total disclosed fund raised from seed to IPO from Crunchbase between 2012 and 2020, along a best-fitting regression on the projected growth of 5 verticals in Vietnam on a polynomial regression R2 = 0.952
-
These 5 industries in Vietnam include e-Commerce, Financial Services, Online Media, Online Travel and Food & Transport
22
10x10
Southeast Asia: Startup Ecosystem 2.0
#3 Social Commerce to dominate Projections
Predictions Source: https://theaseanpost.com/article/future-consumption-asean
Social Commerce GMV will cross US$10B by 2026, and US$100B by 2030 With a continued rise in e-commerce adoption, mixed with a growing GDP per capita over the next decade, we predict that Social Commerce will rise as a % of overall e-commerce, similar to what has evolved in China over the past decade. Method for comparison to China: - Compared Social Commerce market as a % of overall e-commerce in China to predict growth rates in SEA - Sourced e-commerce projected growth from Google Temasek SEA Digital Economy Report 2020 - Applied market share ratios in SEA 10 years behind China
Source: Google, Temasek, Bain e-Conomy report
23
10x10
Southeast Asia: Startup Ecosystem 2.0
#4 Bumper years for MedTech to come Projections
Movers and Shakers
Predictions Source: GGV Internal Database, Crunchbase, Logarithmic regression
Rise of Southeast Asia Medtech fundraising size will cross US$1.5B by 2025 - These industries include Health Care, Home Health Care, Medtech AI, Biotechnology, Medtech Information Systems, etc. 24
10x10
Southeast Asia: Startup Ecosystem 2.0
#5 Boom for IPOs in Search for Exits
Anticipated Exits Include:
Projections
SEA
Predictions India
*Southeast Asian countries include Indonesia, Malaysia, Philippines, Singapore, Vietnam and Thailand
% of Total Capital Raised from IPOs
Source: Deloitte, EY, Chittorgarh
The number of IPOs in Southeast Asia is expected to cross 300 by 2030, as more local startups seek an exit in domestic public markets. - The number of SEA startups expected to go public rises in tandem with Indian startups, with Indonesia and Thailand leading the pack in both number and funds raised
25
10x10
Southeast Asia: Startup Ecosystem 2.0
#6 Exponential Uptick in B2B SaaS Startups Projections Projections
Predictions
We estimate that B2B/B2B2C startups will capture a greater share of total capital deployed
% of Total Funding of Startups with >$100M Raised (ASEAN)
- Total investment value grew exponentially since 2018, with nearly US$300M of capital deployed into B2B and SaaS-based companies across Southeast Asia - Amongst startups with over US$100M raised, roughly 20% are B2B startups but the total funds raised till date only contribute to 6% of the total amount (US$2.1Bn out of US$38Bn). - We anticipate a 30-50% share to be captured in the next decade; referencing a more developed market such as the United States, which has over 60% of their top funded startups being B2B companies.
Source: Venture Cap Insights, GGV Internal Database
Projection
26
Southeast Asia: Startup Ecosystem 2.0
#7 Media and Entertainment Tech: Funding Size to Grow Substantially Projections
10x10
Movers and Shakers
Predictions
The rise of SE Asia Entertainment & Media (E&M) funding size will cross US$0.5B in 2025, and US$0.7B by 2030 E&M startups focused on Asian content are gaining a global following, leading to increased funding in SEA - 2020 only recorded $100M in funding; that number will grow 5x in 3 years. - Used total disclosed fund raised from seed to IPO from Crunchbase between 2012 and 2020, along a best-fitting polynomial regression on the projected growth of the total entertainment and media market in Singapore, Indonesia, Vietnam, Malaysia, Philippines and Thailand - E&M industries includes: Digital entertainment, media and entertainment, content, podcast, social media, video on demand, video streaming and, etc. 27
Southeast Asia: Startup Ecosystem 2.0
#8 SEA Emerges as a global Islamic Tech Hub
10x10
Predictions
Indonesia’s and Malaysia’s market size will grow 8x current size by 2030, including Muslim lifestyle/Halal economy in industries as varied as fashion, food, and finance. Both market sizes combined are bigger than UAE’s. SEA comprised around 240 million Muslims, and Indonesia has the largest Muslim population globally with 225 million Muslims. %
GR A C
3 23.
Islamic finance assets of GCC countries reached $1.2 trillion in 2019*, followed by Middle East and North Africa countries at $755bn (excluding the GCC), and Southeast Asia at $685bn. Top 5 Islamic Fintech markets are Saudi Arabia, Iran, UAE, Malaysia, Indonesia, with Indonesia having 31 fintech providers while Malaysia coming in close with 25 per May 2021.
*CAGR as reported by Dinar Standard & Elipses Global Islamic Fintech Report 2021
A few renowned SEA Islamic fintech players:
Prediction bases: ● Rise of Muslim lifestyle/Halal economy in various industries: fashion, food, finance in Indonesia as supported by strong demand from neighboring Islamic countries: Malaysia and Brunei ● Strong government support for the Halal industries through a variety of community initiatives and infrastructural incentives
Data from Dinar Standard & Elipses Global Islamic Fintech Report 2021
28
10x10
Southeast Asia: Startup Ecosystem 2.0
#9 Fintech-only Unicorns to emerge in Southeast Asia Snapshot of FinTech Landscape (ASEAN vs Mature Markets) Predictions
Indonesia
Philippines
Thailand
Vietnam
China
Australia
USA
United Kingdom
No. of FinTechs
300
190
96
118
2,160
733
16,000
2,500
No. of FinTech Unicorns
1
0
0
0
11
3
73
12
Unbanked Population (M)
130 (48%)
72 (67%)
13 (18%)
67 (69%)
225 (16%)
(0.5%)
20 (6%)
3 (4%)
Internet Population (M)
200 (73%)
74 (68%)
50 (70%)
67 (70%)
910 (65%)
22 (89%)
295 (90%)
63 (96%)
Total Population (M)
270
108
70
96
1400
25
328
66
Digital Wallet % of Payments
25%
16%
19%
18%
71%
22%
24%
29%
Source: Worldpay Global, CB Insights, Tracxn
Despite the maturity of the Fintech ecosystem in more developed markets, ASEAN countries spot further upside potential with its growing internet population and observably unbanked consumer base, which present an attractive opportunity for e-wallets and neo-banks. While digital wallets presently capture a modest market share of payments across the board, we anticipate the region to leapfrog in digital infrastructure and for Fintech-only unicorns to emerge.
29
10x10
Southeast Asia: Startup Ecosystem 2.0
#10 More Mega-Merger Roll-ups to come Mergers ordered by transaction value (in USD) Predictions
GoTo 2021 $18 billion
● Indonesia’s #1 ride-hailing transport service (Gojek) and #1 online marketplace (Tokopedia) combined to form the country’s largest technology group ● Seeking dual listings in New York and Jakarta, targeting a $40bn IPO ● 1.8bn+ transactions ● Gross Transaction Value (GTV) of $22bn+
Bank of America Merrill Lynch 2008 $50 billion
● #1 bank by market cap (Bank of America) and #1 U.S. brokerage by AUM (Merrill) combined to form world’s largest retail brokerage ● 20,000+ advisers and $2.5 trillion in client assets
Heinz Kraft 2015 $50 billion
AB InBev 2008 $52 billion
● Producers of a portfolio of the world’s largest food brands combined to form 5th-largest food company in the world (3rd-largest in the U.S.) ● 200+ products ● Annual revenue: $28bn
● #2 (InBev) and #4 (AB) combined to form world’s largest brew ● 1 of top 5 consumer product in the world ● 300+ brands ● Annual revenue: $36bn+
ExxonMobil 1998 $81 billion
● #1 (Exxon) and #2 (Mobil) combined to form world’s largest oil & gas company and 3rd-largest company in the world ● Annual revenue: $193.1bn
30
Government Programs Contributing to Success
Phnom Penh, Cambodia
31
Southeast Asia: Startup Ecosystem 2.0
Singapore: Economy Overview
SINGAPORE - Real GDP and GDP Growth Rate (US$ Bn/US$), 2011-2020
Overview Singapore is one of the top-performing economies in the world with GDP per capita among the highest. The average real GDP growth rate between 2011-2020 is around 2.89%. Sectoral Highlights Singapore is one of the global financial centers and key trade hubs. The country’s expertise in semiconductors and data storages also makes it Asia’s high-tech manufacturing hotspot. Business & Investment Climate Singapore ranks 2nd globally in terms of ease of doing business (2020). Supported by robust regulatory and IP framework, pro-business policies and stable political environment, the advanced business ecosystem has attracted global investors, MNCs and regional startups. Source: MarketLine
Notable development priorities in recent years include: Focus on high-tech manufacturing. Accelerate national digitalization. Supporting local businesses. SMEs are expected to be the future impetus of the country. Some of the challenges the country is facing include an aging population and increasing competition from China and India in maintaining the inflow of foreign talents.
SINGAPORE - Digital Economy
Digital economy - Singapore ranks 1st in Asia in terms of digital infrastructure and 1st worldwide in terms of technological readiness. - The digital economy is estimated to be around US$9 Billion in 2020 with a growth rate of 19% toward 2025. Source: MarketLine; Google, Temasek, Bain & Company SEA E-conomy Report 2020 Source: MarketLine, The Economist Intelligence Unit (EIU); Google, Temasek, Bain & Company SEA E-conomy report 2020; World Bank Doing Business report 2020.
32
Southeast Asia: Startup Ecosystem 2.0
Singapore: Government Support
GOVT FINANCIAL SCHEMES
FOR STARTUP Special Fund for Startups (SSFS) (2020-2021) ● EDBI & SEEDS Capital ● A time-limited scheme for co-investment in startups to sustain growth momentum through COVID-19. Startup SG Founder provides mentorship and startup capital grant to first-time entrepreneurs. Corporate Venture Launchpad provides co-funding for corporates to build new ventures. Startup SG Tech POC/POV: Funding for Proof-of-Concept and Proof-of-Value projects to support commercialization of technologies.
FOR INVESTORS Startup SG Equity: ● EDBI: Fund-of-funds investment into deep-tech focused VC funds. ● SEEDS Capital / SG Innovate: Direct co-investment in tech and deep-tech startups. Section 13H/ Fund Management Incentive (S13H/FMI) ● S13H provides tax exemption for income from funds, while FMI offers a 5% concessionary tax rate on income from managing S13H approved funds. Section 13 series: Other tax incentive schemes for Singapore funds. Angel Investors Tax Deduction (AITD): Tax deduction for approved angels by Mar 31, 2020.
Ministry of Trade & Industry (MTI) ● EDB fosters Singapore’s business ecosystem and invests in selected technology sectors through its investment arm EDBI. ● Enterprise SG (formerly Spring & IE) supports enterprise development and invest in startups through its investment arm SEEDS Capital. ● Startup SG: an array of startup-support programs ranging from funding, coaching to infrastructure and talent sourcing. ● A*Star: the R&D agency incubates deep-tech startups through A*StartCentral and commercializes its IP portfolio through A*ccelerate.
IMDA under the Ministry of Communications & Information (MCI) regulates and promotes the infocomm and media sectors. IMDA has launched a number of initiatives and grants to support startups/SMEs in the ICT sector such as iJam, SG:D Spark and Accreditation@SGD.
SGInnovate Singapore’s investment arm for Deep Tech. National Research Foundation has launched a number of funding initiatives (eg. POC & TRD, TIS, EVSF) and programs to strengthen the country’s R&D capabilities for innovation (eg. AI, Cybersecurity). INSTITUTIONS
INFRASTRUCTURE Singapore has 10 Centers of Innovation as of Mar 2021 according to the MTI.
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Southeast Asia: Startup Ecosystem 2.0
Singapore: Government Support “In the last decade, Singapore has positioned itself as a launchpad in the region, by growing its startup and VC community through co-investment and other startup-oriented schemes. We are encouraged to see the VCs seeded by our ESVF scheme attracting international LP capital as they grow to support the next generation of entrepreneurs and startups. As the local startup scene enters a new phase of maturity and growth, we are confident that these startups will extend towards global markets by leveraging on Singapore's vibrant innovation ecosystem and strong international networks.”
Professor Low Teck Seng CEO of National Research Foundation Singapore “Singapore has long been the location of choice for multinationals anchoring regional headquarters in Asia, and in the last decade has grown into a hub for global tech companies and the nexus of the regional startup ecosystem, offering unrivaled access to funding, a progressive IP framework and deep talent pool, coupled with a market that is distinctly suited to accelerating commercialisation from test-bedding all the way to full-scale deployment. These provide the competitive edge for the next generation of startups to take on an increasingly fluid and competitive global environment. The government continues to build on the success of earlier programs to catalyse private sector venture capital investment, with EDBI playing a pivotal role in stimulating and nurturing development in select high growth technology sectors across healthcare, information & communication technology, and emerging technology, and looking to further spur development in areas of strategic national importance such as advanced manufacturing, pharmbio, medtech and agri-food tech amongst others.”
Ms Chu Swee Yeok CEO and President of EDBI
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Singapore: Key Industries EMERGING INDUSTRIES
Aerospace ● Government supports R&D programs and encourages private sectors to participate in the sector. ● Advanced ecosystem to develop, test bed and commercialize satellites solutions, with presence of global satellite players. ● Experience in electronics, precision manufacturing and ICT.
Biomedical Technology ● Favourable regulatory environment for R&D and products commercialization. ● Ecosystem supported by global pharmaceutical companies and government’s initiatives. ● Growth driven by increasing demand for medical devices during the pandemic.
Precision Engineering ● Driven by demand from other growing industries such as semiconductors, medtech and aerospace. ● Continuous R&D innovations by global leading OEM companies in the ecosystem open new avenues. ● Government plans to enhance competitiveness in the advanced manufacturing sector.
Key Pillars ● Singapore’s position as the financial and professional services hub of the region is cemented by the robust growth of the sector over the past 10 years. ● The country’s expertise in semiconductors and data storages also makes it one of Asia’s high-tech manufacturing hotspots. In recent years, the sector has seen expansion in the biomedical manufacturing, electronics and precision engineering clusters. ● Wholesale, Retail Trade & Hotel continues to be one of the key sector, contributing 19.4% to the 2019 gross value added (GVA).
SINGAPORE - Nominal GVA by Sectors, 2011-2020
Urban Solutions ● Incentives to address problems of small, densely populated urban areas. ● Solutions in the space are also pioneered by well-funded startups in sectors such as Transport & Logistics, Real Estate, AgriTech. Source: MarketLine
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Indonesia: Economy Overview
INDONESIA - Real GDP and GDP Growth Rate (US$ Bn/US$), 2011-2020
Overview The 4th most populous country in the world (2020). Indonesia’s robust GDP growth (5% during 2011-2019) is fueled by a large consumer base with rising middle-class and healthy labor market. Economy Highlights Agriculture has predominantly been the key contributor to the economy. The country also enjoys large mineral deposits and rich biodiversity. Business & Investment Climate Indonesia ranks 73rd in terms of ease of doing business. The country has effective competition law and low total tax rate, yet policy uncertainty, FDI restrictiveness and lagging infrastructure remain as concerns. Notable development priorities in recent years include: - Improve business ecosystem & investment climate. - Enhance economic value-added and job creation. Accelerate industrial digitalization. - Reduce disparities across the archipelago through connectivity and infrastructure projects. These initiatives are charging investors’ confidence, promising a more vibrant, business-friendly environment in the future. Digital economy - Singapore and Vietnam are 2 countries that have maintained their double-digit growth since 2019, mainly driven by the e-Commerce sector. - Home to 5 SEA unicorns, including Bukalapak, Gojek, OVO, Traveloka & Tokopedia. Source: MarketLine; Google, Temasek, Bain & Company SEA E-conomy report 2020; World Bank Doing Business report 2020.
Source: MarketLine
INDONESIA - Digital Economy
Source: MarketLine; Google, Temasek, Bain & Company SEA E-conomy Report 2020
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Indonesia: Government Support
Indonesia Investment Coordinating Board (BKPM) Indonesia’s government agency responsible for regulating and promoting domestic and foreign investment. Notable initiatives includes: ● NSWi - National Single Window for Investment ● PTSP - a one-stop service for business & investment licensing. ● Tax Incentives such as Tax holiday for 18 eligible sectors (2020).
POLICY INCENTIVES
FOR STARTUP ● Corporate tax rate has been reduced from 25% to 22% for 2020/21 and will be lowered to 20% in 2022. ● Super Tax Deduction for labor-intensive industries, human development or R&D expenditure. ● Digitized and simplified business procedure such as business licensing, tax payment, export customs declaration
FOR INVESTORS ● Equal process for both domestic and foreign investors. ● Improved regulations on e-commerce, fintech, cybersecurity, electronic info & transactions and personal data protection. ● The “negative investment list” was loosened over the time and replaced by the “priority list” in 2021. ● Offering tax allowances for investors in 183 business lines.
INFRASTRUCTURE Indonesia had 21 Science Techno Park (STP) as of 2019 according to the Ministry of Research and Technology.
Ministry of Industry (Kemenperin) mapped out the Indonesia’s digitalization roadmap “Making Indonesia 4.0” in 2018, with two startup-related initiatives "Empower SMEs" and "Establishing Innovation Ecosystem". ● Startup 4 Industry (MOI): a range of startup-support programs, including Comptech, Hackindustry, Techlink, etc. Ministry of Info & Comms Technology (Kemenkominfo) ● Palapa Ring: aims to improve Internet access for the whole nation, which creates more opportunities for digital economy players. ● 1001 Digital Startup Movement: an incubation-focused initiative with coverage over 15 cities and target of 5000 startups by 2025. ● NextICorn Foundation promotes Indonesia’s digital ecosystem and startups to international investors. The Creative Economy Agency (BEKRAF) aims to promote the Indonesia’s creative economy. Its startup-support program is Bekraf for Pre-Startup (BEKUP). Financial Services Authority (OJK) is in charge of regulating the FinTech sector and has licensed 146 P2P lending companies as of Apr 2021. The Ministry of Micro, Small & Medium Enterprises (Kemen KUKM) established the Deputy of Entrepreneurship in 2021 to support entrepreneurs. The Ministry of Research and Technology (Kemenristek) launched the Technology-Based Startup Program (PPBT) to help startups get funding & coaching.
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Indonesia: Key Industries EMERGING INDUSTRIES Medical Devices & Pharmaceuticals ● Incentive to reduce dependence on imports of raw materials & medical devices. ● The industry gained momentum since the Universal Health Coverage (JKN) program in 2014 and benefited from rising middle class. ● Government’s initiatives such as accelerating licensing and reducing foreign ownership restrictions for companies in the sector.
Key Pillars ● Indonesia has been one of the world’s major producers, exporters and consumers of agricultural products. ● The mining, manufacturing and utilities sector has been the key contributor to Indonesia’s economy, with prominent industries such as petroleum & natural gas, F&B, textile & apparels, electronic appliances, transport equipment and chemical, pharmaceuticals. ● Wholesale and retail trade continues to be the key driver. Indonesia also witnesses the financial sector gain more traction in recent years while Transportation, warehousing & telecoms continues to be the leading sector in FDI and DDI realization.
INDONESIA - Nominal GVA by Sectors, 2011-2020
Electric Vehicles (EV) ● Rich nickel reserves needed for EV batteries. ● Indonesia aims to be the global hub for EV industry supply and to sell only EVs by 2050. The government issued regulations and incentives to accelerate the domestic EV industry. ● Increasing spending on technology R&D and infrastructure to support the sector. Digital Economy-based Industries Indonesia is expected to have the largest and fastest growing digital economy in the region, with mature sectors such as e-Commerce and FinTech. With an burgeoning Internet user base that still lags behind its huge population and favourable government initiatives in recent years, the digital economy still promises a lot of headroom for growth.
Source: MarketLine
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Vietnam: Government Support
POLICY INCENTIVES
FOR STARTUP ● Corporate tax exempted for 4 years and reduced by 50% for the next 9 years. ● Use of government-owned R&D facilities and incubation facilities free-of-charge. ● A US$1.4M fund of the MST program SpeedUp has been committed to support 50 selected startups during the 2017-2019.
FOR INVESTORS ● 2018: Legally recognized “Startup Investing Activities” ● Simplify the investment procedures (Decree 38/2018/ND-CP and Decree 31/2021/ND-CP) ● Apply the same procedures for both foreign and domestic investors.
INFRASTRUCTURE
Ministry of Science & Technology (MST) ● Startup Programs: ISEV, NSSC ● Annual event: TechFest MOST mapped out a national scientific & technological (S&T) development strategy for the 2011-2020 period. In 2016, the government approved the “Supporting National Innovative Start-up Ecosystem to 2025” Project (or “Project 844”), which aims to develop a startup-friendly & investment environment and targets 2,000 startup under coverage by 2025.
Ministry of Planning & Investment (MPI) ● Startup Programs: Vietnam National Innovation Center ● Annual Event: Vietnam Venture Summit, VIIE NIC member startups enjoy 10% preferential tax rate over the first 30 years, a 50-year coverage of 100% land lease in high-tech areas, exemption of other infrastructure fees and simpler administrative procedures. A US$815 million investment has been earmarked at the Vietnam Venture Summit 2020.
Vietnam Chamber of Commerce & Industry (VCCI) ● Startup Programs: Khoi nghiep Quoc gia (National Startup Program) ● Event: Festival Khoi nghiep (Startup Festival) Represents businesses and enterprises in Vietnam. One of VCCI’s responsibilities includes supporting the technology development and innovation progress of the community.
GOVERNMENT FUNDS Ministry of Info & Comms (MIC) introduced the “National Digital Transformation Program to 2025” in 2020. The strategy has witnessed drastic acceleration during the COVID-19.
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Appendix
Manila, Philippines
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Author: Golden Gate Ventures Golden Gate Ventures is a leading Southeast Asia focused venture capital firm headquartered in Singapore. Founded in 2011 by Silicon Valley natives, the firm has launched four funds and invested in over 60 companies. The investment thesis focuses on the rising consumer class in Southeast Asia. Golden Gate Ventures is actively sought out by new economy entrepreneurs because of its “founder first” reputation. The firm consistently utilizes its extensive network to access regional cross-border growth opportunities and applies best practices emerging in Silicon Valley.
“Founder First” – emphasis on accelerating sustainable growth and profitability through proven operational improvement strategies developed over multiple venture funds Golden Gate Ventures helps the portfolio companies develop and implement strategic and tactical growth initiatives, including introducing partnerships with leading consumer brands and global organizations, developing digital growth strategy, helping talent recruitment, fundraising and improving internal governance, etc.
Southeast Asia: Startup Ecosystem 2.0
Contributors Vinnie
Lauria
-
Founding
Partner,
Golden
Gate
Ventures
Vinnie is an entrepreneur turned venture capitalist. He’s been investing in Asia for over a decade and has made 60+ investments to date. He is a Kauffman Fellow and Tsinghua EMBA candidate. Vinnie joined his first startup while still in high school.
Dea Surjadi - Head of Indonesia, Golden Gate Ventures TV journalist turned tech entrepreneur turned investor, Dea brings operational experience dedicated to the success of the portfolios.. As an active member of the Indonesian tech ecosystem, Dea brings over 10 years of internet startup experience to the firm. She enjoys long walks chats at the beach on product- market fit and growth strategies.
Jeffrey Dong - Intern, Golden Gate Ventures Jeffrey is an INSEAD MIM candidate passionate about investing into the consumer economy. He has experience working in different business functions around the world, from Hong Kong to the U.S. An avid writer, he runs a newsletter about entrepreneurship, tech and VC.
Tatarit Yensuang - Intern, Golden Gate Ventures Tatarit is currently pursuing a dual degree in Business and Computer Science under the Management, Entrepreneurship, & Technology Program at UC Berkeley. Excited about unique, inspiring ideas and innovations, he has contributed to the work at several leading startups and corporations across SEA and in the U.S.
Freddy Shen - Investment Associate, Golden Gate Ventures Freddy is a detail oriented and inquisitive venture capitalist, with 7 years of experience across two continents on helping build the bridge of start-ups and investors ecosystem between ASEAN and Chinese market.
Kha Pham - Intern, Golden Gate Ventures An Economics major at Singapore Management University, Kha enjoys watching how technology could transform industries and people’s behaviors. She loves Southeast Asia - half for the food and half for what the future promises the budding startup scene here.
Winnie Wang - Community Manager, Golden Gate Ventures Winnie has three years of experience building communities, with a focus on branding, partnerships, as well as supporting entrepreneurs and investors in communications and PR. She comes from an eclectic background in startups, scientific research and civil service.
Acknowledgements We would like to acknowledge and thank Professor Low Teck Seng CEO of National Research Foundation Singapore, and Ms Chu Swee Yeok CEO and President of EDBI for their contributions to this report.
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Sources (1 of 2) Reports • e-Conomy SEA 2020 Report https://economysea.withgoogle.com/ • Dinar Standard and Elipses global islamic finance report 2021 https://www.salaamgateway.com/specialcoverage/islamic-fintech-2021 • Worldpay Global Reports 2020 http://offers.worldpayglobal.com/rs/850-JOA-856/images/GPR-2020.pdf?mkt_tok=eyJpIjoiWm1SalpEUXhOelEyWkdZeiIsInQiOiJXbXVmdHZ4OFJuNXlyM2cx bWRMUGliZThRU044RnBQbUVZdGJkdDNrdUxkMU1SSGl3NmRGOVFsSXhlRDVuV1dvNXFaSTVra2ZJZFFZWmI4SUN3R0ZkQ3h2M2IrUktLOHcrZGhBaHduN 2FidmlPRWpNYlBLMFJmYUFUaXpPQ0ZzYiJ9 • Digital 2021 Australia https://datareportal.com/reports/digital-2021-australia#:~:text=There%20were%2022.82%20million%20internet,at%2089.0%25%20in%20January%202021 • Digital 2021 Indonesia https://datareportal.com/reports/digital-2021-indonesia#:~:text=There%20were%20202.6%20million%20internet,at%2073.7%25%20in%20January%202021 • Digital 2021 China https://datareportal.com/reports/digital-2021-china#:~:text=There%20were%20939.8%20million%20internet,at%2065.2%25%20in%20January%202021 • Digital 2021 Vietnam https://datareportal.com/reports/digital-2021-vietnam#:~:text=There%20were%2068.72%20million%20internet,at%2070.3%25%20in%20January%202021. • https://www.cbinsights.com/research-unicorn-companies • Traxn Fintech Startups in China and United States • https://tracxn.com/explore/FinTech-Startups-in-China • https://tracxn.com/explore/FinTech-Startups-in-United-States • https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/audit/sea-aud-dea-ipo-market-report-2020.pdf • https://www.chittorgarh.com/report/list-of-ipo-by-year-fund-raised-success-mainboard/85/
Online Databases • Crunchbase - https://www.crunchbase.com/ • Venturecap Insights - https://www.venturecapinsights.com/ • Preqin - https://www.preqin.com/ • Tech in Asia - https://www.techinasia.com/ • e27 - https://e27.co/ • Golden Gate Ventures Proprietary Database also referred to as “GGV Proprietary Database” • MarketLine - https://www.marketline.com/
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Sources (2 of 2) Country Data • • • • • •
The Economist Intelligence Unit (EIU) Google, Temasek, Bain & Company SEA E-conomy report 2020 World Bank Doing Business report 2020 https://assets.kpmg/content/dam/kpmg/sg/pdf/2018/07/ASEAN-Business-Guide-COMPLETE.pdf https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/audit/sg-audit-deloitte-2016-sea-ipo-market-report.pdf https://www2.deloitte.com/content/dam/Deloitte/sg/Documents/audit/sea-aud-dea-ipo-market-report-2020.pdf
• Singapore: • https://store.marketline.com/report/ml00002-024--singapore-in-depth-pestle-insights/ • https://www.pwc.com/sg/en/financial-services/assets/tech-startup-funding-trends-and-outlook.pdf • https://www.gobusiness.gov.sg/images/budget2021/Budget%202021%20Business%20Booklet%20(Updated%209%20Mar).pdf • https://www.edb.gov.sg/ • https://www.startupsg.gov.sg/ • https://www.imda.gov.sg/ • https://www.nrf.gov.sg/ • https://www.enterprisesg.gov.sg/ • https://ace.org.sg/risk-capital/ • Indonesia: • https://store.marketline.com/report/ml00002-041--indonesia-in-depth-pestle-insights/ • https://www.bkpm.go.id/images/uploads/printing/Magazine_Invest_Indonesia.pdf; • https://www.bkpm.go.id/images/uploads/printing/Invest_Magazine_Vol._1_2020_.pdf • https://www.bkpm.go.id/images/uploads/printing/INVEST_II_-_Full.pdf • https://www.angin.id/wp-content/uploads/2020/05/Connecting-Indonesian-Startups-and-Dutch-Companies-52020.pdf • https://www5.bkpm.go.id/en/publication/detail/news/winning-potentials-in-indonesian-pharma-and-medical-industries • https://hsfnotes.com/indonesia/2021/04/21/new-foreign-investment-rules-in-indonesias-healthcare-and-pharmaceutical-sectors/ • Vietnam: • https://doventures.vc/assets/uploads/reports/download/vietnam-innovation-and-tech-investment-report-fy2020-1624893687.pdf (Doventure Link) • http://www.mpi.gov.vn/en/Pages/tinbai.aspx?idTin=50274&idcm=133 (MPI link) (Report by Do Ventures x Vietnam National Innovation Center) • https://vneconomy.vn/viet-nam-se-tro-thanh-trung-tam-khoi-nghiep-hang-dau-dong-nam-a-646135.htm • https://tuoitre.vn/speedup-ho-tro-3318-ti-dong-cho-50-du-an-20191016192541229.htm • https://www.vietnam-briefing.com/news/why-vietnams-emergence-as-startup-hub-promising-for-investors-2.html/ • https://www.businesstimes.com.sg/asean-business/investors-pledge-us800m-for-vietnam-startups • https://tuoitre.vn/khoi-cong-xay-dung-trung-tam-khoi-nghiep-sang-tao-tp-hcm-20201001143244342.htm
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