SINGAPORE – Start-up funding in Southeast Asia slowed last year as COVID-19 pandemics affected the region’s economic growth opportunities and made investors more cautious.
According to data compiled by DealStreetAsia, a Singapore-based media company of the Nikkei group, Southeast Asian startups raised a total of $ 8.6 billion in 2020, down 2% from 2019.
This is in contrast to the rapid start-up investment trends seen in the U.S. and China, where fast-growing large technology startups were pulling risk money under the global low interest rate environment – funding rose the U.S. will start up 13% to $ 156.2 billion in 2020, according to a PitchBook report, suggesting that Southeast Asia ‘s young digital economy still does not have enough companies to attract such investors.
Barriers and travel restrictions in the region also made it difficult for investors to hold face-to-face meetings and due diligence, especially for cross-border investment contracts. Even the regional financial center, Singapore, tightly controls borders, so people cannot enter or leave the city, where investors used to and have meeting starters.
The impact of the pandemic became clear near the end of the year: In the first quarter of 2020, the region ‘s start – ups raised $ 2.9 billion, but the amount was reduced to $ 2.2 billion in the second quarter, $ 1.8 billion in the third quarter and $ 1.6 billion in the fourth quarter.
In 2020, the Gojek superapp in Indonesia was the best start-up currency in Southeast Asia, which raised a total of $ 1.65 billion from Facebook, PayPal and state-owned telecom operator Telkomsel, among investors. other investment.
Singapore’s Gojek rival, Grab, was in second place, raising a total of $ 1.05 billion. Most of this was a $ 700 million investment from Japan’s Mitsubishi Finance Group UFJ, announced in February, seeking collaborations in digital financial services.
Over the past few years, Grab and Gojek, both valued at more than $ 10 billion, have been the leading financing companies in the sector. But as the pandemic changed people’s way of life and work, so did their major equestrian industries. Instead, start-up rates in other sectors were beginning to attract more investment.
One such area is fintech, digital financial services such as e-payments, online lending and cryptocurrencies. LinkAja, Indonesia’s email operator, raised $ 100 million from a group of investors including Grab in November. Fintech startups totaled $ 1.25 billion through a total of 125 contracts.
At the same time, the transition from work to home has resulted in the provision of delivery and delivery services. Flash Express Thailand, in which its efficient delivery operations are based on technology, raised $ 200 million in October from a group of investors. Growth in the logistics sector coincided with the expansion of e-commerce platforms such as Tokopedia Indonesia, which raised $ 350 million.
Looking ahead, as the global economy begins to recover and investors have greater expectations of returns, industry experts say other sectors will rise in 2021 as well.
One key sector is “edtech,” or online education services, which has already seen an increase in China and India, and some local startups are raising big money.
DealStreetAsia data showed that investment in edtech start-ups in the sector in 2020 was only $ 54 million. But “action has been going on at an early and late stage [edtech] contracts as a result of the shift to remote learning, which accelerated the adoption of education technology, “said Peng T. Ong, co-founder and managing partner at Monk’s Hill Ventures, a Singapore-based venture capital firm that invests in across the region, to Nikkei Asia.
“The pandemic has forced schools to adapt to remote or hybrid learning environments, and we will continue to see increased demand from parents and teachers to make the virtual classroom more attractive to students,” he said.
Peng said his company remains “cautiously optimistic” about 2021, indicating that the region’s untapped opportunities provide “plenty of room for entrepreneurs to come in and use technical business models to add value.” to create. “
Another focus in 2021 is whether more Southeast Asian startups are seeking an IPO and raising money from the public market, with a focus on the current IPO and stock markets. Some of the largest startups in the region, such as Tokopedia, have recently announced an IPO.
“Companies in Southeast Asia have been discussing a lot of discussions about listing through SPAC,” said Michael Lints, a partner at Golden Gate Ventures in Singapore, referring to the recent increase in U.S. of listing using a special purpose construction company.
“There are certainly opportunities to consider listing in 2021 or 2022. There is a hunger in the market for more technical company listings. With the recent direct listing regulation of the NYSE, SPACs and public investors looking for results, we may hear more stories of the start of the process, “he said.
Peng of Monk’s Hill Ventures pointed out that the stronger start-up rates are not in a hurry to go public, saying, “With enough private equity money to support them, these companies will target more businesses build stronger and more confident before they present themselves. the public markets. “