SINGAPORE – The listing of two of Southeast Asia’s technology giants is likely to pave the way for more high-growth companies emerging from the region, the venture capital firm said 500 startups.
Contrary to the concerns that regional heavyweights can “devour” smaller startups and disabled innovation, Vishal Harnal told CNBC that “couldn’t be further from the truth”. Rather, the IPOs of Grab and GoTo could strengthen the ecosystem and produce more billion-dollar start-ups.
Driving service provider based in Singapore Action announced in April that it would go public through a merger with a special purpose vehicle valued at $ 39.6 billion – the largest blank check deal ever. Meanwhile it is newly merged Indonesian on-demand platform GoTo Group confirmed to CNBC that it would go public this year.
“Although there will be (mergers and acquisitions) as these companies acquire smaller startups, they will invest in far more companies than they acquire, and this will make many more billion dollar companies – or unicorns – as a result born, “said Harnalal “Road Signs Asia” Monday.
That’s because the founders of successful companies have newfound liquidity to invest in the ecosystem, either actively or as angel investors – those who invest in companies in the early stages. Meanwhile, employees who see their employers grow from seed funding to IPO are more likely to start their own businesses.
A passenger takes a ride on a Gojek motorcycle taxi in Jakarta on May 24, 2018.
Ismoyo Bay | AFP | Getty Images
According to a study of 500 startups, of the nearly 150 active and former unicorns founded in China, 40% were invested by BAT companies. In total, BAT companies have invested in 915 technology companies since going public.
In contrast, there have been less than half as many mergers and acquisitions, of which only 14 were in companies valued at more than $ 1 billion.
“We saw this in China with BAT – Baidu, Alibaba, Tencent. Now in Southeast Asia we have the equivalent, GSG – Grab, Sea and GoTo, ”said Harshal, referring to the Singapore-based internet giant Marine group.
“Companies like GSG are spending all the more money to train the ecosystem, ensure the introduction of technologies and invest in the expansion of the Internet economy,” he said. “The more intruders emerge for newer startups to build businesses and take advantage of the businesses that are now.”