South-east Asia startup ecosystem 'still has runway'

Singapore

SOUTH-east Asia's fast-growing startup ecosystem still has legs, although the opportunities are shifting and are distinct from those in Silicon Valley in the United States, speakers at the Echelon Asia Summit 2019 said on Thursday.

Nicko Widjaja, chief executive of MDI Ventures, said that despite the dominance of large unicorns in the region, there is generally still an abundance of funding for startups in the region. "Right now, however, the competition might be around Grab, Gojek and Tokopedia, but I don't think the ecosystem is in a rut.

"There are emerging sectors right now, especially in fintech, healthtech and new retail."

He added, however, that the opportunities are evolving; e-commerce is due for consolidation in favour of the largest, most established players.

"I'm sorry, Bukalapak, but I think your days are numbered." Though an e-commerce unicorn, Indonesia's Bukalapak is much smaller than the leading players like Tokopedia.

"Right now, it's all about e-commerce and fintech." Mr Widjaja said.

"If you do something else, if you do the Internet of Things (IoT), most likely you will fail - not because you are not good, but because time is not on your side."

He predicted that "new retail" - in which novel ways of consumption are enabled by technology - would be the next wave.

"Our ecosystem is not the Silicon Valley ecosystem. Ours is not software-as-a-service; it is built on transaction and e-commerce. We are more or less like China.

"The next trend will be fintech and after fintech, it will be new retail,"said Mr Widjaja, whose MDI Ventures is a corporate venture-capital initiative by Telkom Indonesia. It is based in Jakarta, but has operations in Singapore and Silicon Valley, and is set as an independent entity with its own funding processes.

The two-day Echelon Asia Summit, held at the Singapore Expo, has drawn 15,000 participants, comprising startups, investors, aspiring entrepreneurs, corporates and government agencies, who aim to discuss the issues and opportunities thrown up by Asia's emerging markets and ecosystem.

On another stage at the event, Agung Nugroho, the co-founder of Indonesian startup Kudo, said the fields of e-commerce, payments and land transport are already dominated by "titans" in the region, making it difficult for a fresh startup to compete in those segments. "If you want to be in that area, do you have the right to play against these titans, much less the right to win?" he asked.

There are greener fields in the business-to-business space, where winners have yet to emerge, he added.

Kudo, which connects online and offline economies for small and medium-sized local businesses, was acquired by Grab in 2017.

Mr Widjaja warned that the South-east Asia market differs from other markets, and that it is important to be sensitive to those differences.

Take the area of exits, for example: While startups on the United States' west coast have reasonable expectations of launching initial public offerings (IPOs), South-east Asian businesses face greater uncertainty in getting good exits through listing.

"For investors (in South-east Asia), I think trade sales are the best way to go," he said.

He also described differences in talent and funding opportunities.

Silicon Valley in California attracts talent from all over the world, for one, and is ahead of South-east Asia by at least 17 years when it comes to funding, he said.