Emerging $ 1 billion startups are emerging as the biggest driver of exit activity among startups in the region.
Latest M&A deals in South and Southeast Asia – unicorn startup operating in e-commerce Tokopedia acquires wedding service provider Bridestory and Gojek acquires AirCTO recruitment platform of India – showing that emerging USD 1 billion startups are the biggest driving force for exit activities of regional startups.
As of June 24, the announcement of Trax’s acquisition of the Shopkick app (based in the US), a unicorn startup in Singapore, further confirmed the “taste” of unicorn startups in Southeast Asia in the context of They are looking for stronger growth momentum.
Statistics show that in the past two years, 11 unicorn startups in Southeast Asia have made about 40 acquisitions (including non-regional acquisitions), in addition to buying stakes in more than a dozen new technology companies. Some companies, such as Grab and Gojek, have established their own venture capital funds, thus acting as both a source of funding and a potential buyer that early stage venture capitalists could turn to.
These start-ups may reach US $ 100-200 million in the next 3-4 years. However, usually, eventually, early investors will own a small amount of shares in unicorn startups because the majority of deals are done in the form of stock swaps rather than cash payments.
When a startup proceeds to exit to pay back investors, startups can choose one of two ways: sell the company or IPO. According to a recent report, as of June 2018 in Southeast Asia, a total of 66 startups have divested. By the end of this year, the number will reach nearly 200, of which exit by IPO accounts for a very low proportion.
Not surprisingly, Indonesia is the most vibrant place with all four of its unicorn startups aggressively acquiring startups. Since 2016, GoJek has purchased 12 startups. If local startups (such as Loket booking platform, MVCommerce payment company, advertising company Promogo) help the company expand the service system that GoJek can provide to customers, Indian startups ( including C42 Engineering, Pianta and AirCTO) help increase technology design and management capabilities.
Another Indonesian unicorn startup, Traveloka, has also acquired three online travel companies, while in addition to Bridestory, Tokopedia has acquired an app for Parentstory parents.
In Singapore, Sea spent nearly $ 20 million in 2017 to buy three unidentified companies. Grab acquires two payment applications Kudo and Ikaaz. Before buying Shopkick, Trax also bought Quri (USA) and LenzTech (China).
Last year propertyGuru real estate startup acquired Vietnam’s Batdonsan.com.vn page. Earlier it bought marketing companies ePropertyTrack and RumahDijual of Indonesia.
According to Teddy Oetomo, the CSO of the unicorn Bukalapak (Indonesia), the unicorns in the region all want to become “super applications”, with the desire to be able to meet all the daily transaction needs of users. “Companies that want to become super apps are acquiring small startups because they obviously can’t be experts in every field, so the easiest way is to buy another startup, which is faster than spontaneous. new array “.
Grab has bought shares in Ninja Van (Singapore), Moca (Vietnam) and Ovo (Indonesia). It was the same strategy when GoJek acquired Halodoc, Pathao and Pasarpolis. Both Grab and GoJek have their own venture capital funds to focus on such deals.
Having just raised $ 4.5 billion in Series H and is looking for another $ 2 billion, Grab announced plans to acquire or invest in at least six tech startups this year.
Akshay Garg, co-founder and CEO of Kredivo (an Indonesian startup) commented that the acquisition of unicorns will bring positive effects to the entire regional startup ecosystem. In the eyes of unicorn startups, the appeal of smaller startups lies in their affordable value and their access to technology and talent. But for founders, selling a company to a unicorn isn’t always a good choice.
“It really depends on the nature of the deal. If the startup has no way of development and no other options to survive, the founders don’t see it as an achievement. But if the acquiring a startup for something of the high value it has built, it is a success “.
Thu Huong / Nikkei
* Source: Young intellectuals