Pilots of the Indonesian giant Gojek on the streets of Jakarta.
SINGAPORE – The appetite for Southeast Asian start-ups is growing as investors seek to exploit the region’s vast potential and hunt for the next highly successful IPO.
But this hunger could remain indefinite for some time, according to the managing partner of one of the region’s early-stage venture capital firms, who said some start-ups are set to go public.
“There are definitely companies in our portfolio that are in demand from more angles, but them [the companies] you just don’t have the appetite either, ”Vinnie Lauria of Golden Gate Ventures told CNBC.
Southeast Asia has been the subject of an investment frenzy in 2021, attracting a signal $ 6 billion in the first quarter. IPO announcements from Grab, GoTo and Bukalapak have sparked new confidence in the region.
But Lauria said many companies in her portfolio have rejected or rejected various offers to go public – either via a SPAC or direct IPO – because they say they are still at the right level of maturity, preferring instead to be “ready.”
To be sure, a public listing opens start-ups to a greater level of scrutiny from investors, as well as regular reporting requests. Lauria, whose portfolio includes Carousell online listings and the Carro car market, declined to specifically name any company, but said two of the prospects were above or near $ 1 billion in valuations.
Moving forward cautiously
Southeast Asia currently hosts about 20 unicorns – start-ups with a valuation of $ 1 billion or more – and the region’s technology start-ups are Forecast to be worth $ 1 trillion by 2025.
Some have already stated their plans to go public. Others, meanwhile, have been more guarded. Lauria said, however, 2022 could mark a turning point, with nearly half of the potential list by then.
“For the approximately 20 unicorns in Southeast Asia, we will probably see eight of them take this road for next year,” he said.
The hesitation of some founders can run counter to the search for an exit from a VC, when investments are made and can be repaid. But Lauria said she was looking forward to it. After all, as the saying goes, “a bad apple ruins the group.”
“If we had two jumping in the air, that could literally blow people away from Southeast Asia for 10 years because they lost a lot of money,” he said.
“We take it a little slower and make sure the companies that come to us are of phenomenal quality. I think, in the long run, that will be much better,” Lauria said.
However, the prospects of Southeast Asian start-ups seem increasingly promising, according to Lauria, who said the region is now entering its next phase of growth as second-generation entrepreneurs emerge.
“We’re just starting to see the initial notes of a second generation. But as it happens, I think it’s pretty game-changing,” Lauria said.
Typically, a generation in terms of start-up lasts from seven to eight years, during which time, experience and technology evolve. It not only improves the quality of start-ups and the caliber of the teams, but also the amount of capital they are able to raise.
“For the longest time there has been a huge difference in experience in Southeast Asia versus a market like the US Now, a lot of that has changed,” continued Lauria, who started her business in Singapore in 2011.
“Having this strong second generation on the horizon gives me a lot of confidence for the next 10 years ahead,” he said. “Southeast Asia receives this platform which is so hard to lose. It puts it on stage globally.”