May 23, 2019

South-east Asia startup market still robust, but opportunities shifting: Echelon speakers

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

Nicko Widjaja, chief executive of MDI Ventures, said that despite the dominance of large unicorns, there is still an abundance of funding for startups in general in the region.

"Although right now the competition might be around Grab, Gojek and Tokopedia, I don't think the ecosystem is in a rut," he said. "There are emerging sectors right now, especially in fintech, healthtech and new retail."

The opportunities are evolving, Mr Widjaja explained. He said that 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," he declared.

"Right now it's all about e-commerce and fintech," he said. "If you do something else, if you do Internet of Things, most likely you will fail not because you are not good, but time is not on your side."

"New retail", in which new ways of consumption are enabled by technology, is the next wave, he predicted. 

"Our ecosystem is not the Silicon Valley ecosystem," Mr Widjaja said. "Our ecosystem 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."

At a separate stage, Agung Nugroho, the co-founder of Indonesian startup Kudo, said that 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 said.

There are greener fields in the business-to-business space where winners have yet to emerge, he added. Kudo, which helps connect online and offline economies for small and medium local businesses, was acquired by Grab in 2017. 

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

When it comes to exits, for example, while startups on the United States' West Coast have reasonable expectations of launching initial public offerings (IPOs), South-east Asian businesses experience greater uncertainty in getting good exits through listing.

"For investors (in South-east Asia) I think trade sale is the best way to go," Mr Widjaja said.

Mr Widjaja also described differences in talent and funding opportunities. Being located in California, Silicon Valley attracts talent globally, for example. Silicon Valley is also ahead of South-east Asia by at least 17 years when it comes to funding, he said.

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(The Business Times)