Southeast Asian tech startups are attracting investors from all over the world. Startups in the region raised more than $8.2 billion in 2020, nearly four times as much as they did in 2015. This trend continued in 2021, with regional mergers and acquisitions reaching a new high of $124.8 billion in the first half of the year, up 83 percent from the previous year. This raises the question of who is investing in Southeast Asia. Let us look at the three main sorts of investors who are putting money into Southeast Asia’s tech industry and fuelling its growth.
Southeast Asia has become a desirable market for American and Chinese technology companies. Internet coverage in the region is 70%, greater than the worldwide average, and digital adoption is still in its infancy – the adoption of digital services like e-wallets and online shopping did not take off until the epidemic. With investments in Sea Limited and Lazada, China’s Internet giants Tencent and Alibaba were among the first to assist early e-commerce growth in Southeast Asia, and have since expanded their reach into other online verticals. Tencent has invested in Voyager Innovations (PayMaya), SHAREit, iflix, Ookbee, and Sanook, while Alibaba has funded Akulaku, M-Pay (monkey), DANA, Wave Money, and Mynt (GCash).
Tech companies from the United States have also recently entered the market. Gojek received a $3 billion Series F investment from Google, Facebook, Tencent, and Visa in June 2020. In October, Google and Temasek Holdings of Singapore invested $350 million in Tokopedia. In 2018, Microsoft made an undisclosed investment in Grab, as well as a $100 million investment in Indonesian e-commerce business Bukalapak.
According to DealStreetAsia, Southeast Asian companies raised $6 billion in the first quarter of 2021, making 2021 again another record year for VC investment in the area. In comparison to the rest of Asia, the region is also gaining traction as a destination for investment capital. As shown in the table below, regional VC investment increased 5.2 times from $1.6 billion in 2015 to $8.2 billion in 2020.
Southeast Asia also offers a large number of VC investment options in comparison to its market size. VC investment in China reached approximately $300 per person between 2015 and 2020; in Southeast Asia, despite a recent investment boom, this statistic is just $47.50 per person or less than a sixth of that in China. This means there is a lot of money to make in developing the region’s digital economy. Because of China’s population growth issues, as well as the latter is stronger digital economy market saturation and maturity, the region’s population and growth prospects are brighter.