Attain out, GoTo IPOs might spawn extra Southeast Asian unicorns: 500 startups

SINGAPORE – The listing of two of Southeast Asia’s technology giants is likely to pave the way for more high-growth companies emerging from the region, the venture capital firm said 500 startups.

Contrary to concerns that regional heavyweights could “eat up” smaller startups and hinder innovation, Vishal Harnal told CNBC that “couldn’t be further from the truth.” Rather, the IPOs of Grab and GoTo could strengthen the ecosystem and produce more billion-dollar start-ups.

Singapore-based ride-hailing company Grab announced in April that it would go public as part of a merger with a special acquisition firm valued at $ 39.6 billion – the largest blank check deal ever. Meanwhile, the newly merged Indonesian on-demand platform GoTo Group confirmed to CNBC that it will go public later this year.

“Although there will be (mergers and acquisitions) as these companies acquire smaller startups, they will invest in far more companies than they acquire, and this will lead to many more billion dollar companies – or unicorns – as a result Born ”, said Harnal on Monday to“ Street Signs Asia ”.

They will invest in far more companies than they will acquire, and that will result in many more billion dollar companies.

Vishal Harnal

managing partner, 500 startups

That’s because the founders of successful companies have newfound liquidity to invest in the ecosystem, either actively or as angel investors – those who invest in companies in the early stages. Meanwhile, employees who see their employers grow from seed funding to IPO are more likely to start their own businesses.

Harnal compared the process to what was going on in China among its famous tech stocks collectively known as BAT – Baidu, Alibaba and Tencent.

A passenger takes a ride on a Gojek motorcycle taxi in Jakarta on May 24, 2018.

Ismoyo Bay | AFP | Getty Images

According to a study of 500 startups, of the nearly 150 active and former unicorns founded in China, 40% were invested by BAT companies. In total, BAT companies have invested in 915 technology companies since going public.

In contrast, there have been less than half as many mergers and acquisitions, of which only 14 were in companies valued at more than $ 1 billion.

“We saw this in China with BAT – Baidu, Alibaba, Tencent. Now in Southeast Asia we have the equivalent, GSG – Grab, Sea and GoTo, ”said Harshal, referring to Singapore-based internet giant Sea Group.

“Companies like GSG are spending all the more money to train the ecosystem, ensure the introduction of technologies and invest in the expansion of the Internet economy,” he said. “The more intruders emerge for newer startups to build businesses and take advantage of the businesses that are now.”

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