Under the predicament of Softbank, Sun Zhengyi is going to find a way in Southeast Asia.
Editor’s note: This article is from the WeChat public account “investing in the network” ( ID: China-Venture), author Wan Hao.
Originally this year is the bumper year of Softbank. However, Uber’s market value is less than expected, WeWork’s listing is blocked, and various setbacks have caused Softbank stocks to fall. Compared with April, Softbank’s valuation fell by 31%. Another report said that Softbank Vision Fund II The period of fundraising also encountered trouble.
“The results are far from the goal, which makes me feel ashamed and urgent.” Sun Zhengyi said in an interview with Nikkei Business Weekly.
At the time of the decline in investment performance, Sun Zhengyi turned his attention to the emerging market, Southeast Asia. He believes that the fast-growing land will be the next treasure after the Chinese and American markets.
“In the past, I have envied the size of the US and Chinese markets, but now I can see that many hot and fast-growing companies come from small markets like Southeast Asia.”
Sun Zhengyi once put forward the “time machine theory”. He believes that the United States, Japan, China and other countries are at different stages of development. When Japan and China are still immature, they are first developed in more developed markets such as the United States. Do business, and when you return to the post-issuance country, it is like sitting on a time machine.
The same is true of a large number of entrepreneurs flocking to Southeast Asia. A Southeast Asian entrepreneur told China Investment Network that the business model that works in China will have a great chance of reappearing in Southeast Asia.
Sun Zhengyi once created the investment myth of “Alibaba” with a return rate of over 1,700 times. Now it is questioned because of Uber and Wework’s huge losses. Can he find the next “Alibaba” in Southeast Asia? What opportunities does Southeast Asia have for innovators and capitalists to rush to?
1. Unicorns in Southeast Asia
The legendary story of the Chinese unicorn is being reproduced on this land south of China.
The “Grab” in Southeast Asia is one of the most famous cases. The Singapore taxi service provider, established in 2012, has accumulated $9.1 billion in financing and has a valuation of 14 billion US dollars. According to Tencent’s “First Line” report, in 2018, Grab’s revenue exceeded $1 billion, and its client downloads exceeded 125 million. It has already operated in 235 cities in 8 countries in Southeast Asia.
These startups are still following the rules of the Internet in China – the winners take it all. That is to say, based on a main business gathering users, and then extending an ecological closed loop. For example, the Chinese beauty group has carried out various businesses such as take-away and taxiing around the food, clothing and housing.
Grab’s business began to expand like an octopus. It launched its food delivery business in June 2018 and has already ranked first in the market in Thailand and the Philippines. Grab also launched e-wallets and payments. Business, Grab has already cooperated with more than 60 financial institutions in the ASEAN region.
“I hope that Grab’s future positioning can be transformed from a single taxi software to a ‘Super APP’ mobile service platform that consumers use every day and is more in line with the lifestyles of consumers in Southeast Asia,” Grab president Ming Maa said.
For example, the financial payment company Go-jek not only has its own valuation of 9.5 billion US dollars, but also 12 startups through investment and mergers and acquisitions. Businesses range from taxis, e-commerce, movie tickets to electronic payments.
According to the $1 billion valuation requirements of Unicorn, there are eight companies in Southeast Asia that meet the standards, including Housing Construction Corporation Revolution Precrafted, cross-border e-commerce platform Bukalapak, financial payment company Gojek, mobile travel company Grab, online Business platform Lazada, online travel service platform Traveloka, Indonesia e-commerce platform Tokopedia and game company VNG.
These Southeast Asian companies are mostly growing fast and have high valuations. According to reports, Gobi Venture Investment Director Tu Zhiyue said that there are many entrepreneurial projects in Southeast Asia. The absolute value of valuation is not expensive, but if you compare the business data with China and the United States, The valuation is very high.
Behind these emerging unicorns, there are giants from China, such as Tencent, Alibaba, and Sunsoft’s Softbank. It is said that the high valuation of Southeast Asian start-ups depends on Beijing or Tokyo.
2. What did Softbank do in Southeast Asia?
In the past two years, Sun Justice’s Vision Fund has spent about $70 billion and invested in nearly 70 technology companies, including WeWork, a shared office startup, Slack, an office information exchange platform, and car service. Platforms Uber, Grab, Ola and China’s Didi travel.
The Economist has previously reported that 2019 will be the year of test results, as many companies investing in Softbank will go public. But from Uber, WeworkIn terms of benefits, this result is obviously not very good, analysts said that the Japanese investment company will lose billions of dollars.
Sun Zheng said that he was ashamed of the unsatisfactory investment performance and said that he would look to Southeast Asia, which is booming. “This is just the beginning. I think there is great potential in Southeast Asia.”
Softbank’s most significant investment in Southeast Asia is for the travel platform Grab, which has participated in six rounds of financing. Softbank is also appearing behind Tokopedia, snapdeal, and paytm.
In Softbank’s investment landscape for Southeast Asia, there is also ally Alibaba. Softbank is the largest shareholder of Alibaba. According to incomplete statistics, Softbank and Alibaba have invested in four companies in Southeast Asia and India, mainly in the field of e-commerce and mobile payment, especially India’s “Alipay” – Paytm. Softbank has invested more than $1 billion in its investment, and Alibaba has also participated in its multiple rounds of investment.
Joserey Housenbold, managing partner of Vision Funds, said that another very common theme across all investments is actually around data.
“In the concept of singularity and artificial intelligence, it is actually about the integration of data and people and machines. To make the world a better place, to make people happier, to enrich their lives, to provide better products. And services, how do we deal with this data? Whether it’s using data to achieve drug discovery or trying to improve the efficiency of food delivery, it doesn’t matter. Because almost every company has a lot of data.”
In Sun Zheng’s vision, he hopes that whenever we use a smartphone, call a taxi, order a meal, stay at a hotel, pay for it, or receive medical care, we will deal with a company belonging to the Softbank family in so-called data transactions. . As Sun Zhengyi likes to say: “Who controls the data, who controls the world.”
Gangbi Venture Partners Tang Qibo told Investment Network that because Southeast Asia is still in an emerging stage, it is mainly focused on the fast-moving, available high-frequency, and high-frequency tracks required for travel and e-commerce. Moreover, there are not many bids for big funds like Softbank.
3. Opportunities and Challenges in Southeast Asia
What charm does Southeast Asia have for the capital giants to be fascinated by?
First of all, there is naturally a vast market with rapid growth. Southeast Asia has 380 million Internet users and is the fastest growing Internet user in the world. According to Google data, in 2018, the Southeast Asian Internet economy achieved a total value of $72 billion in goods (GMV) through online travel, e-commerce, online media and transportation. It increased by 37% compared with the same period last year. 32% compound annual growth rate (CAGR) from 2015 to 2018, by 2025