With more, market share and revenue also grow.
But in the middle of this year, some changes happened quietly.
The frustration of WeWork and its IPO has made investors even more dissatisfied with overvalued technology startups. Under this scrutiny, startups are under increasing pressure to be required to justify their huge valuations. Maybe this is the first time a startup has been asked to behave like a “real” company in its life.
Profitability was once seen as the icing on the cake, but now it has become the theme of the entrepreneurial game. Starting a company without making money is tantamount to a hooligan. Perhaps the entrepreneurs in 2019 had already anticipated this and decided to take action.
Recently, Indonesian e-commerce giant Bukalapak announced the resignation of its co-founder and CEO Achmad Zaky. At the same time, Bukalapak did not promote someone from within the company, but instead appointed Rachmat Kaimuddin, a talented person with extensive experience in banking and business consulting. The move is also considered to be part of the company’s efforts to strengthen financial management and improve profitability.
Malaysia’s auto trading platform Carsome aims to become the “Automobile Market Leader” in Southeast Asia. The company recently announced that it has completed a $ 50 million Series C financing and has publicly achieved its “operating profit” goal by the end of next year. Since the end of 2018, another clear profit orientation has emerged, especially on the investor side. Even the newly established venture capital company Kinesys Group is emphasizing “the sustainable path of portfolio companies.”
Venture companies are investing in non-tech industries, such as the hotel and catering industry, which are considered to have a clearer path in terms of sustainability, thereby increasing the diversity of their portfolios. In addition to growing their own businesses, these catering and hotel companies are also looking forward to digital transformation of their businesses.
Financing is even harder for entrepreneurs who want to raise money-it’s challenging enough to prove to potential investors that your product really needs it; not to mention show them how you can do it over time Internal profit. So how will this affect startup financing in 2020? For companies in the later stages, perhaps the review will be more difficult.
Basically, when considering a potential investment, venture capital firms focus differently on early and late-stage startups. Although investors tend to focus on the potential and opportunities of early-stage startups, they will think more about the growth of late-stage startups. Because late-stage startups already have a product and people are using it.
How fast are you growing? Are there plans to expand into new vertical or geographic areas? Are there any signs of profit? How can we work together to advance this process? E.g. Vertex HoldingLeading investment institutions such as s believe that investment in early-stage startups should not be underestimated.
Salim Group’s corporate venture capital unit has also confirmed their preference for startups because startups are considered more malleable and easier to train. If you are financing a late-stage startup, this prediction is not meant to discourage you. In fact, these changes in the ecosystem are triggers for startups to build a stronger, self-sustaining business.
Based on this, in Southeast Asia, We have summarized the changes of 6 major industry trends in 2019
1. Segment leaders emerge
Singapore’s biggest news for 2019 is Carousell’s acquisition of Philippine classification giant OLX. OLX provided free hosted classified ads to customers from all over the world, as well as a forum where users could exchange and share experiences on various related topics, and the company subsequently merged with 701Search. These two transactions brought Carousell’s valuation to $ 850 million (S $ 1.16 billion), making the brand a leading brand in the Southeast Asian classification sector.
Apart from Carousell, we’ve also seen rising stars in many new areas in the region.
For example, ShopBack, a Southeast Asian e-commerce cashback platform founded in 2014, still dominates multiple Southeast Asian markets.
In the block fashion women’s market, Love Bonito continues to expand to more markets, while its rival Forever 21 is filing for bankruptcy, and currently there is only one Outlet store in Singapore.
TheAsianparent, the largest online mother-to-child platform in Southeast Asia, completed a multi-million-dollar C round of financing invested by institutions such as Fosun Ruizheng Capital, Fosun Mother-Infant & Family Industry Group, JD.com, and ATM Capital in July. After the financing, the company will accelerate the expansion of business in new markets and provide safe and reliable social spaces for more women worldwide. This year, the company has also stepped up its grasp of parenting space and is preparing to launch its own baby and pregnant product line. Companies such as 99.co and Carro are also actively expanding their market shares in the real estate and automotive industries, respectively.
A number of digital leaders have emerged in 2019, and investors will continue to bet on these Southeast Asian companies.
2. Profit comes first
Another big news this year is the downfall of WeWork. News outlets have overwhelmingly reported how WeWork has grown from a $ 47 billion valuation to almost bankruptcy, and the bad news has not even stopped. WeWorkThe story marks a change in how people think about business operations. Prior to that, startups seemed to only know about pursuing high-speed growth, and they spawned billion-dollar unicorn companies.
However, these increases are often accompanied by high costs. Because these multi-billion dollar companies often operate with unsustainable cost structures, this has led to unprofitable balance sheets. They also often adopt an overly optimistic approach to profit.
But fantasy meets reality and everything collapses.
Suddenly, claims about company valuations are turning to profitability rather than revenue growth. As at the beginning of this century, we are seeing a shift from user growth to revenue growth.
This year, we also saw a shift from revenue growth to companies with a good business foundation or profit. In the case of Singapore’s grocery delivery startup Honestbee, we saw a mysterious founder and a huge injection of well-known venture capital from Silicon Valley and a South Korean consortium. But how much more money can stand up to it?
In fact, the fresh food e-commerce in Southeast Asia as a whole is not optimistic. Founded in Singapore in 2011, RedMart has tried to build its own online supermarket. But after 6 years of tossing, sales are 0.7% of Singapore’s offline supermarket Fairprice. Redmart, which raised $ 55 million in funding, was sold to Lazada at the end of 2016 for $ 35 million.
Honestbee encountered the same problem as the former, that is, the timing and feasibility of the business model. When its cost structure caught up with business fundamentals, the company had to restructure its business.
3. Multicurrency wars are heating up
In 2019, several FinTech companies were established in Singapore. It is worth noting that the British fintech company Revolut was listed in Singapore last October and competed with Singapore startups YouTrip, InstaRem and TransferWise. The latter three companies can easily allow users to enjoy multi-currency wallets with attractive exchange rates. Recently, ride-hailing service giant Grab has made waves in the fintech space with the launch of the GrabPay Card as part of its ongoing collaboration with MasterCard.
This is said to be the first unnumbered card in Asia, available in both digital and physical cards. With it, users can spend at any global store that accepts Mastercard credit cards and earn points for every transaction. All in all, the multi-currency scene is getting hotter and more and more players, providing consumers with more choices and benefits. That said, consumers are not limited to choosing from just one card.
In fact, Singaporeans today usually hold up to 10 valid cards, including their bank credit cards.
4. Vietnam investment boom
DealStreetAsia reports that investment institutions such as Golden Gate Ventures, Access Ventures, Burda Principal Investments, 500 Startups, Jungle Ventures, and Cyberagent Ventures have signed an agreement with Vietnam to invest 10 trillion in Vietnamese startups over the next three years Vietnamese Dong ($ 425 million).
The agreement was reached at the Vietnam Venture Capital Summit on June 10, 2019.
The Vietnam Venture Capital Summit is dedicated to reaching all investors. At the conference, VinaCapital also reached a $ 1 billion agreement with Mirae-Naver Asia Growth Fun. The agreement shows that Mirae Asset has invested an unknown amount of money in VinaCapital Ventures and Naver to help companies in its portfolio implement expansion plans.
“Vietnam is gaining more attention from international investors, and we believe they will have sufficient opportunities to deploy the promised funds,” said Pham Hong Quat, Minister of Science and Technology Market R & D.
In 2012, there were 400 start-up companies in Vietnam. Last year’s data showed that the number of start-up companies has reached 3,000, and the total financing in 2018 reached $ 890 million.
Vinnie Lauria, founding partner of Golden Gate Ventures, stressed that although Vietnam still faces challenges in the investment process, the number of venture capital firms willing to invest indicates that Vietnam has become one of the region’s key strategic markets.
5. The crypto company is silent
2018 witnessed the decline of digital assets, and the prices of major currencies such as Bitcoin and Ethereum plummeted from historical highs to 2017 levels. Just as prices have risen, the number of crypto-related companies has also increased significantly in 2017 and 2018.
With the decline of digital assets, the number of globally active crypto companies is also declining.
In 2019, no one seems to be talking about cryptocurrencies anymore. Judging by the sluggish price levels of various major cryptocurrencies, it may take some time in Southeast Asia to hear them again.
6. Shared bike offline
In 2019, Singapore’s bike sharing economy is officially dead. Bikes ready to be rented used to be found everywhere in Lion City,But after companies like Ofo, oBike and Mobike ceased operations in Singapore, these bikes are now gone. Even Singapore’s dominant ride-sharing app, Grab, has quietly removed GrabCycle from its mobile service.
In fact, bike sharing has never been meaningful in Singapore. Singapore has hot weather throughout the year and locals enjoy an efficient transportation system.
That said, bike sharing and electric scooters have never solved the pressing pain points of Singapore users. Projects copied from China alone or Chinese projects going overseas may not be able to live in Southeast Asia.
Copy from China is the current trend of entrepreneurship in Southeast Asia. The story that happened in China 10 years ago is being staged in Southeast Asia. Entrepreneurs hope to make the time difference and become the next Internet and e-commerce giant in new traffic.
However, Southeast Asia is not China.
As Dai Yusen, a partner of Zhenge Fund said, Chinese entrepreneurs are now more and more prepared to enter the global market, and many of China ’s fast-growing new technologies and skills can also be applied to Southeast Asia The focus is on how to replicate domestically proven skills and experience.
editor | 云 晞 @ 出海
Picture | Pexels
