Southeast Asia Tech Investment – 2019


February 02, 2020

Southeast Asia Tech Investment – 2019

It is our great pleasure to share this latest report in our series that tracks digital investment in Southeast Asia. The data and insights we have accumulated in this Southeast Asia tech investment report cover the period up to the end of 2019.

Click HERE to view the report.

Investment Landscape

Some changes have been seen in landscape of technology investment in Southeast Asia in 2019. The total amount we have seen invested in tech companies in the region in 2019 totalled $7.7B. This is noticeably lower than the $12B we recorded in 2018, however while there were fewer ‘mega-deals’, there was a significant increase in smaller VC deals. The total amount invested in smaller deals (less than $50M invested) set a new record of $2.4B, up from $1.5B in 2018. In contrast, the amount that was deployed in largest deals (more than $50M invested) was $5.3B in 2019, compared with $10.5B in 2018.

Exits and Liquidity Events

The number of liquidity events increased in 2019 per our observation at the half year mark. For the full year it reached 64, exceeding 2018’s total of 56.

Total proceeds from liquidity events in 2019 was $2.2B, equalling 2018’s amount. The largest exits were: Bigo – acquired by YY Inc for $1.45B; 701 Search – acquired by Carousell for $272M; and Wavecell – acquired by 8×8 for $125M.

As a qualifier, while we included the full value of the Bigo event, that may overstate things couple of ways. It included existing YY Inc. owners among the selling shareholders and may exaggerate the value of liquidity generated. Also, we don’t know the proportion of the deal that can truly be assigned to the company’s Southeast Asian footprint. In the case of 701 Search, the full value of that deal is also perhaps not liquidity since it was a mix of cash and shares.

Regardless, these are significant deals and show that corporate acquirers are actively acquiring startups from Southeast Asia. A typical profile of a liquidity event in Southeast Asia in 2019 remains a trade exit to a buyer from Asia, with deal proceeds of less than $100M.

Looking ahead to 2020

Southeast Asia in 2019 has remained a very attractive region for tech investors. We see strong growth in investment at most deal sizes, and also a welcome diversification of investment into startups in more countries and in different sectors. As we have said in previous reports, we believe that high-quality startups exist across the region and good opportunities exist at many investment stages. Looking ahead to 2020 we expect these positive trends to continue as the fundamentals of the region remain positive – a large and rapidly digitising population that demands better online services, combined with many industry sectors adopting new technology to transform their operations. Whether 2020 sees a return of the same velocity of huge deals that we saw in 2018 is uncertain. While there is a new wave of large tech startups emerging, there is also increasing discussion about prioritising profitability over growth, and hence the requirements for investor capital may be lower. We will be watching closely and be commenting in the middle of the coming year.