Amit Anand, Founding Partner of Jungle Ventures, explains why this young, digitally connected region is an economy at tipping point
Amit Anand, Founding Partner of Jungle Ventures, explains why this young, digitally connected region is an economy at tipping point
World's First Mobile-Only, Millennial Generation
Over the past year, Southeast Asia, which is home to the world’s third-largest population, added 40 million internet users, as compared to 100 million between 2015 and 2019. Today, the region's 400 million internet users, most of whom are young, increasingly affluent digital natives, spend 4-10 hours on their phones each day, forming a large homogenous digital market in this otherwise fragmented geography. This creates some unique opportunities for anyone looking to capture the region’s consumer spend, which is $2tn and growing.
Homogenous Behavior in a Heterogeneous Market
While the consumer experience is largely homogenous, thanks to the growth of large digital platforms, Southeast Asia is a diverse, fragmented geography where local operating expertise is absolutely critical. Barriers to entry often relate to operating complexity so founders and investors must evaluate whether the need that they seek to address is the right one to focus on; if the solution necessarily needs to be a local one; and, most importantly, they must get team and timing right.
Experienced Talent Base
Similar to China and India, many of the first-generation Southeast Asian tech start-ups were founded by returnees who balanced their local market understanding with global experience from having worked in Silicon Valley or other developed ecosystems. These start-ups and the local offices of global tech giants such as Facebook and Google became breeding grounds for the next generation of start-up founders. Nearly 40,000 employees work for just the top 10 internet companies in the region, and their alumni have launched 1,200 start-ups just in the past few years. Fueled by venture dollars, these start-up veterans are now building the next generation and, arguably, more capital-efficient, internet-enabled businesses. As a result, the region has over 84 ‘soonicorns’ (start-ups on their way to becoming unicorns), an increase of over 9x over the past five years. Acqui-hires and industry consolidation have also driven M&A activity in $100-500mn exits. Jungle itself has had three exits in 2020, including the first acquisition by Intuit in the region.
COVID-19 Tailwinds
Notably, fund flows into start-ups have not slowed amid the pandemic. Between April and June, when many nations were in full lockdown, investments in Southeast Asian start-ups jumped by 91% year on year to $2.7bn, while the number of transactions climbed 59% to 184. COVID-19 has driven more people online and increased online consumption. As a result, e-commerce and derivative sectors such as logistics and fintech continue to benefit. COVID-19 has also exposed the importance of family safety, insurance, and financial stability, so healthtech is an emerging area. More than 100 million workers in emerging Asia are looking to retrain and reapply for productive work, creating opportunities in education, upskilling, and employability. The next wave of growth is also expected to come from the digitization of the 100+ million businesses that are ramping up tech adoption, in many cases to capture new opportunities created by COVID-19.
About Jungle Ventures
Jungle Ventures is one of Southeast Asia's largest independent venture capital firms, based in Singapore. Jungle invests in early- to growth-stage companies in Southeast Asia and India, and aims to build category-defining businesses that stand the test of time.