8 predictions for the southeast asian tech scene a checkpoint · catcha group is southeast...

8 Predictions for the Southeast Asian Tech Scene – A CheckpointPlus 3 New Predictions for Indonesia

December 2018

www.catchagroup.com© 2018 Catcha Group. All Rights Reserved.

2

Hey folks!

If you know me, you know how much of

a Southeast Asia (SEA) believer I am!

I’m always impressed, inspired and

invigorated by the talent, opportunities,

and growth coming out of this region.

That’s why I’ve focused my entire

journey as an entrepreneur out of here.

Would you have guessed that a local

startup would acquire its competitor,

the largest provider and pioneer of e-

hailing services?

Or that SEA would have more Internet

users than the US?

Even I never expected that SEA’s tech

entrepreneurs would be killing it at this

level!

But my team and I like a challenge. So

we thought we’d try to predict the

future. That’s why, since 2017, we’ve

released our predictions for where the

SEA tech landscape would go.

Earlier this year, we announced 8

predictions which we felt would reshape

the market till 2020. And today, just in

time for Wild Digital Indonesia 2018 (our

rockin’ premier tech conference),

here’s a midway checkpoint of those

predictions. Bonus: we’ve added 3

brand-new ones just for Indonesia!

Let’s see how many we get right. And

more importantly, let’s see if SEA can

surpass even Catcha’s wildest

expectations in the next 24 months!

BOOM!

Patrick Grove

Co-Founder & Group CEO

Catcha Group

FOREWORD

If you have any questions on the report, please reach out via [email protected]. Opinions expressed are solely perspective of Catcha Group. Neither Catcha Group or any of its respective affiliates or employees makes any representation or warranty, express or implied, as to the accuracy or completeness of the information contained in this document. All figures as in USD.

mailto:[email protected]

ABOUT CATCHA GROUP Our portfolio of companies – past and present

Video on Demand service for emerging markets, currently

present in 24 countries with 5m+ monthly users, raised $303m in

funding since inception in 2015

SEA’s leading digital media group. Acquired by Media Prima

for $24m in May 2017

Malaysia’s largest coworking space with over 100,000 sqft in

total to date

Leading operator of online classifieds businesses in emerging

markets. Its 17 portfolio companies are present in 19 markets

SEA’s No. 1 network of online automotive portals with 7 brands

across Malaysia, Thailand and Indonesia

Operator of Asia’s no. 1 network of property websites. Acquired

by Rupert Murdoch’s REA Group for $534m in Nov 2015

SEA’s leading internet and digital conference, held across 5

cities with 1000+ attendees

Purpose-built digital hub for the SEA regional tech ecosystem18+

Years of enabling disruptive

businesses

60+ Investments globally held

directly or indirectly

30+ Countries which our portfolio

companies are present in

5IPOs in the last 10 years

(4 on ASX, 1 on Bursa Malaysia)

$550m+Combined value of 2 strategic

exits over the last 3 years

$2bn+ Value creation since inception across portfolio

3,000+Employees globally across

portfolio of companies

10xAverage return on investment

across major portfolio assets

#1Market leadership across

multiple categories

Catcha Group is Southeast Asia’s leading internet group. The Group was

established in 2004 and is headquartered in Kuala Lumpur, Malaysia.We build

and invest in disruptive internet companies across emerging markets

globally. Today, we are also looking at solutions to grow the tech and start-up

ecosystem via co-working spaces, building Malaysia’s first KL Internet City,

applying blockchain to equitize content creation, and delivering impact.

8 predictions for the SEA tech scene over the next24 months, as made in

February 2018

REVIEW


6

REVIEW8 Predictions for the SEA tech scene over the next 24 months, as made in February2018

• Internet penetration is on track, with 350m internet users

Tech funding in 2018 has reached $9.1b, 50% more compared

to 2017.

By the end of 2019, SEA will have 460m

internet users and $10b raised in private tech

funding

• Yes, Grab is now SEA’s first decacorn.First Decacorn ($10b+ valuation) will emerge

from SEA

• No sign of this yet but startups valued from $10mil to

$100mil are raising funds at record volumes in 2018,

compared to the last 3 years.

A new Unicorn will be built in less than 3

years from launch

• Yes, China is emerging to be the largest source of funding in

SEA.

Chinese companies remain the largest source

of tech funding

1

2

3

4


7

• There have been no new IPOs in SEA in 2018.At least 2 more IPOs in excess of $500m

• In March 2018, Grab acquired Uber’s operations in SEA, with

Uber taking a 27.5% stake in Grab.

Consolidation of the SEA tech landscape –

there will be 2 acquisitions in excess of

$500m

• Yes. Corporates such as Toyota, Hyundai and Microsoft have

invested in SEA startups. Government participation has also

been increasing.

Corporates and governments in SEA will

invest at least $1bn in the startup ecosystem

• Virtual currencies are only legal to trade. However,

Philippines, Indonesia and Singapore have regulatory

frameworks in place. Thailand is also mapping out its own

central bank digital currency.

At least one SEA country will accept/issue a

virtual currency as a legal tender

REVIEW (CONT.)8 Predictions for the SEA tech scene over the next 24 months, as made in February2018

5

6

7

8


8

PREDICTION #1By the end of 2019, SEA will have 460m internet users and $10bn raised in private

tech funding

1.1 Mbps1.2 Mbps1.5 Mbps1.6 Mbps1.9 Mbps2.3 Mbps2.9 Mbps3.9 Mbps

5.5 Mbps

7.8 Mbps

11.2 Mbps

16.0 Mbps

22.8 Mbps

-2 Mbps-1 Mbps0 Mbps1 Mbps2 Mbps3 Mbps4 Mbps5 Mbps6 Mbps7 Mbps8 Mbps9 Mbps

10 Mbps11 Mbps12 Mbps13 Mbps14 Mbps15 Mbps16 Mbps17 Mbps18 Mbps19 Mbps20 Mbps21 Mbps22 Mbps23 Mbps

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018E 2019E

Source: World Bank, Google-Temasek Report, Internet Live Stats, Akamai, Crunchbase, Pitchbook; Figures are as at 30 Nov 2018. Only disclosed deals from startups that are backed by angels, accelerator/incubator, seed funds, and VC/PE funds are included.

SEA Private Tech Funding, # Internet Users, Fixed Broadband Speed (2007-2019E)

68m 75m 80m

111m127m

148m166m

186m

219m

246m

350m

460m

$0.0b $0.0b $0.0b $0.1b $0.2b $0.1b$0.5b $0.8b

$1.3b

$2.3b

$6.0b

$9.1b$10.0b

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019e

▪ SEA currently has 350m internet

users. Indonesia, Malaysia,

Philippines, Thailand among the

Top 10 most engaged countries on

mobile internet globally

▪ Fundraising in SEA in 2018 has

increased by more than 50%

compared to 2017

✓On

track

SEA private tech funding

Internet users

Fixed broadband speed


9

PREDICTION #2First Decacorn ($10bn+ valuation) will emerge from SEA

Source:, Crunchbase, Company Annual Report, Press Releases.

*Estimation is based on extrapolation from SEA market capitalisation in 2017, assuming SEA between 2017 and 2019 achieve the same growth rate of market capitalisation per internet user as China between 2008 and 2010

459m

Tencent: $13bn

Baidu: $6.6bn

460mInternet

PopulationAverage SEA unicorn

valuation could reach up to

$12.4bn

China in 2010 SEA in 2019E

Tencent: $13bn

Baidu: $6.6bn

$94.5b $86.5b*

Combined Market

Capitalisation of

Market Leaders

✓On

track


10

PREDICTION #2First Decacorn ($10b+ valuation) will emerge from SEA

$2.8b

$7.1b $6.5b

2016 2017 1H 2018

Funds raised by SEA unicorns

Funds raised

▪ SEA recorded 524 deals by venture capitalists, 4 times more compared to 2012.

▪ Most funding in 2018 went to SEA’s unicorns, with Grab emerging as the region’s

1st decacorn, after landing investments from Toyota, SoftBank, and a number of

financial firms including including OppenheimerFunds, Ping An Capital, Vulcan

Capital, Macquarie Capital and Lightspeed Venture Partners.

Source: Google-Temasek Report, Crunchbase, Pitchbook, press release, company website; Figures are as at 30 Nov 2018.

✓On

track


11

Companies Year founded Year achieved

Unicorn status

Years taken

1995 2014 19

2007 2015 8

2009 2015 6

2009 2014 5

2010 2016 6

2011 2014 3

2012 2017 5

2012 2015 3

Company X 2018/2019 2021 < 3 years

PREDICTION #3A new Unicorn will be built in less than 3 years from launch

It is becoming faster than ever

to become a Unicorn – it took

4.7 years on average for the

Unicorns above to attain $1b+

valuation

*

*

Source: Crunchbase, press release, company website.

⌽Not

known


12

PREDICTION #3A new Unicorn will be built in less than 3 years from launch


$0.7b

$1.0b$0.9b

$0.8b$1.0b

$1.4b

$0.4b$0.3b

$0.4b

2016 2017 1H 2018

Funds raised by SEA non-unicorns

Startups valued <$10 mil

Startups valued $10mil - $100mil

Startup valued $100mil - $1b

SEA’s internet economy is currently

experiencing a funding surge as the ecosystem

matures – startups valued from $10mil to

$100mil are raising funds at record volumes

compared to the last 3 years.

⌽Not

known


13

$0.5b $0.8b$1.3b

$2.3b

$6.0b

$9.1b

2013 2014 2015 2016 2017 2018

PREDICTION #4Chinese companies remain the largest source of tech funding

In terms of fund value, China is

still leading the way in SEA

investments, despite having a

slightly lower number of fund

deals compared to Japan. Total SEA Private Tech Funding

Source: Pitchbook, Crunchbase, Tech in Asia. Data as at 31 Dec 2017. Only deals with disclosed investors and size of more than $100m are included.

✓On

track


14

$0.5b $0.8b$1.3b

$2.3b

$6.0b

$9.1b

2013 2014 2015 2016 2017 2018

PREDICTION #5At least 2 more IPOs in excess of $500m

$586m

Nov 2014

AUS

MY

Acquired

$534m

Nov 2015MY

Acquired

AUS

• As funding levels increased

over the last few years, the

size of exits increased as well.

We have seen IPOs at a much

larger value than M&As in

recent years. The successful

IPOs of Sea and Razer have

boosted investors’ confidence

in SEA’s future Tech IPO

prospects.

• In 2018, M17 Entertainment,

parent company of Singapore-

based dating app Paktor,

withdrew its US IPO.

$200m

Sep 2013SG

AcquiredJPN

$1.96b*

Apr 2016SG

Acquired

CHN

raised $529m

in

SG

Nov 2017

@ $4.4b

raised $884m

in

SG

@ $4.9bOct

2017

$3.13b*

Jun 2017SG

AcquiredCHN

Total SEA Private Tech Funding

Source: Pitchbook, Crunchbase, Techcrunch. Data as at 30 Nov 2018.* Alibaba acquired 51% stake in the deal, later in Jun 217 acquired another 32% stake at a valuation of $3.13bn

?

⌽Not

known


15

PREDICTION #6Consolidation of the SEA tech landscape – there will be 2 acquisitions in excess of $500m

▪ With enormous late-stage funding, tech unicorns will use M&A to

expand product offerings. Notably, Grab and Go-Jek are building out

their mobile payments capability via M&A

▪ Increased funding and valuations lead to higher expectations by

investors for faster and bigger results, which then drive the tech

M&A market as companies cant rely on organic growth anymore

▪ With hugely successful startups acquiring more companies, it will

help create a stronger M&A ecosystem, thereby generating more

liquidity and encouraging more investment in the region

▪ We have seen this done by Google and Facebook in the US and

Alibaba and Tencent in China – it will happen here as well

1

2

3

4

$100m

Apr 2017IDN

Acquired

SGCEO

Anthony

Tan: “Deals

similar to

Kudo may

be targeted”

2016

2017

The most active Unicorn

acquirer in SEA

• We have seen startup valuations increase dramatically over years. As

valuation expectations normalize moving forward, we expect to see

more corporates and unicorns using M&A to grow.

• In March 2018, Grab acquired Uber’s operations in SE, with Uber

taking a 27.5% stake in Grab.

Source: Bloomberg, The Strait Times, company website.

2018

✓On

track


16

PREDICTION #7Corporates and governments in SEA will invest at least $1b in the startup ecosystem

The increasing number of opportunities in SEA’s tech ecosystem have seen corporates such as Toyota, Microsoft, Google and Razer beginning to

invest in other startups – which goes hand-in-hand with increasing government participation. In 2018, the total investment from corporates and

governments has already surpassed $1b.

Go

vern

me

nts

Co

rpo

rate

s

Source: Screenshots from the Jakarta Post, The Star Online, Digital News Asia, Straits Times, Deal Street Asia, Techcrunch, Reuters, Bangkok Post, Lowyat.net

2018

✓On

track


17

PREDICTION #8At least one SEA country will accept/issue a virtual currency as a legal tender

While most governments do not recognize virtual currencies as legal tenders now, governments are becoming

more open to virtual currencies’ role in society due to massive public interest

Jan 2015 – Monetary Authority of Singapore to

regulate virtual currency intermediaries for money

laundering and terrorist financing risks (Source)

October 2018 – Singapore’s Central Bank Will Aid

Crypto Startups in Opening Bank Accounts

(Source)

Jul 2014 – Thailand approves fully-legal Bitcoin

exchanges (Source)

August 2018 – Thailand is mapping out its own

central bank digital currency (Source)

March 2014 – Central Bank of Vietnam officially

does not support Bitcoin (Source)

July 2018 - Import of ASIC cryptocurrency mining

equipment is temporarily banned (Source)

Jan 2015 – Central Bank of Indonesia warns

against Bitcoin use (source)

July 2018 – Trade Ministry has declared

cryptocurrency a legally tradable commodity, and

is setting regulations and taxations (Source)

Mar 2014 – Central Bank of the Philippines issues

warning on digital currencies (Source)

Jan 2018 – Central Bank of the Philippines grants

first cryptocurrency exchange licenses (Source)

Then

Jan 2014 – Central Bank of Malaysia has no plans

to regulate bitcoin (Source)

Dec 2017 – Central Bank of Malaysia releases

draft rules for cryptocurrency exchanges (Source)

Now

⌽Not

known

http://www.mas.gov.sg/News-and-Publications/Media-Releases/2014/MAS-to-Regulate-Virtual-Currency-Intermediaries-for-Money-Laundering-and-Terrorist-Financing-Risks.aspx

https://www.ccn.com/singapore-central-bank-will-aid-crypto-startups-in-opening-bank-accounts/

https://cointelegraph.com/news/thailand-approves-fully-legal-bitcoin-exchange

https://techcrunch.com/2018/08/31/thailand-blockchain/

https://www.techinasia.com/bitcoin-illegal-in-vietnam

https://www.ccn.com/vietnams-central-bank-approves-call-to-suspend-import-of-cryptocurrency-miners/

https://www.coindesk.com/indonesia-central-bank-warns-bitcoin-use/

https://cryptodisrupt.com/indonesia-declares-cryptocurrency-a-commodity/

https://www.coindesk.com/philippines-regulator-issues-warning-digital-currencies/

https://www.coindesk.com/philippines-central-bank-grants-first-cryptocurrency-exchange-licenses/

https://www.coindesk.com/malaysian-central-bank-no-plans-regulate-bitcoin/

https://www.coindesk.com/malaysias-central-bank-releases-draft-rules-cryptocurrency-exchanges/

INDONESIA

A closer look at the localtech scene


19

Indonesian tech scene over the next 24 monthsPREDICTION 1:

Funding in Indonesia will exceed funding in Singapore


Increasing market leader performance

To date, Indonesia's unicorns and Singapore's unicorns have raised a similar amount of funding. With

Indonesia expecting to have more unicorns by 2019, they will soon take

the lead.

Larger market size

Indonesia's larger market size indicates a larger opportunity to grow compared

to Singapore - this is reflected in increasing number of Series C funding

deals.


20

133mil

Tencent: $13bn

Baidu: $6.6bn

5milInternet

Population

Tencent: $13bn

Baidu: $6.6bn

~$20bn $22bn*Combined Market

Capitalisation of

Market Leaders

PREDICTION #1Funding in Indonesia will exceed funding in Singapore

Source:, Crunchbase, Company Annual Report, Press Releases, Reuters.

To date, Indonesia’s market

leaders have raised almost

the same amount as

Singapore’s unicorns. With

Indonesia expecting to have

more unicorns by 2019, they

will soon take the lead.


21

$0.2b

$0.7b

$1.4b

$3.0b

2014 2015 2016 2017

Total invested in Indonesia

PREDICTION #1Funding in Indonesia will exceed funding in Singapore

Source:, Crunchbase, Singapore Venture Capital & Private Equity Association, Tech in Asia, CB Insights.

13 1217 15

27

35

18 17

2429

23

10

21

3532

36

57

44 4237

45

36

2924

3329

Indonesia (# Series C deals)

Singapore (# Series C deals)

Singapore is experiencing a decline in

number of Series C funding deals, while

Indonesia is slowly increasing. Indonesia also

has a market of 133 million Internet users –

26 times larger than Singapore – giving it

more room to grow as reflected in the

increase of total funds invested in Indonesia

across the years.

Indonesia private tech funding


22


At least 2 unicorns from the fintech and healthtech sectors

Large unbanked population with high adoption

Indonesia's growing Internet-savvy middle

class indicates increasing demand for fintech

services.

Healthtech's increasing popularity in Asia Pacific

Indonesia is bound to follow in China and India's

footsteps to explore healthtech innovations.

Increasing funding interest and strong government support

Investors are diversifying away from ecommerce.

The Indonesian government have begun to put in place initiatives

to support fintech and healthcare.


23

Source: World Bank, We Are Social, Daily Social, Statista, CB Insights, Google-Temasek

$15b $19b $22b

$54b

Indonesia

Indonesia fintech market size (transaction value)

2016 2017 2018 2025

46% 45%

21%

52%39%

25%

Indonesia Malaysia Phillippines Singapore Thailand Vietnam

Fintech adoption

133mil

25mil67mil

5mil57mil 64mil

Internet users

PREDICTION #2At least 2 unicorns from the fintech and healthtech sectors

64% of Indonesians aged 25 years and older are unbanked, which represents a strong opportunity for fintech startups who

can step in. With high adoption rates and a market whose transaction value is set to double by 2025, the fintech sector in

Indonesia is set to grow exponentially.

2x


24

$16.5mil

$45mil

$37mil

$22.4mil

$89mil

$15mil

Source: CB Insights, Jakarta Post, Finnews.asia, press releases, company website.

3

11

21

53

Indonesia

Fintech deal activity in Indonesia (#)

2014 2015 2016 2017


The Indonesian government is in the midst of establishing regulatory frameworks, a fintech hub, and has issued support to

fuel fintech growth in line with its exploding ecommerce sector. Indonesia’s largest banks have also started to invest heavily

in fintech by either establishing funds, incubators or acquiring fintech startups. Together with an increasing trend in the

number of fintech deals in Indonesia, the environment is ripe for an Indonesian fintech unicorn to emerge.

Banks investing in fintechGovernment support

2.5x

Up-and-coming startups


25

Source: Galen Growth Asia, Healthtech.id, CB Insights. Figures are as at 30 June 2018. *includes Southeast Asian countries, China, India, Australia, Japan, New Zealand, Bangladesh and Taiwan.


In 1H 2018, funding for healthtech in Asia has reached $3.3b across 107 deals – this is estimated to continue increasing and

Indonesia already holds the 2nd largest market share in Southeast Asia behind Singapore. Indonesia’s healthcare market is

also projected to be worth $363b in 2025, but currently there are only 160,000 doctors to serve a population of 250 million

people.

$20b

$363b

Indonesia

Indonesia healthcare market size

2010 2025

18x

$0

$200

$400

$600

$800

$1000

Early Series A Series B Series C Series D

Tota

l fu

nd

ing

per

sta

ge (

$M

)

Asia Pacific healthtech funding trend*

2016 2017 2018

India32%

China22%

Singapore11%

Australia8%

Japan8%

Indonesia5%

Others14%

Market share


26


Source: Google-AT Kearney study, Tech In Asia, Reuters, press release, company website.

Both local and foreign investors are looking diversify their investment away from e-commerce, with healthcare and fintech

becoming the top two categories that they are interested to invest in. This is aligned with increasing activity amongst local

companies and growing government support in Indonesia.

$13mil

$12.1mil

Increasing local activity

Up-and-coming startups

Government support

64% 70%

29% 20%

Local investors Foreign investors

Indonesia’s top two categories to invest in (% of of responses)

Fintech

Healthcare

43%60%

21% 10%

Local investors Foreign investors

Indonesia’s top two categories to decrease investment in (% of of responses)

E-commerce

Social media


27


Indonesia will have the largest share of ‘Nexicorns’ - startups

worth >$100mil

Increased internet penetration

Indonesia already has the largest

number of Internet users. This will

continue to increase as

infrastructure improves.

Fastest growing internet economy

Indonesia's internet economy

is predicted to grow to $100b by

2025

Strong funding opportunities

Indonesia is receiving

increasing funding interest.

Largest market size

By 2050, Indonesia will have the third

largest middle class population in emerging markets


28

PREDICTION #3Indonesia will have the largest share of ‘nexicorns’ - startups worth $100mil

Source: Google-Temasek Report, CB Insights, The Jakarta Post; Figures are as at 30 Nov 2018.

$8b $7b $6b $3b $5b $2b

$27b

$10b $12b $9b $8b $5b

$100b

$22b

$43b$33b

$21b $21b

Indonesia Singapore Thailand Vietnam Malaysia Phillippines

SEA internet economy market size (GMV)

2015 2018 2025

133mil

5mil

57mil 64mil

25mil

67mil

Internet users

• Indonesia has a market of Internet users that is 27x bigger than Singapore.

• Indonesia has the largest and fastest-growing internet economy in Southeast Asia, and is predicted to grow to $100

billion by 2025.

The Rp 14 trillion Palapa Ring project

aims to expand domestic broadband

service nationwide, particularly in

remote Indonesian regions.


29

PREDICTION #3Indonesia will have the largest share of ‘nexicorns’ - startups worth USD100mil

Source: Google-Temasek Report, Crunchbase, Pitchbook. Figures are as at 30 Nov 2018.

Fundraising in Indonesia is ahead

of the rest of SEA, and only

slightly behind Singapore. Also,

the number of companies in

Indonesia that have raised first-

round funding has increased by

more than 300%, compared with

2012 – indicating a growing

investor interest in the country.

$1bn

$3bn

$1bn

$3bn

$6bn

$1bn

$2bn

$7bn

$1bn

Indonesia Singapore Rest of SEA

SEA internet economy market size (GMV)

2016 2017 1H 2018

504

1032

834Total number of deals


30

PREDICTION #3Indonesia will have the largest share of ‘Nexicorns’ - startups worth USD100mil

Source: HSBC, Economist intelligence Unit, Google-Temasek Report

While Singapore currently has

the largest share of Nexicorns,

the country is projected to

have a much smaller middle

class population by 2050.

Meanwhile, Indonesia will have

the largest middle class

population amongst its SEA

peers, and already has the

largest total number of

startups.mil

100mil

200mil

300mil

400mil

500mil

600mil

700mil

800mil

900mil

India China Indonesia Phillippines Thailand Malaysia Singapore

Projected size of middle class population by 2050

# Small startups (<$10m) 2010 377 348 749 1807

# Little Ponies (>$10m) 16 7 8 7 27

# Nexicorns (>$100m) 7 1 2 3 12

# Unicorns (>$1b) 4 0 0 0 4

2015 #

8 predictions for the southeast asian tech scene a checkpoint · catcha group is southeast...

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