Grab, GoTo IPOs could spawn more Southeast Asian unicorns: 500 startups

SINGAPORE – Public listings of two of Southeast Asia’s tech giants are likely to pave the way for the emergence of high-growth companies in the region, venture capital firm 500 Startups said.

Contrary to concerns that regional heavyweights could “swallow up” small start-ups and hamper innovation, Vishal Harnal told CNBC that “this couldn’t be further from the truth.” On the contrary, he said, the initial public offerings from Grab and GoTo could boost the ecosystem and produce more than $ 1 billion start-ups.

Singapore-based rideshare company Grab announced in April it would go public through a $ 39.6 billion special purpose acquisition company merger – the largest deal ever blank check ever made. Meanwhile, the newly merged Indonesian on-demand platform GoTo Group has confirmed to CNBC that it will go public this year.

“Although there are (mergers and acquisitions), as these companies will acquire smaller start-ups, they are going to invest in a lot more companies than they acquire, and that’s going to lead to a lot more ‘billion dollar companies – or unicorns – having been born because of it, “Harnal told” Street Signs Asia “on Monday.

They’re going to invest in a lot more companies than they buy, and it’s going to lead to a lot more billion dollar companies.

Vishal Harnal

managing partner, 500 Startups

This is because founders of successful businesses will have new cash to invest in the ecosystem, either actively or as angel investors – those who invest in start-ups. Meanwhile, employees who have seen their employers switch from seed funding to IPOs may be more inclined to start their own businesses.

Harnal compared the process to the one that took place in China among his famous tech actions known collectively as BAT – Baidu, Alibaba and Tencent.

A passenger takes a ride on a Gojek motorcycle taxi in Jakarta on May 24, 2018.

Ismoyo Bay | AFP | Getty Images

According to a study by 500 Startups, out of nearly 150 active and former unicorns created in China, 40% were invested by BAT companies. In total, BAT companies have invested in 915 technology companies since their IPO.

In contrast, there have been less than half of that number of mergers and acquisitions, of which only 14 involved companies worth more than $ 1 billion.

“We’ve seen this happen in China with BAT – Baidu, Alibaba, Tencent. Now in Southeast Asia we have the equivalent, GSG – Grab, Sea and GoTo,” Harshal said, referring to the giant. the Singapore-based Internet Sea Group.

“More companies like GSG are spending money to educate the ecosystem, ensure technology adoption and invest in expanding the internet economy,” he said. “The more it creates strides for new start-ups to build businesses and leverage the businesses that exist now.”

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