A lanyard showing logos of Southeast Asian e-commerce and gaming group Sea Ltd is pictured at its office in Singapore, March 5, 2021. REUTERS/Edgar Su/File Photo
SINGAPORE, Dec 2 (Reuters) – Valuations of startups in Southeast Asia, home to popular online platforms such as Grab and Sea (SE.N), have become irrational due to heavy capital inflows from global investors, a partner at venture capital firm Golden Gate Ventures told Reuters.
China’s crackdown on its tech sector has also contributed to capital injections to the region, causing valuations of many startups to outpace their business principles, Justin Hall, a partner at Golden Gate Ventures, said at the Reuters Next conference.
“One of the biggest factors when it comes to the irrational valuation is the influx of U.S. and global money. There is an extraordinary amount of money coming into the region … and the end result is that you have too much money chasing after too few deals,” Hall said.
Golden Gate’s portfolio companies include payments platform Stripe and delivery firm Ninja Van.
In the first half of 2021, the number of investments in the region surged 20% over the year ago period to a record, with Indonesia and Singapore attracting the lion’s share of funding, according to a report by Southeast Asian venture capital firm Cento Ventures. Total fund inflows amounted to $4.4 billion.
Investor interest is being driven by the region’s growth potential, with its internet economy forecast to more than double to $360 billion in gross merchandise volume by 2025.
Such interest has helped spawn several multi-billion dollar businesses recently.
Grab, the region’s biggest ride-hailing and delivery firm, will make its market debut on Thursday on Nasdaq after a record $40 billion merger with a special purpose acquisition company (SPAC). Its Indonesian rival GoTo Group raised $1.3 billion last month, ahead of an IPO planned for next year. read more
Dmitry Levit, a partner at Cento said, however, these companies were not necessarily a template for smaller unicorns.
“I would say the recipe of raise a massive round for Indonesia only has kind of played out,” he said, adding that there were opportunities in Vietnam and other Southeast Asian countries.
The pending acquisition would add transfer-agent and ownership-record capabilities to Morgan Stanley at Work; the…
Mark Stewart exits immediately as the board continues examining the company’s business mix, footprint and…
The pending deal would connect asset-backed financing with its tokenization business, but market-size figures do…
The automotive-parts supplier ends its interim leadership arrangement more than a month ahead of the…
A joint ministerial statement calls for sectoral discussions and an end to market-distorting policies, without…
Wärtsilä’s 35-megawatt storage project pairs batteries with energy management and maintenance, with takeover expected in…