There's money flying around in Southeast Asia

Asia Tech Review: 8 March 2021

Mar 08, 2021

Welcome back,

Wow, lots happening in this week’s newsletter, particularly in Southeast Asia. The last seven days saw some huge funding rounds in that part of the world, an under-the-radar exit and a massive new VC fund has closed. All of these are proof points that the region and its startup ecosystem are on the up.

Speaking of Southeast Asia, we just crossed one year since we launched The Ken’s Southeast Asia subscription. It’s been quite a year—ignoring Covid for a moment—and we’ve published impactful and deeply-reported stories that you won’t find elsewhere. There’s even more planned for 2021.

Over the past week alone you can read: why BCG opened a digital ventures arm in Singapore; whether K-pop and the Hallyu wave is fading in Southeast Asia; how alumni networks like XA from Google and Uber old boys are on the rise; and a profile of fast-growing robo investment startup Stashaway.

We have an archive of free-to-read stories, but do drop me a note if you’d like a trial code for 30-days—that’s something all of our paying readers can give out.

Take care and see you again next week,

Jon

China

Meitu has pulled a Tesla after it said it bought $40M in Bitcoin and Ethereum. The spend was based both on potential long-term financial gains and as a way to get into blockchain technology and decentralised apps, the company said. It may increase its crypto total to $100M. (That’s a decent chunk of the 2.5B RMB, or $385M, it has in cash and other resources.)

Meitu’s founder is a Bitcoin believer—he had 10,000 BTC as of 2018. But still the cynic in me can’t help but point out that there may be another reason: the company’s stock price has flatlined since its IPO in Hong Kong in 2016. Buying into crypto creates a new (and maybe exciting) narrative.

Meitu claims 300M downloads of its selfie apps, it once also made its own beautification-optimised smartphones, but if you dig into financial reports, things aren’t quite so rosy.

It got out of selling smartphones, quit e-commerce and its various apps have just plateaued at just shy of 300M monthly users, with just 5% annual growth between 2019-2020. Meitu also remains unprofitable—though losses reduced during Covid-19—and it has been accused of nefariously using/collecting data from its apps.

All in all, there’s not been huge leaps since it went public at a valuation of over $4 billion more than four years ago. Today it is valued at a more conservative US$1.5 billion—it is in need of a growth story for the markets.

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News on ByteDance has been a little quiet of late: but the media giant is developing new projects. One is a Clubhouse-like service that it is building in China, another could be self-driving cars. Media reports suggest ByteDance invested in $25M in QCraft, a Chinese autonomous vehicle startup founded by former Waymo engineers.

An exploit in Microsoft’s Exchange Server email product has apparently impacted 20,000 US-based businesses. The firm had earlier warned customers that a new China state-sponsored threat actor was exploiting four previously undisclosed security flaws

A look inside China’s ‘Sharp Eyes’ surveillance program, which is aiming to monitor 100% of all public space as part of a new policy from the government

Ant Group CEO Eric Jing has assured employees that the firm will go to IPO—that’s in response to concern from workers who are unable to liquidate their share options

JD is heeding Ant’s lesson: it is reportedly planning to remove its application to list its fintech business on China’s Shanghai Star market. JD Technology, as it is now, was tipped to raise more than $3B in the float. That’s a small portion of Ant’s $40B target, but it seems fintech platforms are playing it safe until there’s further clarity on how Ant and other businesses can proceed

Alibaba snapped up Bangladesh-based food delivery service HungryNaki—the deal is via Daraz, the South Asian e-commerce site it owns

The US is fostering global partnerships to counter China’s growing technology expertise

Xiaomi previously shut its messaging app but now it has reopened it as a Clubhouse China clone—yep, another one

Hong Kong

Hong Kong is considering whether to allow SPAC listings

India

India is threatening Facebook, WhatsApp and Twitter employees with jail sentences

The warnings are in direct response to the tech companies’ reluctance to comply with data and takedown requests from the government related to protests by Indian farmers that have made international headlines, the people say. At least some of the written warnings cite specific, India-based employees at risk of arrest if the companies don’t comply, according to some of the people.

Zomato could raise up to $1B in its IPO

Flipkart, meanwhile, could go public in the US via a SPAC, according to news reports

India is trying to get Tesla to commit to production in the country rather than China

Apna, a one-year old startup that helps blue collar workers get hired, raised $12.5M—that’s just months after it raised $8M

A secondary sale from PolicyBazaar, which unloaded $45M in shares, reportedly valued the business at $2.4B—the company is said to be looking to go public at a valuation of around $3.5B

Southeast Asia

Sea had another big year of growth, with overall revenue doubling—Shopee’s revenue rose 116% to reach $1.8 billion for the full year of 2020. But the staggering losses continue as it goes fully after growth. Sea’s 2020 loss came in at $1.6B, wider than the $1.45B it lost in 2019.

The hot debate is whether the firm is overvalued with a current market cap of $117B. Its share price has dropped nearly 20% from an all-time high in February. With 100%+ revenue growth forecast for 2021, many of the questions about Sea, the Shopee business, profitability and valuations will begin to be answered this year.

Perhaps more interestingly, it now has a $1B investment fund: Sea Capital. That’s formed by a takeover of former Hillhouse investor David Ma and his Hong Kong-based firm, Composite Capital Management. It’s a move that bears similarities to Tencent, Sea’s long-term backer, which is known as much for its investments—Snap, Tesla, JD.com, Meituan, PDD, Riot Games, Epic Games etc etc.

What about those who want to follow Sea to public markets? There’s plenty of SPAC news: PropertyGuru, which called off an IPO in 2019, looks like the prime candidate to go public via a SPAC first; close behind is Indonesia’s Bukalapak, which is reported to be in early stage talks with several blank cheque companies over a listing

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Asia Partners, a VC firm co-founded by former Sea executive Nick Nash, finally closed its inaugural fund. Some two years in the making, it clocked in at $384M—which makes it one of the region’s largest funds and certainly the largest debut from a firm. It is targeting later stage deals around the (apparently) Series C-D gap. I’ve been around long enough to remember the Series A gap—things have certainly changed!

An under-the-radar startup—Stamped—was just acquired for up to $100M. Canada-listed WeCommerce is paying an initial $85M, including $75M in cash, to buy the Singapore-based company, which provides reviews, ratings, loyalty and rewards programs for Shopify merchants. Incredibly, Stamped never raised outside funding which means all that money goes to founders and staff

Grab is helping Indonesia vaccinate its population—I hope this initiative expands to other countries, too

Another promising initiative from an on-demand company is Gojek’s move to decarbonise its business—initially it is calculating its carbon footprint, a first time to being able to shrink it

South African digital bank Tyme is eyeing Southeast Asia with an initial launch planned for the Philippines in partnership with local conglomerate JG Summit

Payment processing startup Xendit raised $64.6M in a big round led by Accel

Another payment challenger, Xfers, grabbed $30M through an investment from Payfazz, an agent-based selling network. Together, the two will run a joint venture that builds financial services and taps each the two businesses

Logistics firms are growing like weeds in Southeast Asia, recall Thailand’s Flash. Indonesia-based SiCepat raised $170M—that’s apparently a Series B (a large one, indeed) and it takes the company close to the $1B valuation mark

Thailand’s prime minister is investigating Facebook’s claim that the army misused its social network to influence conversations around the ongoing war in the south of the country. Facebook removed 185 accounts and groups in the move. Notably, the PM is the former head of the army

It looks like Indonesia plans to place restrictions on overseas goods, particularly those from China. “Calls to love our own products, Indonesian products, must be echoed. I also campaign for hatred towards products coming from abroad,” said President Jokowi. “Love our goods, hate foreign goods.”

Trade minister Muhammad Lutfi told a news briefing Jokowi’s remarks were in response to concern that Chinese manufacturers were copying products designed by small and medium-sized Indonesian enterprises and selling them on foreign e-commerce platforms at a fraction of the price, crushing local producers.

Japan

SoftBank will double down on payments by merging Line Pay, the payment service from chat app Line, with its PayPay app that is developed by India’s PayTM, according to Bloomberg. Line is on course to merge with Yahoo Japan as soon as this month after Covid forced a delay

South Korea

Korean companies are shaking up Japan’s manga industry with digital products and platforms—they include Piccoma, which is backed by chat app Kakao, and Line Manga, from Line. Despite their growth, aided by Covid-19, paper comics remains king

Inside e-commerce giant Coupang’s IPO—which could raise $3.6B, making it the largest Asian listing in the US since Alibaba

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