Recently, when I went to Singapore to speak at the SuperReturn Asia Conference, I was lucky to address the leaders of such global investment arms as Alibaba, large family offices such as Iconiq Capital, whose portfolio includes families associated with founders of Facebook and Nvidia, and asian and American venture capital funds. Besides the event presentations, I visited Singapore’s new buildings with vertical gardens, making it a true concrete jungle. I also tried the legendary Chilli Crab. I came across an article titled “Why Southeast Asia Is the New Startup Frontier,” which highlighted the region’s rise in innovation.
The visit also gave me a valuable experience to contemplate the parallels and distinction between start up ecosystems in Latin America (Latam) and Southeast Asia (SEA). It is possible to compare the amount of the US$72 billion invested in SEA within the last five years against the US$33 billion raised by Latam. In the case of Latam, whose GDP in 2024 will be 5.5 trillion, and which.
Growing Population and Middle Class
Dividing by the average capital collected by start-ups of that year ($1.1 billion), we find the percentage ratio of capital raised with respect to GDP of 0.02%. By doing the same calculation with SEA that has a GDP of US$4.25 trillion and an average of US$10 billion raised, the ratio amounts to 0.235%. This implies that SEA is much ahead of Latam in terms of how the percentage of venture capital (VC) investment is relative to GDP at more than 11 times higher. This information represents an immensely more intensive emphasis on VC in the economy in Southeast Asia than in Latam.
Yet, even with this difference, the Latam-based public technology companies have created US$175 billion in market capitalization (based on the market cap of Mercado Libre, Nubank, Globant, DLocal, and VTex), which is more 200 percent that of SEA, which has US$83.08 billion (based on the market caps of Grab, Goto/Gojek/Tokopedia, and SEA Limited). This shows how LatAm is more efficient with the use of capital.
Expanding Digital Economy
However, Mercado Libre and Nubank have supported or rather improved their worth since their initial public offerings and secured a market capitalization of US$95.3 and US$67.01 billion, respectively. The number of shares offered in Mercado Libre has grown by over 250 percent in the span of five years and over 50 percent since the IPO of Nubank in 2021 (Source: Yahoo Finance).
This is an indication of the maturity of the startup ecosystem in Latam and the capacity of it to yield sustainable business models. Although SEA appears to have fallen behind in the age of fast commerce and rider apps, which one can see via its iconic investment in Grab, Latam has its use cases, and business models with high margins based on SaaS. One such case is the Globant, which is reflective of a US$8.76 billion market cap and 1700 percent ample since its initial public offering.
Supportive Government Policies
With that being said, it is noteworthy to say that Latam has not gone without its difficulties. Stone Pagamentos, which has been losing up to 50 stock value, in the last 12 months, is an example. Did not know that as of 2023 there are over half of the unicorns in the world settled in Asia? This is an amazing fact portraying the continents emergence as a world powerhouse in startups. Whether it is the fintech technologies transforming the way banks operate or online stores changing the way people shop, Asia keeps establishing new tech and business trends. The central figure of this boom is Tech on Asia.
The group that unites the active startup environment in the region and offers essential tools to entrepreneurs, investors, and experts. In this article, the author examines the importance of Tech in Asia in the aspects of collaboration, network and investment in the startup environment of the region. Further on we will examine the startups opportunities and problems in different fields, increasing tendency in venture capital investment and necessity in community building as the mechanism of innovation. In the last 20 years, there has been a critical revolution in the culture of startups in Asia.
Conclusion
The area used to be viewed as a manufacturing center, the idea shifted into innovation and dynamism since the appearance of technology. Nations such as India and China turned into key centres of technology activity in the early 2000s; India was particularly praised due to its IT services, whereas China grew to be a driving force in e-commerce with such businesses as Alibaba. A unicorn refers to a privately-owned startup business that is worth more than 1 billion dollars. In 2012, JiaYu was the first Asian unicorn, and since then, everything has changed dramatically.
Asia as a region took its share in almost 50 percent of around 1K unicorns across the globe as of 2023. High growth and considerable number of consumers have made it appealing to many corporations and the countries on the forefront of such ventures are India, China, Singapore and Indonesia. The past ten years have witnessed a tremendous growth in the venture capital investment in Asia. Statistical analysis by Crunchbase has reported that Asia achieved a historical milestone in 2022 with venture capital exceeding 100 billion dollars, a significant milestone which depicts the gaining of trust in Asia-based startups.