Investors from all over the globe are noticing the rise of tech companies in Southeast Asia. The region's startups raised more than $8.2 billion in 2020, four times the amount they did in 2015. This trend was continued in 2021 with regional M&A reaching a record high at $124.8 billion in its first half, an 83% increase over the previous year.
This raises the question: Who is actually investing in Southeast Asia?
Let's look at the three main types of investors that are driving Southeast Asia's tech industry growth.
Since 2020, Singapore has registered more than 229 family offices with assets totaling $20 billion.
Big tech
The U.S.-based and Chinese tech companies have found Southeast Asia to be a lucrative market. The region has a 70% internet penetration, which is higher than the global average. However, digital adoption in the region is still nascent. It wasn't until the pandemic did digital services like e-wallets or online shopping take off.
Tencent and Alibaba, China's tech giants, were among the first companies to invest in Sea Limited and Lazada in Southeast Asia. They have since expanded their reach into other verticals. Alibaba has backed Akulaku and M-Pay(eMonkey), DANA and Wave Money, while Tencent has invested into Voyager Innovations, SHAREit and iflix.
U.S.-based tech companies have recently joined the market. Gojek secured a $3 billion Series F round of funding from Visa, Facebook, Tencent, Tencent, and Google in June 2020. Together with Temasek Holdings in Singapore, Google invested $350 million into Tokopedia in October. Microsoft also invested an undisclosed amount into Grab in 2018, and $100 million in Bukalapak, an Indonesian ecommerce company.
Venture capitalists
According to DealStreetAsia in Q1 2021, Southeast Asian startups raised $6Billion. This makes 2021 another record year for VC investments in the region.
This region is also becoming more popular as an investment destination relative to Asia. As you can see, regional VC investment increased 5.2 times to $8.2 Billion in 2020 from $1.6 Billion in 2015.
There are many opportunities in Southeast Asia for VC investment, given its size. China saw VC investments of almost $300 per person between 2015 and 2020; however, this metric is only $47.50 per person for Southeast Asia, despite a recent boom in investment. This compares to China's nearly $300 per person. This means that there is a significant opportunity to invest in the region's digital economy.
China's challenges in population growth and the region's high digital economy maturity mean that there is a greater chance of the region seeing a rise in its population.
