Venture capital for tech startups in Asia reap rewards

March 30, 2016 / by / 0 Comment
  • SumoMe

Investments in technology startups in Asia have been shooting up in valuations, rivaling the pace of companies in the United States. A study by venture capital research firm CB Insights revealed that the last quarter of 2015 saw 71 startups in Asia receive fundraising rounds of $278 million or more, compared to just 37 in 2014 and from only 55 in the Q3 2015.

Asian banks, private equity firms, venture capital funds, and hardware and Internet giants are now more willing to invest in domestic start-ups. American investors are also recently more keen on backing Asian players with advantages in their home markets.

According to the World Bank, the gross domestic product in South Asia rose to 7.3 percent in 2015 and is expected to grow by 7.5 percent in 2017. Countries in East Asia and Pacific region, are still formidable, even from a “slightly less-than-expected” 6.4 percent economic growth in 2015. Meanwhile, even the politically turbulent Central Asia region expects to reach 3 percent this year, from its 2.1 percent growth last year. This huge economic potential has been profitable to many businesses, especially in the mobile software sector.

Many mobile software companies that set their sights in Asia, such as Didi Kuaidi and FlipKart, have seen their meteoric rise to a $1 billion valuation in just over a year from its first product release—a feat that would draw great attention, perhaps even envy, had this happened in Silicon Valley.

Tech apps in Asia: a deep and vast potential

Startups are concentrating more on profitability, apart from just increasing market share in the region. Kunal Bahl, CEO of Indian e-commerce company Snapdeal, said that his company aims to be lucrative in two to three years.

“We are building the highways of commerce, investing tremendously in technology,” Bahl said. “Just scale will not bring profits, sustainable capabilities will bring tremendous profits.”

The APUS Group is another firm that has seen an upsurge in valuation and investments. It had 40 million downloads within three months of the July 2014 release of its APUS Launcher app. Li Tao, the company’s founder and a first-time entrepreneur, secured a meeting with a dozen major investors within 45 days, guaranteeing $100 million from three venture capital firms with speed and ease. Today, more than 200 million people use APUS apps, which now include a mobile browser and a flashlight.

Localization in Asia is key

Asia’s mobile and digital advertising market will be worth more than $7 billion in 2019, according to market researcher Frost and Sullivan. In particular, the Southeast Asian region will continue at a compounded annual growth rate of 48 percent from 2015 to 2019, after hitting $1 billion in 2014. This indicates that the Southeast Asian mobile market’s pace will outgrow developed regions in the world, thanks to the emerging number of mobile users in Asia.

Moreover, Asia’s middle-class population is expected to increase to 1.8 billion by 2020, providing plenty of growth opportunity, according to LINE CEO Takeshi Idezawa. He also emphasized the importance of localization in expanding to other Asian markets.

Localization has also been a key strategy of Born2Invest, a business and finance news app that’s steadily climbing the ranks among its counterparts in the industry. Curating the latest stories from the most trusted sources and delivering it to the user in 80 words or less, it ranks ahead of The Wall Street Journal, and Bloomberg Business in app stores.

“I don’t believe any other news app currently competes on the same turf. For one, most if not all are ‘general’ news apps and not specific to business news. Second, I don’t know of any single competitor that offers news in 20+ languages via native iterations. Finally, B2I has a very strong, native business and revenue model that is baked into our product from the start,” Born2Invest CEO Dom Einhorn said.

The app also invests in a content first approach. “We never launch any acquisition strategy without having good content in place first. Aside from that, we are putting a special emphasis on user acquisition in emerging markets such as Southeast Asia. We always try to identify the path of least resistance in each market,” Einhorn added.

Banking on capitalization seems to be working for both LINE and Born2Invest. LINE is the top messaging app in Japan, Taiwan, and Thailand, and is now taking off in Indonesia. Idezawa described Indonesia’s user base as the fastest growing he has seen. On the other hand, Born2Invest enjoys 31,000 users from the Philippines, and has readers from over 169 countries. The app successfully solves the problem of catering to a highly fragmented audience and readership that is increasingly hard to reach and engage, making it increasingly popular with mobile users in Asia,

LINE and Born2Invest are just two of the many mobile companies that enjoy doing business in Asia’s huge marketplace. The strong Asian market is the reason why many investors choose to focus on the region first rather than try to expand to the rest of the world. With the data of growth and profit in the region, tech and mobile businesses are sure to see more backing in Asia.




Tech Enthusiast, Not a science geek but interested in all things tech can live a day without pizza but not without my smartphone