- Appetite for Southeast Asian startups is growing, but that hunger could remain unfulfilled for some time, according to one of the region’s early-stage venture capital firms.
- Golden Gate Ventures’ Vinnie Lauria told CNBC that several companies in his portfolio have rejected or postponed various offers to go public.
- “There are definitely companies in our portfolio that are asked from multiple angles, but they don’t have the appetite yet,” he said.
The appetite for Southeast Asian startups is growing as investors look to tap into the region’s vast potential and seek the next highly successful IPO.
But that hunger could remain unsatisfied for some time, according to the managing partner of one of the region’s early-stage venture capital firms, who said some startups are lagging behind going public.
“There are definitely companies in our portfolio that are being asked from multiple angles, but [the companies] just don’t have the appetite yet,” Golden Gate Ventures’ Vinnie Lauria told CNBC.
Southeast Asia has been the subject of an investment frenzy in 2021, attracting a report of $ 6 billion in the first quarter. The IPO announcements from Grab, GoTo and Bukalapak have sparked new confidence in the region.
If we had two explode, that could literally turn off the people of Southeast Asia for 10 years.
But Lauria said that several companies in his portfolio have rejected or postponed various offers to go public, either through a SPAC or a direct IPO, because they say they are not yet at the correct level of maturity, preferring instead to be ” ready. ”
To be sure, a public listing opens startups to a higher level of scrutiny by investors, as well as demands for regular reporting. Lauria, whose portfolio includes the Carousell online classifieds business and Carro auto market, declined to name any specific company, but said two of the prospects were above or near the $ 1 billion valuations.
Proceed with caution
Southeast Asia is currently home to around 20 unicorns, startups with a valuation of $ 1 billion or more; The region’s tech startups are forecast to be worth $ 1 trillion by 2025.
Some have already declared their plans to go public. Others, meanwhile, have been more closely watched. Lauria said, however, that 2022 could mark a turning point, with nearly half potentially listed by then.
“For the more than 20 unicorns in Southeast Asia, we will probably see eight of them take that route over the next year,” he said.
The hesitancy of some founders can work against the pursuit of exits from a VC, when investments are made and can be cashed. But Lauria said that he is looking at the long term. After all, as the saying goes, “a bad apple spoils the bunch”.
“If we had two explode, that could literally turn off the people of Southeast Asia for 10 years because they lost a lot of money there,” he said.
“Let’s take it a little slower and make sure the companies that come there are of phenomenal quality. I think in the long run, that will be much better,” Lauria said.
Second-generation ‘game-changing’ start-ups
Still, the prospects for Southeast Asian startups look increasingly hopeful, according to Lauria, who said the region is now entering its next stage of growth as the second generation of entrepreneurs emerges.
“We are starting to see the initial notes of a second generation. But while that happens, I think it is quite changeable,” Lauria said.
The strong second generation on the horizon gives me a lot of confidence for the next 10 years.
Typically a generation in terms of start-up lasts seven to eight years, during which time, experience, and technology evolve. That not only improves the quality of startups and the caliber of the teams, but also the amount of capital they can raise.
“For a long time there was a big difference in the experience in Southeast Asia versus a market like the United States. Now, a lot of that is changing,” continued Lauria, who started his business in Singapore in 2011.
“Having this strong second generation on the horizon gives me a lot of confidence for the next 10 years,” she said. “Southeast Asia is getting this platform that is then hard to lose. That puts it on the global stage.”
