7 predictions for Southeast Asia’s tech scene in 2017
By Patrick Grove January 5, 2017
- SEA to become a bigger Internet market than the US
- Funding will be harder to get, but at least three companies will raise 9 figure rounds (US$100 mil and above)
The year 2016 has ended, and it came with some unexpected surprises. It was the year of Brexit and Trump, and the year Uber exited China. Everyone has been asking, “What will happen in 2017?”
Here are my 7 predictions for the Southeast Asian tech scene in 2017:
1. South East Asia becomes a bigger Internet market than America
The ASEAN region will register over 300 million smartphone users in 2017, compared to America which only has 225 million. What that means is that every global app or service you can think of (email, social media, chat, etc.) has more users in Southeast Asia than in all of America. What this also means is that internet companies in our part of the world can be, and should be bigger than our US counterparts in time!
2. Funding will be harder to get (so conserve what you have)
Fund raising is going to be harder to get in 2017 for most companies. Recent news talking about a tough VC climate, flat rounds and a challenging fundraising environment are correct. The money is out there, but investors and VCs are going to be a lot more demanding on the caliber of companies worthy of further funding. To simply close funding based on increases in revenue when your unit economics remain negative is not going to cut it. If you don’t know your CAC intimately (or even what it is), you have no chance of raising further funding (whereas 12 months ago you could, because even then, most VCs didn’t know what it was either!).
3. At least three companies will raise 9 figure rounds (US$100 mil+)
2017 will be the year of big funding rounds for a select few companies that are creating massive disruption. Gojek and Grab were not one-offs in 2016. We really are in a region creating great massive companies (see point 1) and smart entrepreneurs will scale quickly requiring that next funding boost to wipe out the competition (most often, from outside the region).
4. There will be another exit in excess of US$500 million
We’ve seen 3 exits in excess of US$500 million (Jobstreet, iProperty and Lazada) over the last couple of years, and this trend will continue. More and more corporate buyers in the West and up North (China, Korea, Japan) are realizing that they can’t always go it alone, and that working with and acquiring local teams and entrepreneurs can give you unprecedented market share and dominance from Day 1. BAT (Baidu, Alibaba, Tencent) all have teams in the region looking for the next big deal, so expect them to find something sooner rather than later.
5. The Year of China
China is quietly and quickly becoming an influential force in the region – more than US internet companies, for a number of reasons. Expect this to continue with more Chinese VC funds coming to Southeast Asia, Chinese entrepreneurs spending more time in the region and more Chinese corporates (BAT and many others) investing (and acquiring) in the region.
6. There will be a widespread embrace of Fintech
There’s been a number of small players dabbling in Fintech, but 2017 will see widespread growth in this sector. Consumers are becoming more open to using the technology, governments are getting more comfortable with the idea of Fintech and banks are looking to partner with entrepreneurs to drive this.
7. Every week, a different startup will run out of money
It’s only natural. Some will be high profile, but the majority will quietly disappear and close their operations. Nobody ever said building a disruptive business was easy. The good news is that everyone involved in a startup that didn’t make it will have learnt incredibly valuable lessons that will make their next venture significantly more likely to make it!
I’m excited to what 2017 brings…I think it’s the year for Southeast Asia to make huge steps towards becoming a super power in the Internet world and we look forward to being part of this dynamic beautiful ecosystem.
Patrick Grove is co-founder and Group CEO of Catcha Group. The article was first published here.