Burda zeroes in on Southeast Asia
By Sharmila Ganapathy-Wallace June 1, 2017
- Malaysia is starting to have good Series B companies but Indonesia has a higher profile
- The draws are economic growth, Internet & mobile penetration and a growing middle class
TRADITIONALLY, venture capitalists (VCs) from North America and Europe have largely ignored Southeast Asia, save for the select few who see the potential in this part of the world.
“Actually the number one challenge is just visibility, just making sure that Southeast Asia is at the top of their [VCs’] minds. Because, let’s say VCs in the US and Europe, if they think about Asia, a lot of times it is China, India, maybe Japan and Korea.
“Southeast Asia I think until relatively recently, was thought of as an emerging market and they were not sure what’s really going on here,” says Albert Shyy (pic), who heads Burda Principal Investments’ Singapore office.
Speaking to Digital News Asia in a recent interview, Shyy thinks that things are changing. “Burda actually is one example of that. We’re a German entity, our headquarters are in Munich, and when we were looking at investing in Asia, we looked at China, India and we looked at Southeast Asia.
“And actually, internally, we came to the conclusion that Southeast Asia was where we wanted to be to invest in this region. I think the main factors that are drawing a lot of investors to this part of the world are the economic growth, Internet penetration, mobile penetration and a growing middle class and all those macro-level factors are becoming quite interesting.
“But also, I think the ecosystem is starting to mature a little bit. Investors have been investing in tech in this region for a few years now. We’re a Series B fund, if we had looked at this region two years ago we would have said ‘okay, macro and demographically it’s interesting, but there’s not enough depth’,” he admits.
How has their opinion changed now in terms of looking at investing in Southeast Asia? Shyy highlights that being a Series B fund, Burda is a little different from a Series A or early-stage investor.
“We are focusing on the B2C space; the consumer Internet story for Southeast Asia still has a long way to go. It’s basically the same macro level factors I was talking about, consumption and digitalisation. And I think that e-commerce is a sector that we actually still like quite a bit.
“There’re actually a lot of interesting companies that are starting to emerge at the Series B and Series C stage. They’re working on their business models and are profitable, so I think although there’s still a ways to go, we’re seeing good teams and companies that are starting to solidify their businesses in the region. Overall, e-commerce still has a long ways to go in Southeast Asia, according to forecast reports there’s still a lot of growth to go.”
Commenting on trends he foresees in this space, Shyy notes that the e-commerce space is consolidating at a horizontal level. “E-commerce has typically been very M&A heavy, you have big guys like Amazon and Alibaba who are now open to acquiring [companies] to fill specific gaps in their capabilities. So I think companies that help them grow are also very interesting; in terms of partnering with some of the larger e-commerce companies.”
As for Burda itself, Shyy points out that they have a couple of Southeast Asian companies in their portfolio, although they’re quite new to the region.
“We’ve invested in a price comparison website called Priceza based in Thailand, it gives us a pretty good understanding of the overall e-commerce sector. We’ve also invested in a search engine in Vietnam called Coc Coc, it’s a good way to see how trends are going. Hopefully we have something to announce within the next couple of months if all goes well.”
What is his opinion of markets like Singapore and Malaysia? “I think Singapore is definitely still the regional hub, a lot of companies are already incorporated in Singapore, or maybe have a regional team in Singapore. For Malaysia, actually for Series B, there’re a good number of companies that we’re starting to see, but I would say it’s slightly lower in profile than Indonesia. So I think there are good entrepreneurs and I think for our stage, there are opportunities in the region,” he concludes.