SEA deal value to increase 2X by 2024: Bain & Company
As startups in the Southeast Asian neighbors start to attract investors from around the world, the region’s venture capital and private equity investment might see an increase of upto $70 Bn in the next five years, according to a study by Bain & Company.
About 90 percent of investors believe that Indonesia and Vietnam would be the next hot market in 2018-19 after Singapore for emerging companies, tech-related jobs and higher returns on investment.
The tech sector is expected to account for 20 to 40 percent of the deal value. The report suggests that the fintech industry is going to attract more innovation and funds. Thus, leading to more employment in the technology sphere in the region.
Since 2012, the Southeast Asian countries have attracted big unicorns such as Grab, Go-Jek and Traveloka who account for a total market value of $34 Bn. The report also suggests that the high investor interest is because of consumption-based industries and technology sector. Moreover, healthcare and education are also sectors that are garnering funds from global investors.
Compared to 2012, the number of companies raising funds and expanding their investments in job creation, innovation and in general expansion of their enterprises increased by 300 percent in Indonesia by the year 2017. When Indonesia and Vietnam’s total funds raised are put together, they contributed to 20 percent of the entire region’s equity deal value.
Government backing and on-the-grounds initiatives helped in building sophisticated startup centers which gave VCs the support and motivation to invest in the region’s talent, according to the Bain report. The Monetary Authority of Singapore made it easier for venture capitalists who supported startups and growing businesses who were just starting out in the market. The Vietnam Silicon Valley program, launched in 2016, announced that the government of Vietnam would provide financial and legal framework to 2,600 startups over a period of 10 years.
Southeast Asia is more than likely to produce at least 10 new unicorns by 2024 i.e. companies that are able to reach a market value of $1 Bn within a short span of time.
Startups in Southeast Asia continue to grow, thus creating a demand for sophisticated talent. It is precisely why the fintech sector is on the rise with more people interested in learning about new innovations and skilling themselves so that they can move up the ladder in these emerging economies. A higher investor interest translates into expansion of businesses which thus means more jobs, opportunities of training and development and innovations across the board.