myths about startups & venture capital in asia

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Amit Anand - Founding Partner (@amivedand) Alexander Jarvis- Partner (@adjblog) Singapore - 15th July, 2014

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Overview of the most common misconceptions about investing and operating in Asia.

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Page 1: Myths about startups & venture capital in asia

!Amit Anand - Founding Partner (@amivedand)

Alexander Jarvis- Partner (@adjblog) !Singapore - 15th July, 2014

Page 2: Myths about startups & venture capital in asia

What Jungle Does

Page 3: Myths about startups & venture capital in asia

Investing and building companies in APAC since 2011

Marketing & Analytics / Big Data

Marketplaces

FinTech

Cloud / SAAS

Page 4: Myths about startups & venture capital in asia

7 Myths about Asian startups and Venture

Capital

Page 5: Myths about startups & venture capital in asia

You need to be in the Valley to build a big consumer company

#1

Page 6: Myths about startups & venture capital in asia

China has already created a company of scale (Sorry America…)

• Alibaba’s sales for 2014 are forecasted at $420BN, 2.5x over 2012. • Amazon reported sales of $74.4BN for fiscal 2013 and EBay… fiscal 2013 of $16 Billion,

less than one-tenth Alibaba’s 2012 sales

Page 7: Myths about startups & venture capital in asia

…India has 4+ consumer unicorns

Page 8: Myths about startups & venture capital in asia

• 1m active customers • 79m monthly visits • Millions of Euro per month in

revenue !

• 1.6m customers served • 27m monthly visits • Millions of Euro per month in

revenue

Rocket are building companies of scale across SEA, achieving a lot in just 2 years

Source: http://www.kinnevik.se/en/Investor/Kinnevik-Rocket-capital-markeys-day-2014/

Page 9: Myths about startups & venture capital in asia

APAC is set dominate ecommerce, 41% larger than America in 2016

2.2%!

Asia-Pacific! North America! Western Europe!

Eastern Europe! Latin America! Middle East & Africa!

2.1%!

27.9%! 35.9%! 28%! 3.6%!

3.1%!

1.6%!

2011!

30.5%! 33.5%! 26.9%! 3.8%!

3.4%!

1.9%!

2012!

33.4%! 31.5%! 25.7%! 3.9%!

3.5%!2013!

36.2%! 29.7%! 24.3%! 3.9%!

3.6%!2014!

2015!

2016!2.3%!

38.2%! 28.8%! 23.4%!3.8%!

3.6%!

2.3%!

39.7%! 28.2%! 22.6%!3.7%!

3.5%!

Source: eMarketer, 2013

B2C Ecommerce Sales Share Worldwide, by Region, 2011-2016 - % of total

• 2013: Sales is expected to grow 18.3% to $1.298 trillion with Asia-Pacific surpassing North America to become the world's #1 market for B2C ecommerce sales.

• Despite strong growth, North America’s share of global sales will drop from 33.5% in 2012 to 31.5% in 2013 as Asia-Pacific surges ahead.

• Asia-Pacific in 2013 will see sales increase by more than 30% to over $433 billion — or more than one-third of all global B2C ecommerce sales.

• Three Asia-Pacific markets — China, India and Indonesia — will see faster B2C ecommerce sales growth than all other markets worldwide in 2013.

Page 10: Myths about startups & venture capital in asia

There already are ‘big’ consumer companies

Page 11: Myths about startups & venture capital in asia

Definitely need to be in the Valley for

ENTERPRISE startups!

#2

Page 12: Myths about startups & venture capital in asia

Heard of these guys in India and Australia?

Page 13: Myths about startups & venture capital in asia

You will hear of these ones soon

Page 14: Myths about startups & venture capital in asia

There are already APAC unicorns in enterprise

Page 15: Myths about startups & venture capital in asia

Internet penetration in Asia is too low

#3

Page 16: Myths about startups & venture capital in asia

Almost 200m users online in SEA already

Source: UBS

Page 17: Myths about startups & venture capital in asia

How does Asia stack up globally?

Source: US census bureau, InternetWorldStats, CNNIC, Tencent, Facebook, Vkontakte, ITU, CIA

Page 18: Myths about startups & venture capital in asia

APAC has almost half of global users, simply put

Source: US census bureau, InternetWorldStats, CNNIC, Tencent, Facebook, Vkontakte, GSMA Intelligence

Page 19: Myths about startups & venture capital in asia

Internet traffic will be double the US in 2015

2012 2013 2014 2015 2016 2017 CAGR ’12-17

By Geography (PB per Month)

Asia Pacific 310 614 1,168 2,053 3,377 5,257 76%

North America 222 380 632 993 1,466 2,087 56%

Western Europe 181 276 426 655 976 1,384 50%

Middle East and Africa 50 96 182 333 559 861 77%

CEE 66 116 211 365 577 845 66%

Latin America 55 97 179 304 481 723 67%

Total (PB per Month)

Mobile data and internet 884 1,579 2,798 4,703 7,436 11,157 65%

Source: CISCO VNI, 2013

Page 20: Myths about startups & venture capital in asia

Social media penetration in APAC is the global average

Source: US Census Bureau, CNNIC, Tencent, Facebook

Page 21: Myths about startups & venture capital in asia

Internet penetration may be comparatively low

right now, but that’s still a LOT of people online

Page 22: Myths about startups & venture capital in asia

There is no innovation in Asia

#4

Page 23: Myths about startups & venture capital in asia

CAGR of tech patents in SEA is 7x USA

Growth of tech patents in SEA VS USA

-45%

0%

45%

90%

135%

180%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

SEA USA

Source: Patents by technology, OECD. SEA consists of ID, MY, PH, SG and TH

CAGR

SEA 14%

USA 2%

Page 24: Myths about startups & venture capital in asia

Asia’s share of global tech patents is converging

% of global tech patents in Asia VS USA

0%

10%

20%

30%

40%

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

Asia USA

Source: Patents by technology, OECD. Asia consists of ID, MY, PH, SG, TH, CN, HK, IN, AU & NZ

Page 25: Myths about startups & venture capital in asia

2 of Fastcompany’s most innovate companies are Asian

Page 26: Myths about startups & venture capital in asia

India - Zipdial: Missed call innovation led to one of its kind partnership with FaceBook

Page 27: Myths about startups & venture capital in asia

Singapore - Rotimatic: Will lead to female empowerment

Page 28: Myths about startups & venture capital in asia

There is no innovation in Asia

X

Page 29: Myths about startups & venture capital in asia

You can’t get an exit in Asia

#5

Page 30: Myths about startups & venture capital in asia

• Australia • Freelancer • iSelect • Xero • 3P Learning • OZForex • SEEK • Carsales

We have already had IPOs

• Malaysia • Jobstreet • iProperty • MyEg • iCar • iBuy !

• Singapore • AsiaTravel • PropertyGuru

(Coming)

• India • Justdial • MakeMyTrip • InfoEdge

Page 31: Myths about startups & venture capital in asia

• JobStreet / Seek - A$545 • Viki / Rakuten - $200m • Travelmob / HomeAway - $22 • Zopim / ZenDesk - ~$30m • SGCarMart / SPH - $48m • TransferTo / Ingenico - $38m • JobCentral / CareerBuilder - N/A • SoundBuzz / Motorola - $27.65m • Detik / Para Group - $60m • Tarad / Rakuten - N/A

!• Reebonz and RedMart worth $100m+ already

And solid acquisitions

Page 32: Myths about startups & venture capital in asia

You can get an exit, they just aren’t as big as the

US (yet)

Page 33: Myths about startups & venture capital in asia

There’s no entrepreneurial talent (in

Asia)

#6

Page 34: Myths about startups & venture capital in asia

Twice as many Philippinos than Israeli’s recon they have the skills to startup!

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Perceived Capabilities!Percentage of 18-64 population who believe to have the required skills and knowledge to start a business

Page 35: Myths about startups & venture capital in asia

Indonesian’s are twice more likely to be founders than in America

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Total early-stage Entrepreneurial Activity (TEA)!Percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business

Page 36: Myths about startups & venture capital in asia

They aren’t as afraid of failing as you think

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Fear of Failure Rate!Percentage of 18-64 population with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business

Page 37: Myths about startups & venture capital in asia

Asians are representing abroad… how much?

Page 38: Myths about startups & venture capital in asia

…half the US startup jobs

Page 39: Myths about startups & venture capital in asia

AND… Asian founders in America raise more money

Founding team racial composition vs. median funding received ($m)

$0.00

$1.00

$2.00

$3.00

$4.00

All Asian Pacific All white Mixed All Black

$1.3

$2.2$2.3

$4.0

Source: CBInsights, 2010. National seed and Series-A - Jan to June 2010

Page 40: Myths about startups & venture capital in asia

They see good opportunities locally (As much as the US

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Perceived Opportunities!Percentage of 18-64 who see good opportunities to start a firm in the area where they live

Page 41: Myths about startups & venture capital in asia

More of their friends have set up companies

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Know Startup Entrepreneur Rate!Percentage of 18-64 population who personally know someone who started a business in the past two years

Page 42: Myths about startups & venture capital in asia

More media attention than developed markets

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Media Attention for Entrepreneurship!Percentage of 18-64 population who agree with the statement that in their country, you will often see stories in the public media about successful new businesses

Page 43: Myths about startups & venture capital in asia

Far more intend starting up in next 3 years than in US and UK

Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer

Entrepreneurial Intention!Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who intend to start a business within three years

Page 44: Myths about startups & venture capital in asia

Asians are entrepreneurs, they are

half of the US ecosystem!

Page 45: Myths about startups & venture capital in asia

There is no smart money in Asia

#7

Page 46: Myths about startups & venture capital in asia

Premoney Asia 2014

Page 47: Myths about startups & venture capital in asia

Active Investors in Asia

Page 48: Myths about startups & venture capital in asia

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