The potential of the Southeast Asian start-up economy has been growing steadily since 2010. However, with the pandemic and the move towards digitalisation, 2021 was one of the biggest years in terms of growth and fundraising. The total valuation raised by start-ups in the region was $25.7 billion, which is double the valuation from the previous year. Venture capital and private equity firms are terming this phenomenon as the ‘Gold Rush’, and it is expected to continue well into 2022.
While the growth of businesses in the region started almost half a decade after China, with only a handful of startups such as Grab from Singapore and Gojek from Indonesia taking the spotlight; the penetration of smartphones has totally changed the ecosystem in recent times.
The distribution of capital in the region is now much more diverse, with fintech start-ups leading the way. In 2021, fintech start-ups raised a whopping $5.83 billion, 4 times the valuation raised in 2020. This surge is mostly due to the shift towards cashless services and other digital financial requirements during the pandemic. Digital wallet startups such as Philippines-based Mynt and Vietnam-based M-service raised $475 million and $300 million respectively in 2021. Both brands stated that Covid-19 acted as a huge push, and they also received Unicorn status alongside J&T Express from Indonesia and Singapore-based Ninja Yan.
There is also a lot of potential for brands that have not yet received the Unicorn valuation of $1 billion. Doctor Anywhere, a Singapore-based tele-health service provider raised $65 million in 2021, something that would not have been possible earlier. On the other hand, the Unicorns from the region are now going public. Clearly, the future of start-ups in Southeast Asia is largely dependent on foreign investors.