Posts

Indonesia is arguably the most important internet market in Southeast Asia as a result of its sheer size, emerging middle class, and digitally savvy population.

The annual global digital ecosystem report by We Are Social says Indonesia has 132.7 million internet users, which points to a penetration rate of 50% of the population. 130 million of these use some form of social media, showing how plugged in Indonesians are when it comes to documenting their lives online or using platforms like YouTube to consume content.

Source: We Are Social

With half of the Indonesian population still offline, there’s massive potential for ecommerce ventures, smartphone manufacturers, as well as brands building products to appeal to millennials in the country.

Other countries in Southeast Asia – Malaysia, Singapore, Thailand, and the Philippines for example – may have higher internet penetration rates but their smaller populations can’t compete with Indonesia in terms of volume.

It’s these numbers that have forced investors to take notice.

study by Google and AT Kearney indicated that venture capital activity in Indonesia has grown 68X in the past five years, driven mainly by growing interest in ecommerce and ridesharing.

Total VC activity in the first eight months of 2017 was recorded at US$3 billion – more than double the number for the entirety of 2016, which was US$1.4 billion.

The same study predicted the volume of investments in Indonesia will continue to grow in the foreseeable future because VC investment as a percentage of GDP in Indonesia is actually lower than its Southeast Asian counterparts.

Source: Google / AT Kearney

What are Indonesians doing on the web?

Indonesian residents love the internet. 79% of survey respondents in the We Are Social report said they logged on to the web at least once a day. The average daily time spent online was almost 9 hours with approximately 5 hours dedicated to social media and streaming music.

Source: We Are Social

The majority of web traffic in Indonesia comes from mobile phones, facilitated by the availability of cheap smartphones to the Indonesian population coming online for the first time; sidestepping desktops and PCs directly.

Access to mobile has also caused excitement around fintech as only 36% of Indonesians possess bank accounts and only 3% have credit cards. If e-wallet platforms get it right, there are 125 million mobile internet users waiting for easy banking.

[subscriber_signup]

Indonesians are also increasingly using the internet to embark on their product buying journeys. 45% of Indonesian netizens search online for a product or service to buy with a similar number landing on an online store and 40% make ecommerce transactions at least once a month.

Source: We Are Social

Fashion & beauty categories attract the highest amount of spend online, almost double that of electronics despite having a lower basket size than consumer appliances like mobile phones, cameras, and wearable gizmos.

It was estimated that Indonesians spent close to US$10.3 billion online in 2017.

Source: We Are Social

Dizzying statistics aside, the Indonesian market still has plenty of space to grow.

Expect heightened competition in the years to come as incumbents jostle for space and keep raising large war chests to outmuscle opponents. VCs, especially with an entrenched position in the market, can’t afford to back down now – there’s too much skin in the game for them to consider any hasty exits.

Recent developments already demonstrate how investors are taking a long-term view of the market. Alibaba injected over a billion dollars in local ecommerce marketplace Tokopedia last year. JD.com, Alibaba’s direct rival in China, has opened fulfillment ccenters across Indonesia with a view to keep expanding. And homegrown unicorn Go-Jek is rapidly transforming into a Wechat-esque ‘super app’ with users able to do everything from hail motorbikes to get their plumbing fixed, and pay for it via e-wallet.

Here’s what you should know today.

1. Malaysian VC association joins forces with regional counterparts

The Malaysian Venture Capital & Private Equity Association (MVCA) is now part of the ASEAN Venture Council (AVC).  With four of ASEAN’s key VC associations now on board, the AVC could have a positive impact on growth prospects for startups across the bloc.

By linking the four national bodies together, the AVC is intended to facilitate greater knowledge sharing and collaboration among VC firms and early-stage businesses throughout the region.

This could lead to a boost in tech investment throughout Southeast Asia

While VC funding more than doubled quarter-on-quarter to US$191.6 million in Q1 2017, it fell far short of the US$330.6 million invested across 65 deals a year previously.

Read the rest of the story here.

 

2. Rocket Internet sells 51% of fashion site Namshi to Dubai’s Emaar Malls for $151 million

Today Rocket Internet announced that it has sold 51%  of Namshi, its Middle Eastern Amazon clone, to Emaar for $151 million.

Emaar lost out on buying online retailer Souq.com when Amazon got ahead of the game.

Emaar Malls has long been looking to ramp up its presence on the web and said that it will use the new asset to expand its logistics and expand more brands to selling online. Emaar earlier this month also acquired Dubai-based online marketplace JadoPado, and it’s also involved in a joint venture with Yoox Net-A-Porter to expand the latter company’s business into the region.

Read the rest of the story here.

 

3. Pinterest launches a ‘Shazam for food’ feature

Pinterest has announced a new recipe-finding feature that makes use of computer vision to tell you about a dish when you point your smartphone camera at it. The company is billing the feature as a way to perform real-time “dish recognition.” The new upgrade is eerily similar to the app from HBO comedy, Silicon Valley.

This is all part of a broader artificial intelligence push in the tech industry to apply machine learning techniques to everyday life.

By training neural networks on huge mounds of data and translating that into a real-time algorithm, tech giants like Google, Facebook, and Microsoft are now developing software products that can digest and understand the world, from text to photos to even videos.

Read the rest of the story here.

 

 

 

 

Winding down from work? Here are today’s top stories that you should know

1. LVMH to launch multi-brand ecommerce site for its luxury brands

Leading luxury group LVMH plans to launch a website in May that will be branded as its department store Le Bon Marché. It will offer labels from the group’s own stable as well as distributing non-LVMH brands — putting it head-to-head with online platforms such as Net-A-Porter and Matchesfashion.com.

Customers that buy both online and in-store typically spend 50% more than those who only visit shops, according to Exane BNP Paribas analysts.

While ecommerce is still a relatively small portion of sales in the global luxury goods market at 7%, it will expand to 12% by 2020, according to Boston Consulting Group.

Read the rest of the story here.

 

2. Go-Jek launches important new feature,now lets users transfer e-cash to each other

The startup has introduced a new feature which allows users to send Go-Pay credit to each other at no cost. It’s a big step in Go-Jek’s evolution into an increasingly powerful payments solution that enables users to transact with each other.

Source: Tech in Asia

Go-Jek also confirmed that users will be able to withdraw Go-Pay credit in the form of cash at several partner banks once the feature is fully implemented. The startup has not yet revealed which banks are involved.
Read the rest of the story here.

3. Dymon Asia announces first close of its debut $50M fund for fintech

Dymon Asia Ventures is focused on fintech deals and it is targeting a $50 million raise. Today, its founding partners disclosed a first close of $20 million from a range of LPs that include Thai bank Siam Commercial, which invested an undisclosed sum via its fintech arm, Digital Ventures.

While plenty of funds have sprung up to tackle Series A deals, Dymon Asia is aiming to cater to a very specific category of fintech-led companies where the partners believe their resources and understanding can move the needle.

“We want to give fintech founders the attention they need, especially the b2b guys who often don’t appeal to traditional VCs,” said Dymon Asia partner, Christiaan Kaptein.

Read the rest of the story here.

 

4. Community Chatter: The Alipay of Indonesia

Source: Sheji Ho, CMO at aCommerce

Go-Jek is moving towards its goal of becoming a leading payments platform for Indonesians.

Thailand’s startup media outlet Techsauce published two detailed reports this month; Investor Guide Q1 2017: Thailand Tech Startup Report and its annual Southeast Asia’s Top 75 Fintech Startups Report. What were the key takeaways to know about Thailand’s startup ecosystem and Southeast Asia’s tech investment landscape? We take a look at both reports:

How did Thailand startups do in terms of funding?

An introduction to Thailand

Total funding figure in Thailand is getting bigger – no less than $85.2 million as seen in the chart below. The exact number can’t be pinpointed as there were several undisclosed Series B investments.

Notable funding mentions: 

  • E-book platform Ookbee raised $19 million from Chinese giant Tencent to create a digital content ecosystem in Thailand
  • Fintech startup Omise raised $17.5 million led by Japanese firm SBI Investment
  • Ecommerce marketplace Orami (now Moxy) raised $15 million from Facebook’s Eduardo Saverin B Capital
  • 3 food tech deals were made in 2016. At the beginning of 2017, B2B food supplier platform Freshket has raised an undisclosed six digit funding round
  • Corporate Venture Capital was a trend in 2016 that saw numerous corporations shift focus to technology and innovation as both direct investors and limited partners. This trend is expected to continue well into 2017 with the emergence of property tech in Thailand, pioneered by real estate giant Sansiri

In the graph below, you can see that the number of funded startups has shot from 3 to 75 in only four years. The number of active angel investors and the number of VCs have also grown in tandem.

Data from the report also shows that ecommerce still remains the top category for investors and increased steadily on a year-to-year basis. The second category is logistics with funding raised by aCommerce, Giztix and more.

 

Only two months into 2017, and already eight startups have already raised funding this year.

The diversity of Thai startups attracting investors show that there is more room for verticals such as education tech (edtech) and travel tech.

The report also predicts that by Q2 2017, there should be more funding given to a variety of startups in different sectors and investment opportunities in Thailand’s ecommerce landscape.

Southeast Asia’s top fintech trends

  • While core technologies such as blockchain and AI have gotten a lot of publicity, startups that can realistically develop it or utilize it are still limited but extremely attractive to investors
  • Each country in this report is making moves to launch regulatory fintech sandboxes to test out financial technology framework – Indonesia, Malaysia, Myanmar, the Philippines, Thailand, Singapore and Vietnam.
  • Many fintech firms in the region have mandates to work with banks and regulators, which means expanding beyond their domestic market may be a challenge
  • The entry of Alibaba’s financial arm, Ant Financial, into the region has caused startups that offer similar services to quickly adapt or risk getting squeezed out

Fintech players by country

The image above shows that Singapore is well ahead of other countries in terms of number of fintech companies with 31 players, followed by Thailand with 14 players. More doesn’t necessarily mean better, it will be time until one emerges.

With each country taking initiative to become less cash dependent, for example, Thailand government’s PromptPay initiative, this will be a continued trend into Q2 of 2017.

Insurance technology is still a minority but with Thailand’s Asia Insurance introducing online insurance packages and companies such as AXA and FWD offering online insurance in Singapore, the space is growing.

Financial technology in Southeast Asia is still growing and must in a region where only 27% of the population has a bank account. That leaves around 438 million people unbanked and endless opportunities for fintech firms to bridge the gap that traditional financial institutions are struggling to fill.

2017 is already shaping up to be another year of startup growth in Thailand but investors will be more strategic with their money. As fintech matures, it can only nurture the growth of online transactions.

The original reports from Techsauce can be found here and here.

Here’s what you should know before the weekend.

1. H&M Asia to roll out online strategy

The H&M Asia online stores will open in Hong Kong, Singapore, Macau, Taiwan and Malaysia. A sixth will open in Turkey. Last year, H&M opened online stores in 11 markets, along with a new 427 new brick-and-mortar stores worldwide.

“This means that H&M is now present in 64 markets of which 35 offer ecommerce. ” Said Karl-Johan Persson, CEO of H&M.

Read the rest of the story here.

 

2. Foreign funds pour money into Vietnamese startups

John Wu, Alibaba’s former tech director has poured $3 million into Vntrip.vn.

1337 Ventures, a Malaysian fund, has announced investment in three Vietnamese startups, following Alpha Startups, a startup incubation program launched recently in HCM City.

Each of the three businesses would receive $25,000 in capital and services and have the right to join the 3-month startup acceleration program to be run by 1337 Ventures.

Read the rest of the story here

 

3. SCB & Sansiri join up for property tech

SET-listed developer Sansiri Plc will join Siam Commercial Bank (SCB) in forming the country’s first venture capital firm aimed at investing in property technology (proptech) startups. Siri Venture has has an initial registered capital of 100 million baht of which 90% is held by Sansiri and SCB owns the rest.

This is Thailand’s first foray into property technology.

Read the rest of the story here

Wrapping up for the day? Check out today’s biggest headlines first.

 

1.Ant Financial invests in Thailand’s Ascend Money as part of global expansion play

The companies said in statement that the deal would help Ascend Money grow its digital and offline payments and financial services business in Thailand, while opening doors for Ant Financial to expand into the broader Southeast Asian market.

Read the rest of the story here

 

2. SingPost launches ‘Center of Innovation’, opens ecommerce logistics hub

 The COI will deliver significant enhancements to the ecommerce logistics platform, and also roll out a new version of the Self-service Automated Machine (SAM) platform to enhance customer experience. It will also focus on robotics services.
Read the rest of the story here

 

 

3. Angel networks from 7 SE Asian countries partner for cross-border investing

The alliance is aimed to promote cross-border syndication and co-investment support, as well as intra-ASEAN investment in startups, particularly tech-based companies and high growth business.

Read the rest of the story here