When it comes to picking investments among Southeast Asia’s startups, “Strategy No.1” is to look for the players who are getting Indonesia “right”, said Nick Nash, a co-founder of Singapore-based private equity firm Asia Partners.
The firm, which focuses on growth equity in technology and technology-based companies in Southeast Asia, estimates that 30 per cent of the tech startup “winners” in Southeast Asia will be Indonesia focused.
“You can make a lot of money being a Strategy No.1 company in Southeast Asia,” Nash said, referring to a business that was focused on Indonesia. He was speaking at an event for DBS Group private banking clients on Thursday.
Indonesia has a young and fast-urbanising population of 267 million people, and a $1.1-trillion economy – the largest in Southeast Asia. More than half of all the mobile subscribers in the region are in Indonesia; at 435 million in 2017, the country has more mobile subscribers than North America.
Indeed, Indonesia has attracted billions of dollars in investments in recent years. The Google-Temasek Holdings-Bain & Co report said the country was expected to raise nearly $4 billion in 2019, matching 2018’s fundraising. Over the last four years, some $37 billion had flowed into the economy in Southeast Asia, particularly into the ride-hailing and e-commerce sectors.
Still, among the top-funded companies in Indonesia are Gojek, Traveloka and Tokopedia, which have begun to expand their operations outside of the country and become regional plays.
According to Nash, the next most successful strategy for investments is to focus on Singapore-based regional plays.
While Singapore lacks the population and the larger, fast-growing economies of its Southeast Asian neighbours, “it has a lot of the infrastructure you’d want, the financial services side of it. It’s got the programmers; it’s got the hustle factor of being able to stretch your wings,” Nash said.
He pointed to companies following this model, among them Sea, Grab, Lazada and RedDoorz.
Of the 511 investments in Southeast Asia’s technology companies in the $1 million to $20 million range from 2014 through October 2019, 51 percent were headquartered in Singapore, according to data from Asia Partners.
Previously, Nash was president of e-commerce player Sea, which listed on the New York Stock Exchange in 2017, in an $884-million IPO.