Major VCs in region form ASEAN lobby to ride regional opportunity

The flags of Association of Southeast Asia Nations (ASEAN) member states. Credit:Wikimedia Commons

The Singapore Venture Capital & Private Equity Association (SVCA) and the Asosiasi Modal Ventura Untuk Startup Indonesia (AMVESINDO) – also known as the Indonesia Venture Capital & Startup Association – have jointly announced the creation of the ASEAN Venture Council (AVC). A Memorandum of Understanding (MOU) to this effect was signed on August 30 in the presence of Indonesian President Jokowi Widodo.

The MoU settles the terms of collaboration between the SVCA and the AMVESINDO in strengthening and promoting regional entrepreneurial and financial ecosystem across ASEAN.

Reportedly focusing on the development of venture capital (VC) activity in the region, the growth in number of deals in ASEAN countries has been mainly due to cross-border activity within the region, with VC firms such as 500 Startups and East Ventures driving deal activity.

The ASEAN Venture Council will help each country’s associations stay updated on regulatory issues across the various countries of the region, as well as organise events and share best practices. It also aims to help VC firms collaborate more closely on deal flow, according to SVCA Committee Member and Gobi Partners Partner, Ku Kay Mok.

Contours of AVC

The ASEAN Venture Council will be formed as an umbrella company holding a number of diversified venture associations. It is intended to enable these associations to cooperate more easily to promote and develop the region’s venture capital industry. It will focus on areas such as events, deal flow, education and research.

“Indonesia is one of the hotbeds for startups in the ASEAN region as the country is expected to become the largest digital economy in the region by 2025, thus having AMVESINDO as an anchor member together with SVCA will make a strong start for the Council,” said Ku.

As part of a growing process of regional integration for ASEAN countries, AMVESINDO chairman Jefri Sirait said he was looking forward to “contributing and working together with SVCA to make the ASEAN Venture Council a success”.

Noting one of the elements that could enhance Indonesia’s investment space, Sirait added, “One thing we can learn from Singapore is how to create regulations that clearly differentiate between accredited and retail investors. In Indonesia we do not have this distinction yet.”

Earlier this year, AMVESINDO declared that up to Rp200 trillion ($14.6 billion) of investments were to be invested in the Indonesian startup sector, as the government had been pushing a tax amnesty bill which it said could bring Rp1,000 trillion ($73.2 billion) worth of evaded tax and assets back to Indonesia.  The AVC could contribute in the use of these funds for ASEAN ventures.

This comes at a time when VC investments have declined amid a larger economic slowdown in the region, with the quarterly decline in VC investments the highest since the Dotcom bubble from 1997-2000.

The Wall Street Journal notes the slowdown is most notable in China and India, with VC investments declining by 28 per cent and 17 per cent respectively on a quarterly basis when comparing Q1 and Q2 2016, while South Korea has seen declines of up to 37 per cent, with Q1 2016 seeing $45.8 million in VC investments compared to $72.2 million in Q1 2015.

Regional snapshot

The formation of the ASEAN Venture Council is timely, coming at a period of increasing capital inflows into the region, with Japanese corporates investing infrastructure projects around the regionAlso, it  comes at a time when the region is poised for accelerated economic growth, with an aggregate gross domestic product (GDP) of US$2.4 trillion as of 2015 and ranking as the world’s seventh largest economy.

Some of the positive drivers in the region are rising synergies from multiple forms of economic integration, improving competitiveness and fundamental turnarounds in once-laggard economies such as Myanmar and the Philippines. This is coupled with the economic rise of Indonesia, which is predicted to surpass Russia and Australia by 2023.

Despite the slowdown in VC investments elsewhere, this contrasts with research from Mattermark, which suggests that the VC market in the region has recovered, given that Southeast Asia, while lacking the volume of deal activity in China and India, is seeing more investors lured by high-growth countries like Vietnam and Myanmar, given their young demographics and untapped markets.

This is reflected in the higher funding that VCs are committing to the region as of May 2016.

Table 2- SEAsia

Another positive driver for regional growth is Vietnam, whose economy is forecast to be the most rapidly growing economy in the region for 2016. JP Morgan predicts that the region is positioned to attract further investment, given the opportunities for corporate investment and growth in Southeast Asia.

Speaking on the region’s development, Pravin Advani, J.P. Morgan’s global trade and loan products head of global sales and the Asia-Pacific region, has commented: “J.P. Morgan has been operating in Southeast Asia for 50 years and has witnessed the evolution of the sub-region from a low-cost manufacturing base to a solid pillar of Asia’s GDP growth.

“We see a bright future for ASEAN as the countries strive to sharpen their overall competitiveness through closer collaboration,” he added. The formation of the ASEAN Venture Council will further enable the growth of the regional startup ecosystem, given its synchronisation with their broader regional developments.

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Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.