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Published in 2023, Link
My Key Takeaways
Demographics is destiny?
My takeaways from Asia Partners’ report on why it’s Southeast Asia’s (SEA) moment now:
Southeast Asia’s (SEA) growth thus far
1) Half of the world’s population lives in 29 countries. Only 23 are growing.
2) SEA has 4 of the 23, whereas all of East & North Asia have declining populations (Pg 15). SEA’s population would peak in 2031, later than China, India, Korea & Japan. (Pg 17)
3) SEA grew 8% CAGR from 2000 – 2023 to reach US$3.9T in 2023. Key SEA countries’ nominal GDP would grow between 5% to 11%, compared to ~3% world average.
4) For 2022 equities, half of SEA countries outperformed the US. This is hardly a blue moon event. Over 22 years, half of SEA’s countries outperformed the US. (Pg 5, 6)
5) If you are in the M&A business, do take note as the report predicts that SEA will be one of the most important regions in Asia for inbound M&A.
In page 321, despite SEA’s share of emerging Asia inbound M&A staying at an average of 19% from 2012-2022, the spread between SEA and China could fall over time, and even flip!
6) The report predicts 20+ more billion-dollar value tech companies from SEA by 2029. SEA is ahead of these predictions (i.e. 7 new IPO since 2019) (pg 29).
Recap of three common scaling strategies for tech in SEA (Pg 38 – 40)
1) Indonesia only – strength from large domestic market & talent base.
2) Singapore/Malaysia – strong historical precedence of successful examples of companies scaling regionally from these hubs to whole of SEA
3) Vietnam-only – emerging model
C/D stage funding gap
SEA’s tech sector is evolving from rails (e.g. Telco, hardware) to cargo (e.g. internet & e-commerce, software) (Pg 303)
Series A/B funding ($1-20M checks) has grown. 900 upstream deals since 2019!
The acute gap is at the C/D funding stage ($20-100M checks).
➡️ Comparison data on under/oversupply of capital in SEA depending on stage/ticket size and scaling model (Pg 63-65)
Singapore (SG) – Asia’s de-facto HQ & talent magnet (Pg 41, 42)
1) Many multi-country regions select a de-facto commercial capital (Pg 41, 42):
~29% of Europe-wide roles sit in the UK
~23% of middle East and North Africa roles sit in Dubai
2) 25% of Asia-wide roles sit in Singapore, double that of mainland China and Hong Kong. The number of single family offices in SG also increased from 400 to 700 from 2020 to 2021.
3) 500+ Founders/CEOs from top 55 China universities are in SEA with 68% residing in Singapore (Pg 51). 490+ Founders and CEOs for India and 78% in the city state. You’ll find 240 South Korea founders from top universities of their home country in SEA, and 38% of them living in Singapore!
Talent Feeders, Training Grounds, Magnets (Pg 73, 74)
➡️ For early stage accelerators/investors, see list of “Academy Companies” in SEA contributing more than 4K CEOs/founders into SEA since 2019! (Pg 47, 48, 49, 50)
➡️ Investors could consider evaluating targets’ talent benchstrength with the “Talent Nutrition” framework (104 – 142).
5 models studying country’s GDP versus equity returns (pg 216, 217)
Arranged in decreasing “desirability”, relatively positive models are:
- Model 1 (Global Champions)
- Model 3 (Fair and Balanced), followed by
- Model 4 (Out of sync)
Out of the rare 8 in model 3 (value from economic growth fully captured by shareholders), 25% are SEA countries (e.g. Philippines, Thailand).
4 SEA countries in model 4 where there is strong economic growth with partial shareholder value capture.
Back to basics math-based principles of what a startup should do during recessions (Pg 162)
The report observes overvalued public equity markets (pg 146 – 159), overly optimistic S&P earnings, and expects a global recession.
In the game of ‘musical chairs’ of recession era fundraising, raise early. People are looking at your cash-flow – it’s a lot easier to raise money if you don’t need the money.
The report also observes the phenomenon of prospering “frugaltech” in times of high inflation. 6 SEA examples (e.g. Carsome, Shopback) (Pg 174)
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Despite the “Tech Winter”, we can correlate the percentage of computer science graduates per cohort to a higher concentration of tech companies (market cap >$20B) being founded during the “contrariant trough”.
The next trough corresponds to 2024-2032 (Pg 330).
Silver lining as we look forward to an exciting wave of founders, ready to change the world! 💪
Follow me for the latest insights on Singapore and Southeast Asia. My LinkedIn post here.
About Zhilin SIM
Having worked and lived in Singapore, the Nordics, China, Spain, UK, I’m now based in Paris.
I’m fluent in English, French and Mandarin, and I’m learning Arabic because it’s a beautiful and fascinating language.
My team creates and supports one-many initiatives connecting global corporate and startup ecosystems to business and innovation opportunities in Singapore and Southeast Asia.
I’m passionate about horticulture, watercolour, startups/tech as well as French cuisine, Peranakan kueh techniques and other global cuisines.
Follow me for the latest insights on Southeast Asia and reach out if you think my network in Europe and Asia could be of benefit to your business and innovation activities.
