8 myths about startups & venture capital in asia

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Addressing the key reasons commentators point to about Asia not being an attractive market for investing or to operate as a tech startup.

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8 myths about startups & venture capital in asia

  1. ! Alexander Jarvis, Operating Partner, Jungle Ventures
  2. 8 Myths about Asia
  3. Today we call it
  4. You need to be in the Valley to build a big consumer company #1
  5. China has already created a company of scale (Sorry America…) • Alibaba’s sales for 2014 are forecasted at $420BN, 2.5x over 2012. • Amazon reported sales of $74.4BN for fiscal 2013 and EBay… fiscal 2013 of $16 Billion, less than one-tenth Alibaba’s 2012 sales
  6. • 1m active customers • 79m monthly visits • Millions of Euro per month in revenue ! • 1.6m customers served • 27m monthly visits • Millions of Euro per month in revenue Rocket are building companies of scale across SEA, achieving a lot in just 2 years Source: http://www.kinnevik.se/en/Investor/Kinnevik-Rocket-capital-markeys-day-2014/
  7. APAC is set dominate ecommerce, 41% larger than America in 2016 2.2%! Asia-Pacific! North America! Western Europe! Eastern Europe! Latin America! Middle East & Africa! 2.1%! 27.9%! 35.9%! 28%! 3.6%! 3.1%! 1.6%! 2011! 30.5%! 33.5%! 26.9%! 3.8%! 3.4%! 1.9%! 2012! 33.4%! 31.5%! 25.7%! 3.9%! 3.5%!2013! 36.2%! 29.7%! 24.3%! 3.9%! 3.6%!2014! 2015! 2016! 2.3%! 38.2%! 28.8%! 23.4%! 3.8%! 3.6%! 2.3%! 39.7%! 28.2%! 22.6%!3.7%! 3.5%! Source: eMarketer, 2013 B2C Ecommerce Sales Share Worldwide, by Region, 2011-2016 - % of total • 2013: Sales is expected to grow 18.3% to $1.298 trillion with Asia-Pacific surpassing North America to become the world's #1 market for B2C ecommerce sales. • Despite strong growth, North America’s share of global sales will drop from 33.5% in 2012 to 31.5% in 2013 as Asia-Pacific surges ahead. • Asia-Pacific in 2013 will see sales increase by more than 30% to over $433 billion — or more than one-third of all global B2C ecommerce sales. • Three Asia-Pacific markets — China, India and Indonesia — will see faster B2C ecommerce sales growth than all other markets worldwide in 2013.
  8. There already are ‘big’ consumer companies
  9. Definitely need to be in the Valley for ENTERPRISE startups! #2
  10. Heard of these guys?
  11. There are already APAC unicorns in enterprise
  12. Internet penetration in Asia is too low #3
  13. Almost 200m users online in SEA already Source: UBS
  14. How does Asia stack up globally? Source: US census bureau, InternetWorldStats, CNNIC, Tencent, Facebook, Vkontakte, ITU, CIA
  15. APAC has almost half of global users, simply put Source: US census bureau, InternetWorldStats, CNNIC, Tencent, Facebook, Vkontakte, GSMA Intelligence
  16. Internet traffic will be double the US in 2015 2012 2013 2014 2015 2016 2017 CAGR ’12-17 By Geography (PB per Month) Asia Pacific 310 614 1,168 2,053 3,377 5,257 76% North America 222 380 632 993 1,466 2,087 56% Western Europe 181 276 426 655 976 1,384 50% Middle East and Africa 50 96 182 333 559 861 77% CEE 66 116 211 365 577 845 66% Latin America 55 97 179 304 481 723 67% Total (PB per Month) Mobile data and internet 884 1,579 2,798 4,703 7,436 11,157 65% Source: CISCO VNI, 2013
  17. Social media penetration in APAC is the global average Source: US Census Bureau, CNNIC, Tencent, Facebook
  18. Internet penetration may be comparatively low, but there’s still a LOT of people online
  19. Asians just copy, they don’t innovate #4
  20. CAGR of tech patents in SEA is 7x USA Growth of tech patents in SEA VS USA -45% 0% 45% 90% 135% 180% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 SEA USA Source: Patents by technology, OECD. SEA consists of ID, MY, PH, SG and TH CAGR SEA 14% USA 2%
  21. Asia’s share of global tech patents is converging % of global tech patents in Asia VS USA 0% 10% 20% 30% 40% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 Asia USA Source: Patents by technology, OECD. Asia consists of ID, MY, PH, SG, TH, CN, HK, IN, AU & NZ
  22. 2 of Fastcompany’s most innovate companies are Asian
  23. India - Zipdial: Missed call innovation led to one of its kind partnership with FaceBook
  24. Singapore - Rotimatic: Will lead to female empowerment
  25. • Remember.. you keep saying you don’t invest in an ‘idea’ • Asia has barriers (AKA problems): • Payments • Logistics • Market fragmentation • etc… • In America you can effectively outsource every aspect of your business • In Asia you have to figure out a creative solution to make every aspect of your business work • Why have business model risk when you have execution risk? Have you tried executing in Asia?
  26. Innovation is overrated. Think about ‘copying’ differently, you have to hustle in Asia
  27. You can’t get an exit in Asia #5
  28. • Approximately 1,000 startups in the preceding 3 years ! • 12 successful exits worth S$600 million in 2013 ! • 1.2% exit rate is not too shabby ! • 2x more exits in 2013 than 2011 ! • We are just getting started Let’s look at Singapore, last year
  29. • JobStreet / Seek - A$545 • Viki / Rakuten - $200m • Travelmob / HomeAway - N/A • Zopim / ZenDesk - ~$30m • SGCarMart / SPH - $48m • TransferTo / Ingenico - $38m • JobCentral / CareerBuilder - N/A • SoundBuzz / Motorola - $27.65m • Detik / Para Group - $60m • Tarad / Rakuten - N/A ! • Reebonz and RedMart worth $100m+ already No Unicorns in SEA, but solid acquisitions
  30. • Australia • Atlassian • Freelancer • iSelect • Xero • 3P Learning • OZForex • SEEK • Carsales We have already had IPOs • Malaysia • Jobstreet • iProperty • MyEg • iCar • iBuy • Singapore • AsiaTravel ! ! • Property Guru coming - ~$500m+
  31. You can get an exit, they just aren’t as big as the US (yet)
  32. Asians aren’t entrepreneurs #6
  33. There are still big cultural issues • A lot of people still want to work for ‘Samsung’ • But saying you are a founder is now an acceptable response at a dinner table when asked “What do you do”
  34. But twice as many Philippinos than Israeli’s recon they have the skills to startup! Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Perceived Capabilities! Percentage of 18-64 population who believe to have the required skills and knowledge to start a business
  35. Indonesian’s are twice more likely to be founders than in America Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Total early-stage Entrepreneurial Activity (TEA)! Percentage of 18-64 population who are either a nascent entrepreneur or owner-manager of a new business
  36. They aren’t as afraid of failing as you think Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Fear of Failure Rate! Percentage of 18-64 population with positive perceived opportunities who indicate that fear of failure would prevent them from setting up a business
  37. Asians are representing abroad… how much?
  38. …half the US startup jobs
  39. AND… Asian founders in America raise more money than white founders, by the way Founding team racial composition vs. median funding received ($m) $0.00 $1.00 $2.00 $3.00 $4.00 All Asian Pacific All white Mixed All Black $1.3 $2.2$2.3 $4.0 Source: CBInsights, 2010. National seed and Series-A - Jan to June 2010
  40. They see good opportunities locally (As much as the US Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Perceived Opportunities! Percentage of 18-64 who see good opportunities to start a firm in the area where they live
  41. More of their friends have set up companies Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Know Startup Entrepreneur Rate! Percentage of 18-64 population who personally know someone who started a business in the past two years
  42. More media attention than developed markets Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Media Attention for Entrepreneurship! Percentage of 18-64 population who agree with the statement that in their country, you will often see stories in the public media about successful new businesses
  43. Far more intend starting up in next 3 years than in US and UK Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Entrepreneurial Intention! Percentage of 18-64 population (individuals involved in any stage of entrepreneurial activity excluded) who intend to start a business within three years
  44. Asians are entrepreneurs, they are half of the US ecosystem!
  45. There’s too much seed funding in Asia #7
  46. • In 2006, $48 million seed went into 116 deals ! • In 2013, $83 million was deployed across 257 transactions ! • Average seed rounds have decreased from $413k to $323k ! • In 2012 in America, there were 1,749 seed deals ! • There are 133 accelerators globally, SEA has 1-2 per country Sure, ‘more’ money has come in Source: Asia Venture Capital Journal Research. Seed defined as deals under $1 million in size
  47. “FFF” investments still half of that in America Source: Global Entrepreneurship Research Association, Jungle analysis through Google Explorer Informal Investors Rate! Percentage of 18-64 population who have personally provided funds for a new business, started by someone else, in the past three years
  48. There isn’t that much seed money
  49. There is no smart money in Asia #8
  50. Look around the room!

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