Day: July 7, 2022

With the funding winter set in, growth-stage startups worldwide find it hard to raise capital. Many high-profile unicorns in fast-growing markets like India have started feeling the pinch and are laying off people in hundreds, if not thousands.

In volatile times like this, Pakistan could offer a golden opportunity for VCs to tap into its largely untapped startup sector. The Islamic republic has recently witnessed a steady inflow of VC.

Malaysia-based Gobi Partners is one of the most active VCs in Pakistan. The VC firm has partnered with Fatima Group to form Fatima Gobi Ventures which has invested in two dozen startups, such as Rider, Tazah, Colabs, and Fasset.

In this article, Taraec Hussein, Vice President of Gobi Partners discusses Pakistan’s emerging startup ecosystem.

Improved internet infrastructure

Pakistan is at an inflexion point of mobile connectivity. Pakistan was one of the countries lagging in 3G and 4G connectivity. If you look at some other economies like India and Indonesia, there was always a love period after the introduction of 3G and 4G infrastructure before the market caught on. Right.

For Pakistan, it happened in 2019-2021. There is now a lot of mobile connectivity, and many directly engage on smartphones. The country has over 100 million 3G and 4g mobile connections.

Abundance of talents

Pakistan has many highly skilled professional nationals working in the US, Europe, the Middle East, Singapore, and other Southeast Asian markets. These talented people, trained in some of the world’s best companies, are now returning and starting digital businesses for the country.

As we know, venture capital always seeks talent, so there is a huge talent pool at the co-founder or CEO level, software engineers, and product engineers.

Also Read: Pakistan startups, the last massive untapped opportunity in the world

Pakistan is also a market where IT export is one of the biggest GDP contributors. It has a lot of software houses. As a result, there’s a lot of trained IT talent.

COVID-19-induced digitalisation

The COVID-19 pandemic has accelerated the push or need for digitalisation. There is now a digitalised way of doing everyday tasks. It even exceeded our expectations in terms of how fast can companies grow in Pakistan.

Given that it’s a very nascent ecosystem, how long would it take for Pakistan to catch up to other markets, such as Indonesia? And I think that the timing was right. In terms of COVID-19, the silver lining is that now Pakistanis, who cannot go to a grocery shop or walk into a bank, are looking for online ways to do basic everyday tasks.

High-profile Pakistanis in VC firms in the US

Another crucial thing about Pakistan is a lot of Pakistanis are sitting in high position partner positions in VC firms across the US. So the hurdles to understanding what the Pakistani market is or the opportunities. A lot of these challenges are being curbed by the local Pakistani partners.

Exciting opportunities in crypto, social commerce and agri

The cryptocurrency space in Pakistan presents tremendous opportunities. The Pakistani per capita is one of the world’s highest owners of crypto assets. There are no crypto platforms in Pakistan, but Gen-Z buys digital assets through money changers. This generation’s first investment assets will be either crypto or NFTs. So they are leapfrogging the local exchanges and going straight into digital assets. There is a great opportunity now, depending on how the regulators react to a crypto platform.

The other exciting space is social commerce. If you look at other markets, social commerce has surpassed the market size of e-commerce.

Social commerce is a big part of consumer behaviour in countries like Thailand, Vietnam, and the Philippines. This is a big space in Pakistan because it is a very social market. Whether it is group buying, whether it is a reseller, a live streaming model or the D2C model, many models within social commerce are still not explored in the early days.

Pakistan is a massive agriculture market, and there are many hurdles within the supply chain. There are some companies like Tazah that have raised decent rounds. We will see a lot more opportunities within the agri space.

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We have recently published a new Market Map report, identifying the “indigenous” ecosystem of adtech and martech companies founded and headquartered in Southeast Asia.

The origin of this report can be traced to a dinner conversation between the author and a digital media industry colleague where the question was posed, “Given the dominance of the global platforms in digital advertising and marketing, would it actually be possible to reach a meaningful audience across Southeast Asia, using only a local Southeast Asian owned and built adtech/martech stack?”

We didn’t know the exact answer, but we did know from experience that there is a wide range of locally SEA-owned and built adtech and martech available.

This report sets out to establish some answers to this question with 240+ companies listed in this report, and while achieving a complete tech stack from local players without any intersection with global platforms may require considerable work, there’s no doubt that Southeast Asia has a vibrant and growing adtech and martech sector.

The primary selection criteria for the inclusion of a company in this report is that the company is founded and headquartered in Southeast Asia. If we have inadvertently omitted your company, please let us know.

Digital ad spending in Southeast Asia in 2022 is US$4.2 billion, but still, only 32.9 per cent of total media ad is spent.

eMarketer has reported that digital ad spending in Southeast Asia has grown from US$3.13 billion in 2020 to US$3.68 billion in 2021, a 17.8 per cent growth rate, and is forecast to rise to US$4.20 billion in 2022, a further 11.3 per cent increase.

While this is certainly strong growth, what is more, revealing is the fact that eMarketer also forecasts that the US$4.2 billion for 2022 still only represents 32.9 per cent of total media ad spending for SEA, well behind other global markets.

Also Read: 5 video marketing trends that marketers can leverage in 2022

In particular, large advertising/media markets such as the US and China, and the broader Asia-Pacific region now see digital ad spending has taken a majority share of total advertising expenditure, compared to traditionally dominant broadcast and print media.

eMarketer is forecasting that total APAC digital advertising will comprise 63.4 per cent of total media advertising spending across the region.

US$500 million near-term incremental growth forecast but a larger US$3.9 billion market opportunity awaits

The gap between digital ad spend as a per cent of total ad spend for Southeast Asia and other markets represents a significant opportunity for Southeast Asia and its local adtech and martech ecosystem.

High levels of market growth and shifting ad spending will drive the sector for the rest of this decade as advertisers and marketers continue to move their advertising and marketing expenditures from traditional media to digital media.

In simple terms, if today the local ecosystem had the same per cent share as other markets, the local digital ad spend would be US$8.1 billion, representing a large opportunity for growth from the current forecast of US$4.2 billion.

The current forecast suggests there will be US$500 million in digital ad spend either from new budgets or existing budgets moved from old media to new media over the forecast period to 2024.

Key trends that are changing the game

We see several key trends underway across Southeast Asia in the advertising and marketing technologies sector:

Audience and technology convergence

The lines demarcating media content, community (social media and messaging) and commerce are rapidly blurring, driven principally by maturing technologies and audience appetite.

Also Read: 3 stages of marketing for your startup that can drive effective results

As e-commerce rises, we have seen the arrival of commerce media, with social commerce being the conjunction of community and commerce, and content marketing are where media and e-commerce meet.

Browse your favourite social media and you will see advertising presented as content, with immediate links to buy now. Whether it is the 21st-century version of TV Shopping or a great travel blog that allows you to directly book that villa in Bali and the flights, of course, the path between consumer discovery and inspiration (the content ‘stimulus’) and the ability to buy now (the commerce ‘response’) is shorter than it has ever been.

New formats: Connected TV and audio

The average consumer now likely regularly uses screens in three sizes, across smartphone, tablet/laptop and big screen Android TV to watch the content they want to watch, when, where and how they want to.

With much of the streaming video content available now being consumed by people interchangeably across these three screens, streaming platforms have connected to the programmatic advertising technology ecosystem to deliver ads seamlessly across any device, small or large.

Streaming audio and podcasts are growing rapidly. With the simplified choice this provides to marketers; to buy multiple channels of ad delivery through a concentrated range of digital buying platforms, this will deliver an increased share of ad spend to digital media players and put pressure on traditional free-to-air broadcasters.

Identity, data, attribution and the demise of cookies

For marketers, understanding who their customers are and how, when and where they were acquired is a constant challenge, with the marketer’s goal being to own rich and deep first-party data, and have clear paths of attribution for the acquisition and retention of customers.

Being able to segment an audience into cohorts and profiles to drive a personalised approach to each group via their preferred channel is key to marketing success. Global players have made wide-ranging changes to introduce and enforce stricter consumer data privacy policies and regulations.

Many countries in Southeast Asia are slowly implementing regulatory regimes similar to the EU’s GDPR, and the highly fragmented markets and various walled gardens of global players mean that the marketer’s goal is elusive, at best.

Web3 and beyond

Beyond the near-term hype and fascination with shiny new objects, there should be little doubt that Web3/VR/AR is playing a pivotal role now and will in the next generation of early-stage media and technology companies, innovating and providing new media and consumer experiences for Gen Z and the near middle-aged Millenials.

Marketers are already in this new landscape. New forms of content, interaction, advertising and associated commerce are expanding in Southeast Asia very rapidly.

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The post Why Southeast Asia’s locally owned adtech and martech industry will survive the recession appeared first on e27.

Edukasyon.ph said today it secured an undisclosed sum in bridge funding from several investors, including KSR Ventures, Lorinet Foundation, and Bisk Ventures.

The investment is in the form of a convertible note.

The Filipino edutech startup has used the investment to bolster EDGE Tutor, its online K-12 tutoring services in English and Maths for students aged four to 16.

Launched in 2015, Edukasyon.ph provides access to senior high schools, colleges and universities, scholarships, online courses, and other resources. Edukasyon’s products are Finder (college and career counselling) and Advance (future skills training).

The edutech firm is currently developing a new product to provide parents and their children support and education using the curriculum made by experts.

Edukasyon’s partners include Rex Publishing, Union Bank, PLDT-Smart, Amazon Web Services, Unilever, Asian Development Bank, UN Women, and Ateneo de Manila University.

Also Read: Edukasyon investor Foxmont joins Philippine proptech startup AHG’s US$1.1M seed round

Since the close of Series A in 2019- 2020, Edukasyon.ph claims to have tripled revenues and achieved profitability for its B2B division.

The company said it is close to reaching its first million registered users and has built a community of eight million students.

The Manila-based startup previously closed a pre-Series A round in May 2018 and an investment from the Gobi-Core Philippine Fund in early 2019.

The edutech landscape has changed dramatically in the Philippines, with improvements in internet infrastructure, the explosive growth of e-wallets (estimated 63 per cent penetration by 2025), and massive exposure to online education (over 7 million students in 2021). Today, the country is estimated to be over US$20 billion education market.

 

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LingoTalk, an online language learning platform for schools in Indonesia, has received an undisclosed amount in initial funding from Iterative Capital and Eduspaze.

Several angel investors from the Asia Pacific region also co-invested in the round.

LingoTalk will use the money to enhance its LingoJunior product and acquire more primary school clients across Indonesia. LingoJunior aims to transform the way children learn a language in fun and engaging ways.

Founded by two graduates from Universitas Gadjah Mada (UGM), LingoTalk was part of the recent EduSpaze Accelerator cohort.

Also Read: Edukasyon.ph raises bridge funding to bolster K-12 English, Maths tutoring service

To date, LingoTalk has partnered with more than 150 schools in Indonesia to help them improve the language learning quality index and equip teachers with better teaching tools.

In the remaining months of 2022, LingoTalk will focus on working with schools, education institutions, and parents to uplift children’s language learning journey through innovative and impactful methods.

“At LingoTalk, we believe that a child’s story begins on day one and acknowledge the importance of giving them the learning opportunities to unleash their early potential. With the backing of our investors, we plan to refine the product and expand our reach to primary schools in Java and Sumatra Island”, Andre Benito, Co-Founder and CEO of LingoTalk.

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