In the past years, we were always able to take a glimpse of the next year based on the events that happened on Q3 and Q4. For example, in 2019, we predicted that more startup founders are going to be involved in politics and governance (though it ended in an interesting plot twist) and that there will be greater scrutiny on later-stage companies.
This year, the pandemic dominates the conversation as it affects almost every single aspect of our life. In an unprecedented level, it has impacted various industries from travel and tourism to healthcare. Across the region, both startups and investors found themselves adapting to changes and seizing new opportunities.
But is the pandemic the only thing left to talk about? Is there anything in the startup ecosystem that is not directly affected by it –because life goes on anyway?
We believe so. This year, we are back with another prediction on the key events of 2020 –that are not directly related to the pandemic– that are set to shape the SEA startup ecosystem in 2021.
We identify four major trends that are worth noting about the ecosystem.
Also Read: Whoever wins the US election, the true winner will be the Southeast Asian tech startup ecosystem
The rise of SPAC as an alternative route to public listing
One of the highlights of 2020 was the IPO of Bridgetown Holdings. What set this moment apart from the rest is the fact that the Peter Thiel-backed company is a special purpose acquisition company (SPAC) –a company with no commercial operations that is formed strictly to raise capital through an IPO to acquire an existing company, according to Investopedia.
In an interview with e27, industry players predicted that SPAC will be a popular alternative for regional tech startups to get listed. The advantages of SPAC –as compared to the other alternatives– include its speed and liquidity for both investors and founders.
And they were right. Just this month, Indonesian unicorns Tokopedia and Traveloka had expressed their interests in getting listed through the SPAC route.
Our prediction is that, beyond these two companies, in 2021 we will see at least one more regional unicorns considering the route as part of their exit. Considering the popularity and reputation of both Traveloka and Tokopedia, and how they are often being touted as success stories from the Indonesian market, whatever moves that they are making will draw attention from the public. It will eventually lead to other companies seeing this as a good move –and copying it.
Digital banking is finally happening
One might argue that the pandemic has helped accelerate the adoption of fintech services such as e-payment. But the seed has been sown since the previous years when we noticed progress even in cash-heavy markets such as Indonesia; the pandemic has provided momentum for digital banking to secure its place.
Also Read: What makes Hong Kong the fastest growing startup ecosystem in Asia?
In 2019, Singapore announced the issuance of digital bank licenses which resulted with Grab, Sea, and Ant Group being announced as some of the companies to have secured the licenses. While these services will only start operating in early 2022, we can expect to see more actions from the sector in 2021.
The good news is that Singapore is not alone in this.
Earlier this month, Indonesian unicorn gojek announced an investment in Bank Jago as part of its foray into the fintech sector. Speculation about the unicorn’s foray into digital banking had circulated in 2019 when gojek investor Patrick Walujo bought a stake in Bank Jago.
In November, the Philippine central bank approved rules that will allow the creation and licensing of digital banks which central bank governor Benjamin Diokno dubbed as “additional partners” in promoting market efficiencies and financial inclusion, according to Reuters.
Digging into deep tech
Fintech and e-commerce will continue to dominate startup investment in the SEA region, but there will greater attention towards innovation that comes out of research and development in universities –deep tech.
By far, in SEA, Singapore seems to be the market that is more prepared than the rest to support a deep tech startup ecosystem. In addition to financial support, the government has also recently introduced the Tech.Pass as part of its effort to attract talent into the country.
Does that mean that Singapore will be the only SEA country to shine in this sector?
While the other countries might have plenty to catch up with, it does not mean that they are going to start from zero. In Indonesia, deep tech startups such as Nusantics had secured seed funding round this year, and the country has also seen the launch of its first deep tech accelerator as early as 2009.
Also Read: Why the TradeGecko acquisition by Intuit is a promise fulfilled by the SEA tech startup ecosystem
Computer, show me which startup to invest next
Fundraising remains an activity that is relying on the power of networking. However, in 2021, we will get to see more investors relying on the help of technology to seek potential investments.
One of the venture capital (VC) firms that have already implemented this approach is Rocketship VC. Despite being based in Silicon Valley, the firm was able to expand its portfolio to various regions around the world thanks to its heavy use of data.
Even if the pandemic does not happen, there is already a need for global investors to expand its reach beyond its own home market as the world becomes more connected. In addition to that, as China and the US become more mature as a startup ecosystem, investors will look for fresh opportunities in emerging market. The use of data and artificial intelligence will enable a more seamless process.
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