News came out as early as in September and now the Indonesian fintech company Ovo has officially confirmed its unicorn status, following a recent statement from Rudiantara, Indonesia’s Communications and Information Minister.
“I have talked with its founder, and it is indeed at over one billion. I dare to speak up about this after receiving direct confirmation,” Rudiantara told Antara News.
In the CB Insights report titled The Global Unicorn Club, the valuation of Ovo has reached US$2.9 billion as of March 14, 2019. This exceeds the valuation of Traveloka and Bukalapak, which has already held unicorn status.
It is also noted that even though the startup value is high, it is still recording losses.
But nevertheless, this achievement has made Ovo the country’s fifth unicorn after ride-hailing Go-Jek, online travel booking platform Traveloka, and e-commerce platforms Bukalapak and Tokopedia.
“We are very grateful for this since we have targeted five unicorns as of the end of 2019. Yet, we have managed to have a new one before the deadline is reached. We welcome Ovo as a new Indonesian unicorn,” said Rudiantara.
Since launching a digital wallet in September 2017, Ovo has established itself as the fastest-growing payment platform in Indonesia.
Backed by Lippo Group, Ovo started as a standalone payment app with an edge, being easily accepted throughout Indonesia in malls across Indonesia, ecommerce platform Matahari mall, homegrown coffee chain Maxx Coffee, cinema chains, retail stores and others.
Over 110 million people currently use Ovo which spread across 300 Indonesian cities. “We serve 98 percent of the adult population in Indonesia,” said Ovo’s chief executive officer Jason Thompson.
However, the major breakthrough for Ovo was their partnership with the two unicorns Grab and Tokopedia, as it became their official e-wallet and payment platform.
These deals elevated Ovo in the cashless race in Indonesia as it claimed 60 million users with Grab and another 80 million active users with Tokopedia. Leading the digital payments sphere against GoPay, the startup facilitates a massive amount of cash transactions in its platform which reaches trillions of rupiah each year.
“We see this landmark partnership as a validation of our strategy to enable payments for all Indonesian companies, both online and offline. Cash is a very difficult habit to break and consumers will only switch to cashless if it’s easier and safer than cash,” Ovo’s director of enterprise payments, Harianto Gunawan explained.
But certainly, having a unicorn status is not the end of the road for a startup. Recent reports of layoffs at Bukalapak and WeWork company crisis shows that it is never as easy as it seems to balance between profitability and growth.
When asked about the startup’s strategy moving forward, Sinta Setyaningsih, Ovo’s Head of Public Relations said that “we are still developing and the development of Ovo is still inseparable from cooperation with two unicorns, Grab and Tokopedia.”
He also added that the Lippo Group’s digital payment will continue to focus on encouraging Indonesia to increase financial investment as well as continue to serve the Indonesian people with other products and services.
With less than three months to go in 2019, there are still chance for Indonesia to exceed their pre-set target.
“I pinned high hopes that the target will be exceeded since there are more potential unicorn startups for this year,” Rudiantara added, hinting that these companies may come from the education and health sector.
“Logically, 20 percent of the national budget has been allocated for educational purposes, while five percent is for health. So how could it be possible, if there are no unicorns from both sectors,” Rudiantara said.
India now welcomes its eighth unicorn this year as Rivigo hits a valuation exceeding a billion dollars with the US$4.9 million funding from South Korea fund and KB Platform Fund, the investment arm of South Korea-based KB Financial Group Inc.
KB Global operates a fund size of US$190 million with a 40 percent allocation of its portfolio to Korea startups, with a primary focus to invest in fintech and biotech startups in Southeast Asia, The fund also invested in Singapore’s ride-hailing Grab earlier in July this year.
The news was confirmed according to the regulatory filings with the Ministry of Corporate Affairs which sees a total of 1,263 cumulative convertible preference shares (CCP) shares allotted to the KB Global Platform fund.
With this investment, Rivigo’s valuation is now at US$1.05 billion, from the US$950 million it was valued in February last year when it raised US$50 million from SAIF Partners and private equity major Warburg Pincus.
As a matter of fact, Rivigo has been out to raise fresh capital for more than a year now.
Based on a report by Mint in September 2018, the startup has been in talks to raise US$400 million for its Series E round to further strengthen its technology and network coverage, which is a key game changer for the larger logistics market in the country.
However, according to present developments, the startup has failed to meet the target and has only been received top-up investments by existing backers SAIF and Wrbug who made the US$65 million in July this year.
Launched in 2014, Rivigo uses a relay trucking model, under which a truck driver hands over the vehicle to another driver at a designated pit stop. This avoids long journeys for truck drivers, which are only behind the wheel for a maximum of four to five hours stretch while making sure that the truck is not idle at any point of the journey.
With a fleet of 3 000 trucks, Rivigo currently offers its transport services across ten industries, which includes clothing, eCommerce, automotive, frozen and processed foods, fast-moving consumer goods, and automobiles.
Adding up to the momentum, the Gurugam-based startup has also recently launched the National Freight Index (NFI) in order to bring transparency to the largely unorganized logistics space.
Gazal Kalra, the Co-founder of Rivigo said, “the amount of AI and blockchain you can use in logistics is unparalleled. We generate so much data, something as simple as driver routing can be made much more efficient with machine learning and AI.”
With this, there are now a total of 25 unicorns found in India. Other unicorns that emerged in 2019 also include:
Interestingly, this comes at a time when India’s economy is on a growth slowdown, and apparently the worse in these six years according to India Today.
But still the great news is that it seems like the country’s unicorn club is growing faster than ever, especially when you consider its unicorn count from 2018 where it has produced 15 unicorns, that’s 22 unicorns in two year.
We can’t deny it. Southeast Asia is booming as we see Indonesia and Singapore becoming home to more than a dozen unicorns over the last decade. But then again, if we were to zoom into the Philippines, a different story was told.
Just behind Indonesia, the Philippines is the second-largest country in Southeast Asia with a population of 106 million people. However, its startup scene has yet to produce strong local players that are on par with its Southeast Asian counterparts like Grab or Traveloka.
In the Philippines, there’s only one unicorn: Revolution Precrafted, a property tech firm specializing in luxury prefabricated homes — which drive people to question why?
While the country faces problems like its archipelago being fragmented into thousands of islands or the population struggles with inequality and poverty, these are also the same issues Indonesia faced.
One of the biggest issues, many entrepreneurs claim is holding the Philippines back is the lack of access to capital.
“We have a very young ecosystem and we still need to do a lot in order for us to move on to the next phase. What we need to do is to provide a lot of funding, which at the moment is still at a very low level,” said Rafaelita Aldaba, the undersecretary of the Philippines’ Department of Trade and Industry.
In terms of deal volume, e27 has reported that Indonesian startups have secured at least 46 investments in 2018 which amounts to US$4.07 billion while active startups in the Philippines only raised US$304 million in the same year.
Besides, many entrepreneurs also attribute the Philippines lack of unicorn activity to the general lack of startup entrepreneurship and a conservative business mindset that hinders potential growth.
In other words, the population sees entrepreneurship as highly risky. Founders would have to be able to withstand certain social pressure to start his or her own company and very often, the most difficult part is convincing your parents that it is okay to pursue this path.
As such, the number of tech startups in the Philippines does not tally with the fact that it has a tech-savvy and tech-enabled population.
However, the Philippines’ startup ecosystem is gradually showing signs for the better.
Based on a 2019 report by Startup Blink, the Philippines’ startup ecosystem currently places 54th out of 100 countries all over the world. This compared to the results that were done two years ago, the country has moved up 16 places.
This Startup Ecosystem Rankings for 2019 considers the quantity and quality of both startups and supporting organizations in a given location, as well as the context of its larger business environment.
For the Philippines’ increase in rankings, the report credited it to the connectivity between suburbs and cities in the cluster of Metro Manila, as well as the increasing tech literacy and English proficiency among Filipinos.
The population of both startups and local startup incubators are also on the rise in Manila, as notable incubators like IdeaSpace has received a total of 4,386 applications for its annual program entry.
Besides, the lack of entrepreneurship is also seeing a good turn as the government has taken initiative and started improving the state of the startup economy.
They created a five-point plan to foster the ecosystem and encourage entrepreneurial success, actively organizing various entrepreneurship programs such as P3 Program and Kapatid Mentor Me Program that aims to change the state of the startup ecosystem in the Philippines.
With these collective efforts in helping to change the ecosystem, the expectation is that the Philippines startup ecosystem will grow rapidly in size.
“The Philippines has incredible potential to be a leading startup hub owing to the country’s favorable demographics, available tech talent, and rapidly growing economy,” said Katrina Chan, the Director at QBO Innovation Hub.
“We are starting to see more elements come into place, such as increased investment activity, growing public and private support, rising interest in entrepreneurship which makes me believe the Philippines can live up to its promise and produce the next unicorns to rival the biggest names in the region in the next few years,” she added.
Currently, what we can see with the Philippines is that the country is advancing forward at its own pace with increase infrastructure available, market dynamics, maturing talent, and other economic variables involved in the process.
Overall, the fintech sub-sector in Manilla is the one to watch. Based on the 2019 Global Startup Ecosystem Report, around 15% of the startup ecosystem consists of Fintech startups.
The country also sees the transaction value of these fintech startups reaching US$5.7 billion in 2018 and is forecasted to nearly double to around US$10.5 billion in 2022.
In a piece of recent news, PayMongo has also secured U$2.7 million seed funding which the startup claims is one of the record-breaking seed round raised for any startup in the Philippines.
Now, for some notable fintech startups in the industry, this includes online lending startup First Circle, mobile wallet Coins.ph, and digital services provider Voyager Innovation.
First Circle, a startup which provides supply chain financing, raised US$26 million in 2018 that sets it up for regional expansion. But on the other hand, Coins.ph and Voyager Innovation were both acquired by larger companies.
Coins.ph was acquired by Indonesian ride-hailing unicorn Go-Jek for US$72 million whereas Voyager Innovation which is involved in the delivery of digital services was acquired for US$215 million.
This begs the question if Philippines startups will persevere long enough to become a unicorn, amidst a trend where most startups, statistically 8 in 10, prefer to take the easy exit.
After the biggest success stories of Razer and SEA (formerly known as Garena) went IPO in the last few years, recently the Southeast Asia IPO market is cooling down.
Though you may argue that there is still a list of Southeast Asia unicorns that are yet to be listed, but still from the thousands of startups found in the Southeast Asia region, many are opting for acquisitions and mergers over the route to IPO.
As a matter of fact, venture capital firms predicted at least 700 buyouts between 2023 to 2025.
According to a report by Golden Gates and INSEAD, it is even estimated that the number of SEA startups being acquired by other companies will increase to 759 in three years from now; and this figure alone is larger than the collective figure for the five years from 2014 to 2019.
Michael Lints, a partner at Golden Gate Ventures told Nikkei Asian Review, “The IPO landscape in Southeast Asia is relatively small — besides Singapore and Hong Kong, startups do not have a lot of options to list.”
But it’s not just that. There are high challenges to IPO, especially for tech companies, with the exemplar of high valuation prices fetched by loss-making private tech companies placing many investors under intense scrutiny.
Ride-hailing giant Uber Technologies, for example, which was initially valued at more than US$60 billion saw its post-IPO market capitalization fell to US$54 billion in just a few days.
Specifically. the prediction for the substantial increase in exits is forecasted after 2022 as due to the end of fund life for various venture funds, especially those with funds that have been raised between the year of 2010 to 2012.
At the same time, there will be an influx of fresh capital that will help validate more business models and push more companies towards selling their stakes for growth.
Besides, there’s also a push factor for investors. Regional corporates that are increasingly more active in Southeast Asia are also looking at acquisition as an opportunity to cash out of startups amidst underdeveloped stock markets.
In fact, it is a virtuous cycle as these vehicles and funds are judged by their ability to sell their investments and return the cash back to their investors. Relatively, this also means that they are becoming more dependent on unicorns as they turn into acquirers.
Go-Jek and Grab are reportedly aiming to raise US$6.5 billion collectively in their ongoing funding rounds. By comparison, this is almost three-quarters of the amount raised by 152 companies from IPOs in Southeast Asia that stands at US$9 billion according to Deloitte.
In any case, the most notable regional exits have all been acquisitions.
Take for instance, the sale of the Philippines’ payment company Coin.ph in January was a landmark deal as the startup was acquired by Go-Jek for over US$70 million. And this is just one of the eleven deals that the Indonesian ride-hailing unicorn has made in the last three years.
In fact, that statistics make for more than eight in ten startup exits are predicted to come in the form of acquisition as major buyers like Go-Jek and other unicorns are looking for acquisitions to speed up growth.
“We are seeing a lot of cases where unicorns are undertaking an inorganic growth strategy to fuel their growth runaway,” said Lints. “The acquisition could be complementary to their current product offering and market expansion plans. We believe the acquisition trend would continue as unicorns are looking for ways to grow their market.”
Besides, acquisitions have been one of the better options for companies to expand across Southeast Asia, a region where each country is vastly different in terms of needs, cultures, and regulations. Traveloka, an Indonesian travel tech unicorn has entered the Philippines and Vietnam through acquiring local peers.
At the same time, the increase of non-VC investments also bodes well for M&A activity in the region, as Chinese tech firms like Alibaba, Tencent, and JD have already made several large investments in the region.
And often, such investments are a prelude to future acquisitions, as they are an opportunity for the investor to follow the startup closely and learn more about its market dynamics for several years or months.
While IPO remains to be a challenging option, this shift from IPO to acquisition is in a way healthy for the Southeast Asia economies. As through acquisitions, Southeast Asia is gaining momentum as a thriving ecosystem with attractive opportunities.
Since China released its national guidelines to allow automated vehicles testing on designated streets with a driver present in the vehicle back in 2018, it seems like every other day there’s news regarding the latest advancements in self-driving technologies.
Here’s the latest: Pony.ai is entering into a partnership with Toyota to explore safe mobility services involving driverless technologies.
More specifically, the two companies will work together on a pilot program to accelerate the development and deployment of these autonomous vehicles.
Looking at this alliance that involves the Chinese autonomous unicorn with the Japanese auto giant that makes over 10 million in annual vehicle sales worldwide, unquestionably it will boost their position in the race to bring driverless cars to the masses.
“Autonomous driving technology is the key to creating a better transportation system that will deliver value to the lives of many,” the companies stated in a press release. “Through such collaborations, Toyota and Pony.ai are accelerating the arrival of a safer, more efficient and more enjoyable mobility future for all.”
This announcement came after the self-driving startup revealed its latest test project PonyPilot, that will be testing its “product-ready” self-driving cars within a geofenced area in Guangzhou, which covers roughly 50 square kilometers of central Nansha.
This testing area will be a defined space, covering various destinations including commercial plazas, office buildings, landmark hotels, libraries, and residential complexes. But for now, the PonyPilot will only be accessible to employees and selected affiliates by invitation only.
Founded in 2016 by two former Baidu executives James Peng and Tiancheng Lou, Pony.ai is the first company in the country to launch a robotaxi operation and offer autonomous rides to the general public. But it doesn’t stop there.
The two founders are ambitious and aim to build level 4 autonomous cars which can operate without human oversight for predictable environments, such as industrial parks, college campuses, and small towns, with a tentative development window of 2 to 3 years from now.
Pony.ai’s current full-stack hardware platform, PonyAlpha leverages lidars, radars, and cameras to keep tabs on obstacles within up to 200 meters of its self-driving cars.
On the other hand, it might be unlikely to some but Toyota also has an ongoing player in the driverless car foray.
In March 2018, the firm said that its R&D division at the Toyota Research Institution would be building a closed-course test facility in Ottawa Lake, Michigan that will replicate edge-case driving scenarios too dangerous to conduct on public roads.
Also last year, Toyota has revealed e-Pallete, a fully-automated battery-powered electric car that is designed for a range of mobility-as-a-service businesses. While more recently, Toyota has also invested US$500 million in Uber to jointly develop self-driving cars.
Then again, these two are facing competition from many other startups.
The autonomous driving sector has drawn billions of dollars of investment over the past few years and is becoming one of the key sectors in AI. The sector even sees participation by China’s BAT (Baidu, Alibaba, and Tencent), as well as Huawei and many more.
And that is amid the heated competition with the United States for global leadership.
Last summer, German automotive multinational corporation Daimler obtained a permit from the Chinese government allowing it to test self-driving cars powered by Baidu’s Apollo platform on public roads in Beijing.
Separately, Waymo has racked up more than 10 million real-world miles in over 25 cities across the U.S. and roughly 7 billion simulated miles, in November 2018 became the first company to obtain a driverless car testing permit from the California Department of Motor Vehicles (DMV).
Not to mention, other rivals also include Tesla, Zoox, Aptiv, May Mobility, Pronto.ai, Aurora, Nuro, among some.
Now you must be wondering – who’s ahead in the race?
According to the California self-driving statistics, Chinese companies are still lagging behind US companies in the field, with Waymo drivers disengaging the auto-drive function roughly every 11,000 miles and Cruise drivers once every 5,200 miles on average over a 12-month period through November last year.
By contrast, Pony.ai, the front runner among Chinese autonomous driving companies has reported human intervention once ever 1,022 miles. However, there’s still some catching up Pony.ai has to do and this deal with Toyota comes in time.
“I think in the huge scheme of things, the biggest challenge is still the uncertainty in the open driving environment,” explained Peng on the obstacles the startup had to encounter to create a sustainable autonomous driving system.