When people mention artificial intelligence – or AI – technologies, it usually conjures up images of futuristic talking robots that understand human emotions, or of a dystopian future where machines have taken over the planet and reign supreme over humanity, much like the Terminator movies. The truth is actually more mundane; anyone using a mobile phone with apps, or using the services of tech startups and unicorns, will most likely already be familiar with the capabilities and functionalities of what AI has to offer, even if they are not necessarily aware of its presence. The world of AI has come a long way from its early days of computing simple mathematical equations; the field is now a primary driving and innovating force behind the rise and ascendance of startups and unicorns throughout the world today.
Companies and organizations, both big and small, are now increasingly utilizing AI technologies to help them gain a competitive edge in their industries or fields. This is true as well for the startups and unicorns, such as Grab, that operate in the Southeast Asia region. A majority of these companies and businesses use AI technologies in order to help them improve the way they analyze and process data, which impacts their bottom line and helps them gain market dominance.
One major Southeast Asian unicorn that got it right with AI is Grab. The ride-hailing platform, which has since expanded to include food delivery and digital payments services via its mobile app, became the region’s pre-eminent “decacorn” (a startup with a valuation of over US$10 billion) in part because of its savvy use of “machine learning” AI. Its backend AI technology has enabled the company to develop a platform that is more reliable and intuitive for both its drivers and passengers. For instance, its AI has been able to gather a vast trove of driving and traffic data supplied by GPS for analysis. With the information collected, it has been able to determine the best routes to take for its drivers and passengers, as well as improving the accuracy of its maps and travel time estimates.
Grab is aiming to be a platform that is capable of becoming localized to the problems or challenges that it’s aiming to solve. Since Grab is operating in Southeast Asia, a region consisting of many diverse cultures and languages, it intends to resolve the issue of underserved localized languages in Southeast Asia. In order to achieve that aim, it has partnered with Microsoft in order to develop better natural language processing (NLP) capabilities and functionalities for its various markets. This, in turn, will make its ride-hailing, food delivery and digital payments services even more accessible and attractive to users in the various markets, thus cementing its hold as the region’s pre-eminent unicorn even further.
At the heart of its AI-driven effort is the unicorn’s desire to be an all-in-one “super app” much like Tencent’s WeChat. Grab’s GrabPay service already enables users to pay the fare for rides and order food digitally, and it’s expanding its services into lending and insurance as well. In fact, the company is seriously considering applying for a digital banking license if Singapore permits it. To show its commitment, Grab recently announced that it intends to invest US$150 million in AI and wants to hire more engineers over the next year.
The rapid advancements in AI technology have helped the unicorn Grab to better serve its various markets while maintaining its dominant position as Southeast Asia’s premier app. However, even as other tech and AI companies are striving ahead with the latest technological developments and innovations to further accelerate the emergence of futuristic and complex AI and tech solutions, Grab’s primary focus will still be grounded on the needs of its customers
Sendo, a Vietnam-based e-commerce startup, is poised to become Southeast Asia’s next tech unicorn, which is a startup company with a valuation of over US$1 billion. According to the Vietnamese government’s draft on national strategy on the Fourth Industrial Revolution, the country wants a minimum of five tech unicorns by 2025, and then by 2030. In recent years, Vietnam’s tech ecosystem has been invigorated by the participation of several startup incubators, which have produced tech startups with the capability and finesse to prove their mettle on the world stage.
One such aspiring tech startup is Sendo, an e-commerce retailer and online commerce platform. Established in 2012 as a subsidiary of Vietnamese software conglomerate FPT Corporation, it has since grown to become Vietnam’s second-largest e-commerce site, behind only the Chinese e-commerce behemoth Lazada. Sendo operates both business-to-business and consumer-to-consumer models, serving more than 300,000 sellers and 10 million buyers. It owes its success in part to the fact that it serves a broad base of consumers, rather than just the top-paying ones. For instance, almost 67% of its orders are placed outside of Vietnam’s biggest cities, Hanoi and Ho Chi Minh City. Sendo also ranks fourth in monthly web traffic among e-commerce platforms in Vietnam for the second quarter of 2019, behind its competitors Shopee, Tiki and Lazada, according to a report by iPrice.
It has also notably acquired a rival, Vietnamese pioneer e-commerce platform 123 Mua, in 2014, for about US$469,000 from VNG Corporation, a consumer tech company. At the time 123 Mua’s customer base reportedly numbered 30 million online consumers. As for funding, in December 2014 three prominent Japanese firms, Econtext Asia, SBI Holdings and BEENOS, participated in its Series A funding round. For its Series B funding round held in 2018, the e-commerce startup managed to secure US$51 million in a round led by Japan’s SBI Group, alongside SKS Ventures, Daiwa PI Partners and SoftBank Ventures Korea.
Sendo’s strategy is about serving consumers all across Vietnam, not just the big cities. It estimates that there are 75 million Vietnamese living outside of the large cities of Hanoi and Ho Chi Minh City, and this particular segment of the population, who are mostly spread across the lower-tier cities and provinces, find it harder to access affordable and quality products due to the distribution gap. To better serve this market, and as online payment facilities weren’t as developed as in 2012 when the startup was just established, Sendo made the choice of permitting cash on delivery via Vietnam Post, a delivery company, in order to build trust among its consumers.
Additionally, another element of trust-building the startup employed was to tailor its product offerings for first-time e-commerce buyers by focusing on lower to mid-range priced items such as clothes and home appliances. Sendo understood that these e-commerce buyers are hesitant about spending huge amounts on expensive products that are priced US$1,000 and over but are willing to spend on less expensive necessities that meet their needs.
What’s more, Sendo does not charge merchants any commission fees. Instead, they use an advertising model whereby merchants can pay the e-commerce startup to advertise on either their platform or channels that can direct consumers to the platform.
Eventually, the aspiring tech unicorn startup wants to become the platform solution that can provide high-quality services in all the three areas of digital services, financial services, and physical products for both buyers and sellers alike. As the quality of Vietnam’s tech startups steadily improves, Sendo will be leading the way in fulfilling the country’s ambition of producing several homegrown tech unicorns by the year 2025.
China’s President Xi Jinping, speaking during a group study session for members of the Politburo last Thursday, said that the country “must clarify the main direction, increase investment, focus on a number of key core technologies, and accelerate the development of blockchain technology and industrial innovation”. Additionally, he stressed that blockchain would play “an important role in the next round of technological innovation and industrial transformation”.
While certain Chinese government officials have made comments and statements on blockchain in the past, Xi’s comments are likely the highest-profile public endorsement of blockchain technology for China to date. As it turns out, even as Xi called for more adoption of blockchain technologies in China, there are already hundreds of enterprise blockchain projects being developed in the country, led by some of China’s biggest industry players.
According to the Cyberspace Administration of China, which requires every entity developing blockchain technologies in the country to register with it for oversight, there were 309 such blockchain projects listed for the month of October alone. Some of the information gleaned from the list is that those currently involved in blockchain projects include some of China’s largest banks and commercial tech conglomerates, alongside many public sectors and government projects.
All four of China’s tech titans, Alibaba, Baidu, Tencent, and Huawei, are competing to see which one would be able to develop and provide China’s most advanced blockchain cloud services. According to registration data, all four tech giants have filed blockchain white papers that detail information about their blockchain cloud services as infrastructure providers for third parties.
Alibaba has been particularly busy in the field of blockchain, having filed 90 patent applications for projects that are focused on blockchain-related technologies. Tencent has been developing its own range of blockchain services as well, having filed registrations for its Tencent Blockchain and Tencent Cloud TBaaS Blockchain. As for Chinese search engine Baidu, some of its projects that were registered on the list include Token, which makes use of blockchain to protect intellectual property rights, and Baidu Blockchain Engine which is a cloud services provider. Baidu has also registered and patented its Super Chain, which is focused on providing foundational infrastructure for blockchain services.
On the trade finance and banking side, six banks including ICBC and Ping An Bank have registered a total of 14 blockchain projects. Industrial and Commercial Bank of China (ICBC), which is one of China’s big four state-owned commercial banks and the largest bank in the world by total assets, has registered two blockchain projects: ICBC Financial Services and ICBCXi Blockchain Service, which are projects aimed at improving and facilitating transactions for its clients and customers. Ping An Bank has adopted FiMax, a blockchain network, to improve security and privacy and increase efficiency in transactions and supply chain financing.
The Chinese government is also applying blockchain technologies to a variety of services, such as tax collection, matters of legal arbitration and land development use cases. Blockchain is innovating the legal landscape in China with the introduction of Internet courts. These courts are authorized to deal with a number of internet-related cases such as small loan contract disputes, online intellectual property disputes, and online financing, with all legal processes being conducted online. Both the Beijing and Guangzhou Internet Courts have registered their respective blockchain-based platforms. Some other examples of blockchain projects being utilized by the government sector include Cross-Border Transactions Platform for the State Administration of Foreign Exchange and Blockchain Electronic Invoice for the State Administration of Taxation Shenzhen branch.
Looking forward the number of blockchain projects to be developed and implemented in China is only going to grow at a tremendous rate. Blockchain technologies will play an important and crucial role in China’s industrial and technological innovation and transformation.
What do Beijing and Silicon Valley have in common?
More than two-hundred spawning billion-dollar unicorn companies, according to the latest report by Hurun Research Institute based in China that compiled the listed unicorn startups from around the world.
In this report, unsurprisingly, China and the United States took the top 2 spots with 206 and 203 unicorn startups respectively. Together, both countries account for more than 82 percent of the total unicorn count globally at 494.
Note that the report only considers unicorn companies that received the billion-dollar valuation as a snapshot in June 2019, and doesn’t take into account firms that have already been acquired or listed on the stock exchange board.
“We have found just under 500 unicorns in the world,” said Hurun Report Chairman and Chief Researcher Ruper Hoogewerf, who is also known by his Chinese name Hu Run.
“The Hurun Global Unicorn LIst 2019 is designated to inspire entrepreneurship among wannabe entrepreneurs and encourage investors. These young companies, only 7 years old on average, are the world’s most exciting startups, leading a new generation in disruptive technology.”
The top 3 highest valued companies being online payment systems Ant Financial (US$150 billion), content discovery platform ByteDance (US$75 billion), and taxi-hailing platform Didi Chuxing (US$55 billion).
This is followed by three unicorns based in the United States which are software cloud products Infor (US$50 billion), electronic cigarette company JUUL Labs (US$48 billion), and travel tech startup Airbnb (US$38 billion).
Of course, unicorns can be born anywhere, but why are the spotlights for these two countries in particular? Well, there’s the demographic and startup maturity factor, but ultimately it depends on the industries where investors are placing their bets on.
In China, the finance sector has produced the biggest unicorns, such as Ant Financial and JD Finance, a subsidiary of e-commerce giant JD.com.
Logically, these startups are successful in being supported by internet giants paired with the nation’s march to become a digital cashless society.
At the same time, with fintech growing massively and generating huge revenues for the country, this disperses into China’s ecommerce sector driven by the rapidly expanding number of online shoppers and changing purchasing culture.
In the United States, however, things are a bit different. While they have Amazon and Paypal, most of the current unicorns are corporation service provides, such as Infor Inc. a provider of enterprise software and service worldwide.
The country has a habit of paying for external corporation services, which will help improve their work efficiency and cut operation costs. Besides, the demand is not just locally, Chinese firms also prefer US corporation service providers over domestic companies.
In terms of venture capital firms, the report found the US venture capital firm Sequoia to be one of the most farsighted unicorns. It has invested in 92 of the 494 unicorns,
Meanwhile in second place is China’s internet giant, Tencent Holdings which also holds 46 investments and SoftBank which also has 42 counts of investment.
With just 21 startups valued at more than a billion dollars, you may think that India is way too far behind China and the United States.
Anas Rahman Junaid, the Chief Researcher of the Hurun Global Rich List had told Hindu BusinessLine that, “India can quickly catch up with Big 2, only if the regulatory and business environment is poised to capture the demographic dividend.”
What sets India apart from other hot startup ecosystems like Singapore or Indonesia is the country’s startups pace at entering the unicorn club.
As this report cuts-off at the end of June this year, it does not cover the four additional unicorns that were added to India between the months of July and September.
If you look at the timeline of Indian unicorns, it is the country’s time of harvest as it has long passed the first wave of startups in the country for those that took early-stage risks. And now with better infrastructure and smartphone penetration beyond metropolitan cities, the larger target area and demographic has also present large opportunities for startups.
With large exits like Flipkart which was sold to American retail giant Walmart for US$16 million, this has further boosted investors’ confidence and brought their focus to India.
Moving forward, it’s best we keep an eye out for India as well.
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.