Unicorns are shiny.
Being chased by media and investors, unicorns are often innovative and unconventional, poised to disrupt the industry. From autonomous driving to AI machines that develop personalized healthcare, these startups are using technology to change the way our lives works.
In comparison, things have been a little different for the unicorns in India.
Home to 19 unicorn startups, Indian unicorns are built on fulfilling the simplest of human needs. From online payments Paytm and ecommerce Flipkart to ride-hailing Ola and education Byju’s, Indian unicorns are providing solutions to daily problems.
As Sarbvir Singh, the managing partner at Waterbridge Ventures sees it, the country’s unicorns are removing frictions in areas where people are already spending. Such as public transport startup Chalo, one of Waterbridge’s recent investments, is offering commuters real-time bus timetables and locations, to help the hundreds of millions of users who take the bus.
From India’s first unicorn InMobi, a global platform enabling consumers to discover new services and products as well as creating an advertising market for marketers, Indian unicorn scene has begun in the online consumer sector.
According to data compiled by CB Insights, nine out of India’s top 10 unicorns by valuation are also currently in the online consumer space. The only outlier is ReNew Power, an independent wind and solar-energy producer.
We see the same trend among freshly-minted unicorns as well, such as ride-hailing company Ola’s electric vehicle arm Ola Electric that has raised capital at a high valuation when it is still yet to roll out its service.
While having the backing of its ride-hailing parent company Ola does bring merits, this high valuation is also indicative of the growing confidence in India’s EV market which is projected to reach US$707.4 million by 2025.
Other new 2019 unicorn that operates in the online consumer space is BigBasket. The Indian grocery startup entered the unicorn club in May after raising US$150 million in its Series F round from Mirae Asset-Naver Asia Growth Fund, CDC Group, and Alibaba.
However, at the same time, the new entries into the Indian unicorn club are also signing a somewhat different tune, that hints a newly developing trend.
For starters, there is the first unicorn of 2019, Delhivery that entered the coveted unicorn club after securing an investment from Softbank in March. It is a third-party logistics service provider to offline businesses operating in 1,700 cities across the country.
Then, there is Icertis Inc., which makes cloud-based applications in the contract lifecycle management space for enterprises. The SaaS startup has raised US$115 million last week, propelling it into the unicorn club as reported by Bloomberg News.
In fact, the startup counts companies such as Google, Microsoft, Daimler, Airbus, Johnson & Johson, Lupin, Infosys, Wipro, and Cognizant as customers. In the pharmaceutical industry, the startup already has five of the top seven players as clients.
Also, among s list of 30 soonicorns identified by Indian media outlet Inc42 that shows potential to fetch a US$1 billion valuation by 2020, five startups are in the enterprise tech. This includes Druva Software is a cloud data-protection provider with a suite of global clients and Atlan, which makes data-management software.
According to the co-founder of iSPIRT and think tank for India’s software products industry Sharad Sharma, the ability to sustain capital-efficient growth, SaaS companies are less likely to raise the large amounts of capital that lend huge valuations.
Moreover, a large number of SaaS companies in India remain unfunded, following in the footsteps of bootstrap champ Zoho, India’s largest software products company, which has a topline of around $550 million.
“Nonetheless, India’s SaaS journey is extremely exciting,” said Sharma. “Indian SaaS is doing well at all levels. Companies here are targeting all levels of the market, with firms like Druva catering to large enterprises, Freshworks playing in the mid-market and you have Zoho in the lower-end,”
In the end, it is most likely that India will produce more unicorns in the B2B and SaaS space. But we will still likely see B2C firms continue to top the valuation charts.
From wired-up mannequins acting as tutors to virtual and augmented reality in educational applications, technology is helping to revolutionize the way Indian schoolchildren are learning.
India’s most valued ed-tech company, Byju’s which counts Sequoia, Lightspeed, and Tencent among its backers have topped half of ten billion dollars in valuation with its ongoing Series F funding round that started in December 2018.
This new valuation reportedly at US$5.5 billion, almost doubling from its last valuation of US$3.5 billion. This development came after the startup raised US$86 million from new investors like Qatar Investment Authority (QIA), the sovereign wealth fund of the State of Qatar, and Owl Ventures, an ed-tech investor.
Funding capital from this new round would support the company’s aggressive plans for international market expansion and the creation of world-class learning products for students across the globe.
To date, the startup has raised ₹3,159.4 crore (about US$460.8 million) in the round, led by investors such as South Africa’s Naspers, private equity firm General Atlantic, and Canada Pension Plan Investment Board.
While this certainly is an unprecedented jump within a single round, the reason behind why many investors are clamoring for a piece of the education startup is largely due to it turning a profit and reporting huge rapid growth.
Bengaluru-based Think and Learn Pvt. Ltd., which runs Byju’s grew its revenue threefold in the year ending 31 March to a total of ₹1,430 crore (about US$208.5 million) and turned profitable on a full-year basis.
The firm explained that this was fuelled by a deeper penetration across India and a significant growth in the number of paid subscribers.
Byju’s is currently benefitting from Indian parents’ willingness to spend on education to give their children an edge. The startup has helped millions of students understand concepts in Maths, Science, and English.
In April 2019, Byju’s has reported over 35 million registered users and 2.4 million paid subscribers crossed Rs200 crore (about US$29.06 million) in monthly revenue.
“It is likely that it is commanding steep increases in valuation on a month-on-month basis, not year-on-year, as other startups might,” said Vivek Durai, the Founder of Paper.vc. “Among India’s unicorns, Byju’s has the highest leverage today vis-a-vis prospective investors.”
In India, there are an estimated 270 million children aged between five and 17. The country’s online education sector is projected to be the fastest-growing in the internet market, worth US$2 billion and become Asia’s third-largest economy by 2021, according to a study conducted by Google and KPMG.
Then again, the startup is not only looking at India with its aggressive expansion plan.
According to investors, the edtech startup is also aggressively expanding its global footprint. First, entering into the United States market, as well as the launch of new course material for students in grades I-III have contributed to the valuation jump.
Besides, in January this year, Byju’s has also used US$120 million to acquire US-based Osmo, which provides a playful learning system, bringing physical toys into the digital world through augmented reality and its proprietary reflective artificial intelligence.
“This new acquisition will bolster team Byju’s international plans. With the integration of Osmo, Byju’s will also look to offer a unique, customized, engaging, and fun-learning solution for younger kids,” the startup had said.
Byju’s growth is expected to continue as it expands its learning programs for K-12 students and ventures into new markets.
“Given that in ed-tech there are not too many other large companies available to invest, Byju’s will attract a premium. There are other parameters such as customer acquisition costs, lifetime value of users, which is also much higher for Byju’s than other competitors,” said an investment banker.
But aside from the US, the edtech startup in February has also announced its intention to expand into the UK and Australia.
Then again, the most fundamental reason behind the startup’s success is that it provides a solution to the school-age population who faces fierce competition for university places.
16-year-old Akshat Mugad told Phys.org news, “I have been using Byju’s since last year and my performance has really improved. I understand mathematical concepts much better now.”
This is just one of the many students that have seen improvement from using the online learning site. The platform provides a fun and interactive way for students to learn differently from the rote memorization techniques that are used across much of Asia.
“When learning is a stressful process, it hampers motivation and a student’s quality of education. With gamification, personalization and positive messaging, learning is continuous, interactive and highly effective,” said Byju’s Chief Technology Officer Prakash Ramachandran.
The 4-year-old startup offers a learning app and platform that provides personalized learning programs for school students based on their proficiency levels and capabilities which help them learn at their own pace and style.
The platform also helps in more competitive situations, offers training for preparation of different entrance and competitive examinations like CAT, JEE, IAS, GRE, and GMAT.
“There could still be more valuation jumps”, opined Santosh N., a senior advisor-valuation at Duff and Phelps, one of the largest valuation service providers in the world.
In many cases, investors are offered a different set of rights and conditions such as liquidation preference and anti-dilution protection.
“The amount that an investor pays for a stake in the startup or a new-age company could include an insurance premium for certain rights like liquidation preference and anti-dilution protection,” said Santosh.
The value of these rights could be as high as 20 percent of the total investment amount, and the remaining 80 percent is the value of pure equity.
Byju’s is already the most well-funded edu-tech player in the country, and experts say that the startup will most likely continue attracting a premium since there aren’t many other large companies in this space.
Byju’s is now aiming for a revenue target of over Rs 3,000 crore in the current fiscal, up from Rs 1,430 crore last year.
Ride-hailing giant Go-Jek has secured yet another investment in its ongoing late-stage Series F financing that started since October last year.
Its latest investor is Siam Commercial Bank, Thailand’s oldest homegrown lender that sees King Maha Vajiralongkorn as its biggest shareholder. The investment amount, however, has not been disclosed.
In a report from Bloomberg, people familiar with the matter said that the partnership will help this Indonesian tech startup boost is financial service, while Siam Commercial will benefit from the online growth that will help increase company revenue.
Previously, the startup has already raised over US$1 billion in its Series F first close in February from investors including Alphabet’s Google, JD.com, Tencent Holdings, and Provident Capital.
In fact, at the same week, Go-Jek has also announced additional investments from Mitsubishi Motors, Mitsubishi Corp. and Mitsubishi UFJ Lease & Finance as part of the Series F financing.
But these financings come with little surprise, as Go-Jek is rivaling competitor Grab.
To date, Grab has already raised up to US$4.5 billion in its ongoing Series H which sees investors such as Softbank, Tokyo Century, and Experian, among some.
As a matter of fact, both ride-hailing giants have moved toward digital payments through partnerships with local banks in Thailand.
Grab, the Singapore ride-hailing giant has also raised funds from a Thai Bank, Kasikornbank which has invested US$50 million and the pair together has introduced a co-branded mobile wallet called GrabPay by Kbank.
It’s a win-win situation for both banks and ride-hailing unicorns as the Thai banks, on one hand, can rely on these startups to offer financial services from digital payments to consumer loans. Meanwhile, the ride-hailing firms can have easier access into the region which the business is not fully-regulated.
Go-Jek, which debuted its app for hailing motorbike taxis in Jakarta in 2015, is expanding beyond Indonesia to cater to consumers across Southeast Asia, aiming to popularize an all-purpose consumer app similar to Tencent’s WeChat in China.
In Thailand, Go-Jek began its operations earlier this year under the name Get. The app offers motorcycle rides and food delivery, as well as GetPay, a wallet function that users can top up through Kasikornbank and Siam Commercial Bank’s apps.
It is valued at US$10 billion according to CB Insights, and hosts more than 20 on-demand services on its platform from food delivery to cab-hailing.
They might be mythical beasts that exist only in fairytales, but for those in the startup and venture capital scene, unicorns are something very real.
Unicorns exist and are the much-coveted status for startups and investors, as a symbol of having reached or surpassed the US$1 billion valuation mark.
In fact, based on CB Insights, there are currently over 300 unicorns around the world, roughly half of which are based in the United States.
Then again, the spotlight is gradually moving into Asia, with many placing their bets in the region of Southeast Asia for its huge potential and market.
In fact, there are already several unicorns that have succeeded. Here’s a full list of unicorns in Southeast Asia and the industries they are tackling.
Backers: Tencent Holdings, Cathay Financial Holding, GDP Venture
The first-ever ASEAN startup to IPO in the United States, ecommerce and gaming tech giant SEA has successfully raised US$884 million with its listing on the New York Stock Exchange (NYSE) in 2017. The internet company officially entered the unicorn club in 2016 through its US$550 million fundraisings that involved Cathay Financial Holding, placing its valuation at US$3.75 billion. At the time of its IPO, SEA was valued at US$4.9 billion.
Backers: Horizons Ventures, Accel, IDG Capital
Founded in Singapore and relocated to San Francisco, Razer is a popular name among gamers in Southeast Asia. It is the first company to create computer gear for gamers and has conquered 30 percent of the video game mouse and keyboard business on a global scale since 2015. The company went IPO in Hong Kong in 2017 with a valuation of US$4.4 billion.
Backers: Broad Peak Investment, Investec, Warburg Pincus, Boyu Capital
A newly minted unicorn, Singapore startup Trax is in midst of finalizing a deal to raise US$100 million at a pre-money valuation of about US$1.1 billion. The startup serves the retail industry with its image recognition technology being used by global consumer packaged goods companies including Coca-Cola and Nestle to track their products on retail shelves.
Backers: Microsoft, Hyundai Motor Company, Beacon Venture Capital
Founded in 2012, Grab is an all-in-one transportation service providing a platform that is present in nearly every ASEAN country, covering over 500 cities and towns across eight countries.
Having recently raised US$300 million from Invesco as part of its ongoing Series H funding led by Toyota, Grab recent investments values the company at about US$14 billion, according to a report by CNN.
The startup’s founder, Malaysian-Chinese Anthony Tan who is also Go-Jek’s founder Havard MBA classmate, is going head-to-head with Go-Jek by spending about US$700 million to expand its market share in Indonesia by 2020.
Backers: Tesco, Temasek Holdings, JPMorgan Chase, Rocket Internet
Since its inception in 2012, Lazada has been a major player of online shopping and selling in Southeast Asia. The ecommerce company serves in six countries including Indonesia, Malaysia, Philippines, Thailand, and Vietnam. In June 2018, Alibaba Group announced that it will invest almost another US$1 billion in the online retailer, bringing its valuation up to US$3.15 billion.
Backers: Google, Tencent Holdings, Temasek Holdings
Starting out as a motorcycle ride-hailing app in 2015, Go-Jek is one of the most reported startups in Southeast Asia with its aggressive acquisition activity to build its super app and becoming a full-on demand service platform.
The platform currently offers services including logistics, ticket booking, cleaning service, digital payments, and even barber services. Go-Jek currently operates across 50 cities in Indonesia while also in the process of expanding to other nations in Southeast Asia.
Backers: East Ventures, Sequoia Capital, JD.com
Founded by Ferry Unardi, Traveloka is Southeast Asia’s biggest go-to platform for various traveling needs.
It offers an online platform that allows users to make bookings of services provided by hotels, airlines, train and other transportation operators, events promoters, tourist attraction operators, travel agencies, telecommunication operators, and/or other service providers.
Traveloka was officially a unicorn in 2017 after DealStreetAsia reported a deal that values the startup at around US$2 billion, according to an executive familiar with the company.
Backers: Alibaba Group, East Ventures, SoftBank Ventures Asia
Launched in Jarkata in 2009, Tokopedia is Indonesia’s largest online marketplace. The platform became the country’s most valuable startup after raising US$1 billion from existing investors including Softbank and receiving a valuation of US$7 billion.
Backers: Ant Finacial, 500 Startups, Emtek Group, Mirae Asset-Naver Asia Growth Fund
Founded by Achmad Zacky, Muhammad Fajrin Rasyid, and Nugroho Herushyono in 2010, Bukalapak is the fourth startup in Indonesia to have received its unicorn status after Go-Jek, Traveloka, and Tokopedia. The ecommerce business is an online marketplace that is currently home to more than 50 million users, processing 2 million transactions a day.
Founded by design and real estate developer Robbie Antonio, Revolution Precrafted is a collection of limited edition, pre-crafted properties, varying from homes to pavilions.
The company sells prefabricated homes created and designed by dozens of internationally known architects and designers including Zaha Hadid, David Salle, Tom Dixon, Marcel Wanders, and Lenny Kravitz.
The startup is reported to have passed the US$1 billion valuations in November 2017 and became the first unicorn from the Philippines.
Backers: CyberAgent Capital, Tencent Holdings, IDG Ventures Vietnam
Founded in 2004, VNG is Vietnam’s first ever unicorn startup which specializes in online gaming and ecommerce for the local market. In 2016, the startup reached a US$1 billion valuation after an undisclosed funding round led by CyberAgent Ventures and IDG Ventures.
These are the Southeast Asian unicorns! Which of these unicorns do you think will be the next to IPO? Leave a comment down below.
Southeast Asia unicorns have emerged as the biggest drivers of exits in the region.
Just last week, Indonesian e-commerce unicorn Tokopedia bought over wedding marketplace Bridestory, as revealed in a romantic video where both parties said I do.
This was followed by Singapore unicorn Trax announcing that it had acquired US-based shopping rewards app Shopkick on June 25.
But it’s not just a surge in June. Reports show that exits have been increasing in the past 3 years.
According to the State of Southeast Asian Tech report compiled by Monk’s Hill Ventures and Singapore’s Slush, the region had seen 66 startups achieve exits as of June 2018.
While the report did not specify the profile of acquirers over the last three years, the period coincided with a rise in acquisitions by the region’s unicorns.
Unsurprisingly, a bulk of these acquisitions has been made by car-hailing giant Gojek in lieu of its plan to build a super-app.
In fact, Gojek by far has been the most active, having acquired as many as 11 startups since 2016, according to the data by Crunchbase.
The companies include local payments company MVCommerce, ticketing platform LOKET, and its most recent being Indian recruitment platform AirCTO, which are all intended to ramp up its engineering capabilities.
“The companies looking to be super apps are acquiring smaller startups because they, well, all of us, cannot be an expert in everything,” Teddy Oetomo told Nikkei Asia. “The easiest way to build a new vertical is acquiring it. In addition, acquiring is faster than developing,”
With that said, Go-Jek has been steadily adding new features and services ranging from grocery deliveries, haircuts, and even games for entertainment.
While Gojek is at the forefront of the acquisition activity so far, its competitor Grab is also on an acquisition spree, though more focused on minority stakes.
Though the Singapore ride-hailing giant has only made 2 acquisitions – iKaaz and Kudo – it holds minority stakes in multiple startups including Singapore’s Ninja Van, Vietnam’s Moca, and Indonesia’s Ovo among some.
Besides, Grab is reportedly looking for more acquisition, as it plans to raise US$2 billion more this year to fund an investment of at least six tech startups in 2019.
According to several sources, one of the companies Grab has identified as a potential acquisition target is HappyFresh, in which it already owns a minority stake.
“Whether we invest or acquire will depend on many factors, including, but not limited to, the synergies a company has with Grab’s ecosystem, the growth potential of the company, and the valuation of the company,” Nicholas Anthony, Head of M&A and Investments at Grab said.
Holding the very same concept of having everything “in one single app”, a bulk of acquisitions are made by Indonesia’s travel unicorn Traveloka.
The travel tech unicorn was reported to have acquired three online travel companies in the past year, which are: Travel Book, Mytour, and Pegipegi.
Just today, it has also lead an investment in Singapore-based event tech platform PouchNation which offers a range of solutions for event organizers.
These acquisitions and partnerships further show Traveloka’s commitment to strengthen itself within the travel vertical to grow beyond its core business of flight and hotel tickets.
Similarly, other Indonesian unicorns have also been flexing their buyout muscles.
Besides its recent acquisition Bridestory, Alibaba-backed ecommerce unicorn Tokopedia is also currently in talks to acquire multiple startups including Sayurbox. While Bukalapak in 2018 has also sealed a deal with second-hand marketplace Prelo to acquihire their talent and technology.
Singapore startups have not been far behind, with NYSE-listed Sea buying three undisclosed companies in 2017 for US$19.875 million, according to an SEC filing.
Razer, before its IPO on the Hong Kong Exchange, has also made several acquisitions such as Nextbit Systems, THX, and Ouya to amp up their tech.
New unicorns like Singapore’s Trax has also gotten into the action, having acquired US-based Quri last year and China’s LenzTech this year, before the latest Shopkick purchase.
So far, the unicorns in Southeast Asia are responsible for close to 40 acquisitions, including both regional startups and abroad.
It’s not hard to see why. Instead of building things from scratch, it is highly attractive for these unicorns to acquire smaller startups at conservative valuations and gain access to the startup’s technology and/or talent.
Regional unicorns such as Grab and Gojek are even launching their own investment vehicles to become both a source of funding and potential exit point for early-stage startups.
Moving forward, it’s most likely that we will continue to see an uprise trend in these unicorns creating more exits for startups.