Logo of Phnom Penh Post newspaper Phnom Penh Post - Study: Ride-hailing firms get most funding in SEA internet economy

Study: Ride-hailing firms get most funding in SEA internet economy

Content image - Phnom Penh Post
Cambodia ride-hailing app ExNet shows a passenger’s position near Independence Monument in Phnom Penh’s Boeung Keng Kang I commune. POST PIX

Study: Ride-hailing firms get most funding in SEA internet economy

Ride-hailing companies have taken home the lion’s share of investor dollars in Southeast Asia’s internet economy, amid intense competition among tech firms to become the region’s first “super app”.

Almost 70 per cent of funding went to companies in ride-hailing and e-commerce from 2016 to the first half of this year, according to a joint study by Google, Temasek and Bain & Company.

The study released on Thursday noted that Southeast Asia has remained a bright spot with funding flows growing at a “healthy pace”, even as global venture funding dropped 17.5 per cent in the second quarter of this year from a year ago amid slowing economic growth and a cloudy outlook.

Ride-hailing firms took home the largest sum of around $14 billion, with its two leading players Grab and Go-Jek staging mega financing rounds to build up food delivery and financial services, said the report. It added that both have also acquired new ventures and started acting as investors in the ecosystem.

E-commerce has attracted $9.9 billion worth of investments since 2016, and is on track to meet the record $4.3 billion raised last year.

Funding to other sectors such as online media, however, has slowed.

The bulk of funding has continued to flow to the biggest tech firms in the region, with unicorns in the region attracting $24 billion out of the total $37 billion raised. These refer to start-ups valued at more than $1 billion.

Nearly 70 “aspiring unicorns” – companies valued at between $100 million and $1 billion – have raised more than $5 billion since 2016 as well.

But more late-stage funding is needed for them to scale up, the study found.

Companies in this category include cashback platform ShopBack, logistics provider Ninja Van and financial products marketplace GoBear.

For ‘aspiring unicorns’ to graduate, Southeast Asia needs more late-stage financing through investments that range from $25 million to $100 million and above, the report added.

To attract such investments, the companies need to prove that they can rapidly grow their business either by successfully entering new markets, expanding to other sectors or securing exceptional levels of user engagement and loyalty.

They will also have to show that they can monetise their services.

While venture capital investors are raising larger growth funds to back their most successful investees for longer periods, institutional investors are becoming more willing to enter earlier stages of fund-raising.

The support for start-ups “signals the strong potential the region holds for investors in the long term”, said the report.

Meanwhile, the average deal size in early-stage funding doubled in the past three years, from about $2 million in 2016 for Series A funding to $4 million this year.

Singapore remains the gateway for regional funding and is on track this year to match the record deals and funds raised last year, it added.

There was $5.3 billion raised in 297 deals in the city-state in the first six months of this year, including multi-billion dollar financing rounds by ride-hailing firm Grab and New York-listed e-commerce operator Sea Group.

Elsewhere, funding in Indonesia is on track to break its 2018 record, while the e-commerce sector powers Vietnam’s Internet boom.

The large travel sector and fast-growing online media are “bright spots” in Thailand but its ventures have been facing challenges in raising late-stage funding to scale up the businesses.

THE STRAITS TIMES (SINGAPORE)

MOST VIEWED

  • ‘Education’ a priority traffic-law penalty

    A top National Police official on June 21 neither rejected nor confirmed the authenticity of a leaked audio message, which has gone viral on social media, on a waiver of fines for a number of road traffic-related offences. General Him Yan, deputy National Police chief in

  • Siem Reap’s $18M zoo said to educate public, help wildlife

    Angkor Wildlife and Aquarium Co Ltd has invested $18 million in a zoo in Siem Reap province, which will be opened in October to educate and promote animal conservation as well as attract national and international tourists. Currently, the Angkor Wildlife and Aquarium is building the

  • Volunteer scheme to foster ‘virtuous’ humanitarian spirit

    A senior education official said volunteer work contributes to solidarity and promotes a virtuous humanitarian spirit among the youth and communities. Serei Chumneas, undersecretary of state at the Ministry of Education, Youth and Sport, made the comment during the opening of a training programme called “

  • Chinese firms unveil preliminary results on metro, monorail for capital

    Minister of Public Works and Transport Sun Chanthol and representatives from China Road and Bridge Corp (CRBC) and its parent company, the state-owned China Communications Construction Co Ltd (CCCC), met on June 24 for talks on results of the firms’ preliminary study on a potential metro

  • Nestle’s debut may spur dairy market

    Leading confectionery manufacturer Nestle plans to invest in Cambodia by setting up an operation in the near future, a move majorly hailed by local dairy farmers as a means of boosting the fresh milk market in the Kingdom. During a visit by a delegation led

  • ACLEDA, WU to enable global money transfers

    Cambodia's largest commercial bank by total assets ACLEDA Bank Plc and global money transfer firm Western Union (WU) have partnered to offer customers cross-border money transfers to 200 countries via “ACLEDA mobile” app. In Channy, president and group managing director of ACLEDA, said the June 22 agreement