Patrick Grove: 7 predictions for Southeast Asia’s tech scene in 2017

2016 ended, and it came with some unexpected surprises. It was the year of Brexit and Trump, and the year Uber exited China. Everyone has been asking, “What will happen in 2017?”

Here are my seven predictions for the Southeast Asian tech scene in 2017:

1. Southeast Asia will become a bigger internet market than America

The ASEAN region will register over 300 million smartphone users in 2017, compared to America which only has 225 million. What that means is that every global app or service you can think of (email, social media, chat, etc.) has more users in Southeast Asia than in all of America. What this also means is that internet companies in our part of the world can – and should – be bigger than our US counterparts in time!

Photo credit: Wanaporn Yangsiri.

2. Funding will be harder to get – so conserve what you have

In 2017, fundraising is going to get harder for most companies. Recent news items talking about a tough VC climate, flat rounds, and a challenging fundraising environment are correct. The money is out there, but investors and VCs are going to be a lot more demanding on the caliber of companies worthy of further funding. Simply closing funding based on increases in revenue when your unit economics remain negative isn’t going to cut it. If you don’t know your CAC intimately (or even what it is), you have no chance of raising further funding (whereas 12 months ago you could, because even then, most VCs didn’t know what it was either!).

3. At least three companies will raise 9-figure rounds (US$100 million+)

We really are in a region creating great massive companies.

2017 will be the year of big funding rounds for a select few companies that are creating massive disruption. Go-Jek and Grab were not one-offs in 2016. We really are in a region creating great massive companies (see #1). Smart entrepreneurs will scale quickly requiring that next funding boost to wipe out the competition (most often, from outside the region).

Photo credit: Reuters.

4. There will be another exit in excess of US$500 million

We’ve seen three exits in excess of US$500 million (Jobstreet, iProperty and Lazada) over the last couple of years, and this trend will continue. More and more corporate buyers in the West and up North (China, Korea, Japan) are realizing that they can’t always go it alone, and that working with and acquiring local teams and entrepreneurs can give you unprecedented market share and dominance from day one. BAT (Baidu, Alibaba, Tencent) all have teams in the region looking for the next big deal, so expect them to find something sooner rather than later.

5. The year of China

China is quietly and quickly becoming an influential force in the region – more than US internet companies, for a number of reasons. Expect this to continue with more Chinese VC funds coming to Southeast Asia, Chinese entrepreneurs spending more time in the region and more Chinese corporates (BAT and many others) investing (and acquiring) in the region.

Photo credit: Li Yang.

6. There will be a widespread embrace of fintech

There’s been a number of small players dabbling in Fintech, but 2017 will see widespread growth in this sector. Consumers are becoming more open to using the technology, governments are getting more comfortable with the idea of Fintech and banks are looking to partner with entrepreneurs to drive this.

7. A different startup will run out of money every week